Johannesburg is grappling with a profound financial crisis, evidenced by its inability to pay for crucial services like fuel, leading to the suspension of operations by the Johannesburg Roads Agency. The city's financial woes are so dire that the Democratic Alliance, a main opposition party, reported the suspension of essential services due to a fuel shortfall. This comes as the city proceeds with plans to hire 1,000 new managers and professionals, and increase its overall workforce by 1,700, despite struggling to meet current financial obligations.
Adding to the city's precarious financial state, South African Finance Minister Enoch Godongwana has warned Johannesburg that it risks losing state funding if it doesn't address an unsustainable wage bill and an alleged $1.4 billion in wasteful spending. News24 reported a reiteration of the threat last week, with the Finance Minister pushing back against plans to boost municipal employee pay by $620 million. The city reportedly owes creditors $25.2 billion while having only $3.9 billion in cash, and its adjustment budget is unfunded.
Business leaders, including Business Unity South Africa president Mxolisi Mgojo and Business Leadership South Africa chair Adrian Gore, have expressed grave concerns, stating that Johannesburg's decline undermines South Africa's national growth story. The city, which contributes about 16% to South Africa's GDP, faces potential electricity supply suspension by Eskom over an unpaid debt of $5.3 billion. Capital expenditure has plummeted to 6% of its budget, and maintenance spending is at a mere 0.5% of asset value, despite a 124% real-term increase in rates and service charges over the past 15 years.
Years of neglect and political instability, with 10 mayors and shifting coalition governments since 2016, have exacerbated the crisis. The city's infrastructure is visibly deteriorating, as seen with the Johannesburg Art Gallery, where priceless artworks have been relocated due to structural issues. Despite possessing Africa's strongest municipal revenue base, with major corporates and affluent suburbs, political instability and poor governance have led to this unprecedented situation, threatening the economic engine of the country.
