GOVERNMENT READIES REVAMPED TRANSFORMATION FUND OFFERING BIG BEE POINTS INCENTIVE
- BEE NEWS
- Jan 27
- 3 min read
Tiisetso Motsoeneng | 27 January 2026
The government is preparing to launch a revamped Transformation Fund as early as next week, rewriting incentives that have shaped corporate behaviour for more than two decades.
A trade, industry & competition ministerial briefing pack, seen by Business Day, shows that companies will be able to earn 30 broad-based BEE (BBBEE) points by contributing 3% of net profit after tax to the fund — double the points currently available for the same outlay under traditional enterprise supplier development (ESD) routes.
The 30-point reward is large enough for many companies to move several levels on the broad-based BEE scorecard. For companies in the midrange, a single contribution could lift them into level 3 or higher, improving access to government and corporate procurement without changes to ownership or management.
Early unsigned or conditional commitments listed in the briefing pack totalled R13.1bn, led by R10.8bn from Afreximbank and smaller entries of R500m each from the Unemployment Insurance Fund, Industrial Development Corporation and Development Bank of Southern Africa, while Vodacom-Masiv will pump in about R400m. These sums are not far from the fund’s annual mobilisation target of R20bn.
“The fund will be capitalised through the aggregation of resources anchored in BBBEE policy provisions, complemented by contributions from mechanisms such as Competition Commission public-interest commitments and other strategic funding partners,” the document reads.
Priority sectors
The fund will be in a special purpose vehicle incubated by the National Empowerment Fund, targeting a small set of priority sectors — renewable energy, manufacturing, agro-processing, logistics and digital infrastructure — chosen for their ability to deliver jobs and industrial impact. The fund will offer grants, loans, equity and business development support.
The document also shows the fund will be governed by a minister-appointed board, supported by a public-private investment committee.
The move could simplify compliance and channel more money to black‑owned businesses, offering a fast shortcut to procurement competitiveness without forcing companies to restructure ownership or overhaul management.
However, it also concentrates decision‑making in a minister‑appointed board, potentially raising concern that the commercial rigour needed to turn pooled capital into jobs and business will be undermined by directors beholden to ministerial preferences.
Simplified compliance route
The briefing broadly mirrors the same policy objective as reported by Business Day last year, centralising corporate transformation capital and offering a simple compliance route.
But it is likely to disappoint cheerleaders of the initial proposal to launch the department of trade, industry & competition into action last year. Under that proposal, unlisted companies would have been offered an opportunity to pay 3% of gross revenue into a South African Revenue Service-collected pool managed by a private fund of funds in exchange for an automatic level 3 recognition.
Corporates prefer the option that offers the clearest, cheapest path to procurement advantage and the least compliance friction, one small business owner briefed on the department’s plans said.
Even market leaders with deep pockets find the administrative and operational demands of BBBEE compliance onerous.
Major companies and blue-chip firms maintain in-house transformation units — board-level social, ethics and sustainability committees — adjust strategies to scorecard rules and pour millions into advisory and reporting to protect their ratings.
For black entrepreneurs, the fund promises scalable, patient capital aimed at townships and regional value chains that conventional enterprise development programmes have failed to reach.
Affordable capital shortfall
The Gordon Institute of Business Science and the BBBEE Commission’s 2024 study shows that while ESD spend has grown rapidly, actual outcomes, specifically for sustainable and scalable black businesses, have fallen short of expectations. They identified a chronic shortfall of affordable capital as the primary culprit.
The department first announced the Transformation Fund as a policy initiative at the beginning of 2025, setting a target to mobilise R100bn over the term of the current administration. It framed the fund as a way to aggregate existing enterprise and supplier development and related commitments to create scale and improve access to finance for black-owned businesses.
However, the proposal was met with immediate governance concerns, with Business Unity South Africa signalling its willingness to participate but pushing for clarity on design, governance and implications.
The DA derided it as a “looting scheme” and “madness”, saying it repackages old programmes that have failed to make a dent in poverty and unemployment.
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.