Joburg in Turmoil? Zille Claims Treasury Warns City of Impending Financial Crisis
Helen Zille has claimed that the Johannesburg metro is effectively insolvent following the revelation of a concerning letter allegedly sent by Finance Minister Enoch Godongwana to the DA.
According to Zille, the communication, addressed to Joburg mayor Dada Morero and dated 23 April, revealed that the city owes R25.2 billion to creditors while holding only R3.9 billion in cash and equivalents.
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This creates a troubling deficit of R21.3 billion for the metro.
Zille stated: “This is the primary reason for the city’s inability to maintain or repair infrastructure, resulting in persistent power and water outages, as well as the failure to address breakdowns, leading to a gradual decline in services across the board.”
She further asserted that Godongwana warned about the city’s violations of municipal finance laws, with these alleged infractions posing a “serious threat to the sustainability of the City of Joburg beyond this term of office and detrimental effects on the national economy as a whole.”
Zille Warns R8 Billion Treasury Cut Could Be ‘Final Nail In The Coffin’
Zille claimed that the finance minister issued an official notice indicating that the National Treasury may invoke Section 216(2) of the Constitution if the metro does not rectify its financial issues immediately.
She explained that this could result in the Treasury withholding over R8 billion allocated to the city under the Division of Revenue Act.
“This amounts to more than R8 billion, which would be the final nail in Johannesburg’s coffin,” Zille stated.
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She also pointed out a series of significant financial difficulties faced by the city in recent months.
One such issue was the refusal by the Agence Française de Développement to approve a second R2.5 billion loan after the city allegedly failed to meet conditions related to a previous 2024 loan.
Zille mentioned that the Johannesburg Stock Exchange suspended the city’s bonds due to the late submission of audited annual financial statements.
Additionally, she noted that Moody’s has signaled a potential further downgrade to the city’s credit rating, with audit outcomes expected to worsen.
Finance Law Violations And Wage Deal Under Fire
Zille stated that the minister’s alleged letter outlined several serious financial irregularities by the metro.
These purportedly included passing an unfunded adjustment budget in March despite warnings from Treasury, failing to adhere to Municipal Standard Chart of Accounts regulations, and not controlling irregular, fruitless, and wasteful expenditures.
She also accused the city of violating the Municipal Finance Management Act by not paying creditors within 30 days of receiving invoices.
Another critical issue was the inclusion of a politically negotiated wage adjustment agreement in the adjustment budget.
Zille claimed the minister instructed the city to “cease the implementation of this illegally signed agreement.”
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According to Zille, the DA has been warning for more than three years that Johannesburg was on a trajectory toward financial disaster.
“We have consistently warned in council that the actions mentioned in the minister’s letter were unlawful, and we would seek corrective actions under Section 32 of the MFMA,” she stated.
“This means we will aim to hold all councillors who supported these illegal decisions in council personally accountable for recovering the funds lost by the city under Section 21 (1) of the MFMA, which states that ‘political office bearers or officials who deliberately or negligently permit such expenditures are personally liable.’”
In the meantime, ANC Johannesburg regional secretary Sasa Manganye indicated that the party would respond to both Zille’s comments and the alleged Treasury letter.
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