Johannesburg’s municipal finances have hit a breaking point. Finance Minister Enoch Godongwana confirmed last week that the City of Johannesburg (CoJ) is effectively bankrupt, warning that the R10 billion two‑year wage agreement with the municipal workers’ union SAMWU is “a financial obligation that is not possible to fulfil.” The minister’s letter described a city unable to collect revenue, failing to budget effectively and continuing to spend money it does not have.
The city’s collection rate has slipped from 86 percent to 82 percent, a decline noted in recent municipal performance graphics. Godongwana disclosed that Johannesburg now owes creditors roughly R25 billion, a figure that continues to rise with no clear plan to curb the overspend. He has called on Mayor Dada Morero to explain how the administration intends to reverse the trend, though the minister expressed little confidence that a satisfactory response will be forthcoming.
Compounding the fiscal strain, the minister highlighted R3.9 billion in over‑expenditure, largely driven by employee‑related costs, bulk electricity purchases, inventory consumption and other operational outlays. This follows the controversial R10 billion wage deal, which many analysts say will further erode the city’s already fragile finances.
In a separate expose, Yvonne Grimbeek reported that the CEOs of the Johannesburg Property Company and Joburg Tourism Company are set to receive a combined 62 percent salary increase for the 2026/27 financial year. Executive compensation for senior municipal managers has risen about 26 percent since 2022, far outpacing the country’s inflation rate of roughly 3.2 percent. The steep pay hikes have drawn criticism from the finance minister and fuel concerns about fiscal discipline.
Ratepayers are also feeling the squeeze. The city announced tariff increases for the 2026/27 fiscal year: water charges will rise 12.5 percent, electricity 8.6 percent and refuse removal 6.2 percent. These hikes exceed inflation and continue a pattern of above‑inflation increases that have persisted for at least five years, prompting public outcry over the affordability of basic services.
Mayor Morero’s political future appears uncertain ahead of the 4 November local government elections. Even if the African National Congress retains control of the mayoral office through a coalition, Morero is not expected to be the party’s candidate.
The unfolding financial crisis in Johannesburg underscores broader challenges facing South African municipalities: revenue shortfalls, mounting debt and governance issues. As the city grapples with its fiscal reality, the coming months will likely determine whether corrective measures can be implemented before the next election cycle.
