Ido Lekota delves deeper into the Draft Transformation Fund and other options which have been put on the table
Second to the outcome of the life-changing 2024 elections, South Africans are once again confronted by one of the biggest challenges to their dream of an egalitarian post-apartheid—continuing racial disparities—and finding a solution to the quagmire.
A major cause for the prevailing situation is the recent release for public comment of the Draft Transformation Fund by the Minister for Trade, Industry, and Competition Parks Tau. The Fund is about aggregating various empowerment initiatives under a unified framework, thereby enhancing efficiency and reducing fragmentation. Through its centralised approach, the Fund seeks to foster coherence across government and private sector programmes. This aims to ensure that resources are deployed effectively to maximise impact and accelerate B-BBEE compliance.
Then there is also the announcement by ActionSA about coming up with a plan to replace the country’s current means to achieve both social and economic justice—the B-BBEE driving policies. A key proposal in the plan includes the establishment of an ‘Opportunity Fund’, which the party suggests could be financed by a 5% levy on company profits. The fund is supposed to replace the B-BBEE framework and focus on investments in education, entrepreneurship, and infrastructure in disadvantaged communities.
These developments are an opportunity for South Africans to engage in the development of solutions that can address the legacies of poverty, unemployment, and racial inequalities they continue to face in their country.
They can do so by unpacking the two interventions with regard to their impact capacity when it comes to addressing the challenges they continue to face—more than 30 years after the advent of the their envisioned democratic and egalitarian South Africa.
A key question to ask in that regard is how—from their point of view—each of these announced interventions have the potential to deliver them from these shackles of poverty, unemployment, and racial inequality. This they could achieve, by, for example, interrogating the genesis of each intervention and if that genesis is in sync with their aspirations of a qualitative life in a democratic non-racial South Africa.
For example, as Minister Tau points out, the Draft Transformation Fund is committed to redress driven by the B-BEE framework. This is important because B-BBEE is explicitly designed to redress the economic injustices caused by apartheid, which were fundamentally racial. To this end, it uses mechanisms such as black ownership, management control, and preferential procurement to ensure black South Africans gain meaningful participation in the economy. It is in that spirit that the fund is not only about funding projects but about changing the structure of the economy by redistributing ownership, control, and opportunities for participation in the economy by historically excluded groups.
On the other hand, their identification of the BEE genesis and their affinity with it should not blind South Africans to some of the shortcomings experienced in the implementation of B-BBEE such as corruption, enrichment of the politically connected few; as well as the continuing domination of township economy by giant retailers in the form of shopping malls. They should therefore ask questions about how the Fund is geared towards addressing these challenges.
The most important factor in the whole assessment process is—while they do so—they should not fall into the trap of conflating (whether consciously or subconsciously) the need for B-BBEE as a tool to drive redress and economic transformation and how it has so far been implemented in the country.
Failure to avoid such conflation can only lead to them failing to constructively engaging what could be the most efficient intervention the country needs to achieve social and economic justice. What is needed is an understanding that while B-BBEE has faced challenges such as elite capture and fronting, these are issues of implementation rather than principle.
In assessing the ActionSA suggestion for the replacement of B-BBEE with an ‘Opportunity Fund’ it is important to ask how such an intervention would achieve social and economic justice. This question arises because B-BBEE was developed as a direct response to South Africa’s history of apartheid and systemic racial exclusion. Its core purpose is to address deep-seated economic and social injustices by empowering blacks through targeted interventions in ownership, management, skills development, procurement, and socio-economic development.
Simply investing in education, entrepreneurship, and infrastructure, as the ‘Opportunity Fund’ is supposed to, while important, does not guarantee that black South Africans will have greater control over economic assets or decision-making power in the economy. Without mechanisms for ownership and management control, existing power structures and inequalities may persist.
It is also important to understand that social and economic justice in South Africa is not just about poverty alleviation; it is about correcting historical injustices and redistributing power and resources. B-BBEE’s pillars of ownership, management, skills development, and preferential procurement are designed to ensure that black South Africans are not just beneficiaries, but active participants and leaders in the economy. An opportunity fund that lacks these targeted measures risks becoming a generic development initiative, rather than a tool for justice and transformation.
This is because a policy replacing B-BBEE with an ‘Opportunity Fund’ that does not explicitly address racial redress is anti-transformation because, it shifts the focus from structural change and justice for those most harmed by apartheid to generic development. It also risks perpetuating existing inequalities and fails to deliver the social and economic justice B-BBEE, its implementation flaws aside, was designed to achieve.
As it is, true transformation in South Africa requires targeted, race-conscious interventions that dismantle historical barriers and ensure meaningful participation and ownership for Black South Africans in the economy.
The challenge is how to efficiently apply the B-BBEE policies in a manner that drives the much-needed transformation in this country for the benefit and inclusion of all South Africans. This challenge includes addressing, among others, criticism about B-BBEE’s focus on ownership transactions that do not directly translate into increased employment or meaningful economic participation for the wider black population.
To address these challenges it is important that the Fund supports initiatives aimed at promoting B-BBEE’s genesis of redressing historical inequalities by enabling the participation of Black South Africans in the economy—with such inclusion stimulating economic activity and leading to job creation through increased demand and entrepreneurship.
It is also about driving skills development thereby equipping previously disadvantaged individuals with the capabilities needed to participate productively in the economy, thereby enhancing employability and supporting business growth that generates jobs.
By efficiently supporting black-owned SMMEs through interventions such as preferential-procurement and enterprise development B-BBEE, we can help stimulate employment and innovation thereby improving production and market expansion.
This is the dream that all South Africans can make possible through their input to the Draft Transformation Fund. Such inputs should be about ensuring that the Fund does become 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.
Ido Lekota is a former Sowetan Editor and regular contributor to BBQ Magazine.
