The city has used R2.9 billion (about 38%) of its total capital budget of R7.6 billion. The R2.9 billion spent is equivalent to 0.6% of the city’s GDP. This report offers an analysis of capital expenditure for the third quarter of the fiscal year2023/24, including quarterly and year-over-year comparisons.
Capital budget expenditure increased from Q1 to Q3 of the 2023/24 fiscal year. It grew by 9.1%in the third quarter, rising from about R1.1 billion in Q2 to R1.2 billion. However, this growth has been at a slow pace, considering the fiscal year is nearing it send. Capital budget expenditure for the first three quarters of fiscal year2023/24 totaled R2.9 billion, a modest increase on the R2.5 billion spent during the same period in the previous fiscal year, 2022/23. The capital budget expenditure for the first three quarters is below the expected quarterly average of R1.9 billion.
Figure 1:
Source: EThekwini Municipality Expenditure Unit, 2024
Spending on key infrastructure projects within the water, electricity, roads, and sanitation sectors is progressing with varying degrees of success. Among the water projects, Mkhizwana and Ogunjini Water Treatment Works are advancing under a two-year contract that began in September 2021; Mkhizwana is expected to be completed by April 2024, while Ogunjini faced significant delays, requiring the appointment of a new contractor. The Southern Aqueduct and Adams 6 project shave begun, with Adams Mission 6 now 38% complete. The Hazelmere to Grange project is 80% complete with an expected April 2024 finish. Electricity projects are addressing system migration delays and adjustments in cost processing to enhance reporting and execution efficiency. Road projects like the Clark Road Sea Outfall are still in the planning stages.
Sanitation initiatives: The Hammarsdale Wastewater Treatment Works (WWTW)Expansion and the Northern WWT Rehabilitation are progressing without impediments, while the Umbilo WWTW and other related projects are in various stages of procurement and compliance, aiming for timely completion. These efforts are part of a broader initiative to manage and execute infrastructure upgrades efficiently, with financial outflows expected to increase in the latter half of the fiscal year as projects advance towards completion.
Catalytic projects: The Brickwork’s project, valued at R88 million, initially faced delays due to service reallocation issues, but these have been resolved, and spending is expected to increase in the fourth quarter of the financial year. The Oceans project, worth R59 million, anticipated implementation of both Phase 1 and Phase 2, but difficulties in acquiring land for the planned temporary facilities sites, meant only Phase 1 would proceed. This has led to a significant variance in the projected spending. It’s expected that funds for an approved adjustment budget for the Ntshongweni project will be fully utilized before the fiscal year-end. Overall, the cluster has spent 55.8% of its capital budget, and with the resolution of initial delays and strategic adjustments, spending is expected to continue apace.
Diagram:1
Source: EThekwini Municipality Expenditure Unit, 2024
1. Delays in Legal and Regulatory Approvals: Pending approvals from legal services or changes in the approval processes by the province have delayed several projects like the KwaNgcolosi Rural Housing Project.
2. Contractor Performance Issues: Slow progress, as seen in the KwaLinda Rural project, and major delays due to contractors struggling with the complexity of projects or social issues on sites, such as with the Ogunjini WTW.
3. Operational and Material Constraints: Projects like the installation of meters at various reservoir sites faced delays due to operational challenges and material shortages.
4. Financial and Administrative Setbacks: Issues like the slow commencement of cash flow, as with several sanitation projects, and delays in tender evaluation processes affected the timeline and budget of projects.
5. Community and Stakeholder Challenges: Community opposition led to stoppages of projects like the Shongweni Landfill Leachate Treatment Plant.
The city's actual capital expenditure increased by 9.1% in the third quarter of 2023/24. Despite this growth, a substantial amount of capital remains unspent. Also, the capital budget expenditure for the first threequarters is below the expected quarterly average of R1.9 billion. It is crucial to implement an integrated asset management policy or an infrastructure asset management policy to synchronize the capital budget with actual expenditures and supply chain management plans. This will improve project implementation and service delivery. Strategies such as public-private partnerships can further enhance service effectiveness. Unspent capital risks future capital budget sustainability, particularly as a significant portion of funding is derived from national grants
1. EThekwini Municipality Expenditure Unit, 2024: Section 71 Budget statement report for the month- https://www.durban.gov.za/pages/government/documents
2.Easy Data by Quantec, 2024; Regional Service Standardised Regional Output & GVA at basic prices- https://www.easydata.co.za/dataset/RIES/
3.Durban Chamber of Commerce and Industry, UKZN, Macro Economic Research Unit, eThekwini Municipality, produced Durban Business Confidence Index (BCI),Fourth Quarter 2023 Report.
Produced by The Durban EDGE Team of the
Policy, Strategy Innovation, and Research Department of
The Economic Development Unit of eThekwini Municipality
For more information, contact edge@durban.gov.za
Ref: Siphesihle.Thusi@durban.gov.za
Economic Research Advisor
Economic Information and Research
