The City of Johannesburg is racing against time to avoid a potentially crippling funding blow from National Treasury as mounting debt, multi-billion-rand utility losses and concerns over a controversial wage agreement continue to place pressure on the municipality’s finances.
City officials revealed the extent of the financial challenges during their appearance before Parliament’s Standing Committee on Public Accounts (SCOPA) on Tuesday.
The officials, led by Mayor Dada Morero , were there to account for the city’s worsening financial position and governance failures.
Their appearance before SCOPA comes amid growing pressure from Finance Minister Enoch Godongwana, who has warned that Treasury could withhold the municipality’s July equitable share allocation if key financial concerns are not resolved by the end of June.
At the centre of Treasury’s concerns are the city’s previously unfunded adjustment budget, the credibility of its revenue projections and a controversial R10.3 billion wage agreement.
Addressing MPs, the COJ ‘s Group Chief Financial Officer Tebogo Morake painted a concerning picture of the city’s financial position, revealing that losses from electricity and water services continue to drain billions of rands from municipal coffers.
According to Morake, City Power recorded electricity losses exceeding R5 billion while Johannesburg Water suffered losses of more than R2 billion.
“These are significant numbers; they take almost 10% of the budget as a loss,” Morake told MPs.
He said significant investment would be required to stabilise infrastructure and prevent further financial losses.
The city’s debt burden has also continued to grow.
Morake revealed that consumer debt had increased from R61 billion to R71 billion over the reporting period.
“The consumer debtors increased from R61 billion to R71 billion from 2023/24 to 2024/25,” he said.
While provisions for doubtful debt reduced the city’s net exposure, the growing debt book remains a major concern for the administration.
The hearing also highlighted the scale of the municipality’s unauthorised, irregular, fruitless and wasteful expenditure (UIFWE).
Group Risk and Assurance Executive Director Sinaye Nxumalo told MPs that UIFWE currently stood at approximately R13.3 billion following adjustments linked to audit findings.
However, she said, the city had made progress in addressing historical irregular expenditure.
“Over the five-year period, the city has regularised R45 billion,” Nxumalo said.
Treasury’s concerns extend beyond historical expenditure issues.
In a recent parliamentary reply, Godongwana confirmed that Johannesburg must adopt a funded budget for the 2026/27 financial year and review the R10.3 billion wage agreement reached with the South African Municipal Workers’ Union (SAMWU).
The minister has described the agreement as unaffordable and warned that failure to address the issue could result in Treasury invoking Section 216(2) of the Constitution to withhold funding.
Responding to questions from MPs, city official Mbulelo Ruda defended the agreement, saying it was aimed at addressing long-standing salary disputes while maintaining institutional stability.
“The point of departure is that the politically facilitated agreement is about justice, redress and institutional stability,” he said.
Ruda explained that the agreement was facilitated through the Commission for Conciliation, Mediation and Arbitration (CCMA) and remained subject to affordability and sustainability considerations.
“One of the founding principles of that agreement has always been affordability, financial sustainability and the city’s budget processes.”
He stressed that the city was attempting to balance employee concerns with financial realities.
“There is an affordability principle, there is a sustainability principle and there are city budget processes before any payment that is made towards the agreement.”
Morake also further confirmed that the city remains in constant engagement with Treasury as it seeks to satisfy conditions attached to its equitable share allocation.
He told MPs that the municipality intends tabling a UIFWE policy before council later this month after Treasury flagged concerns regarding the city’s management of irregular expenditure.
According to Morake, Treasury made it clear that failure to conclude the council process by the end of June could affect the municipality’s next funding tranche.
“They made it very clear that if we are not done with the council process by the end of June, the July tranche would be affected,” he said.
The city plans to table the necessary reports before council on 23 and 24 June before reporting back to Treasury.
The latest developments come just days after the Auditor-General delivered a damning assessment of Johannesburg’s finances, with the municipality receiving a qualified audit opinion amid growing concerns about governance, financial management and service delivery.
Should Treasury ultimately withhold funding, Johannesburg could face further pressure at a time when it is already battling escalating debt, infrastructure backlogs and persistent utility losses worth billions of rand annually.
