Gauteng co-operative governance and traditional affairs (Cogta) MEC Jacob Mamabolo has ruled out putting South Africa’s troubled economic and financial hub of Johannesburg under administration, as the metro is working “hard” to address governance failures and financial challenges.
In an interview with Sunday Times’ sister publication, Business Day at the weekend, Mamabolo admitted, however, that the metro, which contributes about 16% to national GDP and employs 12% of the national workforce, faced “severe financial challenges”.
A Cogta MEC can intervene and place a municipality under administration if it fails to meet its financial obligations and provide basic services to residents, among other things.
The city is technically insolvent as revenue collection levels do not meet budgeted targets, and it has an overexpenditure of about R3.9bn on employee-related costs, bulk electricity purchases, inventory consumed and operational costs.
The council’s finances are severely constricted, with poor revenue collection resulting in its failure to meet service delivery targets.
In April, GCR Ratings revised the city’s ratings outlook from stable to “rating watch negative” because of the metro’s delays in finalising its annual financial statements. The city, which has been battling water challenges, has an infrastructure backlog of more than R200bn. It owes Eskom R5.3bn plus a current account of R1.6bn.
The municipality has long been plagued by crumbling roads and deteriorating water and electricity networks, prompting President Cyril Ramaphosa, during an oversight visit to the city a year ago, to propose the establishment of a presidential working group.
Ramaphosa noted on the visit that the city faced “enormous challenges, ranging from financial and governance instability to rapidly deteriorating infrastructure”.
However, the metro has said the decision by the JSE to suspend its listed debt securities was a technical compliance matter related to reporting timelines and not an indication of financial distress or instability.
This was after the bourse said it had suspended Johannesburg’s debt securities with immediate effect from March 27 after the metro failed to “comply with the JSE’s debt and specialist securities listings requirements”, which required that the municipality publish its audited annual financial statements for the year ended June 30 2025 within the prescribed period.
On Saturday, Mamabolo hailed Ramaphosa for establishing the presidential working group to solve the city’s problems, saying his intervention was significant because “the problems our municipalities face, especially a big metro like Joburg, require that national and provincial government co-ordinate their strategies to help address service delivery challenges”.
“Any suggestions that Cogta must do this or that, well, we will not do anything outside that [presidential working group]. Calls that Cogta must place Joburg under administration are not for Cogta to take any standalone decision on the matter. We are working with the national government, and we are happy with the work done by the presidential working group,” Mamabolo said.
“Cogta will work within existing processes of government to determine the way forward for Joburg. The city is hard at work.”
The MEC also rallied behind mayor Dada Morero and his deputy Loyiso Masuku in supporting the R10.3bn wage agreement the metro signed with its disgruntled workers last year, also known as the politically facilitated agreement, aimed at aligning staff salaries with those of employees in other metropolitan municipalities.
This is despite finance minister Enoch Godongwana ordering the metro to scrap what he described as an “illegally signed agreement” and threatening to withhold the July 2026 equitable share instalment of R8bn if the deal were not scrapped, a move that could severely affect service delivery for the city’s more than 6-million residents.
“The city has severe financial difficulties. It has problems, but it’s not bankrupt. We have not been briefed on that. The city is now improving revenue generation. We support the MMC for finance [Masuku]. As a province, we are firmly behind the [budget] speech that the finance MMC tabled. That goes for everything, including the agreement reached with labour,” Mamabolo said.
“The DA must refrain from saying if workers are paid better, then service delivery will suffer. The two are not the same. The plea that we will make to the city is to enter into a partnership with labour. See them as partners to help you turn the corner in increasing revenue generation initiatives such as meter reading and the issuing of municipal [accounts]. When you engage them and treat them as partners, in that way you will be able to raise revenue to fulfil all your commitments.”
Luyolo Mkentane
www.timeslive.co.za
