ANC Joburg criticises Godongwana for not finding ‘political solution’ to financial crisis faced by Morero

Johannesburg mayor Dada Morero has found himself in hot water over a fiery letter sent by finance minister Enoch Godongwana flagging financial irregularities in the city.

This is not the first time Godongwana has sent a warning to Morero, with the first of his warning letters issued last year.

Sunday Times previously reported on a R4bn first instalment that the City of Johannesburg had promised to its workforce, with a balance of R10bn owed to Samwu workers as a result of a politically facilitated agreement [PFA].

Months later, Godongwana flagged the serious financial irregularities brought by this agreement between the workers and the union, saying the city simply cannot afford it.

“It has the potential to destroy the sustainability of the City of Johannesburg beyond this term of office, with negative implications for the national economy. You are well aware that the city cannot afford this agreement,” said Godongwana in a letter dated April 23.

The city’s current adjustment budget is already unfunded in terms of section 18 of the Municipal Finance Management Act [MFMA].

Godongwana warned that failure to comply could trigger punitive action affecting the city’s funding.

So tense was the fallout of the leaking of Godongwana’s letter that some in the ANC Johannesburg regional leadership are said to have called the finance minister in a panic.

They allegedly questioned the letter and how Godongwana did not engage them before issuing it.

Godongwana reportedly told them off, saying he has been engaging government for ages and does not necessarily have to alert the regional political leadership to make decisions.

In response to Godongwana’s scathing statement, the leadership of the ANC Johannesburg requested an urgent meeting with the minister.

The memorandum was penned by regional secretary Sasabona Manganye, who said the region noted with serious concern the issues the minister raised.

Of particular concern was the matter of the politically facilitated agreement between the municipality and Samwu, and its implications for the financial stability of the city.

“As the leading governing coalition party in Johannesburg, we take full responsibility for engaging these matters openly and constructively. We are of the view that before any further steps are considered, direct engagement between the minister’s office and the leadership of the City of Johannesburg is both necessary and appropriate.”

We believe the concerns raised by the minister can and must be addressed through structured intergovernmental dialogue, and we are committed to that process.

—  Regional secretary Sasabona Manganye

Manganye said the people of Johannesburg deserve solutions, not escalation. He suggested that Godongwana could have placed the issues at the doorstep of the leadership in an alternative manner.

“We believe the concerns raised by the minister can and must be addressed through structured intergovernmental dialogue, and we are committed to that process.”

Despite their outcry, the ANC in Joburg has pleaded that Godongwana address the following concerns:

• the clarification of the minister’s correspondence and its implications for the Politically Facilitated Agreement;
• an open discussion of the financial position and challenges facing the city;
• the exploration of sustainable solutions that safeguard uninterrupted service delivery; and
• the strengthening of intergovernmental coordination in addressing the city’s fiscal constraints.

DA mayoral candidate Helen Zille said in a media briefing that the revelations in Godongwana’s letter were clear evidence that the city is bankrupt.

“It owes its creditors R25.2bn while only having cash and cash equivalents in hand of R3.9bn. This means the city does not have the money to pay R21.3bn owed to creditors.”

Zille said 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.

“The minister’s letter also bluntly states that the city has violated the laws governing municipal finances and that these illegal actions have the ‘potential to destroy the sustainability of the city of Johannesburg beyond this term of office as well as the negative impact on the national economy at large’.”

Zille said this will profoundly affect the whole city, and in particular the delivery of subsidised services to the poor.

Zille 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 R2.5bn because it 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 audited annual financial statements timeously.
• Moody’s has warned of further downgrade in the city’s credit rating.
• The expected regression in the city’s audit outcome.

In his letter, Godongwana backed up his threat by itemising the city’s financial transgressions:

• The Adjustment Budget passed in March is not funded. This amounts to unauthorised expenditure, a serious violation of the law. The city proceeded to pass the budget despite Treasury’s warnings.
• The city’s failure to comply with the requirements of the Municipal Regulations on the Municipal Standard Chart of Accounts.
• The city’s failure to prevent and address unauthorised, irregular, fruitless and wasteful expenditure.
• The failure of the city to pay its creditors within 30 days of receiving an invoice, which is a violation of the Municipal Finance Management Act.
• The unlawful introduction of the politically facilitated agreement on wage adjustments into the adjustment budget.

The minister instructs the city to “stop proceeding with the implementation of this illegally signed agreement”. This vindicates the DA’s warning about the devastating financial impact of this agreement on the City of Johannesburg, said Zille.

The DA has been warning for more than three years that the city was headed for a major financial crisis. “We have also consistently warned in council that the above decisions, alluded to in the minister’s letter, were unlawful and that we would pursue corrective measures under section 32 of the MFMA.”

Zille said they will seek to hold all councillors who supported “these illegal decisions” in council, personally responsible for the recovery of the money lost to 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.”