Johannesburg’s municipal finances have reached a critical juncture. 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.” In his letter, the minister described a city struggling to collect revenue, failing to budget effectively, and continuing to spend beyond its means. The city’s collection rate has declined from 86 percent to 82 percent, a drop highlighted in recent municipal performance graphics.
Godongwana revealed that Johannesburg now owes creditors approximately R25 billion, a figure that continues to grow without a clear plan to address the overspending. He has urged Mayor Dada Morero to clarify how the administration plans to reverse this trend, although the minister expressed little confidence in receiving a satisfactory response. Adding to the fiscal strain, Godongwana pointed out R3.9 billion in over-expenditure, primarily driven by employee-related costs, bulk electricity purchases, inventory consumption, and other operational expenses. This situation follows the controversial R10 billion wage deal, which many analysts believe will further undermine the city’s already precarious financial standing.
In a separate report, Yvonne Grimbeek highlighted 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. Additionally, executive compensation for senior municipal managers has risen by about 26 percent since 2022, significantly outpacing the country’s inflation rate of roughly 3.2 percent. These substantial pay increases have drawn criticism from the finance minister and raised concerns about fiscal discipline.
Ratepayers are also feeling the financial pressure, as the city announced tariff increases for the 2026/27 fiscal year: water charges will rise by 12.5 percent, electricity by 8.6 percent, and refuse removal by 6.2 percent. These hikes exceed inflation and continue a trend of above-inflation increases that have persisted for at least five years, prompting public outcry regarding the affordability of basic services.
Mayor Morero’s political future appears uncertain ahead of the local government elections on November 4. 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 ongoing financial crisis in Johannesburg highlights broader challenges facing South African municipalities, including revenue shortfalls, mounting debt, and governance issues. As the city confronts its fiscal reality, the coming months will likely determine whether corrective measures can be implemented before the next election cycle.
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