Zille blames the ANC for the city’s financial crisis.
Finance Minister Enoch Godongwana has warned Johannesburg Mayor Dada Morero that the City of Johannesburg is basically broke.
In a letter leaked to the DA’s mayoral candidate, Helen Zille, it details problems in the city, including unfunded budgets, issues with payments to contractors, reckless financial decisions, and fruitless and wasteful expenditure, among other issues.
Zille briefed the media in Johannesburg on Wednesday about the contents of this letter.
“The minister bluntly states that the city is effectively bankrupt. It owes its creditors R25.2 billion while only having cash and cash equivalents in hand of R3.9 billion.
“This means the city does not have the money to pay R21.3 billion owed to creditors. This is the core reason behind the city’s inability to repair or maintain infrastructure, leading to consistent power and water outages, and the failure to fix breakdowns, resulting in the steady collapse of service provision across the board,” said Zille.
The ANC’s regional secretary in the City of Johannesburg, Sasa Manganye, told The Citizen that the ANC would issue a statement in response to Zille’s comments and Godongwana’s letter.
Godongwana’s scathing letter
However, Zille claimed Godongwana’s letter also bluntly states that the city has violated laws governing municipal finances. He said the city’s illegal actions have the “potential to destroy the sustainability of the City of Johannesburg beyond this term of office”.
“The minister then issues a formal notice to the city that if it is not willing to remedy this situation with immediate effect, the National Treasury will invoke section 216(2) of the constitution and hold back Johannesburg’s allocation under the Division of Revenue Act.
“This amounts to over R8 billion, which would be the final nail in Johannesburg’s coffin. This will profoundly affect the whole city and, in particular, the delivery of subsidised services to the poor,” said Zille.
Financial blows to Joburg
She said Godongwana’s letter follows several financial body blows to the city in recent months.
“The Agence Française de Développement (AFD) refused the city’s request for a second loan of R2.5 billion because the city had failed to comply with conditions attached to an earlier loan granted in 2024.
“The city’s bonds were suspended by the Johannesburg Stock Exchange for failing to submit the audited annual financial statements timeously.
“Moody’s has warned of a further downgrade in the city’s credit rating,” Zille alleged.
Godongwana had allegedly found that the adjustment budget passed by the city in March was not funded.
“This amounts to unauthorised expenditure, a serious violation of the law. The city proceeded to pass the budget despite Treasury’s warnings.”
PFA wage deal
Zille said the minister had instructed the city to halt implementation of the Politically Facilitated Agreement (PFA), which commits to paying workers R10 billion over the next three years.
“This vindicates the DA’s warning about the devastating financial impact of this agreement on the City of Johannesburg. Overall, the Democratic Alliance has been warning, for more than three years that the city was headed for a major financial crisis.”
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