Edition March 2026

As South Africa celebrates 30 years since the adoption of the Constitution,  the Chairperson of the Financial and Fiscal Commission (FFC), Dr Nombeko Mbava, reflects on the strides that the country has made in transforming itself into a more equitable nation. 

The FFC is a unique constitutional institution established to guard against political excesses and ensure checks and balances on the fiscal purse. 

It serves as a guardian of the country’s democracy and safeguards the socio-economic rights enshrined in the Constitution by ensuring that adequate resources flow to provinces and municipalities responsible for delivering education, healthcare, housing and other essential services.

Through its research and independent recommendations, the commission ensures that public money is distributed based on objective analysis of need, capacity and constitutional obligations and not political favouritism or short-term electoral considerations. 

Speaking to Public Sector Manager magazine (PSM) ahead of Human Rights Month commemorations, Mbava admitted that South Africa is a better place than it was 30 years ago. 

Leaving no one behind

“The constitutional democracy has enabled basic services such as water, sanitation, electricity and housing, among others, to significantly be expanded to previously underserved communities, fundamentally changing the quality of life for millions of South Africans,” she said. 

The significant investment in transport infrastructure, including expanding and upgrading roads, railways, airports and ports has also enhanced connectivity and supported economic growth across the country. These improvements, she said, have facilitated trade competitiveness and reduced the spatial inequalities that characterised pre-1994 South Africa. 

Advancements in information and communications technology infrastructure, including the expansion of broadband connectivity, the rollout of fibre-optic networks, and increased mobile penetration, have enabled millions to access information, education, financial services and economic opportunities previously beyond reach.

While government has made strides in progressively realising socio-economic rights enshrined in the Constitution and continues to demonstrate a strong commitment to social development, Mbava is concerned by the persistent triple challenges of poverty, inequality and unemployment. 

Shaping fiscal policy

For Mbava, a redistributive budget is a powerful tool for redress, as those responsible for its implementation must ensure that improved service quality is reflected not only in the allocations but also in the delivery framework.

As Chairperson of the FFC, Mbava leads and coordinates the submission of the commission’s financial and fiscal recommendations – prepared in accordance with Constitutional provisions – to both Houses of Parliament and the provincial legislatures. 

She also provides strategic direction to the commission by overseeing the development of institutional strategy and ensuring effective corporate governance. In addition, she ensures that research activities align with the commission’s mandate and that sound administrative systems are maintained.

Budget process

“The budget process formally begins with the commission’s recommendations. By law, the FFC is required to submit its recommendations on the budget ten months before it is tabled. Accordingly, the commission tables its Annual Research Submission and Recommendations on the Division of Revenue well in advance. For the 2026 Budget, the FFC tabled its annual submission at the end of May 2025,” Mbava explained. 

Thereafter, the commission briefed all nine provincial legislatures and parliamentary committees and the South African Local Government Association on its tabled recommendations. 

It made frequent briefings and submissions in response to parliamentary requests throughout the remainder of the year. 

These addressed departmental budget allocations in relation to performance, as well as in-year budget adjustments and amendments for the 2025/26 financial year. 

Mbava explained that during the 2025 budget process, the commission strongly advised against the proposed VAT increase based on its research and empirical analysis. The effectiveness of VAT as a fiscal instrument was evaluated through analysing its socio-economic impact (on households and consumers) as well as its broader fiscal impact in terms of potential revenue generation. 

“The FFC’s empirical evidence showed that the policy would disproportionately impact lower-income households (regressive impact) and that the revenue-collection potential was lacking and, therefore, unlikely to assist government in reaching its projected revenue targets,” Mbava explained. 

Recently, the FFC was the first institution that spoke to the change in inflationary pressures, which significantly impacts the fiscus and budgetary allocations. The commission has advised that efficiency in public spending be improved through better aligning expenditure with actual inflation and revenue.

Positive growth 

South Africa’s economy is moving along a positive trajectory. From Mbava’s perspective, one of the most notable improvements has been the sustained low-inflation environment – a trend the Commission was among the first institutions to identify and highlight as significant and encouraging for economic stability and consumer confidence. 

She noted that lower inflation has contributed to improved financial conditions, including a moderation in interest rates, a strengthening of the rand, and a decline in the risk premium on South African debt. This has provided meaningful relief to households and businesses through reduced borrowing costs and easing overall cost pressures. 

“The removal of South Africa from the Financial Action Task Force grey list is a significant achievement that demonstrates progress in strengthening anti-money laundering and counter-terrorism financing frameworks. Maintaining this momentum is critical,” she added. 

Way forward 

To ensure that the economy remains on a sustainable trajectory, Mbava said this window of opportunity must be used to consolidate fiscal discipline and refocus policy on the fundamentals of long-term growth in terms of industrial development, policy certainty in finalising legislation enabling the electricity market reform, support for private generation through streamlined licensing, and ensuring Eskom's operational and financial stabilisation. 

In his 2026 State of the Nation Address, President Cyril Ramaphosa outlined a renewed effort to strengthen the economy through structural reforms and strategic infrastructure improvements. He said reforms under Operation Vulindlela had helped restore optimism and investor confidence, noting progress in rebuilding and restructuring key network industries. 

The President highlighted that improvements in these sectors are already attracting investment and supporting job creation. He stressed that completing the reform agenda requires close collaboration between government, business, labour, and other social partners. 

Looking ahead, the President announced a second wave of reforms for the coming year to accelerate faster and more inclusive growth, with immediate priority given to stabilising and strengthening state-owned enterprises such as Eskom and Transnet. These measures aim to ensure reliable, world-class infrastructure while fostering greater competition in electricity generation, freight rail and port services. ❖

Explaining the Prime Interest Rate

PSM asked Mbava for a comment on recent pronouncements by the SARB Governor by Lesetja Kganyago suggesting that the ideal scenario for the country would be to phase out the Prime Interest Rate. 

What this means for ordinary South Africans:

Since 2001, South Africa has used a 350 basis point rule with commercial banks charging consumers a Prime Rate 3.5% above the SARB Repo Rate (base rate).

Key Points:

The fixed gap does not always reflect the actual cost of money or lending risks.

Phasing out the 3.5% markup would require banks to justify their lending margins more transparently.

Banks could implement a Repo-plus/minus model, replacing the current Prime-plus/minus system.

Impact on Borrowers:

Existing debt may not become cheaper.

Example: A loan at Prime + 1% could convert to Repo + 4.5%.

Monthly payments likely to remain the same, but calculations and terminology become clearer for consumers.