Finance Minister Enoch Godongwana gave the 2025 Budget Speech on 12 March. The Budget Policy Statement was scheduled to happen on 19 February. However, the proposed VAT increase delayed the speech. The plan was to hike VAT by two percentage points, from 15% to 17%.
Government expected this increase to bring in R58 billion to manage rising costs over the medium term. Political disagreements made it clear that these decisions cannot be rushed. The speech will now happen next month, as government prepares to tackle pressing fiscal challenges head-on.
At Geddes, we don’t just fund businesses—we back the people who run them. We know the weight of every payroll cycle, every invoice, every tough decision you make to keep things moving. That’s why we care about moments like the Budget Speech, when policies shift and SMEs are left figuring out the next step. We create blogs like these to give you the knowledge and perspective to prepare for what’s ahead.
The Budget is based on four main focus areas:
Key Priorities – What the government aims to tackle.
Spending Plans – Where funds will be allocated over three years.
Financial Outlook – Expected earnings and expenses. Resource Distribution – How money is divided across different levels of government.
What Was Covered In The Budget Speech For 2026
Economic Forecast
These forecasts help form the basis of the budget.
The National Treasury predicts that the economy will grow by 1.9% in 2025, and average about 1.8% through to 2027. But Minister Godongwana pointed out that for real change to happen, the economy needs to grow faster and in a way that benefits everyone. The government is focused on four main goals: keeping the economy stable, pushing through needed reforms, making the government work better, and investing more in infrastructure. This strategy is aimed at creating an economy that’s strong and fair for everyone.
How the Government Raises Funds
To fund the budget, the government relies on different sources. Taxes are the biggest contributor. There’s VAT, income tax, and corporate tax. On top of that, there are also duties, levies, and fines that help bring in money. Borrowing may come into play if there’s a need to cover any shortfalls.
Spending Breakdown
The Budget will be allocated across three key areas. The national government will get funding for essential sectors like defence, education, and home affairs. Provincial governments will focus on schools and hospitals. Local governments will use their share for services such as water, roads, and electricity. A contingency reserve will be set aside for emergencies like natural disasters.
The Budget Speech and Tax Adjustments
From May 2025, VAT will go up by 0.5 percentage points, and another increase will follow in April 2026. This will push the tax rate to 16%. While it’s lower than what was originally suggested, it will still raise prices and make everything more expensive.
When prices go up, customers may spend less, especially on things they don’t absolutely need. Small businesses don’t always have the budget to absorb extra costs, so they have to charge more or take a cut in profits. Over time, this can slow business growth and make it harder to compete.
Businesses can take steps to soften the blow. Instead of increasing prices all at once, doing it gradually can help customers adjust. Offering more value, such as improved service, loyalty rewards, or bundled deals, can help justify the price increase to customers. Cutting waste or negotiating better supplier deals can help businesses stay afloat without putting too much pressure on customers.
Incentives and Support Measures
During the budget speech, the government announced a significant investment of R18.4 billion over the next few years to support businesses across the country. This funding will focus on industries like automotive, business outsourcing, and film production, helping them become more competitive. Special economic zones will be created, and industrial parks revitalised. A major part of the plan is also to support the electric vehicle industry, pushing South Africa toward a greener economy.
For small businesses, the government is allocating R2.1 billion to help around 120,000 businesses, particularly those run by women, youth, and people with disabilities in underserved areas. In addition, R313.7 million will be invested in creating hubs for small businesses, offering them the resources and tools they need to grow. This will allow these businesses to access better support, making it easier for them to expand and become more competitive.
Infrastructure Development
Over the next few years, the government plans to spend R1.03 trillion on infrastructure projects such as roads, water, and energy. This will boost demand for materials like cement and steel and open up plenty of opportunities for construction and engineering companies. The aim is to create a better environment for businesses, attract investments, and stimulate economic growth.
Consumer Spending
Personal income tax brackets will stay the same, leaving taxpayers to feel the pinch from inflation. This will likely push many into higher tax brackets, meaning they’ll pay more despite earning the same.
This change won’t affect those with salary hikes that outpace inflation, but it will certainly hit the pockets of those whose increases were just enough to match rising prices.
Starting 1 March 2025, these new tax measures will come into play and are expected to bring in R19.5 billion in revenue. However, in recognition of the financial strain on many South Africans, social grants will be adjusted.
The SRD Grant, initially set up as a temporary measure during the pandemic, will now continue until March 2026, with R35.2 billion allocated. In addition, the elderly, disabled, and children’s grants will all see an increase, offering some relief for those who depend on these funds.
Businesses may face increased wage demands as employees struggle with higher tax burdens due to inflation-driven bracket creep.
Consumer spending could tighten, impacting sales. However, extended social grants may support lower-income customers, sustaining demand for essential goods and services. Companies should prepare for potential cost pressures while monitoring shifts in consumer behavior and government spending patterns.
Sector-Specific Impacts
Government budget announcements can introduce new policies that influence different industries. Small businesses operating in these spaces must pay attention. Adjustments to import and export tariffs can either raise or lower costs for international trade. Being aware of these updates makes it easier to plan and protect business growth.
Final Word
As a small business owner, you should carefully analyse upcoming budget speech, identify the specific areas that affect your business, and strategise accordingly. If those strategies require growth funding, Geddes Capital can help with a secured busin