Minister Tau’s Non-answers on R100 Billion Transformation Fund

Dear Editor

Minister Parks Tau’s response to the DA’s rejection of the R100 billion Transformation Fund leaves many questions unanswered. Instead, it shows the ANC’s determination on doubling down on its discredited BBBEE policy by expropriating yet more of businesses’ hard-earned profits.

The Transformation Fund will use BBBEE regulations to force companies to contribute proportions of their finances to the fund, which could be a slush fund for the corrupt. Minister Tau’s proposals are deeply worrying:

• A contribution from the 3% of net profits after tax companies spend on enterprise and supplier development (ESD). With ESD funding alone amounting to up to R25 billion annually, the scale of the Fund’s planned expropriation could be enormous.
• Multi-national companies who refuse to hand over equity to black partners will be expected to contribute up to 25% of the value of their South African operations as an “equity equivalent” cash contribution.
• The public interest clause of the Competition Act will be invoked to force companies entering into mergers and acquisitions to contribute to the Fund for these transactions to be approved.

This will not achieve a more equal economy but will instead place yet more disincentives on companies wishing to invest in South Africa. We reiterate our rejection of these proposals.

Another matter that requires urgent clarification is that all monies raised by the state must be channelled through the National Revenue Fund (National Treasury), before being distributed to government entities. It remains to be seen whether Treasury is on board with Minister Tau’s proposals.

The DA offers a better alternative through our Economic Justice Policy, which establishes the conditions for economic growth and partners with the private sector to achieve social goals. In this way, our economy not only grows – but includes us all.

We strongly urge Minister Tau to cease plans on the proposed Fund and institute a root-and-branch re-think of the ANC’s failed BBBEE legislation.

Regards

Toby Chance MP
DA Spokesperson on Trade, Industry & Competition