Municipalities’ total expenditure rose 21.9% to R87.5 billion in the second quarter of the year.

This is according to Stats SA’s latest Quarterly financial statistics of municipalities report which collects a range of financial data from municipalities provides information on where municipalities source their income, and what they spend money on.

Metropolitan municipalities where the biggest spenders at R51.7 billion (59.2%) of the total municipal expenditure, followed by local municipalities with R30.1 billion (34.4%) and district municipalities with R5.6 billion (6.4%).

The largest contributors to total municipal expenditure were the City of Johannesburg and Ekurhuleni with R12.4 billion and R10 billion respectively, followed by the City of Cape Town with a spend of R8.5 billion and the City of Tshwane with R8 billion.

R4.6 billion was spent by municipalities on repairs and maintenance costs in the second quarter compared with R3.1 billion in the previous quarter. This is mainly attributed to the repair and maintenance of road infrastructure in major metropolitan municipalities.

 

Electricity a major cost

According to Stats SA’s report, one of the biggest contributors to this rise in spending was purchases of electricity.

Municipalities spent 20.7% – roughly R18.1 billion – of their total budget buying electricity from Eskom for resale to various customers. This is the second largest cost for municipalities after employee-related costs. However the sale of this electricity brought in R23.1 billion over the same period, contributing 28.8% of total municipal income.

Stats SA noted that the rise in expenditure on electricity was influenced by the Eskom price increase of 9.4% beginning on 1 April 2016, accounting for an extra R3.8 billion spent on electricity.

The winter period is another contributing factor to the rise in electricity spending due to the higher demand. Thus quarter-on-quarter changes should be seen in the context of seasonal patterns.