The Minister of Trade, Industry and Competition, Mr Parks Tau, has published a Draft Transformation Fund concept document for commentary.
This Fund is reminiscent of the Roman Catholic custom of selling letters of indulgence in the fifteenth century. Congregates were able to “buy” remission of their sins while the church raked in the money.
The document’s hypothesis is that after all these years of Black Economic Empowerment (BEE) โ the first legislation was adopted in 2003 and revised in 2013 โ black people’s share in the economy is still too small.
The solution is that government should establish a fund to help black-owned enterprises to successfully participate in the economy as suppliers of goods and services.
The document’s premise is BEE legislation whereby large enterprises should help redress the “injustices of the past” through “black empowerment”.
The supposition is that these enterprises find themselves in a favourable position mainly as a result of historical privilege.
According to BEE legislation, these enterprises should earn certain scores as a prerequisite for doing business with government or even government’s suppliers.
The document, however, adds that enterprises could alternatively pay money into the proposed Fund. Government will do the same. In this way, the Fund is expected to grow with R20 billion annually to reach its target of R100 billion in five years.
The proceeds will be used to exclusively benefit businesses with predominantly black shareholding.
Clearly the document is based on the assumption that government will be able to spend the money more effectively than the private sector. What evidence this assumption is based on is unclear, especially if one considers government’s performance over the past thirty years.
The Freedom Front Plus (VF Plus) suspects, instead, that government’s revenue cannot keep up with its expenditure due to corruption and misappropriation. So, once again the private sector has to repay its supposed historical debt.
The objective is not to directly empower black people, but to pay money into the Fund thinking that government will do the empowerment. This is akin to buying remission of sins, much like the infamous letters of indulgence.
Ironically, efforts to increase black participation in the formal economy had already created a number of billionaires even before 1994 โ with President Cyril Ramaphosa being a shining example. These people’s children were privileged enough to study at the best and most expensive institutions, and will surely be first in line when it comes to benefiting from the Fund.
Anyone is free to submit comments on the proposed Fund until 7 May. The Freedom Front Plus herewith launches a campaign encouraging citizens and civil institutions to participate in the public process.
