Deputy President Paul Mashatile: Launch of Transformation Fund

Programme Director;
Minister of Trade, Industry and Competition, Mr Parks Tau; 
Ministers Gwede Mantashe, Stella Ndabeni and Ronald Lamola;
Deputy Minister Zuko Godlimpi and other Deputy Ministers present;
Members of the Executive Councils here present;
BUSA President, Mr Mxolisi Mgojo;
BBC President, Mr Elias Monage;
NEDLAC Overall Convener Civil Society, Mr Thulani Tshefuta; 
NAFCOC President, Mr Gilbert Mosena;
Directors-General here present and senior government officials;
Entrepreneurs and Transformation Agents;
Ladies and Gentlemen; 
Good morning!

It is always a privilege to be invited to gatherings of this nature, and I remain keen on engaging in dialogues that can advance our nation's progress. This is because conversations regarding economic matters are crucial for fostering inclusive and sustainable development and improving participation in decision-making processes. They facilitate the equilibrium of economic development with social equality, offer an opportunity to rectify inequalities, and foster a more just and stable society.

In a pursuit to establish a more just and equitable economy, I have been actively engaging with various stakeholders to foster economic growth by gathering insights, promoting collaboration, and ensuring government policies and initiatives are aligned with societal needs.

You will also recall that President Cyril Ramaphosa launched Phase 2 of the Business and Government Partnership with the aim of securing progress in energy, transport and logistics, and the combating of crime and corruption as enablers of economic growth and the creation of jobs.

It is the overarching goal of the government to encourage the development of an inclusive economy. Our goal as Government is to create equitable economic growth that benefits everyone in all corners of South Africa.

However, despite last month's celebration of 31 years of political freedom, much work remains to achieve equitable and inclusive economic freedom. South Africa currently faces one of the highest levels of economic inequality globally, with a Gini coefficient of 0.63 and a poverty rate of 17.82%, highlighting the significant disparity in income and wealth.

This measure of inequality implies that a tiny fraction of the population disproportionately enjoys a large amount of wealth and income that is inaccessible to the majority. This of course signifies persistence of the apartheid legacy, a reality that even at this stage of our democracy should never be ignored, or most critically erased from history.

Indeed, these disparities underline the need to develop an inclusive economy, ensuring that everyone participates and benefits. At this current conjuncture, economic freedom for all is what we are pursuing and committed to, whatever the cost!

Ladies and Gentlemen, 
The Freedom Charter advocates for a society in which all individuals, regardless of race or gender should enjoy equal rights and opportunities. This is the ultimate freedom our people need. Together, we must work hard to pull our people out of poverty by 2055, the centenary of the Freedom Charter, using lessons learned from China.
I am introducing the 2055 timeline because this year we are celebrating the 70th anniversary of the Freedom Charter, and the next 30 years must be more decisive, driven by practical interventions in bringing Africans and Black people into the economy in more significant ways.

We must collaborate to eliminate structural barriers and establish equitable opportunities for all. We need to focus on industrial policy, infrastructure investment, and social grants to foster inclusive growth and protect vulnerable populations.

Regardless of the challenges that persist, we have through our democratic dispensation traversed the journey to economic redress together, knowing the significance of inclusive development and growth for South Africa’s economy.

Economic redress and transformation, as anchored on the equality clause of the Constitution of the Republic of South Africa, has been given practical impetus through a plethora of legislation, which includes the B-BBEE Act of 2003, as amended in 2013.

B-BBEE remains a vital part of our economic landscape. It is a critical tool for addressing past injustices and improving economic participation.

Over the past 22 years, B-BBEE has evolved its policy, legislative and regulatory instruments to address challenges and opportunities in promoting an inclusive economy for all South Africans. This evolution is informed by global commitments to address economic inequality and poverty, aligning socio-economic and industrial policies accordingly to address poverty.

Section 2 (h) of the B-BBEE Act provides legislative impetus to the Constitutional undertaking by requiring the government to "increase the effective economic participation of Black-owned and managed enterprises, including small, medium, and microenterprises and cooperatives, and enhance their access to financial and non-financial support."
Over the past 31 years, our country has implemented a comprehensive framework for promoting a transformed and inclusive economy. We must defend this achievement by implementing the policies and legislation that form the basis of our transformation agenda, demonstrating pride in our efforts.

The implementation of this Act, has made significant strides in promoting Black people's economic participation, including their ownership of businesses, occupying management roles in government and corporate, and expanding social investments in rural communities. However, additional efforts are required to further improve these opportunities.

This means we have to deal with challenges that include tick-box approaches, fronting, and non-reporting of compliance requirements, which hinder the overall progress of BEE.

We also have to find solutions pertaining to access to finance for Black businesses. 
It is important to recognise that the funding deficits in South Africa are a contributing factor to the failure of small businesses. In spite of government intervention, such as Enterprise and Supplier Development, which is a critical component of the B-BBEE framework, there is still a need for additional measures to be taken to expand fund access to SMMEs.

Loans are the most common financial instrument for micro, small, and medium-sized enterprises in South Africa, but they often have stringent underwriting standards, making them difficult for smaller businesses with limited collateral and financial records to secure.

This is why we encourage small businesses seeking financial assistance to explore government funding programmes, and business support agencies such as the National Empowerment Fund, Small Enterprise Finance Agency and the Small Enterprise Development Agency.

Ladies and Gentlemen,
Today is an important and historic day for South Africa as it marks a key milestone in our journey towards economic transformation. We fully welcome the launch of the Transformation Fund, as it will serve as a strategic vehicle for businesses to embrace change, foster innovation, and drive growth. This fund will serve as a catalyst for financial support, guiding organisations through crucial transitions and enabling them to seize new opportunities that arise in the market.

As enterprises seek improved access to capital and the need to remain competitive in this dynamic environment, I believe that the Transformation Fund will be invaluable. The proposed Transformation Fund will unleash Enterprise and Supplier Development’s (ESD’s) potency in driving economic inclusion and participation.

We are going to make sure that the Transformation Fund is at the centre of Government, specifically the Presidency. We will work with the Minister of Trade and Industry as well as the key economic cluster Minister to ensure that we meet the set targets, especially in the procurement of goods and services.

This will include expanding spending aimed at supporting African and Black enterprises in townships and rural South Africa led by women, youth, and people with disabilities. The Treasury and the Department of Women, Youth, and People with Disabilities have already collaborated to develop such a framework. The focus is to ensure speed of execution and equally implement the Preferential Procurement Policy Framework Act.

I also want to appreciate the private sector for coming on board to participate in the Transformation Fund. It is commendable that the fund is anchored by private and public sector contributions to the Enterprise Supplier Development and Equity Equivalent Investment Programme obligations.

I am pleased to learn that a centralised fund, administered in partnership with the private sector, will ensure greater access to funding opportunities, especially in township and rural economies. Funding will be allocated to various productive sectors of the economy, which includes, among others, services industry, tourism, and agriculture, thereby supporting majority black-owned entities. Technical support and market access will be prioritised to ensure sustainability through inclusive interventions. 
Investing in a Transformation Fund signifies a commitment to progress and a dedication to long-term sustainability. It will enable businesses to navigate challenges with resilience, adjust in response to changing dynamics, and establish themselves as adaptive leaders in their respective industries.

Compatriots, 
Building an inclusive economy also necessitates acknowledging that South Africa does not function in isolation from the global community. We must comprehend the present global issues and establish plans and policies that will put South Africa on an upward trajectory of progress.

We must diversify our export markets to reduce our dependence on a single trade partner. Most importantly, we must take advantage of the African Continental Free Trade Area, which promotes industrialisation by reducing reliance on raw material exports and promoting value-addition.

The Free Trade Agreement increases our bargaining power in global trade negotiations, allowing us to attract more foreign direct investment, negotiate better trade deals with other countries, and develop diverse industries.

We need to adapt to a new reality by changing business practices and reviewing policies to keep pace with global trends. Government is planning to invest in the Fourth Industrial Skills Revolution (4IR) to revive economic development, revitalise skills, and generate high-quality employment.

Our government has accepted the realities of Artificial Intelligence (AI) and the Fourth Industrial Revolution. These are no longer distant concepts or futuristic dreams—they are shaping our present and defining the contours of our future.

Our approach is informed by the recommendations of the Presidential Commission on the 4IR, which views AI as a tool that can drive social and inclusive economic progress.

In that regard, we appreciate efforts by the Department of Trade, Industry and Competition and Microsoft for reaching an agreement on a R1.32 billion investment to be deployed over the next ten years in the development of Black-owned SMMEs in both tech and non-tech sectors.

The agreement makes provision for the skills development of young Black South Africans in emerging technologies and includes a commitment to research and development to prepare South African industries for the 4IR.

As Government we are also providing a framework for inclusive collaboration between industry, labour, higher education institutions, and society to develop new skills and capabilities for the nation through the National Digital and Future Skills Strategy.

We are implementing measures to increase productivity and develop necessary skills for a knowledge and skills-based economy.

Through the Human Resource Development Council, which I chair, we approved the Reconceptualised Human Resource Development Strategy 2024–2033, together with its implementation plan, the Master Skills Plan 2024–2030, in November 2024.

The strategy aims to improve early learning and schooling outcomes, enhance the employability of youth not in employment, improve the responsiveness of the Post-School Education and Training system to skills demand both in the private and the public sector.
We will convene the HRDC summit at the end of this year, with the goal of encouraging a culture of training and lifelong learning, reducing poverty, inequality, and unemployment, and promoting social cohesion through enhanced education and skills development.

Ladies and Gentlemen,
We will not achieve an inclusive economy as long as corruption persists, both in the public and private sectors. Corruption hinders the growth of Small and Medium-sized Enterprises (SMEs) by increasing costs, reducing profits, and creating uncertainty.

To promote an inclusive economy, we must commit to addressing corruption by strengthening our institutions, fostering transparency and accountability, and promoting citizen engagement. This includes developing and implementing robust anti-corruption frameworks, strengthening our criminal justice system, and encouraging public participation and oversight.

Government is committed to fighting corruption, focusing on accountability, transparency, and the dismantling of corrupt networks. This effort includes establishing specialized investigative units and strengthening legislation to combat money laundering and fraud.

We must all work together to address remaining challenges; hence, the government will be hosting the National Dialogue as part of forging an inclusive development future of our country.

The National Dialogue process is seen as an opportunity to establish a social compact with the public, fostering trust and support for the implementation of the Medium-Term Development Plan.

The Dialogue will provide an opportunity to secure stakeholder commitments for collaboration with the government to achieve common goals. Therefore, as we meet today, let us identify targets and commitments that we must track as we approach the convening of this important Dialogue.

Ladies and gentlemen, as things stand, we might not be in a position to meet all the NDP's 2030 targets, this calls for a focus shift and a modelling exercise, similar to the one that was done by the Gauteng Provincial Government in developing GGT2030, to ensure all targets are met.

This exercise will assist in ensuring that we focus on industrialisation and re-industrialisation, which will assist in bringing Africans and Black industrialists as critical players in the economy.

I am therefore proposing that three war rooms in accordance with the three objectives of the MTDP, as decided by the Cabinet be established. These will include a War Room on the Economy and Jobs, a War Room on Poverty and Hunger, a War Room on Clean Governance prioritising 10-15 Day Payment cycles and Transformative Procurement, and most critically, a War Room on Economy and Jobs.

These War Rooms will not follow the normal Cabinet process. Instead, they will take a deliverology approach, which is the discipline of getting things done. We will do stock takes, deep dives, and intervene decisively where there is no progress. 
Government and the private sector, as represented today, will be represented in each War Room, but this is more than simple representation; it is about accomplishing and obtaining results.

The war rooms must meet regularly to track the work being done and report to the larger war room, which I will convene and report to the President.

Compatriots, let us use this moment to remind ourselves that transformation and economic justice require dedication, vision, and a willingness to challenge the status quo. We can make a real difference in others' lives and create a fairer society through our actions, big and small.

Together, we can build an inclusive economy and transform our society. I am optimistic about our country’s future, indeed by working together we will leave no one behind.

I thank you, Inkomu.

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