In 2026/27, 48.9 per cent of nationally raised revenue is allocated to national government, 41.7 per cent to provinces and 9.4 per cent to local government. This means that R951,7 billion will go to national government, R810.5 billion for provinces and R182,3 billion for municipalities.
Additional allocations to the provincial equitable share include R342 million to progressively equalise Grade R teacher pay, R340 million for the early retirement and voluntary exit programme, and R319 million for the presidential employment initiative.
R1.5 billion is added to the provincial roads maintenance grant in 2026/27 to fund the carry-through costs of the flooding disasters that occurred between April 2024 and June 2025.
Basic Education
In terms of consolidated expenditure, spending on education remains the largest component, at 23.7 per cent over the medium term. Basic education receives R22.7 billion for carry-through costs announced in May 2025. Early childhood development receives the majority of these funds. R9.9 billion supports employee compensation and other pressures in education.
The early childhood development grant receives an additional R12.8 billion over the next three years, expanding service to an additional 300 000 children. This will also maintain the increased per child, per-day subsidy of R24 introduced in 2025/26. The increased allocations align the National School Nutrition Programme to food inflation to continue providing meals to over 9.9 million learners in almost 20 000 schools.
Health
R26 billion is allocated to provinces to bolster the HIV/AIDS programme, such as the prevention of mother-to-child transmission and the provision of antiretrovirals. As part of the targeted and responsible savings initiative, provinces will repurpose some of their funding to meet obligations towards PEPFAR. This follows the United States’s funding withdrawal. Meanwhile, R21.3 billion is allocated to the health sector over the medium term for the compensation and employment of doctors, and to make up for shortfalls in goods and services expenditure.
Local Government
Minister Godongwana said that of the allocated funding to local government, R86.9 billion is to support the provision of free basic services to 11.2 million households. Local government is the sphere where communities experience the state most directly. Yet many municipalities are in financial and operational distress and are, therefore, unable to deliver services as they should.
Audit outcomes highlight this unacceptable reality: 63 per cent of municipalities are in financial distress, and the proportion of clean audits remains unacceptably low. A central challenge with municipalities is that they not only differ in capacity, but also in their revenue-raising potential.
This demands a more targeted approach to respond to the diverse pressures facing municipalities. The National Treasury is revitalising support for development of long-term financial plans. These plans will improve project identification, sustainably plan cash flows and inform financial decisions. This will negate the challenge of unfunded mandates and limited capacity to maintain infrastructure and sustain services.
Arrange a tour