One of the important tasks of the national government is to redistribute funds, mainly received from taxes, to other sectors of the economy. These transfers serve as a financial lifeline to diverse groups, which includes households, public corporations, local and international organisations, and other levels of government.
On the revenue side, the national government generated R1 605 billion in the 2021/22 fiscal year (1 April 2021 to 31 March 2022). The bulk (97,4%) of revenue was from taxes. On the expenditure side, the national government spent R1 935 billion over the same period, according to the latest financial statistics of the national government statistical release.
Almost R72 of every R100 of national government spending was in the form of financial transfers to households, public corporations, organisations and other levels of government. According to a report released by Statistics SA at the end of June, the key areas of spending were:
- Financial transfers (which include grants, subsidies and other transfers) keeps the engine of government going. They also provide support for households and assist in funding the operating costs of public corporations. When we break down the blue bubble in the graphic, data shows the provincial government as the primary beneficiary, receiving nearly half of the financial transfers in 2021/22. This is not surprising, given that the provincial government is primarily responsible for administrating the country’s massive public education and healthcare systems. Provinces that received the most were Gauteng (R141 billion) and KwaZulu-Natal (R135 billion).
- Extra-budgetary accounts and funds – public entities which are involved in delivering services to the government or the public on behalf of the government – were allocated R147 billion. The National Student Financial Aid Scheme (NSFAS) is at the top of the list, with R40 billion received from the national government in 2021/22. South African National Roads Agency Limited (SANRAL) was next in line, receiving R22 billion. Higher education institutions received R43 billion in total, with the largest amounts allocated to the University of South Africa (R5 billion) and the University of Pretoria (R3 billion).
- Households were the second biggest beneficiary of national government transfers, with social benefits accounting for R231 billion. Social benefits include social grants (e.g. family and children, sickness and disability, and old age).
- Public corporations and private enterprises accounted for R102 billion. The following State-Owned Enterprises (SOE) received equity injections to settle government-guaranteed debt: ESKOM (R32 billion), South African Airways (R4 billion) and Denel (R3 billion). South African Special Risk Insurance Association (SASRIA) received R22 billion to cover claims arising from the civil unrest that crippled parts of Gauteng and KwaZulu-Natal in July 202.
- Foreign governments and international institutions benefited, too, receiving R55 billion in 2021/22. Southern Africa Customs Union (SACU) was the biggest beneficiary, receiving this allocation's bulk (R45 billion). This organisation promotes free trade and economic development across the southern African region. As members, South Africa, Botswana, Lesotho, Namibia and eSwatini contribute financially to the union.
Note that the Financial statistics of the national government statistical release and all data covered in this article are for national government departments only. Releases for other levels of government (i.e. provincial, local, and extra-budgetary accounts) and higher education institutions will be published later in the year. A consolidated document will be published in November, providing a financial overview of the entire government sector for the 2021/22 fiscal year. So watch this space!
PERSONAL FINANCE