Pivotal Shifts in the Transformation Landscape
Greetings to all our loyal readers, and welcome to our latest edition of the EconoBEE newsletter.
As with most months in 2025, April brought with it a whirlwind of regulatory developments within the B-BBEE and transformation space. Several updates and draft frameworks have sparked renewed discussion around the future of economic inclusion in South Africa. This month, we’ve spotlighted the most impactful developments beginning with the eagerly anticipated Transformation Fund Concept released by the Department of Trade, Industry and Competition (the DTIC), followed by key insights on the Employment Equity Act repeal, which continues to create waves among designated employers.
Transformation Fund Concept – A Game-Changer for Real Economic Inclusion
In mid-April, the DTIC released a draft concept document proposing the establishment of a Transformation Fund – a bold R100 billion initiative to be implemented over five years. The aim? To support majority black-owned businesses and SMMEs, with a focus on inclusive growth, township and rural upliftment, and the empowerment of historically disadvantaged South Africans, particularly black women, youth, and people with disabilities.
The Transformation Fund differs significantly from traditional ESD approaches. It introduces a mix of grant, equity, and debt funding, alongside non-financial interventions such as access to markets, technical support, mentorship, and accreditation for high-skill industries. The fund will be governed through a Special Purpose Vehicle (SPV) with strong public-private oversight, and contributors can expect immediate B-BBEE recognition for their funding input, as well as tax deductibility under section 18A.
This draft concept is open for public commentary until 28 May 2025. (Has been extended) Stakeholders are encouraged to share feedback at: transformationfund@thedtic.gov.za.
Employment Equity Act Repeal: Where Do Employers Stand Now?
In a parallel development, the government has moved forward with the partial repeal of sections of the Employment Equity Act, particularly those related to Section 53 — the controversial procurement compliance clause requiring a certificate of compliance for companies seeking to do business with the state.
This repeal, which comes after significant lobbying from the private sector, removes the blanket requirement for a compliance certificate, though designated employers are still expected to submit EE Reports and implement Employment Equity Plans. The rationale behind this adjustment, according to the Department of Employment and Labour, is to reduce red tape while still holding employers accountable for transformation progress.
Designated employers must take note: compliance obligations remain. Reporting deadlines, demographic targets, and transformation strategies are still part of the regulatory framework. What has changed is the mechanism for state procurement eligibility — shifting from a compliance certificate model to more targeted procurement regulations.
This development is both a relief and a warning. While the administrative burden is reduced, the spotlight on equitable workplace practices is growing and public scrutiny is intensifying.
A Call for Purposeful Action
These updates serve as a timely reminder that transformation in South Africa is a living, evolving process; not a checklist. Whether it’s through structured funds like the Transformation Fund or internal practices aligned to Employment Equity, businesses must remain intentional and responsive.
EconoBEE continues to support our clients in staying ahead of these shifts. If you’re uncertain about how these changes affect your business or would like to align your strategy with the new transformation roadmap — reach out to our team. Let’s build compliance with impact.
The ruling by the Constitutional Court has forced the government to review both the PPFA Act and its regulations to ensure alignment with the Constitutional mandate stated above and the B-BBEE Act. This does not invalidate the B-BBEE act. The framework of the B-BBEE and how it’s practicable is clear and therefore not affected by the recent constitutional ruling.
