South Africa’s R100 Billion Fund and AMSA Bailout Could Waste Billions, Warns Business Leader

South Africa could be on the verge of misallocating billions of rands in public funds, warns Business Leadership South Africa (BLSA) CEO Busi Mavuso. The concern stems from two major government initiatives: a proposed R3 billion bailout for ArcelorMittal South Africa (AMSA) and the establishment of a R100 billion transformation fund.

While these initiatives aim to provide economic relief and promote transformation, Mavuso cautions that without clear strategies, structural reforms, and measurable outcomes, these funds may be funneled into inefficient spending rather than creating long-term solutions.

AMSA Bailout: A Costly Short-Term Fix?

The government is considering a R3 billion bailout for AMSA, which reported a R1.1 billion loss in 2024. The steelmaker is struggling to keep its longs business operational, which could impact thousands of jobs along the supply chain.

To address this crisis, the government has proposed using the Temporary Employer/Employee Relief Scheme (TERS)—initially created during the COVID-19 lockdown—to support nearly 3,000 AMSA employees for a year at a cost of R417 million.

Mavuso argues that such short-term measures are not sustainable without fundamental economic reforms. “The government must avoid using public money for jobs that do not fundamentally add value,” she said.

She emphasized that if the government focused on fixing South Africa’s logistics system—by enabling public-private partnerships in rail infrastructure, for instance—AMSA could generate enough demand to sustain itself without government intervention.

R100 Billion Transformation Fund Lacks Clear Direction

The second major concern is the Department of Trade, Industry, and Competition’s (DTIC) proposed R100 billion transformation fund, aimed at supporting black-owned businesses and driving economic transformation.

While the initiative sounds promising, Mavuso argues that the plan lacks a clearly defined problem and a structured framework to ensure success.

“Many businesses fail in South Africa due to a lack of skills, market access, and operational inefficiencies—not just a lack of funding,” she said. “Without addressing these core issues, throwing money at the problem won’t create sustainable businesses.”

She also pointed out that the fund’s institutional design and management structure remain unclear, raising questions about how it will allocate resources effectively.

The Need for Structural Reforms, Not Just More Spending

Mavuso urges the government to focus on long-term economic growth strategies rather than short-term financial relief. “Firms are failing daily while waiting for the structural reforms needed to drive the economy,” she said.

Without clear policies and transparent execution, the R100 billion transformation fund and AMSA bailout could become yet another case of public funds being misused, further straining the country’s economy.

The government’s next steps will determine whether these initiatives will drive real economic change or simply become another costly mistake.

{Source BusinessTech}

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