The Democratic Alliance (DA) announced its rejection of government’s new proposed R100-billion race-based Black Economic Empowerment (BEE) Transformation Fund, calling on Minister of Trade, Industry and Competition Parks Tau to immediately bring the matter to Cabinet for proper discussion and approval.

Government has proposed the creation of a R100-billion Transformation Fund aimed at supporting black-owned businesses and small, medium, and microenterprises.

The fund seeks to address the financial barriers faced by historically disadvantaged groups, including black South Africans, women, youth, people with disabilities, and those residing in rural and township areas.

The party said the policy was a “clear violation of the principle of good governance, undermining Cabinet and the Government of National Unity.”

DA spokesperson on Trade, Industry and Competition Toby Chance said Tau’s approach was not only “irresponsible but deeply problematic,” as it completely bypassed the necessary Cabinet discussions and approvals that were required for such significant policy decisions.

“The Minister’s plan to impose further obligations on the private sector through the Broad-Based Black Economic Empowerment (B-BBEE) codes and force companies to contribute to this fund or face penalties is not only uncompetitive but also illegal,” explained Chance.

He said government could not create such a fund without first obtaining the explicit approval of Cabinet, especially when it effectively introduced a new tax on the private sector.

“It is unthinkable that the Minister would announce a policy of this magnitude without ensuring the necessary legal processes are followed. The government cannot arbitrarily impose taxes or new financial obligations on businesses without proper legislative procedures,” he added.

The party expressed concerns over the risk of corruption and mismanagement, which it said would accompany this fund, given the lack of resources and accountability within the National Empowerment Fund, which was tasked with its administration.

“This fund would very easily become a bottomless pit for taxpayers' money, with little to no oversight or meaningful outcomes,” Chance noted.

The DA said it would not support any effort that sought to “undermine” the rule of law or “jeopardise” the competitiveness of the South African economy.

“We will continue to stand for a government that operates transparently, in consultation with its partners, and within the bounds of the law. This reckless plan cannot and will not be allowed to proceed without the necessary legal framework and Cabinet approval,” said Chance.