President Cyril Ramaphosa said on Monday that economic growth without transformation entrenches exclusion, and that transformation without growth is unsustainable, calling for levers of funding for black-owned businesses to be pulled.  

Ramaphosa wrote in his weekly letter to the nation that transformation is not a favour, but a necessity, noting the establishment of the Transformation Fund was created to support emerging, innovative businesses to, in turn, create job opportunities.

Government believes its proposed R100-billion Transformation Fund will help improve the effectiveness of broad-based black economic empowerment (BBBEE) spending as it seeks to aggregate the funding that JSE-listed groups, State-owned enterprises and unlisted private companies spend collectively on enterprise and supplier development, as well as some of the funding multinationals direct towards equity equivalent schemes to secure their BBBEE compliance, without selling shares in their companies.

Ramaphosa said that there was a critical need for black-owned businesses to access funding on affordable terms.

“While much of this funding should come from the development finance institutions, it is the private banks that have the resources to make the greatest impact. They need to review their lending practices to unleash the potential of black business,” he said.

He said South Africans must do away with the “false notion” that they must make a choice between growth and transformation.

“The inequality of our past continues to shape the lives of millions of black South Africans. And yet many who continue to benefit from the legacy of exclusion continue to decry black economic empowerment and are even challenging it in our courts,” he said.

He highlighted that South Africa was tasked with ensuring that it pursued growth and transformation together, with more vigour and to greater effect.

“That is why we continue to strengthen initiatives like the Black Industrialists Programme, which is building successful, competitive, black-owned enterprises in manufacturing and other sectors,” he explained.

Ramaphosa pointed out that through mechanisms such as the Public Procurement Act, government must ensure that businesses owned by women, young people and persons with disabilities enjoy expanding opportunities.

“…we must ensure that transformation reaches into every sector, whether it is mining, construction, energy, IT or agriculture.

“The private sector should use their supply chains far more deliberately to empower many more black-owned businesses, not just to improve their BBBEE scorecard, but to grow and diversify their supplier base,” he said.

He highlighted that as South Africa developed its infrastructure, grew new industries such as green hydrogen and electric vehicles, and drove localisation and reindustrialisation, government would continue to ensure that transformation was a guiding principle.

“The transformation we seek is not about ticking boxes. It is about building a resilient, just economy for generations to come. I call on all South Africans, and in particular the private sector, to recommit to economic transformation,” said Ramaphosa.