The 2018 Budget Speech has been highly anticipated. Following a presidential legacy that has left the country with a floundering economy, there is a glimmer of hope as the new leadership takes the reigns. The two big questions on every South African’s mind are: where will government spending be directed for the year ahead? And how will we be paying for it?

The country’s eyes were on embattled finance minister Malusi Gigaba as he presented the speech on Wednesday afternoon. Before it even began, several members of parliament protested, the feeling being that an individual potentially implicated in State Capture shouldn’t be delivering the budget.

Parliamentary unrest aside, Mr Gigaba highlighted several positive factors, including a positive global economic outlook and a stronger rand. He also noted that in order to bring real change, some of the plans will first cost the country a lot of money, and South Africans will feel the effects. This is exacerbated by new expenses (like free education, a drought relief fund, and the State Capture investigation).

Small business

Mr Gigaba said that the state is developing a fund that will amount to just over R2 billion, to be used to support small businesses in the country. Helping grow this crucial sector will have a significantly positive impact on the economy in the long run.


To help phase in fee-free higher education and training, the government will release R57 billion in the medium term. Mr Gigaba also allocated R30 billion to make schools safer, with an additional R31.7 billion to build new schools, and R3.8 billion to upgrade existing schools. Other highlights in education include that all National Student Financial Aid Scheme loans will be converted to bursaries from 2018 onwards.


Health spending will stand at R205 billion for 2018/2019. Much like the education sector, health is a deeply divided service in South Africa. On one side, you have well-funded and supported private health system, and on the other, a struggling, under-staffed and under-funded public health system. To help get the National Health Insurance up off the ground, Mr Gigaba has allocated R4,2 billion.

Social grants

The social grant budget will be R150.8 billion and will increase to R189.7 billion by 2020/2021. The old age grant will increase by R90, so that the figure stands at R1 690 per person. The child support grant will increase by R20, from R380 to R400. As things unavoidably become more expensive, Mr Gigaba announced that there will be an increase in social grants to help relieve the pressure on those who are most vulnerable. The increase in social protection spending will be 7.9%. Additionally, there will be more relief to some of South Africa’s poorest and most vulnerable citizens.

How will all this be funded? 

VAT will be going up by 1% and will thus stand at 15%. This might sound outrageous at first, but Mr Gigaba reminded South Africans that this figure is still low compared to South Africa’s peers such as Argentina and Morocco. Fuel levies will be raised at 52 cents per litre and the so-called ‘sin taxes‘ will go up between six and 10%. Additionally, South Africa’s wealthiest citizens will contribute more to the state budget as estate duties and luxury goods taxes will also be raised.

Mr Gigaba stressed throughout his speech that the government remains committed to achieving real transformation, job creation and inclusive economic growth. He also highlighted that the youth is critical in growing a robust and sustainable economy.

What a couple of weeks this has been for South Africa! Honestly, this is the stuff political thrillers are made of. Hopefully, now that the Budget Speech is over and done with, and with only a few major changes likely to come (like possible Cabinet reshuffling), things can slowly start stabilising. We’re hoping that the government can once again focus its attention and resources on the issues plaguing the country.

For more details and the full outline, click here.