Agricultural improvement is seen as essential for economic growth, poverty reduction and food security in Africa. However, with new and priority demands for water agricultural allocations have come under closer scrutiny, particularly under water scarcity. In post-apartheid South Africa equitable water allocation has become an emblematic policy goal consistent with the imperative to create a fairer society. Catchment managers are now responsible for water allocation decisions across multiple and competing social, economic, environmental and political priorities. This analysis explores these challenges based on a study in the Luvuvhu catchment, Limpopo Province, which comprised (i) socio-economic evaluation of people's livelihoods across 10 communities, (ii) hydrological modelling studies, and (iii) a detailed performance evaluation for one typical smallholder irrigation scheme. Findings from this study indicate that water allocation for smallholder irrigation provides expected income and food benefits for those with secure irrigation access. However, while increasing water allocation for smallholder irrigation may be argued to redress current inequitable distribution within the national irrigated agricultural sector, there is no convincing evidence to support allocating more water to smallholder irrigation schemes when viewed within the wider development challenges in the Luvuvhu catchment. It is argued that catchment managers should rather consider the hydrological and social benefits associated with improvements in dryland farming for increasing food security under water scarcity.