PRESS RELEASE

21 January 2025

GOVERNMENT’s R100 BILLION ENTERPRISE DEVELOPMENT FUND

JUST ANOTHER ANC CASH-COW

The recent announcement by Minister Parks Tau that Government wants to establish a R100 billion “transformation fund” is yet another typical example of the ANC’s ambition to enforce its delusional and misguided socialistic economic policies, as well as its misplaced confidence in its own abilities to manage such an enormous fund, while keeping its fingers out of the proverbial cash register. 

The National Employers’ Association of South Africa (NEASA) is extremely concerned over the notion of such a fund even being considered to be placed in the hands of the ANC.

The Black Economic Empowerment (BEE) codes already require of businesses to contribute 3% of their net profit after tax towards enterprise and supplier development, i.e. black business. This in itself is outrageous. At this stage, the codes permit business to identify its own avenues to direct these funds into, providing that the beneficiaries fall into the “black” category. 

Although the whole BEE scheme has proven to be an ineffective and failed experiment, at least a business can currently channel these funds into enterprises which it can either supply to or procure from, thereby strengthening its own value chain.

In terms of the new proposal, business will be obligated to pay this 3% contribution to a government fund, or risk being non-complaint with the BEE codes and face possible fines. It will then be Government’s discretion to decide which “black” beneficiaries may then receive grants, equity funding or debt relief (handouts) with no reciprocal benefit to the businesses providing the funding. Effectively, this would mean that businesses would only be pouring their money into a black hole.

As if this is not enough, multinationals, who are currently forced to contribute up to 25% of the value of their South African holdings towards transformation purposes, by virtue of equity equivalent investment programs, will see these funds gobbled up by Government’s enterprise development fund.

NEASA states that this development may well lead to disinvestment from multinationals, who are already discouraged to invest due to BEE requirements, as they may not want to hand over billions to a government which has proven itself to be excessively corrupt.

The ANC does not seem to realise, or maybe simply does not care, that throwing other peoples’ money at the problem of inequality in economic participation will not solve the problem. Most entrepreneurs, irrespective of race, fail due to a legion of reasons, albeit a lack of perseverance, ingenuity, or experience, a poor business idea, lack of market or whatever the case may be. These are simply the laws of business economics, and no amount of government interference will change this.

This proposed fund is nothing more than politicking and, if implemented, will no doubt be flaunted as a glorious ANC achievement, as long as no one peers too deeply into the spending abyss and enquires about the final destination of the funds, a sizeable chunk of which would probably end up in the pockets of the ANC faithful, or the coffers of the ANC itself.

ISSUED BY

Gerhard Papenfus

Chief Executive (NEASA)

MEDIA CONTACT

Charis Esema-Onaolapo

Media Liaison (NEASA)

083 393 4435

media@neasa.co.za