"But with the amount of loading required for test cricket, we had to make the tough call for him to sit it out and focus on returning for the white-ball matches against Netherlands in March.
"Kane loves playing for the Black Caps and especially in test cricket so it was a particularly hard call. However the priority has to be trying to get the injury right and having him available long term."
Trent Boult will also miss the first test as he awaits the birth of his third child, leaving New Zealand to turn to some less experienced names to face a South African side coming off a 2-1 home test series triumph over India.
Central Districts seamer Blair Tickner and Canterbury wicketkeeper Cam Fletcher have earned maiden test call-ups, while Colin de Grandhomme and Hamish Rutherford - seven years since his last test appearance - have been recalled.
The extended squad will allow the selectors to better cover their options while mitigating the health risks associated with bringing players into the team environment at short notice, should there be any injuries.
That has presented an opportunity for Tickner, who will provide cover for the quick bowlers, while Fletcher will be the back-up gloveman to incumbent Tom Blundell.
Tickner has appeared for the Black Caps in eight T20 internationals since debuting in 2019, while this is Fletcher's first call-up after impressing for his province and for New Zealand A in recent seasons.
"Blair's been a consistent performer in the Plunket Shield over the past few seasons and we felt his pace, bounce and aggression covered our bases should we lose a pace bowler to injury," Stead said.
"Cam has been excellent across the three formats for Canterbury over the past couple of seasons, producing consistent and often match-winning performances for his team.
"This will be a great opportunity for him to come into the Black Caps environment and soak up the experience."
Against a backdrop of Williamson's absence and the retirement of Ross Taylor, Otago batsman Rutherford has been included as batting cover in the extended squad, which will again be captained by Tom Latham.
"It's a really exciting time for Hamish to be back in the Black Caps after a long time away," Stead said. "I know he's absolutely buzzing at the opportunity ahead."
De Grandhomme, who missed much of last season with a foot injury, was another player Stead was happy to see return.
"It's pleasing to see Colin back in the test side, having proved such an influential member before his foot injury last season," he said.
"His form of late shows he's clearly benefited from simply getting back on the park consistently, and it's great to have his all-round skills and experience to call on."
Ten-wicket hero Ajaz Patel was again overlooked, still waiting for a homecoming appearance after his historic performance in India, but Stead left open the door for a second-test call up.
While both matches are being played at Hagley Oval, if conditions change between tests and Patel overcomes a left-calf injury there may be room for his inclusion.
"We do have flexibility to make changes as required, with the likes of Trent and Ajaz potentially available for the second," Stead said.
"We're conscious the second-test pitch may differ from the first so we're keen to have the option of adding Ajaz if required."
Black Caps squad for first test against South Africa
Tom Blundell, Devon Conway, Colin de Grandhomme, Cam Fletcher, Tom Latham (c), Matt Henry, Kyle Jamieson, Daryl Mitchell, Henry Nicholls, Rachin Ravindra, Hamish Rutherford, Tim Southee, Blair Tickner, Neil Wagner, Will Young.
