Municipal budgets separate operating expenditure, which keeps services running day to day, from capital expenditure, which builds and replaces infrastructure: pipes, reservoirs, substations, roads and buildings.
Capital spending matters because infrastructure wears out. A municipality that consistently underspends on capital is deferring cost rather than avoiding it, and the bill arrives later as burst pipes, water losses and power failures.
Where the capital budget comes from
Three sources fund capital projects:
- Transfers recognised as capital. Conditional infrastructure grants from national government, the largest source for most municipalities.
- Borrowing. Loans and bonds, available mainly to larger municipalities with the balance sheet to service debt.
- Internally generated funds. The municipality’s own cash, generated from surpluses.
The mix tells you a lot. A municipality building almost entirely from grants has little financial capacity of its own. One funding a meaningful share internally is generating real surpluses.
The largest capital programmes
| Municipality | Province | Capital expenditure | Operating expenditure | Grade |
|---|---|---|---|---|
| City of Johannesburg | Gauteng | See profile | R79.5 billion | E |
| Cape Town | Western Cape | See profile | R64.4 billion | B |
| eThekwini | KwaZulu-Natal | See profile | R61.2 billion | C |
| City of Ekurhuleni | Gauteng | See profile | R57.3 billion | E |
| City of Tshwane | Gauteng | See profile | R46.9 billion | E |
| Nelson Mandela Bay | Eastern Cape | See profile | R19.0 billion | D |
| Buffalo City | Eastern Cape | See profile | R12.1 billion | E |
| Mangaung | Free State | See profile | R11.9 billion | E |
| Emfuleni | Gauteng | See profile | R11.0 billion | F |
| Msunduzi | KwaZulu-Natal | See profile | R8.9 billion | D |
| Emalahleni (MP) | Mpumalanga | See profile | R7.0 billion | E |
| Rustenburg | North West | See profile | R6.7 billion | D |
Each municipality profile breaks capital expenditure and its funding sources down across five years, under the finances section.
Common questions
Why do municipalities underspend their capital budgets?
Commonly because of weak project planning, procurement delays, or a shortage of technical staff to manage projects. Unspent conditional grants can be returned to national government, so underspending has a direct cost.
Can a municipality borrow to fund operations?
No. Municipal borrowing is restricted to capital purposes under the Municipal Finance Management Act. Borrowing to cover running costs is not permitted.
Figures on this page come from National Treasury, Statistics South Africa and the Auditor-General, as set out in the sources and methodology. Read the methodology