SA businesses facing 3 years of VAT and electricity price hikes

During the 2025 State of the Nation Address (SONA), the South African government sent a strong statement to the nation. By forming meaningful partnerships between civil society, government, and business, growth will be the main focus for the immediate future. Clear, ambitious targets were set for the next five years to reduce poverty, drive inclusive growth, create employment, and reduce the high cost of living.

Several flagship projects were also announced, which form part of government’s R940 billion infrastructure commitment for the next three years. These include construction of the Polihali Dam, the Lesotho Highlands Water Project (Phase II), and the Mtentu Bridge, set to be the tallest bridge in Africa. Each of these major infrastructure projects aim to revitalise and power the economy, so that South Africa be an effective competitor on a global scale when it comes to trade and technology.

Supported by various economic and public entity reforms, coupled with the development of the Energy Action Plan and the Electricity Regulation Amendment Act, there was a renewed sense of optimism and confidence in the future of South Africa’s economy.

Rising costs a real concern

However, fast-forward to March, and South Africans were left reeling by several startling announcements. Starting with Eskom, 310 days of uninterrupted power ended with the return of stage 3 load-shedding. Soon another economic shock rippled through South Africa when Nersa approved an electricity hike of 12,74%, effective from 1 April 2025.

A Value-Added Tax (VAT) increase was also announced as part of the 2025 Budget speech. While not passed yet by parliament, there is a high probability that the 0,5% hike to 15,5% will be implemented.

With more electricity and VAT increases planned for the next two years, South African businesses are faced with a double dilemma. On the one hand, government’s significant investment into mega-scale infrastructure projects will create numerous growth opportunities.

On the other hand, businesses’ cashflow will be under more pressure due to the increase in operational and input costs. As a result, businesses will have to find smart solutions to take advantage of new growth opportunities without placing immense strain on their bottom lines.

Identifying new ways of doing business in this economic environment is a must to ensure a sustainable business model.

Will you survive or succeed?

Finding better, smarter ways of doing business usually involves large investments into research, marketing, training, or operational streamlining. Fortunately, this is not the case when businesses decide to benefit from RentWorks’ asset financing solutions.

For over 20 years in industry categories such as IT and technology, medical, fleet, mining and construction, RentWorks Africa has been providing tailored asset solutions to South African companies.

Once companies understand the benefits of the rental concept, purchasing depreciating assets such as IT hardware becomes an obsolete operational strategy. This is because renting enables companies to enjoy full, uninterrupted use of the equipment, after which it’s simply replaced or upgraded when the agreement comes to an end.

Now you don’t have to stop planning for business success to focus on survival following the announcement of these price hikes.

Speak to a RentWorks specialist today about a finance asset solution that helps preserve your cashflow while positioning you for business growth, despite a high-pressure economic environment. Simply visit the RentWorks website for more information or give us a call on
+27 11 549 9000.