The government is weighing a voluntary 3% revenue levy on unlisted companies to feed a central Transformation Fund, promising a predictable R40bn-plus a year in new capital for black-owned small businesses and an expedited route to high broad-based BEE status.
Under the proposal — the details of which are scheduled to be aired at a postponed press conference on Friday — non-listed companies would pay 3% of their gross revenue into a centrally administered Transformation Fund.
In exchange, payers receive automatic level-3 broad-based BEE recognition — which offers stronger standing in corporate and government procurement processes — with a pathway to level 1 if they meet employment equity requirements, Business Day has learnt.
The proposal routes collections through the SA Revenue Service (Sars) to a privately managed fund of funds that provides soft finance — interest-free loans, convertible instruments and technical assistance to black-owned small businesses.
Assuming 15% participation among unlisted companies and roughly R8.7-trillion unlisted revenue in the 2022 revenue base, a 3% levy would produce roughly R40bn a year, enough to top a R100bn target inside three years.
Reprice corporate compliance
The levy, if adopted, would reprice corporate compliance into a single fiscal charge, turning corporate transformation from box-ticking into predictable corporate expense and funnelling private liquidity into market-building ventures, a shift that forces investors and regulators to choose between balance sheet costs and long-term market expansion and political stability.
For companies, it converts onerous compliance into a single predictable line item and generates a pooled, investable capital supply target at market building.
Even market leaders with deep pockets find the administrative and operational demands of broad-based BEE compliance onerous.
Major companies and blue-chip firms maintain in-house transformation units — board-level social, ethics and sustainability committees — adjust strategies to scorecard rules and pour millions into advisory and reporting to protect their ratings.
— Even market leaders with deep pockets find the administrative and operational demands of broad-based BEE compliance onerous.
For black entrepreneurs, the fund promises scalable, patient capital aimed at townships and regional value chains that conventional enterprise development programmes have failed to reach.
The Gordon Institute of Business Science and the Broad-Based BEE Commission’s 2024 study shows that while enterprise and supplier development (ESD) spend has grown rapidly, actual outcomes, specifically for sustainable and scalable black businesses, have fallen short of expectations. They identified a chronic shortfall of affordable capital as the primary culprit.
A fronting complaint in April offers a live example of that failure. The Broad-Based BEE Commission said it was investigating Cape Town radiological firm Bergman Ross & Partners after its black partner, Thapelo Motshudi, accused the partners of reducing his stake and using his name to simulate black ownership. Motshudi said he brought the client opportunity but lacked funding, agreed to a 50:50 split, and later discovered BRP claimed 74% ownership.
The department of trade, industry & competition first announced the Transformation Fund as a policy initiative at the beginning of the year, setting a target to mobilise R100bn over the term of the current administration. It framed the fund as a way to aggregate existing enterprise and supplier development and related commitments to create scale and improve access to finance for black-owned businesses.
However, the proposal was met with immediate governance concerns, with Business Unity SA signalling its willingness to participate but pushing for clarity on design, governance and implications. The DA derided it as a “looting scheme” and “madness”, saying it repackages old programmes that have failed to make a dent on poverty and unemployment.
The tweak, if it happens, comes at a time when SA is grappling with transforming the economy without alienating investors.
In May, communications minister Solly Malatsi gazetted a workaround to the 30% BEE ownership quota, unveiling an equity equivalent investment programme that allows companies such as Starlink to invest in local projects uplifting black communities rather than ceding equity to black partners.
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