DA Criticizes Proposal for R100 Billion Fund Aimed at Black Communities

The Democratic Alliance, South Africa’s second-largest political party, has criticized the trade minister’s initiative to establish a R100 billion ($5.4 billion) fund aimed at supporting Black-owned enterprises by imposing taxes on the profits of existing companies.

According to the country’s regulations concerning Black economic empowerment, firms are required to allocate 3% of their annual after-tax earnings towards the development of Black suppliers. Minister Parks Tau announced this month that the trade department would initiate the so-called Transformation Fund by redirecting that funding specifically for this purpose in response to inquiries from lawmakers.

“The DA will not endorse this nonsense,” asserted Toby Chance, the party’s spokesperson on trade. “This fund has the potential to turn into an endless drain on taxpayers’ resources, with very little oversight or tangible results.”

Chance noted in a statement sent via email on Monday that Tau has not yet secured approval for this plan from legislative authorities or the national cabinet. The Department of Trade, Industry and Cooperation has not provided an immediate response to a request for comments.

The DA is part of a coalition government with the African National Congress following last year’s elections, which did not yield a clear victor. The ANC, which has maintained majority control in elections since the end of apartheid in 1994, has made Black empowerment laws a fundamental aspect of its economic strategy to rectify historical injustices.

Nevertheless, South Africa, the most industrialized nation on the continent, continues to face challenges of sluggish economic growth and high unemployment rates, exacerbated by corruption that discourages investment. The so-called government of national unity established in 2024 has introduced strategies aimed at revitalizing investment through a R4.8 trillion infrastructure initiative.

“The DA will oppose any attempt that threatens the rule of law or endangers the competitiveness of the South African economy,” Chance declared.

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