This publication/ data story contains a quarterly analysis of the eThekwini Municipality’s capital expenditure performance and how that spending is allocated to services. It provides further analysis of the construction sector in relation to the City’s capital spending, as well as a high level impact assessment of eThekwini Municipality's capital expenditure on Durban's economy. The City's fiscal year ends in June, and the first quarter runs from July to September 2021.
Covid19 had a noticeably negative effective effect on capital expenditure, however spending appears to have since recovered in 2021. For example, the City's capital expenditure increased by 3.2% compared to the first quarter of 2020. Due to COVID-19 health protocols such as protective equipment (PPE), the City's capital budget was reprioritised toward the purchase of facemasks, sanitisers, and other PPE, resulting in a decline of 7.3% in 2020. The City's capital spending in 2021 Q1 accounts for 0.2% of the city's annual GDP.
As illustrated in the graph, the amount spent by the City on capital projects has decreased from R2,11 billion in the fourth quarter of 2020 to R654,5 million in the first quarter of 2021. However, this is a noticeable trend in cities, with an increase in capital expenditure in the final quarter of the financial year. However, the significant increase seen in 2020Q4 was primarily driven by the City’s response to COVID-19.
Capital expenditure is critical in providing core services to the City's areas, including bulk services. The primary spending drivers account for 81.3% of total capital expenditure in 2021 Q1. Roads and Transport R196,1 million (30%), including maintenance of existing roads as well as new projects such as GoDurban, Water, Waste & Sanitation R134,6 million (21%), Housing R102,7 million (16%), and electricity R98,5 million (15%).
GDP: The net contribution of Capital Expenditure to the City’s GDP is estimated to be R403 million, 0,09% of annual GDP.
Employment: The Capital Expenditure has generated/ sustained a total of 4 561 jobs, split between:
• 2 707 direct jobs
• 1 248 indirect jobs
• 607 induced jobs
• Every R1 million spent on the capital expenditure will created/sustained 7 jobs.
Household income: The City’s capital expenditure is estimated to have increased household incomes in Durban by R155 million. This will add an extra 0.05% to the City's annual household expenditure. However, this appears to be less than the average inflation increases of 1.1% in 2021 Q1.
In 2020, the City's capital expenditure appears to have decreased. However, the recovery path is noticeable, with a 3.2% increase in the first quarter of 2021. The transport infrastructure sector; including road upgrades is the largest expenditure item on the City's capital budget. The increase in household income due to capital expenditure is less than the increase of inflation in the first quarter in 2021. This highlights the need for the capital expenditure budget to be utilised in conjunction with other investment generation tools, in order to make a net real impact on the City’s households and ultimately the livelihood of its people.