By Daanyaal Matthews
The prospect of a VAT increase has sparked widespread concern across South Africa, with many questioning how they will afford their daily expenses. Amid these concerns, Minister of Finance Enoch Godongwana has defended the move, stating that the government must diversify and strengthen revenue channels to sustain public projects—pointing primarily to the Social Relief Grant.
However, his remarks have been met with criticism, particularly from NGOs, who argue that a VAT hike is not necessary to fund social welfare programs. Many also question how NGOs are expected to function under the added financial strain of increased taxes.
Sima Diar, Programme Manager at NISAA Institute for Women’s Development and Project Coordinator at the National Shelter Movement of South Africa, warns that a VAT increase would be devastating for homeless and GBV shelters. She emphasized that the impact extends far beyond taxation.
“If VAT goes up by 2%, it affects everything—running costs, basic necessities like food and electricity. These are non-negotiable expenses. You can’t scale back on them or cut them from programs while still providing services to survivors of gender-based violence. Shelters will inevitably have to bear the burden of these rising costs, even as funding continues to dwindle,” Diar stressed.
The financial strain on NGOs goes beyond the potential VAT hike. Many organizations are already grappling with reduced government funding, and the abrupt withdrawal of USAID funding has further destabilized the sector.
“We had no contingency plans in place, nor were we given time to create any. This has made it incredibly difficult to ensure programs continue running and that beneficiaries still receive the services they rely on,” Diar added.
With rising costs and declining support, the future of many social welfare initiatives remains uncertain, leaving vulnerable communities at even greater risk.
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