Joburg’s Financial Crisis

Natalie Nyathi

Mayor Dada Morero of Johannesburg is facing mounting pressure to urgently address the city’s deteriorating financial situation, following a strong warning from Finance Minister Enoch Godongwana. In a letter issued on July 30, Godongwana voiced serious concerns regarding the city’s financial management, particularly the high levels of unauthorized, irregular, and wasteful expenditure.

Johannesburg, with its significant budget for the 2025/2026 financial year, relies heavily on grant funding from the National Treasury to finance essential capital projects, including roads, water, and electricity infrastructure. Godongwana’s letter revealed that the city had incurred over R22 billion in unauthorized, irregular, and fruitless expenditure during the previous fiscal year, highlighting a severe lack of financial control and compliance with the Municipal Finance Management Act.

Godongwana has given Morero a two-week deadline to present a credible plan to address these financial issues and hold those responsible accountable. Failure to do so could result in the National Treasury withholding conditional grant funding, a move that could cripple Johannesburg’s ability to provide basic services to its residents. The potential consequences of losing this funding are dire, with the Democratic Alliance (DA) warning of a complete collapse of the city’s finances and a severe impact on residents’ lives.

The DA has been a vocal critic of Morero’s leadership, asserting his inability to manage Johannesburg’s finances effectively and calling for accountability for those responsible for the mismanagement. DA Johannesburg caucus leader Belinda Kayser-Echeozonjoku stated that the city cannot afford to lose any funding, as it is essential for maintaining Johannesburg’s finances and services.

In an effort to address the city’s challenges, Morero established a special task force known as the “bomb squad” to tackle service delivery issues. Led by ANC veteran Snuki Zikalala, the team aims to rapidly respond to service delivery crises and provide oversight for the mayor. However, critics, including the DA, have questioned the legality and effectiveness of this “bomb squad.”

Gauteng Premier Panyaza Lesufi has expressed his support for Morero, stating that he has discussed the matter with the mayor and believes that meaningful progress has been made. Lesufi indicated that Morero has committed to submitting a comprehensive report to the province, which will then be forwarded to the National Treasury.

Adding to the pressure, the Auditor-General has previously raised concerns about Johannesburg’s long-standing financial management issues, including poor debt collection, declining revenue, and inadequate infrastructure investment. These issues have contributed to the city’s financial instability and hindered its ability to provide essential services.

Johannesburg’s financial woes are not new. In late 2024, the city faced potential power cuts due to a dispute with Eskom over unpaid bills, requiring intervention from the national government. Furthermore, President Cyril Ramaphosa publicly criticized the state of the city earlier in 2025, particularly as Johannesburg prepares to host the G20 Summit later this year.

In light of these challenges, Morero has explored various options to secure funding for critical infrastructure projects, including a potential bond sale and public-private partnerships. However, the city’s ability to raise debt is limited by National Treasury regulations.

The situation in Johannesburg highlights the broader challenges faced by many South African municipalities, particularly in balancing service delivery with financial sustainability. Municipalities rely on a combination of revenue collection, grants, and loans to fund their operations, with poorer municipalities being particularly dependent on national transfers. The Municipal Infrastructure Grant is a key source of funding for infrastructure development in these municipalities, but mismanagement and non-compliance with grant conditions can lead to funding reductions.

As the deadline approaches, Mayor Morero faces a critical test in demonstrating his ability to address Johannesburg’s financial crisis and secure the funding needed to provide essential services to its residents. Failure to do so could have far-reaching consequences for the city and its future.