When finance minister Enoch Godongwana presents the third iteration of the 2025/26 budget on May 21, he will be doing so against the backdrop of domestic and global events that have shifted the fiscal terrain for many African governments this year.
Revenue and growth projections are likely to be revised downwards from the budget proposal tabled on March 12, and the uncertainty of the 10%, 25% and/or 31% tariffs on SA exports to the US looms large over several export-driven sectors. In this context, plugging a R75bn revenue shortfall over the next three years will probably result in some tough choices and trade-offs made across government spending.
Godongwana initially proposed a two percentage point VAT increase in February to fund several priorities over the next three years, including a R19.2bn refurbishment of passenger rail services; a R9.3bn increase to healthcare sector funding to employ additional doctors; and more than R156.3bn for water and sanitation infrastructure upgrades. All of these resources are sorely needed across urban, peri-urban and rural communities alike as an investment into the country’s socioeconomic future, but the sustainable funding and function of those and other public services now looks as uncertain as it has ever been.
For context, SA is not the only country in Southern Africa facing stark budget choices right now.
The government in Angola has been hard hit by the downturn in global oil prices, now at $65 a barrel versus the $70 a barrel its December 2024 budget based revenue and spending projections on. Finance minister Vera Davies has said that no option is off the table as they look to raise additional revenue, and a fresh Eurobond issuance and a new IMF programme are just two such options, even as global interest rates remain elevated and global growth projections have shrunk.
Elsewhere, the government in Mozambique has already abandoned a 2022 IMF programme that was derailed by a steep drop in revenue and deep cuts to growth projections after the post-election political and security crisis between October 2024 and January 2025. The details of the new programme are as yet unclear but it is highly likely to mandate the continued consolidation of public spending in a country where cuts to USAID funding have already rippled across its healthcare and education sectors, as well as humanitarian support to the conflict-affected Cabo Delgado region.
Back home, Godongwana has repeatedly dismissed increasing borrowing and introducing new tax measures — for corporations and individuals — as options to fill in the gaps between the government’s ambitions and its new fiscal reality, leaving spending cuts as the most obvious option, but that option is also fraught with risk. There are lessons to be learnt from peer economies that point to doubling down on spending increases in restrictive economic conditions as a way to build more resilience, not less, over the long term.
In Kenya, legislators have had to make a pivot away from previous thinking on budget proposals as a popular revolt against their June 2024 Finance Bill proposal upended the political, economic and security landscape. The proposal put forward by President William Ruto’s government on April 30 will now make targeted adjustments to spending, instead of the sweeping fiscal reforms in 2024, in recognition of simmering discontent towards the government’s handling of economic policy. The initial reaction to the bill’s proposals this year has been muted compared with last year, likely because the government has pulled back on introducing an aggressive expansion to the tax base to raise revenue and service the country’s debt load.
The message sent to Kenya’s government last year was clear: the public now expects budget proposals that address their day-to-day concerns, not just macroeconomic fixes and reflections of partisan point-scoring.
In Nigeria, President Bola Tinubu signed a budget into law on February 28 that represents a 99.96% increase in allocated spending from 2024. After broad, structural changes to government expenditure after his inauguration in late May 2023 — including the removal of a decades-long subsidy of fuel prices that caused a dizzying spike in consumer prices and inflation levels in the two years since — Tinubu’s administration has made its own pivots towards substantial increases in agriculture, health and social welfare.
More importantly, and even with the risk that lower global oil prices will depress revenue in the coming months, the government has doubled down on allocations to capital expenditure to $15.9bn between last year and this year, and a 1,511% funding surge in the communications and digital economy sector from $19.2m to $309m.
Yes, Tinubu, Ruto and the parties they represent will face voters in general elections in March and September 2027, respectively, but these budgets are not simply electioneering — they are timely turns away from cuts and consolidation as measures of first resort.
And while last year’s election in SA is firmly behind us, our representatives in parliament should be cautious of using spending cuts as a fiscal management tool when those cuts offer little in the way of expanding the productive capacity of the country and carry risks of sociopolitical blowback.
Budget cuts have become conventional wisdom in SA in the past decade, but we are no longer living in conventional times.
• Stuurman is adviser: insights & advocacy at Africa Practice
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