The City of Johannesburg metropolitan municipality, which is showing poor economic activity and only attracting a small number of new employed residents, is spending money it is unable to collect.
The Centre for Development and Enterprise (CDE) has warned rising costs and collapsing infrastructure investment are pushing South Africa’s most important city into a dangerous financial spiral.
It says Johannesburg’s budget is increasingly disconnected from reality. The city spends money it does not collect, imposing ever-higher costs on a shrinking rates base and stagnant economy, while squeezing infrastructure investment and turning its suppliers into de facto lenders.
This is the central finding of a CDE report titled “Joburg’s Broken Budget”.
“Johannesburg’s financial crisis is much more serious than an annual budget deficit,” said CDE executive director Ann Bernstein. “The city has become dangerously disconnected from financial reality. It bills residents and businesses, records those bills as revenue and spends on the assumption the money will arrive. Increasingly, it doesn’t.”
The scale of the problem is stark, the CDE said:
- Gross unpaid bills owed to Johannesburg have risen from about R15bn in 2014/15 to nearly R72bn in 2024/25, an increase of almost 17% a year for more than a decade.
- By 2024/25, the annual increase in unpaid debt was equivalent to about one rand in every six the city billed for rates and services.
- In inflation-adjusted terms, infrastructure investment has fallen by about 50% since 2014/15 and by close to 70% per resident.
- Employee-related costs have risen by nine percent a year, from R8.6bn to R20.7bn, over the decade, and now absorb about 40% of the cash collected from customers.
- Unpaid debts to suppliers (mainly Eskom and Rand Water) have climbed to more than R28bn, compared with R12bn a decade ago (June 2025).
“This is a classic municipal doom loop,” said Bernstein. “Residents receive deteriorating services and become less willing or able to pay. The city responds by increasing rates and tariffs on those who do pay. More customers then struggle to pay or find ways to reduce their use of municipal services. Revenue weakens further, maintenance is postponed and services deteriorate again.”
The financial squeeze is occurring against the background of a weak Johannesburg economy.
Over the past decade the city’s economy has grown by about one percent a year in real terms.
Between 2015 and 2025, Johannesburg’s working-age population increased by more than 760,000 people, while the number of employed people rose by only about 30,000.
Over the same period, the city’s spending has increased much faster than its stagnant economy can support.
“A city cannot indefinitely increase the cost of poor and declining services for an economy that is barely growing,” said Bernstein.
Johannesburg can survive potholes and poor refuse collection for a while. It cannot survive without reliable water.
— Ann Bernstein, Centre for Development and Enterprise executive director
“Johannesburg increasingly expects a shrinking group of compliant households and businesses to carry an ever-larger financial burden, and this in a context in which infrastructural deterioration is undermining the prospects for growth.”
The problem is especially visible in electricity. Electricity once provided a crucial source of revenue for the city. Its share of total municipal revenue has fallen from 34% in 2014/15 to 28% in 2024/25, while the amount of electricity purchased and sold has declined significantly. Electricity losses, however, have continued to account for 30% of all the megawatts the city buys, double the amount of the City of Cape Town.
Customers who can afford alternatives are increasingly reducing their dependence on the municipal grid. As they leave, the cost of maintaining the electricity network falls on a smaller and financially weaker customer base.
Water poses an even greater danger. Between 2014/15 and 2024/25, unpaid water bills grew by 20% a year. This is occurring in a city where water failures — dry taps, burst pipes, leaking infrastructure and failing reservoirs — are part of daily life.
“The city needs revenue to maintain and upgrade water infrastructure,” said Bernstein. “But the more unreliable the infrastructure becomes, the harder it is to bill accurately, collect consistently and persuade residents that payment is justified by the quality of the service they receive.
“Johannesburg can survive potholes and poor refuse collection for a while. It cannot survive without reliable water,” said Bernstein. “Households need water, firms need reliable supplies of water. The deterioration of the water system is an existential threat to the city.”
At the same time, infrastructure investment has collapsed while employee and contractor costs have risen rapidly.
“Johannesburg is consuming its future to finance its present. Residents are therefore entitled to ask a simple question: If Johannesburg is spending much more on employees and contractors, why are roads deteriorating, substations failing, water services becoming less reliable and public spaces decaying?” Bernstein said.
The city has increasingly dealt with its cash shortage by delaying payments to suppliers. Trade payables (unpaid debts to suppliers) breached more than R28bn in 2024/25.
“This means Johannesburg is forcing its suppliers to finance its operations,” said Bernstein. “That is not a sustainable financing model. It also shifts the costs of Johannesburg’s failure onto institutions that are themselves important to the national economy.”
There are worrying indications that conventional lenders are becoming more cautious about financing the city. The French development finance agency AFD recently declined to extend a R2.5bn loan to Johannesburg, citing governance concerns, despite having made such a loan as recently as 2024.
What to do
“There is no solution without pain. Johannesburg must dramatically improve collections while protecting indigent households. It must restrain employee and contractor costs, expand infrastructure spending, reduce supplier arrears and rebuild confidence in the accuracy of its billing and financial management,” said Bernstein.
External financial support is probably necessary, but the CDE warned strongly against an unconditional bailout.
“Johannesburg is too important to the country to be allowed to collapse,” said Bernstein. “But national government must not write a cheque that allows the same political and financial practices to continue. Any assistance must form part of a fundamental restructuring of the way the city is governed and financed.”
TimesLIVE
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