The Financial and Fiscal Commission (FFC) submission on the 2026/27 Division of Revenue is a red flag for the Eastern Cape. It shows a province losing working-age residents to other provinces while our own revenue base weakens. The 2026/27 division of revenue leaves our province facing deeper underinvestment and growing service delivery backlogs.
In real terms, this means that classrooms will become more overcrowded, hospitals will remain understaffed and in disrepair, and families in rural areas will be cut off from basic services because gravel roads have turned to mud. Municipalities will be left struggling to deliver water and electricity while residents bear the cost of a budget that does not serve them.
These warnings come as the provincial budget already battles a R2.3 billion shortfall for the current financial year, which Treasury intends to bridge through R1.8 billion in uncertain “own revenue” and R506.8 million from reserves. This is not a credible path to stable service delivery or sustainable job creation.
Over the medium term, the province’s allocation is expected to grow by just 3%, which is far below inflation. Conditional grants show a pattern of stagnation and decline. The roads maintenance grant will fall by over R600 million by 2027. The grant for informal settlement upgrades is slashed by more than 40%. Health facilities and education infrastructure receive increases that are so small they cannot even preserve current levels of service. These figures reflect a retreat from responsibility.
The FFC further highlighted that the Eastern Cape continues to record one of the highest poverty headcounts in South Africa. In 2023, 56.2% of the province’s population lived below the Upper Bound Poverty Line (UBPL). Deep rural poverty is concentrated in districts such as O.R. Tambo (68%) and Alfred Nzo (58.9%), where poverty is entrenched and worsening.
This crisis is linked directly to rapid urbanisation, putting immense pressure on city services and infrastructure while small towns collapse. The new division of revenue formula must take this reality into account, reflecting both the growth in urban populations and the rising cost of service delivery, while acknowledging the unique challenges faced by urban municipalities.
We must act now to reform the Division of Revenue framework. The formulas must be urgently updated with current data. A new dedicated grant for learner transport must be introduced. We must identify new sources of provincial revenue and remove the bureaucratic obstacles that prevent us from unlocking public assets and attracting investment into infrastructure.
We must also heed the Commission’s recommendations. Infrastructure development should be prioritised on projects that make a direct contribution to sustainable development, particularly in critical sectors such as water and energy, which have the greatest impact on economic growth and resilience.
Unless we grow our revenue base, cut red tape, and invest in the future, this province will remain trapped in a cycle of stagnation. Unemployment will rise. Poverty will deepen. People will leave.
The Eastern Cape cannot afford a budget that ignores these realities. Without urgent reform, the province faces a fiscal cliff, leaving its people abandoned in poverty and underdevelopment.