PRESS RELEASE

26 March 2026

BUSINESS REJECTS R100 BILLION TRANSFORMATION FUND

AMENDMENTS TO B-BBEE CODES 

NEASA SUBMITS COMMENTS

The National Employers’ Association of South Africa (NEASA) has expressed its total rejection of the Department of Trade, Industry and Competition’s (dtic) proposed R100 billion Transformation Fund and the concomitant proposed amendment to the B-BBEE Codes.

Read NEASA’s full comments on Draft Statement 000 here.
Read NEASA’s full comments on Draft Statement 400 here.
 
Published on 29 January 2026 for public comment, the dtic’s notices in the Government Gazette propose amendments to several B-BBEE Codes Statements, to among others, set in motion the creation of the ill-conceived Transformation Fund, which was first mooted by President Cyril Ramaphosa on 6 February 2025 when he delivered his 2025 State of the Nation Address.

The amendments aim to woo businesses to contribute 3% of their Net Profit After Tax, annually, towards the Transformation Fund as an alternative to the traditional Enterprise and Supplier Development (ESD) programmes, for a maximum of 20 points on the generic scorecard.

In its submission, NEASA argues that this Transformation Fund merely aims to entrench, deeper, the grip the B-BBEE Act and its regulations already have on the economy, even though it has been clear for all that BEE has failed to deliver economic growth.

NEASA further argues that the Fund will most likely worsen corruption, patronage, inefficiency, and waste, which have left millions of people (mainly black)  without work or opportunities to start and grow a business – hallmarks of the government of the day.

The Transformation Fund effectively strips businesses of their ability to invest in their own value chains and entices them to bankroll a state fund with no transparency, no control, and no promise of return or impact for the sake of earning BEE points.

Such an arrangement is, for many reasons, ineffectual, as it cuts the thread between big business and small business and erodes corporate autonomy. Considering the state’s dismal track record in managing its financing institutions, it does not take a rocket scientist to see this fund for what it truly is – yet another ANC slush fund – a feeding trough, at the ready, for the politically connected few to loot!

It is evident that the more stringent ESD requirements proposed, coupled with the introduction of the state-controlled Transformation Fund, are aimed at channelling all ESD contributions to the Transformation Fund, as this will be the easiest option to comply with. However, NEASA strongly believes that no individual in their right business mind would ever voluntarily invest in this Fund.

Additionally, there are proposed amendments to the B-BBEE Codes pertaining to ownership (i.e. for businesses structured around 51% black ownership and 30% black-women ownership to access preferential recognition), potentially reducing the current benefits associated with 30% black-women ownership and 51% black ownership, and shifting away from these categories, moving toward 100% black owned and 100% black women-owned enterprises.

This, too, will cause an immense compliance burden on business, effectively forcing those businesses that heavily rely on the current framework to reassess their business models, procurement strategies, and ownership structuring in order to remain competitive.

It cannot be gainsaid that the motivating reasons for the creation of a Transformation Fund, are deeply flawed. It merely constitutes another discordant, racially based policy that fails to address the root causes of inequality in South Africa. The fund will only serve to deeper sow division within our society while facilitating the further enrichment of politically connected elites.

Apart from rejecting the proposed amendments in their totality, NEASA provides a textual analysis of the proposed amendments, highlighting, among others, how the amendments fail to go into detail about the governance of the Transformation Fund or how it is supposed to function in practice.

For example, the draft amendments suggest that contributors to the Fund would be required to conduct and submit a needs analysis and report to verify their contributions and impact on the beneficiaries. However, as Government, instead of the measured businesses, would be responsible for deploying contributions to qualifying recipients, it is not at all clear how this will work in reality.

NEASA also highlights various contradictory aspects in the scorecard in the Draft statements that make it unclear whether entities would have a definite choice to comply with either Enterprise Development, Supplier Development, or only the Transformation Fund, or if there would be an implied possibility to contribute to both. NEASA further urges the Department to provide clarity in this regard.

Government should look far beyond the Transformation Fund and the BEE policy as a whole for the upliftment of the South African people, should it wish to achieve economic growth.

It must explore other alternative policies which are conducive to economic and business growth, that are non-racial and focused on a needs-based (poverty and disadvantage) empowerment model. It is truly baffling that Government believes that any amendments to the defective and broken existing system could be the answer.

NEASA remains steadfastly opposed to the current B-BBEE scheme as a whole, largely due to its evident failures. NEASA therefore rejects the Transformation Fund and the proposed amendments in their totality and recommends that the dtic withdraws same.

NEASA stands for a competitive, free-market economy where businesses have autonomy and thrive through innovation, efficiency, and individual merit, and not through state-enforced redistribution and racial policy.

ISSUED BY
NEASA

MEDIA CONTACT
Charis Esema Onaolapo
Media Liaison (NEASA)
083 393 4435
media@neasa.co.za