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Provincial Government: Projected and Actual Expenditure on Buildings and other Fixed Structures 2018/19 - 2026/27 (June 2026)

Executive Summary

Provincial capital spending enters 2026/27 on a tighter footing, with the combined budget for buildings and other fixed structures falling 8.3% to R33.9 billion. Conditional grants are holding up better, declining by just 1.7% to R59.9 billion, which continues to provide an important base of construction activity. By the end of June, provinces had spent R6.9 billion, or 20.3% of their capital budgets, while conditional grant expenditure reached R12.3 billion, or 20.5% of allocations. KwaZulu-Natal remains the largest provincial capital market, while Limpopo has emerged as the strongest growth market. Its capital budget increased 16.4% to R3.72 billion and Q1 expenditure more than doubled to R948 million. The Free State also started the year relatively strongly, spending 27.9% of its annual capital budget by June.

The composition of conditional grants shows where much of the public-sector construction opportunity will come from. Roads remain the largest market, with R19.7 billion allocated through the Provincial Roads Maintenance Grant, followed by R16.2 billion for education infrastructure. Housing and informal settlement upgrading provide close to R16 billion, while a further R7.5 billion is available for health facilities. KwaZulu-Natal has the broadest exposure, leading the country in allocations for roads, education and health while retaining a sizeable housing programme. Limpopo stands out for the increase in funding, particularly roads and education, while the Eastern Cape remains a significant road and school infrastructure market. Gauteng's overall capital budget is lower, but sizeable housing and health allocations continue to provide opportunities, with spending in both programmes relatively strong in Q1.

A total of seven provinces have reduced budgets for buildings and other fixed structures, which limits the prospect of a broad increase in provincial capital expenditure this year. At the same time, substantial funding remains directed towards roads, schools, housing, settlement infrastructure and health facilities. The more important issue over the remainder of 2026/27 will be how quickly these allocations translate into tenders, awards and construction on the ground. On the early evidence, KwaZulu-Natal offers the greatest scale and breadth of opportunity, while Limpopo shows the strongest growth momentum, with more targeted opportunities emerging in Gauteng housing and health, Eastern Cape roads and education, and Western Cape education and transport infrastructure.

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