Provinces Spend R198.4bn in First Quarter of 2025/26, Treasury Reports

South Africa’s nine provinces spent R198.4 billion in the first quarter of the 2025/26 financial year, according to the National Treasury’s Section 32 Report, released on Friday. This figure represents 24.8 percent of the combined provincial main budget of R798.6 billion and reflects an increase of R3.3 billion (1.7 percent) compared to the same period in the 2024/25 financial year.

The Section 32 Report, issued in line with the Public Finance Management Act (PFMA), provides a detailed snapshot of provincial receipts and payments for the period April to June 2025. The data highlights expenditure trends across key sectors such as education, health, social development, compensation of employees, goods and services, and capital assets.

Education Spending Rises by 4.3%

Education continues to dominate provincial spending, with R85.1 billion spent in the first quarter—25.4 percent of the sector’s R334.5 billion budget. Compared to the same period in 2024/25, this reflects a R3.5 billion (4.3 percent) increase, underlining education’s central role in provincial service delivery.

Health Expenditure Slightly Declines

Provinces spent R68.1 billion on health services during the first quarter, accounting for 25.1 percent of the R270.8 billion allocated for the year. However, this amount was R787.6 million (1.1 percent) lower than spending in the first quarter of 2024/25, indicating tighter controls or delayed disbursements in the sector.

Social Development Sees a Drop

Spending on social development stood at R5.5 billion, representing 23.7 percent of the R23.3 billion main budget. Compared to the previous financial year, expenditure in this category decreased by R177.9 million (3.1 percent), raising concerns about potential service delivery impacts in vulnerable communities.

Compensation of Employees Remains a Major Cost Driver

Personnel costs remain the largest share of provincial budgets. By 30 June 2025, provinces had spent R122.8 billion on employee compensation, equivalent to 24.6 percent of the R499.6 billion budget. This was an increase of R5.9 billion (5 percent) compared to the same quarter in 2024/25, reflecting rising public sector wage obligations.

Goods and Services Spending Tightens

Expenditure on goods and services reached R41.3 billion, or 25.2 percent of the R163.7 billion budget. This category saw a R1.1 billion (2.5 percent) decline compared to the previous year, a sign of stricter spending controls as government seeks efficiency gains and reduced wasteful expenditure.

Capital Assets Spending Slows

Capital spending was reported at R8.7 billion, representing 20.1 percent of the R43 billion capital budget. This was a R635.1 million (6.8 percent) decline compared to the same period in 2024/25, highlighting a slowdown in the delivery of capital projects such as infrastructure development and maintenance.

Provincial Revenue Collections Improve

Provinces generated R5.9 billion in own revenue during the first quarter, achieving 22.4 percent of the annual R26.3 billion target. This was an 8 percent (R399 million) increase compared to the same period in the previous financial year. Improved collections indicate stronger revenue performance, possibly due to enhanced compliance measures and better collection systems.

Broader Budget Context

The budgeted figures are drawn from the 2025 Estimates of Provincial Revenue and Expenditure, presented to provincial legislatures between March and June 2025. These estimates serve as the blueprint for provincial financial management and highlight key service delivery priorities.

Accessing the Full Report

The full Section 32 Report on provincial receipts and payments is available on the National Treasury’s official website: www.treasury.gov.za.

This quarterly financial snapshot underscores both progress and challenges in provincial fiscal management. While education spending continues to grow and own revenue collections improve, the declines in health, social development, and capital expenditure point to areas requiring closer monitoring to ensure service delivery is not compromised.