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South Africa’s government has changed its spending habits over the last decade, with increased spending on social benefits and interest payments on debt.
According to Stats SA, the South African government spent R2,187 billion in the 2021/2022 fiscal year – R83 billion more than the prior financial year.
In functional terms (the various activities or services that the government is involved in), general public services were the most costly activity, accounting for R565.2 billion of government spending in 2021/2022.
In economic terms (nature of the transactions involved), compensation of employees was the most expensive at R799.8 billion.
The government prioritises the compensation of employees, which takes up 36.6% of expenditure.
This was concentrated in education (12.7%), health (7.4%) and public order and safety (6.3%).
Other big budget items in 2021/22 contained social benefits (13.7%) – social grants to households – and interest payments on government debt (12.7%).
Years of change
Although compensation of employees takes up the largest percentage of government spending, its share of overall spending has declined since 2014/15 – the earliest year for which easily comparable data is available.
In 2014/15, total compensation for employees accounted for 37.5% of total government expenditure – 0.9% more than in 2021/22.
“Note that this does not mean that the line item has decreased in rand terms. In fact, the public wage bill rose from R513,5 billion to R799,8 billion over this period,” Stats SA said.
The statistics body also highlighted the decline in purchases of non-financial assets, which fell from 9.7% of total expenditure in 2014/2015 to 5.9% in 2021/2022. This category includes infrastructure investments and other fixed assets.
Goods and services saw the second most significant decline (-2.3%), mainly in general public services, public order & safety, defence and economic affairs. That said, there was an increase in the contribution of goods and services related to health (1.0%)
Interest recorded the most significant percentage increase, with payments on debt more than doubling from R125.6 billion (9.2% of total spending) in 2014/2015 to R284.4 billion (13.0% of total expenditure) in 2021/2022.
Stats SA said that this was in line with the rapid rise in South African gross loan debt over the period.
Social benefits saw the second largest increase, climbing 2.5% over the seven years.
“In a nutshell, what does this tell us? That the focus of government spending has shifted away from non-financial assets (which includes investment in infrastructure) and goods and services, and towards social benefits and interest payments on debt,” Stats SA said.
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