The 2026 national budget presented by Finance Minister Enoch Godongwana signaled improvements in fiscal sustainability and credibility, and with South Africa's removal from the Financial Action Task Force gray listing, an improved climate for foreign investment. The supporting features of the budget mainly relate to deficit reduction, debt stabilisation, better revenue collection and return to primary surplus.
Despite addressing service delivery deficiencies and appropriating additional allocations for safety and security initiatives, there remains a lack of confidence among critics in achieving a better life for citizens.
important debates
Recent articles show that intellectuals have begun to discuss the real issues, enriching the discussion on what is needed to pull South Africa out of the stagflation that has trapped South Africa's developmental aspirations over the past decade. Lusanda Batala1 passionately argues that the 2026 Budget is stable but not transformative as it protects the poor but fails to 'rewire' the economy for real human development and job growth. He further said that South Africa needs action, not just stability.
Tshepo Koka2 says: “When township spatial clustering, educational decline and labor market exclusion are treated as externalities rather than structural consequences, we are not doing economics. We are doing algebra separated from anthropology.” He claims that the decline of economic epistemology reflects a shrinking definition of valid economic knowledge, not intellectual decline. Classical political economy understood that economics and power were inseparable, it tried to answer questions such as, Who owns the land? Who controls capital?, and who determines wages? These were fundamental questions in the economics discipline, but modern technical economics often stays away from power.
spatial inequalities
South Africa still faces extreme and persistent spatial inequalities. Most black people still live in remote settlements without access to urban benefits and opportunities. Wealth accumulation is reduced by the destruction of the social fabric due to large travel costs and parents being absent from their children's lives during the most important formative years. This not only denies access to opportunity but also allows destructive forces like gangsterism and drug abuse to disproportionately and disproportionately impact families.
It may seem cynical and expedient to include smart cities and elaborate high-speed trains in the budget year after year. Ayanda and Carolisen3's study highlights the digital divide as a significant challenge, particularly in post-apartheid South Africa, where access to technology remains highly unequal. The study found that achieving smart city status improves urban efficiency and economic growth, but that persistent technological inequality could undermine progress towards social justice in South Africa if not addressed. This and similar internationally benchmarked research should find its way into policy design and impact analysis in South Africa.
economic development
South Africa is an upper-middle-income country, but its GDP per capita is lower than most emerging market competitors and about half the global average, reflecting slow economic growth and structural issues such as unemployment and inequality. SA GDP/CAP in nominal terms in 2025 was about US$6,000, well above the African average of $2,500, but Seychelles ($21,000) was well behind Mauritius ($12,500) and Botswana ($7,500).
The emphasis on macroeconomic indicators such as GDP growth and GDP per capita provides only an average perspective of a country's economic well-being. As a result, these measures may present a misleading picture, especially in contexts where significant inequalities exist. Based on prevailing socio-economic statistics in South Africa, focusing on fiscal metrics as key performance indicators will lead to false starts and ineffective policy responses.
social grant
South Africa remains steadfastly committed to a large social grants budget, and this relief has eliminated most of the problems arising from previously institutionalized discriminatory practices. However, it is stated here that additional measures are necessary to achieve the desired social benefits. The development of the capability approach has been praised by sociologist Amartya Sen as a major improvement over the approach of simply distributing social relief funds. The capability approach includes agency, access to opportunity, and the ability to effectively exploit such opportunity as important levers for accelerating policy enablement and social mobility.
The substantial social wage provided by the South African government is designed to facilitate sustainable upliftment. Many examples illustrate the lack of intentionality in this narrow and outdated methodology. Despite large appropriations for education, mathematics literacy has lagged behind mainstream mathematics in schools. In 2025, two-thirds of all students enrolled in mathematics chose the mathematics literacy option. This prevents many disadvantaged students from pursuing careers in fields such as accounting, engineering, mathematics and data science. This is exclusionary in disguise and certainly will not counter inequality, let alone balance population opportunities for an economically polarized society. This is manifested in the persistent failures of SMME development programs in South Africa.
SMMEs drive growth
Globally, SMMEs have proven to be the main and most effective drivers of economic growth and account for more than 70% of jobs. The mainstream approach to SMME development in South Africa is primitive and first generation in which resources are made available without addressing structural barriers. This primarily involves access to opportunities through access to value-added networks and inculcating a culture of exploiting such opportunities. The intended target audience must also overcome psychosocial exclusion as many would-be entrepreneurs are essentially survivalist and first-generation, living in economically and historically disadvantaged societies.
The well-being of nations should be inclusive and measured using economic, social, health, environmental and institutional indicators that reflect the quality of life of citizens beyond simple economic output. Researchers at organizations such as the United Nations, the World Bank, and the Organization for Economic Co-operation and Development are increasingly using multiple indicators to evaluate national well-being.
Rank low on happiness index
The World Happiness Report is increasingly being used to measure national happiness. It evaluates how people subjectively evaluate their life satisfaction rather than focusing solely on economic indicators such as GDP. The index is prepared by the United Nations Sustainable Development Solutions Network and is based on survey data from the Gallup World Poll. This is in line with the modern development thinking of the United Nations Development Program and the Human Development Index, which emphasizes human capabilities and quality of life rather than just economic growth.
South Africa ranks lower than most upper-middle-income countries such as Brazil, Mexico and China on the happiness index, placing it alongside some lower-middle-income countries. South Africa is generally ranked fourth in Africa. Mauritius and Libya ranked highly due to strong social cohesion, stable living conditions and better governance.
Putting forward fiscal variables such as GDP growth/cap, debt-to-GDP, primary surplus and inflation as primary outcomes in the Budget is limited as these have to be treated as inputs that will positively impact the seemingly difficult and vulnerable social ecosystem.
Professor Randall Carolison is an accomplished business leader with years of experience developing and executing strategy and driving change programs across multiple industries.