The Democratic Alliance, which is South Africa’s second-largest political party, has expressed its disapproval of the trade minister’s plan to create a R100 billion ($5.4 billion) fund intended to assist Black-owned businesses by levying taxes on the profits of existing firms.
In accordance with the nation’s rules on Black economic empowerment, companies are obligated to allocate 3% of their annual after-tax income to support the growth of Black suppliers. Minister Parks Tau revealed this month that the trade department would kick off the Transformation Fund by repurposing these funds specifically for this initiative, following questions from lawmakers.
“The DA will not support this absurdity,” stated Toby Chance, the party’s trade spokesperson. “This fund risks becoming an unending burden on taxpayers’ finances, with minimal oversight and scant measurable outcomes.”
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In a statement released via email on Monday, Chance pointed out that Tau has yet to receive approval for this proposal from legislative authorities or the national cabinet. The Department of Trade, Industry, and Cooperation has not immediately responded to requests for comments.
Following last year’s elections, which did not produce a decisive winner, the DA is part of a coalition government with the African National Congress (ANC). The ANC, which has retained majority control in elections since the end of apartheid in 1994, has positioned Black empowerment legislation as a cornerstone of its economic strategy to address historical inequities.
Despite this, South Africa, the continent’s most industrialized country, continues to grapple with slow economic growth and elevated unemployment rates, challenges that are worsened by corruption that deters investment. The so-called government of national unity established in 2024 has introduced plans aimed at boosting investment through a R4.8 trillion infrastructure program.
“The DA will oppose any measures that jeopardize the rule of law or compromise the competitiveness of the South African economy,” Chance asserted.
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