This report presents the current performance of eThekwini’s capital budget and expenditure for the 2022/23 financial year. It encompasses capital expenditure between July 2022 and February 2023 and provides estimated economic impact results arising from the revised capital budget on Durban’s economy.
EThekwini Municipality has revised its 2022/23 capital budget, resulting in an increase from the initial R5.6 billion to R6.1 billion. This upward adjustment represents a 9% increase, largely driven by the need to repair infrastructure damaged by the recent floods. The Municipality has allocated a 48% increase in funding towards the reconstruction of water infrastructure, a significant boost from the original budget. Additionally, there has been a 35% increase in funding for health and social services, an 18% increase in sanitation, and an 8% increase in housing. These changes have been implemented to ensure that critical areas receive necessary repairs and upgrades, thereby improving the quality of life for eThekwini residents. The increased budget reflects the Municipality's commitment to sustainable and equitable development in the region, demonstrating its dedication to long-term growth and prosperity.
It is worth noting that the City’s capital budget increase is equivalent to 1.7% of Durban's GDP. The City of Durban has already spent R2.1 billion of its 2022/23 budget, which amounts to 35% of the adjusted budget. The housing, solid waste, engineering, electricity, and transport units have all made progress in accelerating their spending on the capital budget through infrastructure repairs or upgrades, with each having already spent one-third of their budgets.
Figure 1: Year-to-date capital expenditures against the total capital budgets
The capital budget for the 2022/23 financial year has seen an increase of approximately R800 million compared to the previous year, to a total of R6.1 billion, up from R5.3 billion in 2021/22. Modeling undertaken by the Policy, Strategy, Innovation and Research (PSIR) Department shows that the anticipated impact of this increase is a 16.3% rise in GDP impact, from R4.3 billion in 2021/22 to R5.0 billion in 2022/23, which accounts for 1.1% of annual GDP. Additionally, the projected impact on employment is also a forecasted increase from 875 jobs created as a result of the budget over the same period in 2021/22 to 1,004 jobs in 2022/23. This represents 0.8% of all employed people in Durban on average, as reported by the StatsSA Quarterly Labour Force Survey.
Figure 2: Economic impact on GDP and jobs
Source: The Durban EDGE, 2023
To address infrastructure demands and secure external funding, the City is actively engaged in private-public partnerships. The City has also drafted a “Development Charges Policy" as a long-term strategy to augment its capital budget and infrastructure reserves. It appears that this has been successful in at least one other city in the country. The City of Cape Town officially adopted the Development Charges Policy (2016), resulting in a sustained rise in the capital budget. Remarkably, during the COVID-19 pandemic in 2020, Cape Town was the only city that did not encounter a decline in its capital budget. This may be linked to the same policy.
The City's capital budget underwent a 15% increase from the previous fiscal year, with 48% of the boost designated for repairing and enhancing water infrastructure. Despite the progress in 2022/23, the City’s capital budget is still lagging behind major Cities such as Johannesburg and Cape Town. It is expected that GDP will be positively impacted by R5.0 billion in the 2022/23 fiscal year, compared to the previous fiscal year. Additionally, the number of employed people is predicted to grow by 1,004 jobs in the 2022/23 fiscal year.
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: Economic Research Analyst-Economic Information and Research. Edited by: Denny Thaver.
