National Budget 2026: South Africa advancing toward sustainable development

The 2026 National Budget Speech is expected to focus on revenue stability, administrative efficiency, and targeted economic stimulus. Recent government policy statements and the 2025 budget review have emphasised a shift toward renewable energy and sustainable growth, which strengthens the likelihood of the following forecasts:

• Tax measures: This year, we may see new taxes on carbon-intensive industries to support the transition to a low-carbon economy. Given the government's recent introduction of rising carbon taxes and public statements supporting climate mitigation, such measures are increasingly probable. As a consequence, certain sectors in South Africa may feel the pressure and push back to maintain operational sustainability e.g. ferrochrome smelters.
• Value-added tax and excise: The South African government may also consider introducing or expanding a carbon tax to support climate change mitigation efforts, reflecting trends observed over the past two years. This is also a matter of ongoing debate as it will influence South Africa’s foreign trade.
• Infrastructure investment: We may see increased funding for infrastructure projects, with a focus on energy, water and transport sectors. Given the government's recent emphasis on renewable energy in the 2025 budget review.
• Climate change initiatives: Support for green industrialisation, skills development and job creation in renewable energy and sustainable infrastructure is expected to continue. The possible establishment of a green investment fund aligns with recent economic data showing growth in green sectors^[1] and continued policy support for climate adaptation and mitigation.
• Energy sector reforms: Potential reforms to the energy sector, including the introduction of new energy sources and technologies, are anticipated. The government may also consider increasing the energy efficiency target for industries and commercial buildings, consistent with recent regulatory trends. The rising energy tariffs remain a concern for heavy emitter industries, specifically resulting in job losses. It may become a requirement out of the 2026 National Budget to apply different rules for different industries which will not be a simple aspect to navigate.
• Green bond issuance: The government may consider issuing a green bond to support climate change mitigation and adaptation efforts, following the positive reception of similar instruments in other emerging economies.
• Climate change fund: The establishment of a climate change fund to support mitigation and adaptation, including the development of climate-resilient infrastructure, would be in line with both recent policy statements and international best practices.
• Electric vehicle incentives: Government may introduce incentives to support the adoption of electric vehicles, building on growing market trends and previous pilot programmes.
• Economic growth and structural reforms: Through accelerated infrastructure investment as government plans to accelerate the implementation of a R1 trillion infrastructure plan, with a particular emphasis on critical sectors such as roads, energy, water and logistics. This substantial investment aims to modernise the nation’s infrastructure as well as foster greater connectivity and efficiency across the country. Continued reforms are expected in pivotal sectors including energy, logistics (notably port and rail concessions) and digital infrastructure. These reforms will aim to unlock bottlenecks and drive economic expansion.
• Corporate tax incentives: Targeted incentives will be directed at encouraging job creation and investment in renewable energy, supporting both employment and environmental objectives.
• Private sector participation: We may see an increase in governments is set to reliance on public-private partnerships , particularly to mobilise funding for state-owned entities . This approach seeks to leverage private investment to enhance public service delivery and infrastructure development.
• Support for small business: We could see targeted initiatives introduced to reduce bureaucratic obstacles and enhance access to funding for small, micro and medium enterprises, thereby promoting entrepreneurship and job creation.

South Africa’s 2026 National Budget is poised to reinforce the country’s commitment to sustainable development through targeted fiscal measures, infrastructure investment and support for green initiatives. By prioritising renewable energy, climate resilience and economic reforms, the government aims to drive inclusive growth while navigating the challenges of a just transition.

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^[1] South Africa’s green economy sectors lead the way in GDP gains