Transformation Fund

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.

The basis for the fund is embedded in Section 7 (2) of the Constitution which mandates that the state must respect, protect, promote, and fulfill the rights in the Bill of Rights. In addition, Section 9(2) of the Constitution of the Republic of South Africa in recognition of the injustices of the past against persons disadvantaged by unfair discrimination, makes provision for the adoption of legislative and other measures to promote equality, including initiatives aimed at advancing persons or categories of persons disadvantaged by unfair discrimination who it is common cause are black people.

In terms of Section 11(2)(b) (B-BBEE Act 53 of 2003, as amended by Act 46 of 2013), which gives expression to the Constitutional imperative, a plan must be developed for the financing of B-BBEE, including the creation of incentive schemes to support effective majority black-owned and managed enterprises.

The growth and sustainability of SMMEs remain vital for the South African economy. Supporting and financing majority black-owned businesses, not only fosters job-creation and economic expansion but also aligns with government policies aimed at reducing unemployment. This approach plays a crucial role in addressing historical inequalities and promoting inclusive economic transformation.

South Africa’s black entrepreneurs continue to face unprecedented challenges in accessing affordable finance, non-financial support and post-investment assistance from the market. The Transformation Fund seeks to be an instrument that will contribute towards economic growth, acceleration of equal economic participation by the historically disadvantaged as well as maintain and create jobs that will alleviate the adverse levels of poverty in South Africa.

The Fund will be administered through Special Purpose Vehicle (SPV). A board of directors constituted by government and private sector will oversee the implementation of the Fund.