Provincial spending is on track after nine months of the financial year. Provinces spent R104,5 billion, or 71,1 per cent of their total budget. This is R16,8 billion more than the expenditure at the same time last year. Provincial expenditure is now comparable with national departments expenditure of R87,5 billion or 73,8 per cent spent (or transferred) for the same nine-month period. Provinces are also performing well on their capital spending compared to last year, spending R8,3 billion or 50,9 per cent of their capital budgets. This analysis is based on the statement on revenue and expenditure published by the National Treasury yesterday on 30 January 2003, and is available on the treasury website www.treasury.gov.za.
National government transferred R88,8 billion of the equitable share grant, and R9,7 billion in conditional grants, to provinces in the first nine months.
Social development expenditure of R23,8 billion compared to R17,1 billion at same period last year.
Health expenditure of R23,8 billion or 74,2 per cent of budget.
Strong growth in education capital spending. Present expenditure of R1 billion already equals the total capital expenditure for last year, and far exceeds the R350 million spent in the first nine months of last year.
Provinces have, to date, collected 93 per cent of budgeted own revenue.
This assessment focuses on overall spending by provinces. It must be borne in mind that this masks individual performance by provincial departments. For any figure produced, individual provincial departments in that sector may be doing better, or worse, than the average picture. It is critical that no generalisations are drawn to cover all provincial departments as such an approach undermines the system of accountability, where each head of department is responsible for the spending in that department. Where more information is required on any provincial information, the accounting officer of that provincial department should be contacted, or alternatively, the head of the provincial treasury.
This report on the preliminary outcome of the 2002/03 provincial budgets after nine months into the financial year (from 1 April 2002 to 31 December 2002) is based on their budgets as adjusted (through their Adjustments Budgets). Table 1 indicates their revised budget against which the nine-month figures are compared.
 Provinces have spent R104,5 billion or 71,1 per cent of budgeted expenditure of R147,0 billion after nine months. This compares well with the 69 per cent spent for the same period last year, and is R16,8 billion more than the R87,3 billion for the same period last year.
 Personnel expenditure is at R55,2 billion or 75,5 per cent of the budgeted R73,2 billion for the year 2002/03.
 Provinces have budgeted R117,6 billion for social services, which include spending on education, health and social development1. Spending on social services is at R86,5 billion or 74 per cent of the social services budget.
o School Education: Education expenditure is at R39 billion or 74,2 per cent of the adjusted budget of R52,5 billion. The education budget is largely personnel driven and expenditure on personnel is R34,2 billion or 77 per cent of the budget of R44,5 billion.
o Health: Health expenditure is R23,8 billion or 72 per cent of the adjusted budget of R33 billion. This amount compares well with the R21,3 billion or 71,3 per cent spent for the same period last year. The spending represents a healthy increase over the amount of R34,2 billion or 71,4 per cent for the same period last year.
o Social Development: Provinces spent R23,8 billion or 74,3 per cent of their revised budget on social development in the first nine months of the year. This represents a massive increase over the R17,1 billion spent for the same period last year. The reason for this is the acceleration in the take-up of the Child Support and Disability Grants, as well as payment of the R2 billion social grant arrears (transferred on the last day of the previous financial year) during the first nine months of the year. Provinces are estimated to have spent R1,2 billion or 60,2 per cent on Social Grant Arrears of R2 billion for the first nine months of 2002/03.
Education 52,540,064 38,969,049 74.
Health 33,024,685 23,776,602 72.
Social Development 32,037,850 23,795,335 74.
Total 117,602,599 86,540,987 73.
 Capital expenditure2 after nine months is R8,3 billion or 50,9 per cent of the capital budget. This is a significant improvement on last year, as provinces have spent R2,7 billion more compared to the same period last year, when provinces had spent 46,7 per cent. Typically, most capital spending has a slow uptake and most spending takes place in the last quarter of the year, so it is early to project on whether provinces will spend their full capital budgets at the end of the year.
 It must be noted that the capital budget for 2002/03 of R16,2 billion is significantly higher than the actual R11,1 billion spent on capital last year. Given the higher amount of R16,2 billion, spending of 50,9 per cent is a remarkable achievement, and indicates that provinces have improved their spending on capital.
 Provincial spending compares favourably with national departments. Spending on capital by the justice and protection sectors (correctional services, safety and security, justice and defence) was R1,2 billion or 50,6 per cent of their total adjusted budget of R2,4 billion. Other national departments with significant capital budgets are transport, which spent or transferred R1,4 billion or 74 per cent of its budget of R1,9 billion, and public works which spent R309,2 million (or 34,4%) of their R985,3 billion.
 The provinces with the most rapid rate of capital spending are Western Cape and Mpumalanga at 60 per cent of their budgets, with the lowest being Free State at 41 per cent. In absolute terms, the highest capital expenditure is in Gauteng at R1,8 billion, followed by KwaZulu-Natal (R1,6 billion) and Eastern Cape at R1,3 billion. KwaZulu-Natal, for example, improved its spending capacity from 30 per cent last year to 50,2 per cent for the same period this year.
2002/03 Expenditure as % Actual vs.
Eastern Cape 2 659 669 1 318 407 49.
Free State 1 090 941 443 533 40.
Northern Cape 350 502 197 484 56.
North West 1 034 532 522 689 50.
Western Cape 1 551 690 935 132 60.
Total 16 253 703 8 274 855 50.
The biggest provincial capital budgets are for public works, roads and transport. These departments are performing the best, having spent R2,9 billion, or 68 per cent, of their R4,2 billion budget. The spending compares well with the R2,0 billion spent last year for the same period, and to the full-year spending of R3,2 billion last year. Between provinces, the lowest spending is North West (42,3%), whilst Gauteng records 116,5 per cent3.
Expenditure 2002/03 Excluded % Actual vs.
Eastern Cape 721 882 395 880 54.
Free State 281 576 179 034 63.
Northern Cape 159 101 104 224 65.
North West 232 953 98 529 42.
Western Cape 712 706 407 656 57.
Total 4 246 532 2 885 378 67.9% 3 203 683 2 001 560 1 Some public works capital expenditure reports include some health and education capital spending, e.g.
Education departments have spent 47,6 per cent of their budget, or R1,1 billion. This compares well to the R350,1 million spent for the same period last year, and even exceeds the full-year spending of R1,069 billion. The spending in Northern Cape (7,4%) and Free State (20,7%) is relatively low, whilst Mpumalanga (74,4%), North West, Eastern Cape and Western Cape all record over 70 per cent spending.
3 Some of the public works reports contain some of the capital spending for education and health. This is the case in Western Cape and Gauteng, hence the "overspending" in Guateng. The monthly reports are not always fully reconciled when submitted for publication.
Province 2002/03 Adjusted Budget Excluded Suspense % Actual vs.
Eastern Cape 401,257 281,871 70.
Total 2,270,035 1,080,003 47.
Expenditure in the health sector is lower as a share, at 41,9 per cent, or 1,1 billion. This amount may be understated by some health spending being classified under the public works vote (e.g. in Gauteng). The total amount spent still compares well with the R878,5 million spent for the same period last year. Total spending for full-year in 2001/02 was R2,2 billion. Between provinces, the lowest share of spending is in North West (26,5%) and Northern Cape (28,6%), with Free State recording the highest share at 64,7 per cent.
Eastern Cape 541 715 222 303 41.
Expenditure in housing is at 46,1 per cent, or R2,3 billion. The total amount spent still compares well with the R1,8 billion spent for the same period last year, or 50 per cent of their total spending of R3,6 billion for 2001/02. Gauteng records the lowest share at 24,9 per cent, with Eastern Cape at 35,9 per cent, compared to a high of 69,1 per cent in Western Cape.
 Provinces have collected 93 per cent of budgeted own budgeted revenue of R4,4 billion for the year, collecting R4,1 billion after nine months.
 The high 93 per cent collection may be an indication of provinces being modest in their revenue projections in their initial budgets, as the R4,3 billion budgeted amount is still less than the R4,5 billion actually collected in the previous year (2001/02). The collection varies from a low of 77,3 per cent in Gauteng, to a high of 148,8 per cent collected in Eastern Cape.
 The national government transferred R88,8 billion of the equitable share, and R9,7 billion in conditional grants, to provinces in the first nine months.
 After nine months in the 2002/03 financial year provincial revenue received or collected was therefore R102,5 billion or 72,5 per cent of budgeted revenue.
 The capital budgets of departments like Provincial and Local Government, Water Affairs and Forestry and Mineral and Energy reflect the major capital transfers to local government. Information on actual spending by municipalities is not available.
 The Department of Provincial and Local Government transferred (or spent) R1 billion, or 56 per cent, of its capital budget of R1,8 billion. About R1,67 billion is for the Consolidated Municipal Infrastructure Programme (CMIP).
 The Department of Water Affairs and Forestry spent or transferred R871 million or 63 per cent of its budgeted capital of R1,4 billion (of which R1 billion is budgeted for local government).
 The recurrent budgets for the departments of provincial and local government and water affairs also contain significant operating grants for local government, consisting of R4 billion for the equitable share and R700 million for the water operating grant. Most of the recurrent expenditure on these budgets will therefore be for local services, including free basic services, mainly via local government budgets.