What the R100bn BEE Transformation Fund Means for Your Business

The South African government has reaffirmed its commitment to transformation with the R100 billion BEE Transformation Fund, an initiative aimed at supporting black-owned businesses and accelerating economic inclusion. Announced last year and recently promoted by President Cyril Ramaphosa during the 2025 State of the Nation Address (SoNA), the fund has sparked both enthusiasm and controversy.

While the fund promises to provide much-needed financial and developmental support to black-owned enterprises, it has also drawn criticism from opposition parties and business groups. Questions have been raised about how the fund will be managed, whether it will truly stimulate economic growth, and if it could lead to further financial burdens on private companies. Here’s what business owners need to know about how this initiative will work, its potential impact, and how to prepare.

What is the BEE Transformation Fund?

The BEE Transformation Fund is a government-led initiative designed to mobilise R100 billion by 2029 to boost BBBEE. Administered by the National Empowerment Fund (NEF), the fund will consolidate resources from various sources, including:

• Enterprise & Supplier Development (ESD) contributions from private-sector companies
• Government funding and incentives
• Public-private partnerships focused on transformation
• Equity Equivalent Investment Programme (EEIP) contributions from multinational companies

Unlike previous transformation initiatives, the fund will pool resources into a centralised system, aiming for a more structured and high-impact approach to economic development. The goal is to support black-owned businesses and SMMEs, particularly in key sectors like manufacturing, agriculture, ICT, tourism, and township or rural enterprises.

Is This a New BEE Requirement?

The Department of Trade, Industry and Competition (DTIC) has clarified that the BEE Transformation Fund does not introduce new compliance obligations. However, businesses with BEE scorecard requirements, particularly under ESD and ownership elements, will be expected to contribute to the fund in line with existing BBBEE codes.

According to Parks Tau, Minister of Trade, Industry and Competition, businesses will be required to contribute an equivalent of 3% of annual net profit after tax towards black supplier development. Additionally, multinational corporations may need to set aside 25% of their South African operations’ value for transformation purposes under the EEIP.

Criticism and Controversy Surrounding the Fund

Despite government assurances, the BEE Transformation Fund has faced significant pushback from opposition parties and business groups.

The Democratic Alliance (DA) has criticised the fund as a potential “slush fund”, warning that it could suffer the same fate as the R500 billion Covid-19 relief fund, which was plagued by allegations of corruption and mismanagement. DA spokesperson Toby Chance has expressed concern that the fund could become a tool for political elites rather than a genuine economic growth driver.

The National Employers Association of South Africa (NEASA) has also spoken out against the initiative, arguing that the government is replacing its failed BEE policies with another costly intervention.

Businesses have raised concerns that forcing private companies to contribute to the fund could be seen as an additional tax, increasing financial strain at a time when many are already struggling with economic instability, power outages, and policy uncertainty.

Despite these concerns, Minister Parks Tau and President Ramaphosa have stood firm, insisting that the fund will be strictly governed by BBBEE regulations to ensure proper allocation and impact.

How Will the BEE Transformation Fund Work?

The fund will not create additional compliance requirements, but rather redirect existing transformation contributions to maximise impact. Businesses that already contribute to BEE initiatives may see their funds consolidated into this broader structure, aiming for greater efficiency in driving economic transformation.

For qualifying black-owned businesses, the fund will provide:

• Direct financial support for growth and expansion
• Business development services and mentorship
• Access to supply chains and market integration

While participation in the fund is technically not mandatory, businesses seeking to maintain or improve their BEE scorecard rankings may find it beneficial to align their ESD and procurement strategies with the fund’s objectives. This alignment could enhance compliance scores, open doors to new funding opportunities, and strengthen supplier networks.

What Should Businesses Do Now?

The BEE Act is legislation that stands on its own. Furthermore the BEE Act has a ‘trumping clause” that states it trumps any legislation in South Africa despite the Constitution. What does this mean?

1. Current impact on your BEE initiatives: There is no current impact as the various BEE Codes written under The BEE Act do not allow for this fund. Without the BEE Transformation Fund being explicitly gazetted across ALL Sectors and Generic B-BBEE Codes, this will not be implemented on the relevant certificates and scorecards. 
2. How is the ESD element impacted as it currently stands: The purpose of Enterprise and Supplier Development is clearly defined in the BEE Codes. The purpose is to identify local Black owned suppliers within your industry/sector, support them through Enterprise Development and grow them to become suppliers for your company, thereby achieving Supplier Development. The Transformation Fund will bypass this intent behind the Codes of Good Practice. ESD is the backbone to The BEE Act and driven all the way down the supply chain from government suppliers to the last company in this chain. In order to conduct business with SOE a supplier needs to be B-BBEE compliant. Their suppliers then request that their suppliers are compliant and so forth. This is ultimately the driving force behind transformation in our country. 
3. Engage with your BEE verification agency: A reputable BEE Verification Agency will know this cannot be enforced or scored on until such time as the Minister of the DTIC replaces the existing B-BBEE Codes of Good Practice. 
4. Stay informed: The fund is still evolving, so watch for updates on eligibility, contributions, and sector-specific impacts.

The R100 billion Transformation Fund represents both opportunities and responsibilities for business owners. Whether you’re looking to maintain your BEE verification certificate or explore potential funding and partnerships, now is the time to strategise and stay ahead. 

Need expert advice? Contact our verification specialists today to ensure your business is prepared for the next phase of BEE transformation.