Johannesburg’s financial crisis has moved beyond routine council management and now demands national intervention. With the City of Johannesburg (CoJ) racing to satisfy National Treasury, facing a R2.1 billion unfunded budget gap, relying on short-term borrowing to survive, and still showing no clear plan to withdraw from the R10.3-billion “illegally signed” wage deal with SAMWU, civil society says the metro can no longer be trusted to fix itself.
This week, the CoJ council scrambled to process documents demanded by National Treasury in an attempt to hold onto national grants amid the metro’s deepening financial collapse.
The Joburg Crisis Alliance, WaterCAN and JoburgCAN believe this is insufficient in the face of the City’s well-known financial chaos, and reiterate the call for national intervention.
“Without national intervention this city, which contributes 16% to the country’s nominal GDP, will continue to deteriorate and erode the value it creates for the rest of South Africa. This is a national crisis,” said the statement.
This was the last full council meeting of the 2025/26 financial year, with the new municipal financial year beginning on 1 July 2026.
The two-day council meeting, which concluded on 24 and 25 June, processed just 53 of the 91 items scheduled for the sitting.
“While Council tabled a range of Treasury-mandated reports aimed at preserving access to national grants, these administrative exercises cannot disguise the reality facing residents: deteriorating infrastructure, worsening water and electricity services, increasing tariffs, and a municipality that remains under formal financial scrutiny,” the organisations said.
Pushed to the top of the list were items required by National Treasury, including:
- The CoJ’s updated 72-page strategy for preventing and reducing unauthorised, irregular, fruitless and wasteful expenditure (UIFWe);
- A 38-page report formally regularising historical UIFWe, processed by the Municipal Public Accounts Committee (MPAC) and certified as irrecoverable. This included R877 million in irregular expenditure incurred from 2010/11 to 2015/16, and R42 million in unauthorised expenditure incurred from 2022/23 to 2023/24. Documents were missing for much of this expenditure. The irregular expenditure included catering bills, consultants, IT services and locksmiths, and involved the Transport, Group ICT and Development Planning departments. It also included R673 million paid by Transport to Piotrans, which manages Rea Vaya, from 2022/23 to 2025/26. Piotrans was appointed on an expedited basis due to poor planning. The unauthorised expenditure was all incurred by Social Development as “overspending of budget”. In some cases, MPAC recommended opening criminal cases with the SAPS.
- The 43-page Financial Turnaround Framework for 2026/27 to 2028/29, aimed at “restoring liquidity, revenue integrity, infrastructure delivery and institutional accountability”.
- A collection of documents relating to bringing the utilities entities in line with National Treasury requirements for its metro trading services reform programme. The CoJ has a complicated structure with 14 entities, including the trading services City Power, Joburg Water and Pikitup, and desperately needs the funding offered to compliant metros through this reform programme.
Yet civil society remains “sceptical of the CoJ’s ability to transform its newly tabled strategies into action”.
“For many in the council chambers, it was a tick-box exercise and we are deeply concerned that the majority of councillors are willing to effectively condone irregular behaviour. For example, the unauthorised, irregular, fruitless and wasteful expenditure strategy claims it has ‘a zero-tolerance level’ for such spending, but this is not borne out in practice as CoJ has already declared R3.636 billion in new UIFWe for 2025/26, largely for budgeted bulk electricity purchases,” the organisations said.
Civil society said it was already well established, as MPs pointed out earlier this month, that regularising UIFWe already incurred is not a sign of improved governance and does not remove the obligation to act against those responsible.
Meanwhile, the financial future of the City is “fragile”, according to its own Financial Turnaround Framework. It further notes that the City relied on a “huge short-term loan” simply to survive the 2024/25 and 2025/26 financial years.
“The Framework explicitly tells us that National Treasury’s formal assessment of the 2026/27 Draft MTREF identified a R2.1 billion unfunded budget gap. Furthermore, Moody’s has placed the City’s Ba3 rating under review for possible downgrade, while the City’s sweeping arrangement sits at the centre of its structural governance failure.
“What this tells us is that, while attempts to collect greater revenue from already financially stretched residents are needed, there is a deeper need for a full structural overhaul. It is unlikely this will happen unless national government formally intervenes in the municipality,” the organisations said.
Ring-fencing
In terms of Treasury’s metro trading services reforms, CoJ entities Joburg Water and City Power are due to be financially ring-fenced from 1 July.
“Ring-fencing has previously been promised, so we are sceptical as to whether this will become a reality. The City has for years used the sales of water and electricity to subsidise other City operations. While the ring-fencing is welcomed, City Power and Joburg Water are now on very shaky financial grounds, partly due to the costs of huge water and electricity losses. Both have huge infrastructure backlogs and inadequate capital budgets, largely because they were deprived of their revenues.
“Reforming these crucial entities is a huge task. The City is rewriting service delivery and revenue management agreements with the entities, in line with the reforms. Civil society calls for this process to be transparent.”
Meanwhile, CoJ has not fully complied with the written warning by Finance Minister Enoch Godongwana, which included a threat by Treasury to halt the July tranche of the equitable share grant, which could be as much as R3.6 billion.
The Minister warned that the 2025/26 adjustment budget was unfunded, due primarily to the implementation of the R10.3-billion “illegally signed” wage deal, known as the Political Facilitated Agreement (PFA), with the South African Municipal Workers’ Union (SAMWU).
“The council has not rewritten either budget, but rather seems to be aiming to improve its financial position, such as through revenue collection, so the 2026/27 budget will be sufficiently funded.
“Civil society calls on the CoJ and National Treasury to update Joburg residents on the equitable share situation and to answer key questions: will the July tranche, which will likely fund services for indigent citizens, be transferred to the City? If it is not, then the City must explain exactly how it intends to fund this shortfall,” said the statement.
You can read our notes from the council sitting here.
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