The Department of Trade, Industry and Competition’s (dtic) proposed R100 billion Transformation Fund has sparked significant debate. At Signa Advisors, we welcome the intention to unlock funding for black-owned businesses and deepen meaningful transformation. But the question remains: will the Fund, as currently framed, deliver real impact—or risk duplicating existing efforts?
Our view is simple: this is a step in the right direction, but how we build the path matters.
Beyond Capital: Understanding the Real Barriers
The Fund assumes that lack of access to finance is the main barrier to growth for black-owned enterprises. But as practitioners working closely with entrepreneurs, we know the real obstacles are often more complex:
- Exclusion from value chains
- Weak infrastructure and fragmented local markets
- Limited access to business networks
- Gaps in technical support and strategic development
Capital is a lever, not a silver bullet. Transformation requires capability, opportunity, and a conducive ecosystem—not just cheques.
Aligning with What Already Works
South Africa already has several transformation and development vehicles: the IDC, Jobs Fund, sector-specific B-BBEE Trusts, and ESD programmes that fund and develop suppliers within real value chains.
The Transformation Fund should not compete with or override these existing structures. It should align with them, complement them, and fill the gaps they can’t reach. A theory of change, with clear metrics and cross-programme integration, is essential.
Who Should Manage the Money?
If this Fund is to work, implementation must be credible, agile, and grounded in experience. That means selecting fund managers and intermediaries with:
- A track record of developmental impact
- Transformation credentials, especially black and black women-owned
- Experience in blended finance and small business development
We strongly support a Fund-of-Funds model. Government’s role should be to set the rules, hold intermediaries accountable, and create enabling infrastructure—not to operate or control the Fund directly.
Sector Prioritisation: One Size Won’t Fit All
The idea of aligning the Fund with sector masterplans is sound. But sector-specific needs must drive the funding instruments:
- Grants may work for early-stage innovators
- Low- or no-interest loans build accountability
- Equity might suit scaling businesses with high-growth potential
We also urge the dtic to consider the realities of informal and hybrid sectors. Onerous eligibility criteria could shut out exactly the kind of entrepreneurs the Fund is meant to uplift.
Inclusion Must Be Practical, Not Symbolic
Addressing spatial and demographic exclusion is key. But inclusion shouldn’t just be a principle—it must be embedded in funding design. That means:
- Earmarked funding for youth-, women-, and rural-based enterprises
- Support for anchor businesses in underserved regions to stimulate demand
- Infrastructure coordination to ensure supported businesses operate in viable environments
Real inclusion goes beyond ownership. It means meaningful participation, decision-making power, and benefit-sharing.
Keep What Works: ESD and Ownership Innovation
Let’s not reinvent the wheel. Many private sector players have effective Enterprise and Supplier Development (ESD) initiatives. These programmes should not be undermined or crowded out.
Instead, the Fund could reward innovative models already aligned with the B-BBEE Scorecard:
- Collective ownership structures
- PE-style black fund manager vehicles
- Growth-focused support for small black-owned enterprises
We must move away from compliance-led box ticking toward models that build real value.
Sustainability Starts with Payback
Long-term sustainability can’t rely on grants alone. We believe repayable finance is the most responsible model:
- Interest-free or low-interest loans create skin in the game
- Recycling capital keeps the Fund alive and scalable
- Grant capital should be used sparingly and strategically
This is how we build a culture of accountability and avoid short-termism.
Transparency Builds Trust
We encourage full public reporting on the Fund’s operations: where money goes, what impact it delivers, and what lessons are learned. That’s how trust is built, and how transformation efforts evolve.
In Conclusion: The Right Fund, the Right Way
The dtic has taken an important first step by opening this Fund for consultation. Our hope is that its final design reflects a deeper understanding of the systemic challenges it seeks to solve. That it empowers those who have long been excluded. That it builds partnerships, not parallel structures. And that it keeps government in a strategic role—not an operational one.
With the Transformation Fund on the horizon, understanding how it aligns with your existing initiatives is crucial. If you’re exploring what this could mean for your business, our team is here to support you with clarity, insight, and practical guidance.