The Democratic Alliance (DA) has lambasted the Transformation Fund proposed by the ANC as a sophisticated mechanism of ‘looting’ and economic capture that will only benefit the politically-connected elite.
(Photo by Ihsaan Haffejee/Anadolu via Getty Images)
The Democratic Alliance (DA) has lambasted the Transformation Fund proposed by the ANC as a sophisticated mechanism of ‘looting’ and economic capture that will only benefit the politically-connected elite.
DA spokesperson for trade Toby Chance on Thursday said the party rejected the fund as another of the ANC’s “failed” broad-based black economic empowerment (broad-based BEE) schemes that “enrich elites, not workers”.
He told a media briefing that the DA’S submission to the department of trade, industry and competition presented an alternative vision of economic empowerment that transcends racial boundaries.
The draft concept document released by the department on 19 March, proposes the establishment of a R100 billion Transformation Fund anchored in broad-based BEE policy. It is framed as a flagship initiative to accelerate transformation and support black-owned businesses, particularly small, medium and micro enterprises.
The fund will see the 3% of net after-tax profits that companies are required to spend on enterprise and supplier development under broad-based BEE codes of good practice diverted to the central fund for disbursement to black businesses.
The ANC says its black empowerment drive aims to reverse the economic imbalances which favoured whites.
On Thursday, Chance argued that the transformation fund would block growth by focusing on race and not on investment or job creation and that the DA backed “real empowerment” through economic growth and striving to reach the United Nation’s sustainable development goal targets.
“The department’s concept document has attracted much attention, in terms of impracticality. Organised business and think tanks have all been vocal against the fund, as it will not deliver economic growth and job creation,” he said.
He added that a recent survey showed South Africans were against the government continuing with broad-based BEE after years of failed implementation.
He said the fund was a “continuation of broad-based BEE policies which have failed to bring disadvantaged South Africans into the economic mainstream and have left eight million people unemployed, up from five million people in 10 years, while enriching a small elite”.
The fund would not address barriers to foreign investment inherent in broad-based BBEE and “other heavy-handed government policies”.
“Over a period of 20 years, the narrative and the orthodoxy around transformation has been corrupted. It’s not real transformation. It’s actually seizure of assets to the benefit of a small number of people”.
DA national spokesperson Karabo Khakhau described the fund as “an activated looting scheme”.
“Funnelling money to a select few in the name of transformation, is not transformation. In fact … it is an activated looting scheme that is always available for evil ones to manipulate,” she said.
“Prioritising funding for the same politically connected people or elites in the name of being pro black is not transformation. That is corruption, and that’s what we need to be able to crack the whip on here, and that’s why we’re anti this, this whole idea that such funds are supposed to work.
“You take a Karabo, and on the basis of Karabo being black, you give her an opportunity for funding. She gets her success. And instead of moving on to [other candidates] …you take the same Karabo again, and you make her the same dipper of the same system.
“And then Karabo becomes loyal to you and your organisation in how she manipulates her tenders, in how she trades and who her trade partners are and she becomes a tycoon of a system that is only focused on one person, while black, coloured and Indian people who are supposed to be empowered … fall behind the line.”
DA deputy spokesperson on trade Mlondi Mdluli said empowerment and redress were “deep issues” that were sensitive and should be broached with “compassion, clarity and effectiveness”.
He argued that existing state-supported funds such as the Black Business Supplier Development Programme and the National Empowerment Fund had failed to address systemic economic challenges.
Chance said the DA’s alternative vision to the fund detailed in its submission emphasised creating an environment where “everybody can grow”, regardless of race. This includes investing in quality education, skills development, cutting bureaucratic red tape and fostering an inclusive economic growth strategy.
True empowerment comes through growing the economy, not through redistributive mechanisms, he argued.
Responding to a question on the narrative that the DA was anti-transformation, and whether the issue could destabilise the government of national unity, DA national spokesperson Willie Aucamp said ANC governments of the past had not empowered the majority of black people.
“Their policies were not pro black because it did not empower the largest amount of black people in this country,” he said.
“When the DA entered this government of national unity, we said that we’ve got two main aims. The one is to grow our economy, and the second one is to create jobs. And in everything we do, we ask ourselves whether what we are doing will contribute towards that, and if it’s not, we won’t do it.
“But we did not agree to be co-opted by the ANC, the Democratic Alliance is a party in our own right, and we will remain so. In most of the issues that come up in the GNU we do agree with each other, but where we disagree, we will not be a rubber stamp to just say yay and amen into whatever it is that the ANC does that we might differ with.”