JOHANNESBURG, Gauteng — A severe Johannesburg financial crisis is threatening the collapse of basic municipal services, according to a stark new assessment by the Centre for Development and Enterprise (CDE). The policy institute’s latest report, Joburg’s Broken Budget, reveals a structurally unsustainable model where the metropolitan municipality consistently spends far more than it collects, culminating in a staggering R72 billion in unpaid debt.
Over the last ten years, the burden of unpaid bills from households, businesses, and government departments has surged from roughly R15 billion to nearly R72 billion. This massive shortfall is severely straining a contracting rates base within a fragile local economy. Compounding the deficit, CDE executive director Ann Bernstein pointed out that employee-related expenditures have climbed by 9% annually over the same period. These costs have escalated from R8.6 billion to R20.7 billion, now consuming approximately 40% of all revenue collected directly from ratepayers. Bernstein emphasized that citizens have every right to demand answers as contractor and staff costs rise while roads crumble, substations fail, and essential services degrade.
The municipality’s cash flow mismanagement is further evidenced by its growing arrears to critical bulk suppliers. Outstanding debts owed to Rand Water and Eskom have swelled to over R28 billion. While the city managed to disburse just over R5 billion to Eskom last Friday, with an additional R1.8 billion payment scheduled for the end of this week, Bernstein questioned the financial mechanics behind these settlements. She noted that it remains entirely opaque where these funds were sourced and which essential municipal functions or budgets were slashed to cover the utility bills.
This fiscal dysfunction is particularly acute within City Power. The municipal electricity entity is trapped in a cycle of shrinking revenue contributions, declining sales, and mounting uncollected debt. The formal customer base has contracted from 414,000 to 383,000. Alarmingly, Bernstein highlighted that between 20% and 30% of all electricity purchased by the city yields zero revenue, largely due to illegal connections and power theft.
While residents have grown accustomed to navigating potholes and enduring erratic power supply, Bernstein warned that the deteriorating water infrastructure represents a far more severe threat. She stressed that a complete water failure is not merely a service delivery complaint, but an “existential crisis” for both local enterprises and residential households.
To reverse this downward trajectory, the CDE is urging municipal leadership to implement immediate, structural reforms. The institute’s recommendations center on drastically overhauling revenue collection mechanisms, enforcing strict caps on employee and contractor spending, prioritizing critical infrastructure investment, and executing a credible plan to eliminate the mounting supplier debt.
