Parliament’s committees on finance and appropriations have raised concerns about rising illicit economic activities and their damaging effects on South Africa’s economy.
The Standing Committee on Finance, Standing Committee on Appropriations, Select Committee on Finance and the Select Committee on Appropriations today met with the Minister of Finance, National Treasury officials and the Commissioner of the South African Revenue Services (SARS) for a briefing on the Fiscal Framework and Revenue Proposals that the Minister tabled with the 2026 Budget.
While there were mixed reactions to the budget, there was a common concern among members of the committees about the growing illicit trade and its threat to the country’s economy.
The Chairperson of the Standing Committee on Finance, Dr Joe Maswanganyi, said the influx of illicit counterfeit goods was problematic and a serious threat to the economy. He said: “This is a serious matter, causing damage to the economy of the country, our committee will engage with SARS, the Border Management Authority and the Police. This is a matter that needs a multidisciplinary approach; it needs all of us to find a solution.”
Mr Edward Kieswetter, the SARS Commissioner, told the joint meeting of the four committees that while some success has been reported in responding to the complex and syndicate crime of illicit trade, over the last 15 to 20 years South Africa’s illicit economy has grown faster than the official one.
“It has gone from about 5% of the GDP to probably between 12 and 15%, and if you translate into number, it means the size of our illicit economy is anywhere between R800 billion and R1,2 trillion. If we translate that to tax, it means 200 to 300 taxes that we are not collecting. There is a strong business case to do better,” he said.
The SARS Commissioner said the problem requires a coordinated approach by all state agencies, instead of the current approach where each department is pursuing their narrow mandate, often with perverse incentives. “But we don’t have a national dashboard that measures if we are making progress in dealing with the crimes of corruption and illicit economy. The way capital budgets are allocated is ineffective, because we allocate capital budgets to departments to do different things rather than fixing the problem,” said Mr Kieswetter. He proposed a need for a different approach in the manner government departments and agencies were organised and how resources are allocated.
Some of the SARS Commissioner’s proposals include the establishment of a national illicit economic disruption programme to be headed by the President, strengthening inter-agency collaboration, targeting high-risk value chains, starting with tobacco, fuel and alcohol. “We also propose the establishment of dedicated prosecution and courts. At the moment, a lot of our seizures get caught in long processes, so it creates uncertainty. We must also leverage the experience of SARS and scale up investment in technology, data science and AI so that the whole justice and security cluster can benefit,” Mr Kieswetter explained.
Commenting of the 2026 Budget, Ms Mathapelo Siwisa of the Economic Freedom Fighters said the budget failed to respond to challenges facing rural areas. “It does not address the issue of rural provinces. The conditional grant funding for infrastructure does not address the quality of water. It means we will build infrastructure to supply dirty water to the community,” she said.
Another MP, representing the official opposition, uMkhonto weSizwe, Mr Des van Rooyen, labelled the budget a compliance budget and accused National Treasury of balancing the book at the expense of addressing real issues. “Borrowing is dominant in this budget. At what cost is our sovereignty compromised? We don’t even know the conditions of this borrowing. The MK Party is also concerned about how the private sector is brought in through Operation Vulindlela,” he said.
Other members warned that fiscal discipline alone was not going to create jobs. The also were concerned about the projected economic growth of 2%, which they said would not be enough to create jobs.
The National Treasury said the 2026 budget introduces a fundamental shift in subnational fiscal architecture, moving from oversight to active structural intervention. “This involves changes to legislation, governance and technology at the municipal level, and strict headcount controls and compensation discipline at the provincial level. The budget reflects the improvements in South Africa’s debt portfolio, including a credit rating upgrade and declining bond yields, reflecting increased investor confidence and lower borrowing costs,” said the Director-General, Dr Duncan Pieterse.
Finance Minister Mr Enoch Godongwana dismissed any fears that the borrowing was linked to any conditions that might compromise the sovereignty of the state. The Minister also thanked members of the committees for what he said was a robust and substantive discussion.
Sakhile Mokoena
27 February 2026
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