First decline in public-sector capital expenditure since 2010

A Statistics South Africa (Stats SA) report revealed that capital expenditure in the public sector shrunk for the first time since 2010, falling by 4,3% in 2017.

Stats SA’s latest Capital expenditure by the public sector report said the shrink in public-sector capital expenditure was as a result of a pull-back in spending on plant, machinery, new construction works and transport equipment.

The agency said that capital expenditure is money that an institution spends to buy, maintain or upgrade fixed assets such as buildings, vehicles, land and equipment.

“A decline in spending on fixed assets by 360 of the 751 public-sector institutions saw total capital expenditure fall from R283,3 billion in 2016 to R271,2 billion in 2017,” Stats SA said in a statement.

The agency said Transnet had been the major contributor to the 4.3% decrease, with the state-owned transport and logistics company spending R8,2 billion less on fixed assets, a decline from R33.6 billion spent in 2016 to R25.4 billion spent in 2017.

“The National Department of Water Affairs and the Water Trading Entity were the second and third largest contributors to the decline in public-sector capital expenditure. The Department of Water Affairs scaled back on the maintenance of conveyance systems while the Water Trading Entity spent less on the construction of dams, sewerage pumps and water generators. Together, both institutions reduced capital expenditure by R4,4 billion. In fact, the nine water boards covered in the report indicated a 19% decline in total capital expenditure in 2017 compared with 2016,” Stats SA said.

The agency said Eskom and Transnet had been the biggest spenders on fixed assets, with Eskom accounting for 28% of total capital expenditure and Transnet for 9%.

“Eskom increased its capital expenditure to R75,7 billion in 2017 from R73,0 billion in 2016, mainly due to its work on the Kusile power station,” Stats SA said.

The 257 municipalities in South Africa accounted for 23% of total public-sector capital expenditure, Stats SA said, adding that Johannesburg, Cape Town and eThekwini were the largest contributors.

“New construction works represented the bulk (84%) of total municipal capital expenditure. eThekwini, for example, spent R4,9 billion on the construction of the Integrated Rapid Public Transport Network and rehabilitation of various roads within the city,” Stats SA said.

The largest contributor to provincial government capital expenditure, according to Stats SA, had been the KwaZulu-Natal Department of Transport.

“The department spent R3,5 billion on new construction, focussing on upgrading roads in areas such as Ulundi, Umzumbe, Maphumulo and AbaQulusi,” Stats SA said.

The agency said institutions of higher education had contributed the least to total public-sector capital expenditure.

“The University of Stellenbosch, the biggest spender within this group, focused on upgrading lecture rooms and offices,” Stats SA said.

“New construction works represented the biggest portion (69%) of total public-sector capital expenditure in 2017. Plant, machinery and equipment represented 17% of the R271,2 billion, followed by land and existing buildings (6%), transport equipment (2%), and leased assets and investment property (1%). ‘Other’ fixed assets contributed 4%,” the agency added.

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