South Africa’s 2026 Budget highlights the importance of restoring the financial and operational health of public sector institutions, particularly state-owned companies responsible for delivering critical infrastructure and services.
Many of the country’s largest infrastructure institutions – including those responsible for electricity generation, rail and ports – face significant operational and financial pressures. Years of underinvestment, governance weaknesses and rising debt have weakened their performance, with broader consequences for the economy. Constraints in electricity supply and freight logistics have become major bottlenecks to investment, exports and economic growth.
The budget emphasises that improving the governance and financial sustainability of these institutions is essential to reducing fiscal risks. Government guarantees to public entities amount to about R1 trillion, representing a substantial potential liability for the national budget. These guarantees are heavily concentrated in a small number of large state-owned companies, particularly Eskom and Transnet, meaning financial stress in these institutions poses significant risks to the fiscus.
Strengthening oversight and governance is therefore a key priority. Government is focusing on improving board oversight, strengthening financial management and enhancing monitoring of public entities. The budget also highlights the importance of improved fiscal risk monitoring frameworks, including regular reporting on guarantees, contingent liabilities and the financial performance of major public institutions.
At the same time, reforms are underway to improve operational performance and attract investment. These include opening freight rail networks to third-party operators, expanding private participation in port terminals, and enabling greater private investment in electricity generation and transmission. These reforms are intended to improve efficiency in key network industries while mobilising private capital.
Public institutions will also play a central role in delivering infrastructure investment. Government and public entities are expected to spend more than R1 trillion on infrastructure over the medium term, with projects in energy, transport, water and social infrastructure. In addition, the Infrastructure Fund pipeline includes projects worth several hundred billion rand, aimed at crowding in private investment.
Overall, the 2026 Budget makes clear that restoring the health of public sector institutions is critical to improving infrastructure delivery, reducing fiscal risks and supporting stronger economic growth.
