KwaZulu-Natal will have to reprioritise its existing budget to fund new service delivery programmes, despite an increase in the provincial equitable share and conditional grant allocations by the National Treasury, finance MEC Francois Rogers said.
Direct transfers to provinces from the National Treasury are projected to grow from R730.7bn in 2024/25 to R833.8bn in 2027/28, or by about 4.5% a year. The transfers include R633.2bn for the provincial equitable share and R134.6bn for conditional grants in 2025/26.
For KwaZulu-Natal, which contributes about 16% to SA’s GDP, the transfers include an equitable share allocation of R128.09bn and conditional grants of R26.36bn in the 2025/26 financial year.
Tabling the provincial budget on Tuesday, Rogers said it was the first time in “many years” that the province received more funding from the national government, courtesy of a change in the provincial equitable share formula.
Rogers said that in previous years changes to the formula had not worked in the province’s favour, resulting in less funding from the national government.
“These additional provincial equitable share funds were allocated to a number of provincial service delivery priorities, the 2025 wage agreement gap where departments were required to budget for a 4.6% increase compared to the 5.5% that has been agreed to by government, as well as for the Presidential Youth Employment Initiative for the employment of educator assistants under Vote 5: Education,” Rogers said.
“Some of the additional funds were given to the province by National Treasury for a specific purpose and were allocated to various votes in line with these conditions.”
He said for now the funds for the 2025 wage agreement gap had been allocated to the social sector departments in view of their ongoing budget pressures. “The balance is kept in the contingency reserve with an in-year assessment to be undertaken of the remaining departments’ personnel spending pressures before making allocations in the 2025/26 adjustments budget in November 2025.”
Almost 80% (79.9%) of the provincial budget is allocated to the social services departments: education, health and social development.
Education funding increases by R3.7bn to R66.7bn in 2025/2026.
“Education receives funds towards addressing budget pressures that have been evident since the commencement of the fiscal consolidation budget costs,” Rogers said.
“The funds for the employment initiative will be used to employ 10,322 educator assistants in the 2025/26 year on a 12-month contract.
“Health receives funding towards addressing the budget pressures that have been evident since the commencement of the fiscal consolidation. The department also receives funds for the 25-wage agreement gap,” the MEC said.
Rogers said the expenditure cuts implemented in 2024 when the government of provincial unity was formed had resulted in spending by the government on “nice-to-haves” falling from R10bn to R4.9bn.
“Cabinet resolved to adopt a cost-containment instruction note which is aimed at sustaining KZN’s ability to take care of its needs while protecting its future, cutting the nice-to-haves to protect the must-haves.
“One such example is cabinet’s agreement to do away with rental vehicles, with procurement for vehicles in line with National Treasury guidelines,” the MEC said.
“Another initiative to be introduced in April 2025 is the departmental financial dashboards. Every department will now have a dashboard reflecting creditors, debtors, cash balances and projected expenditure. This will assist committees and members of the executive to effectively and simply monitor the financial position of the department.”
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