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PULSE - Metropolitan and Local Government Capital Expenditure on Key Focus Areas 2021/22 - 2022/23

The LGCE Dataset includes capital expenditure for the 2021/22 and 2022/23 financial periods and will be updated quarterly. Budgetary allocations for 2023/24 will be released with the 1^st quarter 2023/24 update due for release in December 2023.  Click here to download the LGCE Dataset

Background

A total of R903bn was allocated to public infrastructure in the 2023 Budget, on average R300bn per year for the three-year period from 2023/24 to 2025/26. Of this Government accounts for 50 percent (or R455bn over the MTEF period), distributed via National, Provincial and Local Government departments. National Departments contribute around 10 percent of total infrastructure projected expenditure by Government (excluding SOE’s), with the bulk being channelled via provincial and local governments. Local governments contribute just over 40 percent of total infrastructure expenditure by general government, or around 20 percent of total public sector infrastructure including SOE’s.  The role of local government is therefore crucial to infrastructure development, considering that over R60bn is allocated across local governments annually. Yet, information is highly fragmented across the more than 250 municipalities, making it more difficult to monitor from a strategic planning purpose and/or to hold local authorities accountable.  As higher lending rates and weak economic growth feed into reduced demand for residential development, with levels of investment in the commercial sector being depressed for some time, the role of government in investment in construction will become more paramount. Understanding where funding is allocated at a more micro (local government) is critical to align strategic priorities, to identify pockets of growth, not only at a provincial level, but also at a lower local government level.

Local governments have been struggling for decades to effectively spend budgetary allocations, as it is not only about funding, but capacity to plan, implement and monitor financially viable projects. The skills dilemma is not just in terms of engineering skills, but also relates to accounting and management skills. Budgets need to consider cashflows, where all too often capital budgetary allocations are transferred to operational expenditures due to a shortfall in funding.  Given the current fiscal constraints, monitoring local governments’ ability to generate internal funding is becoming increasingly important to mitigate the possible decline in government funding without having to cut infrastructure expenditure on critical services. Benchmarking performance between local governments is an important tool and where some level of accountability can be enforced. But this is impossible with fragmented information, which is why we have developed the all-inclusive Local Government Capital Expenditure Dataset, to track local government performance, benchmark performance against other local governments and identify growth opportunities.

The following indicators are currently included:

1. Capital Expenditure Functional
2. Capital Expenditure as % of total expenditure
3. Capital Expenditure on key focus areas
   1. Housing
   2. Health
   3. Energy Sources
   4. Road Transport
   5. Water Management
   6. Waste Management
   7. Waste Water Management
4. Employee Related Costs
5. Source of Finance for Capital Revenue
   1. Internally generated funds (Rands)
   2. Internally generated funds as % of total capital revenue
6. Surplus/Deficit % of total operating revenue

Information is sourced through various documents released by National Treasury.

Local governments are divided by Metro’s, District Councils and Local for all nine provinces including Gauteng, Western Cape, Eastern Cape, Kwazulu Natal, Northern Cape, Limpopo, Mpumalanga, Free State and North West Province.

Full details available in the LGCE Dataset, now available to download from the website.

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