Empowerment organisation red flags R100 billion Transformation Fund

SME empowerment organisation Unconventional CA (UCA) has raised concerns that the Transformation Fund offering big black economic empowerment points incentive reflects no meaningful shift from earlier drafts and is unlikely to serve the real needs and requirements of South Africa’s entrepreneurs and small, medium and micro enterprises (SMMEs).

- PHILIPPA LARKIN

GOVERNMENT in partnership with the private sector seeks to establish a R100 billion aggregated Fund to support the ever-growing funding requirements for businesses owned and managed by black entrepreneurs.

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This is in response to the news that the government is getting ready to move ahead with the revamped fund as soon as next week.

Government in partnership with the private sector seeks to establish a R100 billion aggregated Fund to support the ever-growing funding requirements for businesses owned and managed by black entrepreneurs to propel inclusive growth across various sectors of South Africa’s economy.

The Transformation Fund is anticipated to be capitalised at R20 billion per annum over a five-year period.

Under the proposal, companies that contribute 3% of their net income to a so-called Transformation Fund will earn double the points currently available for a scorecard that measures businesses’ support for greater economic inclusion.

Hiten Keshave, the CEO of UCA and an Enterprise & Supplier Development (ESD) specialist, said in a statement the latest version of the fund does little to address the fundamental questions around impact, accountability, and practical SME development.

“There are no material changes to what was first drafted” said Keshave. “At its core, this remains a proposal to centralise capital, without any clear direction on how those funds will actually translate into sustainable SME growth or meaningful support for entrepreneurs on the ground”