The Division of Revenue Bill has officially been signed into law in South Africa, outlining how government spending will be distributed among national, provincial, and local levels. Discover the full breakdown and implications for 2025.
In a major development for South Africa’s public finance landscape, the Division of Revenue Bill — also referred to as the Revenue Bill — has officially been signed into law. This legislation plays a critical role in defining how the country’s financial resources are distributed among the national government, provincial administrations, and local municipalities. As South Africa enters the second half of 2025, this law promises a new era of structured and equitable government spending.
The signing of the Revenue Bill follows months of political negotiation and fiscal uncertainty. Earlier this year, both Cabinet and major opposition parties rejected the national budget proposals, delaying the finalization of the Division of Revenue Bill. These delays caused concern across all levels of government, particularly among municipalities dependent on national transfers for basic service delivery.
But now, with the Division of Revenue Bill finally enacted, the South African government can move forward with confidence. The bill outlines not only how much money each tier of government will receive, but also introduces mechanisms to ensure the efficient, transparent, and performance-based use of public funds.
What is the Division of Revenue Bill?
The Division of Revenue Bill is an annual legislative instrument that determines how revenue raised at the national level is allocated among the three spheres of government: national, provincial, and local. Its primary goal is to promote equitable and developmental spending, ensuring that all regions — especially under-resourced municipalities — receive their fair share of funding.
This bill is a cornerstone of South Africa’s intergovernmental fiscal system. It ensures that national departments can implement critical policies, provinces can deliver essential services such as health and education, and municipalities can manage local infrastructure, waste management, housing, and water services.
Highlights of the 2025 Revenue Bill
The 2025 Division of Revenue Bill allocates over R2.1 trillion in total government spending. Key highlights include:
- R1.2 trillion to national government programs, including infrastructure, energy, and defense.
- R720 billion to provincial governments, primarily for education, healthcare, and transport.
- R190 billion to local municipalities, focusing on improving service delivery, infrastructure maintenance, and rural development.
Each allocation is guided by a formula that considers population size, poverty levels, infrastructure backlogs, and fiscal capacity, ensuring that spending aligns with local needs and development priorities.
Delays and Political Debate
The path to enacting the Revenue Bill was far from smooth. The initial budget proposal tabled in February 2025 was met with sharp criticism from both Cabinet members and opposition parties. Concerns were raised about increasing debt levels, the sustainability of social grants, and the perceived lack of funding for struggling rural municipalities.
As a result, a revised budget was drafted and resubmitted in April. However, it too failed to gain sufficient support in Parliament. Only after extensive stakeholder engagement — involving the National Treasury, provincial finance departments, local government representatives, and civil society — was a final version agreed upon.
Finance Minister Thabo Mokoena, speaking after the bill’s passage, stated: “This Division of Revenue Bill represents the balance between growth and equity. It empowers provinces and municipalities while reinforcing accountability and performance in public spending.”
A New Era for Government Spending
The newly enacted Revenue Bill is not just about numbers — it is a blueprint for South Africa’s development. It emphasizes outcomes-based budgeting, linking the release of funds to measurable targets and service delivery outputs.
For instance, municipalities that demonstrate improved governance and financial management will receive performance-based grants. Similarly, provincial departments are required to submit quarterly progress reports aligned with national development indicators.
This approach is intended to enhance accountability while ensuring that every rand spent delivers value to the South African public. The bill also introduces improved monitoring tools and expanded roles for parliamentary committees in overseeing expenditure.
Impact on Local Government
Local government is arguably the biggest beneficiary of the 2025 Revenue Bill. With R190 billion in direct transfers, municipalities can now plan and execute projects with greater certainty and autonomy. This includes upgrading water and sanitation systems, maintaining road networks, and investing in community-based development.
The Department of Cooperative Governance and Traditional Affairs (COGTA) hailed the bill as “a transformative milestone for municipal resilience.” According to COGTA, the bill’s provisions will strengthen local democracy by allowing communities to influence spending decisions and demand better service delivery.
However, challenges remain. Many municipalities still face capacity constraints, including a shortage of qualified staff and inadequate financial systems. The bill addresses these issues through conditional grants for capacity-building and technical support.
Economic and Social Reactions
The signing of the Division of Revenue Bill has been welcomed by economists and development analysts. Public finance expert Dr. Sipho Dlamini, from the University of Pretoria, remarked: “This bill is more than just a budget. It’s a vision for shared growth and development.”
Civil society organizations also applauded the bill’s emphasis on pro-poor spending and rural development. The inclusion of funds earmarked for early childhood development, primary healthcare, and social housing is seen as a step in the right direction toward achieving the Sustainable Development Goals (SDGs).
Businesses, especially in the construction and infrastructure sectors, are optimistic about the increased spending on public works. Many hope that government procurement under the new bill will prioritize local suppliers and small businesses, further stimulating the economy.
What Happens Next?
With the Division of Revenue Bill now law, the implementation phase begins. The National Treasury will begin releasing funds in tranches, beginning in July 2025. Provinces and municipalities are expected to align their budgets and development plans with the national framework, ensuring synergy across all levels of government.
By the end of August 2025, all departments must submit revised spending frameworks and performance indicators. Parliament’s finance and appropriations committees will monitor compliance and publish quarterly reviews of budget execution.
Moreover, the South African public is being encouraged to take an active interest in how public funds are used. Through platforms like municipal Integrated Development Plans (IDPs) and Treasury’s online expenditure portal, citizens can track government spending and hold leaders accountable.
Watch the Debate and Learn More
For those interested in seeing how the bill was debated and passed in Parliament, a full recording is available on the official government YouTube channel.
Additional information and the full text of the 2025 Division of Revenue Bill can be found at:
- Official Government Portal
- National Treasury South Africa
- Parliamentary News Portal
- Statistics South Africa
Conclusion
The enactment of the Division of Revenue Bill marks a new chapter in South Africa’s journey toward economic equity, transparent governance, and effective public service delivery. While challenges remain, this legislative milestone offers hope that public funds will be used more wisely, and more fairly, than ever befor
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