By Antony Sguazzin
Johannesburg’s mayor has been asked to explain how South Africa’s richest city will recoup R24.4 billion ($1.4 billion) of funds squandered in “unauthorised, irregular, fruitless and wasteful expenditure.”
Minister of Finance Enoch Godongwana has given Dada Morero 14 days to explain how he plans to fix the city’s finances, according to a letter dated July 30 seen by Bloomberg.
The city may lose part of the funding it receives from the central government if Morero doesn’t comply with the request.
Home to some of the continent’s biggest companies and its largest stock exchange, Johannesburg has been struggling to maintain basic services.
Losing financing will further hit the city — poised to host leaders from the world’s biggest economies in November — where roads are riddled with potholes and its 5 million inhabitants have to suffer regular water and power outages as well as high levels of crime.
“The city has been exceptionally badly run,” said Tracy Ledger, a senior researcher at Johannesburg’s Public Affairs Research Institute. Johannesburg isn’t “spending the money where it is required. Against that standard, the city has failed,” she said.
President Cyril Ramaphosa’s government accounts for 15% of the Johannesburg’s R89 billion budget, according to Chris Santana, a councilor for the Democratic Alliance, the biggest opposition party in the municipal council.
Johannesburg is governed by a coalition led by Ramaphosa’s African National Congress and has been in disarray for years. The city has had nine mayors since 2016, including two from the DA.
“Johannesburg is now facing the gravest financial threat in its democratic history,” the DA said.
“If Treasury pulls back or suspends these funds, as the minister warns in his letter, the city’s ability to deliver the little basic services it is currently able to deliver, will collapse entirely.”
Godongwana didn’t specify when all the funds were wasted in his letter, but said that more than R3 billion pertained to the year that ended March 31, 2024.
The city was R221 billion behind on maintenance and overdue upgrades needed for water, power and road infrastructure last year, council documents seen by Bloomberg showed.
“Losses resulting from irregular expenditure were certified by council as irrecoverable, without having conducted an investigation to determine the recoverability,” Godongwana said.
“Similarly with fruitless and wasteful expenditure, no investigations were conducted.”
Morero’s office didn’t respond to phone calls or text messages requesting comment.
The National Treasury also didn’t immediately respond to a request for comment.
In June, Morero announced a team of former senior city officials and the one time head of the national broadcaster to improve service delivery in the city.
He termed the team the “bomb squad,” named after a well known tactic employed by the national rugby team, the Springboks.
On Sunday, Panyaza Lesufi, premier of the Gauteng region that includes Johannesburg, replaced the heads of some provincial departments in a bid to improve performance.
“You are requested to take all the necessary steps to rectify the situation,” Godongwana wrote in the letter.
The plan “must also outline a plan of action to address the failure and to implement the necessary consequence management against the responsible officials, including any councilors who may have contributed to the failure.”
National Treasury also funds the supply of some essential services such as water provision for the poorest families in a number of major South African cities.
South Africa’s Sunday Times reported on the letter earlier.
BLOOMBERG