DA slams plan for R100bn black fund

South Africa’s second-biggest party criticised the trade minister’s plan to start a R100 billion ($5.4 billion) fund to boost Black-owned businesses by taxing existing firms’ profit.

Under the country’s rules on so-called Black economic empowerment, companies have to contribute 3% of their annual after-tax profit to the development of Black suppliers. The trade department will start the so-called Transformation Fund by channeling that money specifically, Minister Parks Tau said in a response to lawmakers’ questions this month.

“The DA will not support this madness,” said Toby Chance, the Democratic Alliance’s spokesman on trade. “This fund could very easily become a bottomless pit for taxpayers’ money, with little to no oversight or meaningful outcomes.”

Tau has yet to obtain approval for the plan from lawmakers and the nation’s cabinet, Chance said in an emailed statement Monday. The Department of Trade, Industry and Cooperation didn’t immediately respond to a request for comment.

The DA is in a coalition government with the African National Congress after last year’s election failed to produce an outright winner. The ANC — which had previously won a majority in all votes since the end of White-minority rule in 1994 — made Black empowerment laws a cornerstone of its economic policy to address the injustices of the country’s past.

However, slow economic growth and high joblessness have plagued Africa’s most-industrialised nation as corruption deterred investors. The so-called government of national unity set up in 2024 has instituted policies to revive investment through a R4.8 trillion infrastructure drive.

“The DA will not support any effort that seeks to undermine the rule of law or jeopardise the competitiveness of the South African economy,” Chance said.

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