By: Lonwabo Mtyeku | Photo Credit: Sourced – GroundUp
Seen Here: Finance Minister, Enoch Godongwana
Cape Town, 25 February 2026 — Finance Minister Enoch Godongwana has tabled South Africa’s 2026 National Budget, outlining a measured fiscal consolidation strategy coupled with targeted support for small businesses and a renewed push on infrastructure investment.
The Budget seeks to balance fiscal sustainability with economic stimulus, positioning structural reform and regulatory relief as twin levers to unlock growth in a constrained domestic and global environment.
Debt Stabilisation After 17 Years
In a notable shift, National Treasury projects that government debt will stabilise for the first time in 17 years before beginning a gradual decline over the medium term. This marks a critical milestone for fiscal credibility, as rising debt-service costs have increasingly crowded out social and capital expenditure in recent budgets.
Economic growth is forecast at 1.6% for 2026 — modest but indicative of gradual recovery amid logistics reforms, improved energy availability, and stabilising inflationary pressures.
The Minister emphasised that restoring fiscal resilience remains central to safeguarding investor confidence and protecting the country’s sovereign risk profile.
SME Relief: Raising the VAT Threshold
A key highlight of Budget 2026 is the increase in the VAT registration threshold to R2.3 million. The adjustment responds to longstanding concerns that compliance burdens disproportionately affect small and growing enterprises.
By raising the threshold, government aims to ease administrative pressure and improve cash-flow flexibility for SMEs operating near previous limits. The move aligns with broader commitments made during the State of the Nation Address to reduce red tape and support entrepreneurship.
Additional tax measures include:
- An increase in the capital gains tax exemption for qualifying small business disposals (for individuals aged 55 and older) from R1.8 million to R2.7 million.
- An increase in the qualifying business value cap from R10 million to R15 million.
These adjustments are designed to facilitate succession planning, incentivise reinvestment, and unlock capital within the SME ecosystem.
Infrastructure Investment Exceeds R1 Trillion
Infrastructure remains the centrepiece of government’s medium-term growth strategy. Public-sector infrastructure spending is projected to exceed R1 trillion, with transport and logistics receiving the largest allocation.
Key focus areas include:
- Modernisation of rail and port systems to reduce export bottlenecks.
- Expansion and strengthening of electricity transmission infrastructure.
- Investment in water security and municipal services.
- Public-private partnerships at six strategic border posts to ease congestion and accelerate trade flows.
These interventions are aimed at removing structural constraints that have suppressed productivity and elevated operating costs for businesses.
Advancing Regional Integration
Budget 2026 also reinforces South Africa’s commitment to the African Continental Free Trade Area (AfCFTA).
The Minister confirmed that National Treasury will ease certain cross-border capital flow restrictions to enhance competitiveness and position South Africa as a financial gateway for continental investment.
The policy direction underscores government’s intention to deepen regional trade linkages while strengthening the financial sector’s role in supporting intra-African commerce.
A Shift from Policy to Implementation
While the Budget introduces targeted tax relief and maintains spending discipline, its broader success hinges on implementation capacity. Infrastructure delivery, regulatory reform, and efficient execution of public-private partnerships will determine whether projected growth gains materialise.
Budget 2026 reflects a pragmatic recalibration: stabilise public finances, reduce friction for small businesses, invest in enabling infrastructure, and integrate more effectively with continental markets.
The immediate challenge now shifts from fiscal design to delivery — ensuring that commitments translate into measurable economic momentum over the coming years.
