The 2025 Budget Speech, delivered by Finance Minister Enoch Godongwana, set out a bold and pragmatic plan to stabilise South Africa’s economy and drive business growth. While companies continue to face challenges—including slow economic growth, rising debt costs, and increased taxes—there are also opportunities.

In this guide, we break down how the Budget Speech affects South African business owners, what key changes to expect, and how to navigate the evolving economic landscape.

Key Takeaways from the 2025 Budget Speech

1. VAT Increase and Tax Implications for Businesses

One of the biggest announcements in the Budget Speech 2025 is the increase in value-added tax (VAT) by 0.5% in 2025/26 and another 0.5% in 2026/27, bringing the total VAT rate to 16%. This change is aimed at funding essential sectors such as health, education, and infrastructure.

How the VAT Increase Affects Businesses:

• Higher operational costs, especially for businesses that cannot claim VAT refunds.
• Changes in consumer spending patterns due to rising costs of goods and services.
• Increased pressure on cash flow management for SMEs and retailers.

How to Stay Ahead:

• Reassess pricing strategies to maintain profitability.
• Optimise stock purchases before price increases take effect.
• Manage cash flow efficiently with Merchant Capital’s flexible business funding solutions.

2. R1 Trillion Infrastructure Investment: Business Growth Opportunities

The government has committed R1 trillion over the next three years for infrastructure investment, broken down as follows:

• R402 billion for transport and logistics.
• R219.2 billion for energy infrastructure.
• R156.3 billion for water and sanitation.

This massive investment opens new business opportunities for companies in construction, logistics, supply chain management, and related sectors. Improved infrastructure will also reduce transport and energy costs, directly benefiting business efficiency.

How to Capitalise on This Opportunity:

• Position your business to secure government contracts.
• Invest in equipment and workforce expansion to meet increased demand.
• Use Merchant Capital’s growth funding to access new opportunities ahead of competitors.

3. Energy Sector Reforms and Eskom Debt Relief

A key focus of the Budget Speech 2025 is stabilising the South African power grid. With revised Eskom debt relief, the government is pushing for:

• More private sector participation in energy production.
• Investment in independent power generation and renewable energy.
• Improved grid reliability, reducing loadshedding in the long term.

For business owners, this means:

• Fewer power disruptions in the coming years.
• New opportunities in renewable energy and solar solutions.
• More private sector involvement, allowing businesses to invest in self-generated power.

How to Stay Ahead:

• Explore alternative energy solutions such as solar power.
• Take advantage of business funding for energy efficiency upgrades.
• Secure flexible financing from Merchant Capital to future-proof your operations.

4. The Impact of the Budget on Small Businesses

While the budget does not provide direct tax relief for small businesses, it does prioritise structural reforms that aim to ease operations for SMEs. These include:

• Easier digital business registration and compliance processes.
• Reduced red tape in logistics and skilled visa processing.
• Stronger public-private partnerships to boost SME investment.

For entrepreneurs and SME owners, these reforms could mean faster approvals, increased funding access, and better conditions for business expansion.

How to Stay Ahead:

• Leverage digital business services to streamline operations.
• Improve cost efficiency to manage increasing operational expenses.
• Apply for flexible funding from Merchant Capital to sustain business growth.

How Merchant Capital Helps South African Businesses Adapt & Grow

With the 2025 Budget Speech signalling economic shifts, businesses need to stay agile. Having access to fast, flexible funding can help companies navigate rising costs, VAT hikes, and new business opportunities.

Merchant Capital provides:

• Immediate working capital to manage VAT increases and rising costs.
• Business growth funding to seize new infrastructure and energy opportunities.
• Flexible repayment structures tailored to your revenue cycle.

With no long waiting periods, Merchant Capital ensures that businesses have the cash flow needed to thrive in South Africa’s changing economy.

The Bottom Line

The 2025 Budget Speech highlights both challenges and opportunities for South African businesses. While rising taxes and economic stagnation present hurdles, increased infrastructure spending, energy sector reforms, and regulatory improvements create potential for growth.

The businesses that thrive will be those that adapt, invest wisely, and secure the financial backing needed to navigate these changes. Merchant Capital is here to ensure you’re ready for whatever comes next.

Need fast, flexible funding to keep your business moving forward? Get in touch with Merchant Capital today to explore your funding options!