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Government funding allocations: Who are the main beneficiaries

Where does your tax money go after it has entered the state coffers?

Recent data provided an overview of how national government distributes money to other levels of government. Statistics South Africa (Stats SA) publishes financial data for the different levels of government (i.e. national, provincial, local and extra-budgetary accounts) and higher education institutions in separate reports throughout the year.

These are followed up by a consolidated report in November that provides an overview of net government finances. Stats SA’s most recent release of data on national government fi- nances, in the financial statistics of national government report, shows that national government spent a total of R1.33 trillion in 2016/17.

This is four percent higher than the R1.28 trillion spent in 2015/16.

The biggest spending item was financial grants. Not to be confused with social grants, financial grants are transfers from one government unit to another government unit, or to an international organisation. Grants are the financial fuel that keeps the wheels of government turning. In 2016/17, national government transferred R764 billion (57 percent of total spending) in the form of grants to other levels of government and international


So, who are the major beneficiaries of national government grants?

Provincial government received the bulk of grants in 2016/17, almost two thirds of the R764 billion. This was six percent more than the amount received in 2015/16. This is expected, as the nine provinces are responsible for administering some of the core functions of government (for example, education and health).

About 14 percent of the financial grants were transferred to the 257 mu- nicipalities. Just over 11 percent (or R87 billion) was paid to South Africa’s 252 extrabudgetary accounts and funds.

R46 billion (six percent) was paid to foreign organisations and international institutions. R39 billion of this amount was paid to the Southern African Customs Union, which South Africa is a member of. The New Development Bank, es- tablished by countries belonging to the BRICS group (Brazil, Russia, India, China and South Africa), received R3.5 billion.

South Africa’s 26 higher educa- tion institutions received R28 billion (four percent) of national government grant transfers in 2016/17.

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