PRESS RELEASE

28 May 2025

NEASA:

Transformation Fund reinforces racial gatekeeping, not real empowerment

(Click here for the Afrikaans version of this press release)

The National Employers’ Association of South Africa (NEASA) has expressed strong opposition to the Department of Trade, Industry and Competition’s (dtic) proposed R100 billion Transformation Fund, labelling it a dangerous step toward state-managed racial gatekeeping in the private sector.

Download NEASA's full comment here.

Published for public comment on 20 March 2025, the draft concept document – accompanied by contradictory public statements by Minister Parks Tau – has raised serious concerns about the intent, execution, and economic impact of the proposed fund. NEASA warns that instead of advancing genuine empowerment, the fund entrenches racial criteria as the primary basis for financial support, with no regard for business merit, economic sustainability, or investor accountability.

“This is not empowerment—it is enforced redistribution by racial classification,” said Gerhard Papenfus, Chief Executive of NEASA. “It strips businesses of their ability to invest in their own value chains and forces them to bankroll a state fund with no transparency, no control, and no promise of return or impact.”

Currently, measured entities can use their Enterprise and Supplier Development (ESD) contributions to support black-owned suppliers, clients, or other businesses in their own value chain. Certain provisions contained in the concept document of the proposed Transformation Fund, removes this flexibility, and mandates entities to contribute to a centralised state-managed fund with no influence over who receives support.

“In this model, companies are expected to contribute resources without knowing who the beneficiaries are, how funds are used, or whether any economic value is generated,” Papenfus added. “This reduces transformation to little more than a transaction to buy B-BBEE points - completely undermining the spirit of genuine empowerment.”

NEASA's submission further highlights the absence of qualifying criteria for beneficiaries beyond race. The draft document makes no mention of business skills, qualifications, or the viability of applicants, leaving contributors unable to assess risk, returns, or long-term value. Alarmingly, the fund proposes outright handouts rather than structured loans, placing it in stark contrast to existing, yet also failing empowerment programmes, operating on the loan-structures.

The use of the term "risky rural and township businesses" in the concept document—without clarification—further underlines the uncertainty and volatility associated with the proposed model. If the 24+ existing government funds aimed at black-owned businesses have failed to deliver transformative outcomes, NEASA asks: why would a riskier, less accountable fund perform better?

“South Africa does not need another failing, state-managed fund. We need policies that encourage growth across the board, reduce red tape, and foster true entrepreneurship. Economic success can never be determined by race, but by innovation, sustainability, and free-market principles,” Papenfus emphasised.

The proposed Transformation Fund will deepen state interference in private business, entrench patronage networks, and further erode investor confidence at a time when the economy is already on the brink. With corruption and regulatory inefficiencies estimated to have cost the country R1.5 trillion between 2014 and 2019, centralising another R100 billion in an opaque and ideologically driven fund is economically reckless.

“NEASA stands for a competitive, free-market economy where businesses thrive through innovation, efficiency, and individual merit—not through state-enforced redistribution,” Papenfus concluded.

ISSUED BY:

National Employers’ Association of South Africa (NEASA)

MEDIA CONTACT

Izaan Ludick

069 427 1720

Media Liaison (NEASA)

media@neasa.co.za