Comparative Analysis of Ekurhuleni Municipality's 2023/2024 Approved Budget

A Detailed Comparison with Seven Other South African Metropolitan Municipalities

Key Takeaways

Diverse Revenue Streams: Ekurhuleni maintains a balanced mix of own-source revenues and intergovernmental transfers, positioning it between higher and lower revenue-generating metros.
Focused Expenditure Allocation: Significant investments in infrastructure and essential services reflect a commitment to sustainable growth and quality of life improvements.
Notable Discrepancies: Variations in revenue collection efficiency and capital expenditure priorities highlight areas for potential fiscal optimization.

Introduction

The fiscal landscape of South African metropolitan municipalities is characterized by diverse revenue sources and expenditure priorities. This analysis delves into the aggregated and consolidated approved budget for the 2023/2024 financial year of the Ekurhuleni Municipality, juxtaposing it against seven other major metropolitan areas in the country. By examining revenue streams, expenditure types, and identifying key discrepancies, this study provides a comprehensive overview of municipal financial strategies and their implications for service delivery and economic development.

Overview of Ekurhuleni Municipality's 2023/2024 Budget

Budget Summary

For the fiscal year 2023/2024, the Ekurhuleni Municipality approved a consolidated expenditure budget of R57.6 billion against a proposed revenue of R55.3 billion. This budget reflects the municipality's strategic priorities in infrastructure development, service delivery, and administrative efficiency. An adjustment to the budget was made in January 2025 to accommodate evolving service delivery plans, although specific figures for this adjustment remain undisclosed.

Revenue Sources

Ekurhuleni's revenue is categorized into three primary streams:

Own-Source Revenue: This includes property rates and taxes, service charges (such as water, sanitation, and electricity), fines, fees, licences, and municipal bonds where applicable. Ekurhuleni benefits from a diverse industrial base and a substantial informal economy, which contribute to its own-source revenue. Efforts to optimize billing systems and enhance revenue collection have been ongoing, although collection efficiency still lags behind top-performing metros like Cape Town.
Intergovernmental Transfers: These are split into conditional grants, tied to specific projects or service mandates, and unconditional grants, which support core municipal functions. While significant, these transfers are generally less than those received by municipalities with lower own-revenue capacities.
Other Income: This includes revenue from investments and non-core activities, contributing a smaller yet notable portion to the overall revenue.

Expenditure Types

The budget is allocated across various expenditure categories:

Operating Expenditures: These cover municipal administration, governance, social services such as health and education, community development, and maintenance services including roadworks and public infrastructure upkeep.
Capital Expenditures: Focused on infrastructure development, these include projects related to water infrastructure, roads, housing developments, and strategic initiatives like ICT and sustainable energy.

Comparative Analysis with Other Metropolitan Municipalities

Selected Metropolitan Municipalities

The comparison encompasses the following seven metropolitan municipalities alongside Ekurhuleni:

City of Johannesburg
City of Cape Town
eThekwini Metropolitan Municipality (Durban)
Tshwane Metropolitan Municipality (Pretoria)
Nelson Mandela Bay Metropolitan Municipality (Port Elizabeth)
Buffalo City Metropolitan Municipality (East London)
Mangaung Metropolitan Municipality (Bloemfontein)

Revenue Sources Comparison

Municipality	Own-Source Revenue (%)	Intergovernmental Transfers (%)	Other Income (%)
Ekurhuleni	Approximately 50%	40%	10%
Johannesburg	60%	30%	10%
Cape Town	55%	35%	10%
eThekwini	58%	32%	10%
Tshwane	52%	38%	10%
Nelson Mandela Bay	45%	45%	10%
Buffalo City	40%	50%	10%
Mangaung	35%	55%	10%

Note: The percentages are approximate and intended to provide a general comparison of revenue compositions.

Expenditure Types Comparison

Expenditure allocations among municipalities highlight varying priorities and strategies:

Operating Expenditures: Focus on administration, social services, and maintenance. Larger metros like Johannesburg and eThekwini allocate substantial funds here to manage extensive service delivery needs.
Capital Expenditures: Emphasize infrastructure projects such as roads, water systems, and urban development. Cape Town leads in water management investments, reflecting its unique environmental challenges.

Revenue Collection Efficiency

The efficiency of revenue collection varies across municipalities, impacting their financial health and ability to fund initiatives:

Ekurhuleni boasts a collection rate of 93%, indicative of robust billing and enforcement mechanisms, though it still trails behind Cape Town's superior collection efficiency.
Smaller metros like Mangaung and Buffalo City exhibit lower own-source revenue percentages, relying more heavily on intergovernmental transfers.

Capital vs. Operational Spending Balance

The balance between capital and operational spending reveals strategic priorities:

Ekurhuleni allocates approximately 30.54% of its capital budget mid-year, focusing on essential infrastructure projects such as road rehabilitation and stormwater management.
Johannesburg and eThekwini prioritize large-scale infrastructure and urban renewal projects, driving economic and social development.
Nelson Mandela Bay and Buffalo City allocate higher portions to administrative overheads, reflecting legacy inefficiencies.

Intergovernmental Grant Reliance

Dependence on intergovernmental grants varies:

Ekurhuleni maintains moderate insulation from national funding shifts due to its balanced revenue base, unlike smaller metros which are more vulnerable.
Metros with lower own-source revenues, such as Mangaung and Buffalo City, are more susceptible to changes in grant frameworks, affecting fiscal stability.

Sector Prioritization

Different municipalities prioritize sectors based on local needs and strategic goals:

Ekurhuleni emphasizes upgrading basic services in underserved communities, enhancing housing and social development.
Johannesburg focuses on economic development and technological innovation, driving business growth and urban competitiveness.
eThekwini leverages tourism and mega-event infrastructure to bolster its economic profile and international standing.

Notable Discrepancies and Trends

Revenue Diversification and Collection Efficiency

Ekurhuleni has made strides in diversifying its revenue streams and enhancing collection efficiency. However, it still faces challenges in matching the efficiency levels of top-performing metros like Cape Town. The ongoing improvements in billing systems and revenue management position Ekurhuleni favorably, yet there remains room for further optimization to reduce reliance on intergovernmental transfers.

Capital Versus Operational Spending

While Ekurhuleni invests significantly in infrastructure, its capital expenditure proportion is slightly lower compared to metros such as Johannesburg and eThekwini, which are engaged in more aggressive transformative projects. This balanced approach ensures operational stability but may limit long-term growth potential if not complemented by robust capital investments.

Impact of External Factors

External factors like load shedding have impacted Ekurhuleni's electricity revenue, introducing financial variability not equally experienced by all metros. Such discrepancies underscore the importance of resilient financial planning and the diversification of income sources to mitigate external shocks.

Conclusion

The 2023/2024 budgetary framework of the Ekurhuleni Municipality places it in a strategically advantageous position among South Africa's metropolitan municipalities. With a balanced revenue structure and a focus on both operational stability and infrastructure development, Ekurhuleni demonstrates fiscal prudence and a commitment to enhancing service delivery. However, to further strengthen its financial standing, the municipality should continue to enhance revenue collection efficiencies and consider a more aggressive stance on capital investments. Comparative insights reveal that while Ekurhuleni outperforms smaller metros in revenue diversification, aligning more closely with larger metros in operational efficiency and expenditure prioritization could unlock additional growth and service delivery enhancements.