The South African National Budget: What Mattered Then, What Matters Now

South Africa’s national budget has always been more than just figures—it is a reflection of the country’s economic realities, policy choices, and aspirations. Over the past thirty years, the budget has evolved from a tool for redress and reconstruction to a mechanism grappling with debt, economic stagnation, and public sector sustainability. But where do we go from here?

What Mattered Then: The Budget in the Early Years of Democracy

In the years following 1994, South Africa’s budget was shaped by the need to:

1. Redress Apartheid-Era Inequalities – The government prioritized social development, focusing on education, healthcare, housing, and welfare grants to uplift disadvantaged communities.

2. Expand Basic Services: Electricity, water, and sanitation projects were rolled out on a large scale in previously underserved areas.

3. Job Creation & Economic Growth – Policies like the Reconstruction and Development Programme (RDP) and the Growth, Employment and Redistribution (GEAR) strategy aim to create employment and encourage private sector investment.

4. Public Sector Growth – The government expanded employment in sectors such as education, healthcare, and law enforcement to support service delivery. This is also aimed at job creation to reduce unemployment.

5. Infrastructure Development – Roads, transport systems, and public buildings were constructed to support economic expansion.

Main Sources of Revenue Then

To achieve the above, the government needed to establish sustainable revenue sources that would not only support its priorities but also potentially expand the expenditure priority list.

The early post-apartheid government relied on:1. Personal and Corporate Income Taxes – Strengthened tax compliance and progressive taxation.2. Value-Added Tax (VAT) – A key indirect tax to boost revenue.3. Trade Tariffs & Customs Duties – Shaped by global trade integration and international trade relations.

While these revenue sources laid the foundation for South Africa’s early development, today’s economic realities demand a different approach.

What Matters Now: The Budget in 2024 and Beyond

While some priorities remain unchanged, today’s budget landscape reflects the nation’s new economic realities:

1. Debt Management & Fiscal Sustainability – Rising debt and interest payments currently constitute a significant share of government spending. Post-apartheid, South Africa maintained relatively low debt levels, reaching a record low of 23.5% of GDP in September 2008. However, following the global financial crisis of 2007/2008, debt levels began to rise, peaking at 75.1% of GDP in September 2024.

2. State-Owned Enterprise (SOE) Bailouts – In the last ten years, the South African government has devoted significant resources to rescuing state-owned enterprises (SOEs) like Eskom and Transnet, placing pressure on the nation’s budget.

3. Healthcare & National Health Insurance (NHI) – The proposed National Health Insurance (NHI) seeks to revolutionize healthcare by providing universal access to quality healthcare for all South Africans, regardless of their socio-economic status. Its implementation will require substantial long-term financial support.

4. Public Sector Wage Bill – Government salaries constitute a major expense, igniting discussions about sustainability. In the last thirty years, South Africa's public sector wage bill has experienced considerable growth, which mirrors the expansion of public services and modifications for inflation and living costs.

5. Social Welfare - The South African government also prioritizes social grants to reduce poverty, address historical inequalities, and support vulnerable groups like children, the elderly, and people with disabilities. Grants boost local economies, improve health and education outcomes, and promote social stability by meeting basic needs.

   
   

Main Sources of Revenue Now

1. Personal Income Tax (PIT) –In the 2024 South African national budget, personal income tax (PIT) was the largest revenue source, contributing R738.7 billion out of the projected R1.73 trillion in tax collections. This means PIT accounted for approximately 42.6% of the total tax revenue.

2. VAT (15%) – In the 2023/24 fiscal year, South Africa's tax collections totalled R2.2 trillion. According to the South African Revenue Service (SARS), Import VAT and Customs Duties together accounted for 19.3% of the total tax revenue, with Import VAT contributing 15.2% and Customs Duties 4.1%.

3. Corporate Income Tax – In the 2024/25 South African national budget, Corporate Income Tax (CIT) was projected to contribute approximately R302.7 billion to the total tax revenue of R1.73 trillion. This represents approximately 17.5% of the national revenue.

4. Fuel Levies & Excise Duties – In the 2024 South African national budget, fuel levies and excise duties collectively accounted for approximately 13.6% of the total tax revenue, amounting to R237.6 billion out of R1.73 trillion.

Key Differences: Then vs. Now

Aspect	1994-2000	2024 & beyond
Top Priority	Social development & basic services	Debt, economic growth & SOEs
Major Expenditure	Education, housing, welfare	Social grants, debt servicing, energy
Biggest Fiscal Challenge	Expanding services to all citizens	Managing debt & funding SOEs
Economic Growth	Steady post-apartheid growth	Slower growth, high unemployment

Looking Ahead: The Budget’s Balancing Act

As South Africa moves forward, the budget must balance:

●        Investing in long-term economic growth while addressing short-term fiscal pressures.

●        Sustaining social programs without deepening the debt crisis.

●        Attracting investment to expand the tax base and create jobs.

The narrative conveyed by South Africa’s national budget reveals that a national budget is more than mere numbers—it reflects the country’s priorities and future direction. The question is: How will South Africa shape its financial future in the years to come? What will be the nation’s priorities? And how will it fund these?

Looking ahead, South Africa’s financial future will depend on striking a delicate balance: fostering growth while managing debt, investing in infrastructure while sustaining social programs, and ensuring fiscal discipline while promoting economic inclusion. The choices made in the next decade will define the nation’s economic trajectory.