If you spend your days inside B-BBEE transactions like I do, you’ll know the story by heart. Good businesses try to do the right thing by becoming sound empowerment partners, and then the deal stalls on one thing: money – that is either too expensive, too risky, or simply unavailable.
For years we’ve asked what it would take to turn “almost bankable” empowerment projects into real, durable transactions that shift ownership, scale black-owned suppliers and build local capacity. The proposed Transformation Fund is the first answer I’ve seen in a while that takes the problem seriously at the right scale.
The R100bn Concept
In March 2025, the Department of Trade, Industry and Competition published the draft concept for a centralised, R100-billion initiative with the explicit aim of aggregating public and private resources and routing them toward majority black-owned firms and SMMEs.
It isn’t a vague press release; the draft maps a five-year mobilisation plan of roughly R20 billion per year and, crucially, proposes to pull through existing transformation instruments rather than invent new ones. Enterprise & Supplier Development (ESD) contributions and Equity Equivalent flows are intended to be channelled into a single vehicle with proper governance, measurement and reporting. In other words, less fragmentation with more firepower.
Government has already socialised the idea at senior level. In early May, Deputy President Paul Mashatile fronted a business breakfast framed as the launch of the Fund concept – importantly, a signal of political ownership rather than a promise that cheques would start clearing the next day.
The public narrative since January has been consistent: This is not a “new obligation”; it’s a way to co-ordinate what the economy already spends on transformation so that it lands with more impact – especially in townships, rural areas and productive sectors with high barriers to entry. That coherence matters to CFOs who’ve been asking for predictability.
The Fund’s Architecture
What gives me confidence is the architecture on paper. The Portfolio Committee briefing in June set out a fund structure using a Special Purpose Vehicle with its own board, an oversight committee, and a product mix that goes beyond plain debt. It includes grants for early-stage or higher-risk plays, concessionary funding, equity, and even listed instruments where broad-based structures make sense. If you’ve ever watched a perfectly good supplier fall over because the capital stack was wrong, you’ll understand why this matters.
The presentation also confronts a truth that many of us see in the trenches: South Africa spends billions on ESD every year, yet too much of it is thinly spread, compliance-first, or locked in silos. Aggregation is the point.
Critiques and Counterpoints
Will there be debate? There already is – and that’s healthy.
Business groupings and policy institutes have raised concerns about governance, market distortion and execution capacity. As someone who is pro-Fund, I take those critiques as design constraints rather than reasons to abandon the project. The answer is rigorous governance, clear investment mandates, and measurement that distinguishes point-scoring from real-economy outcomes: plants built, jobs created, local content raised, and black women owning and running meaningful stakes in growth businesses.
If the Fund can keep its risk appetite developmental without becoming a dumping ground for bad credit, it will do exactly what the codes asked of us two decades ago but at a scale we’ve never achieved.
The Fund in Practice for Existing Businesses
So what does this mean in practice for the companies I advise – especially multinationals and large South African groups? It means that ownership deals that have been stuck on affordability can be re-cut with blended finance rather than with contorted vendor loans. It means that supplier development budgets can stop behaving like a thousand watering cans and start behaving like patient, professional capital – paired with technical support and market access – so that strategic black-owned suppliers actually scale. And for multinationals with global control constraints, it means that you finally have a credible route to substantive outcomes – through equity-equivalent and programme finance – that line up with both head office policy and South African expectations. That alignment is the difference between annual debates about “points” and a multi-year transformation thesis that your board can stand behind.
The Road Ahead
None of this is automatic. The Fund is still moving through consultation and Cabinet processes; the ESD rule changes that would enable immediate points on contribution still need to be gazetted and operational details finalised. But the direction of travel is clear: a single front door, a common set of rules, and the political will to make transformation finance less fragmented and more effective. If you’ve ever said, “We’ll invest when there’s a proper mechanism”, consider this your heads-up to get your pipeline and paperwork in order.
My stance is simple. I’m in favour of the Transformation Fund because it addresses the hardest part of empowerment with instruments that match the risk, and because it focuses the system on outcomes, not optics. If we build it with discipline – credible governance, smart product design, and relentless measurement – it can turn a lot of near-misses into bankable deals that last.
At the same time, we should be realistic: This is the start of a long journey. Consultation, policy alignment, and the hard work of execution still lie ahead. Transformation at this scale will not happen overnight, but the Fund creates the kind of platform that makes the journey possible – and worth staying the course.
