JOHANNESBURG, Gauteng — The City of Johannesburg financial crisis has reached a critical tipping point, according to a stark new warning from the Centre for Development and Enterprise (CDE). In its latest report, Joburg’s Broken Budget, the policy institute reveals that the metropolitan municipality is consistently spending more money than it collects, driving an unsustainable non-payment crisis that directly threatens basic service delivery.
The scale of the fiscal challenge is staggering. Unpaid bills owed to the municipality by households, businesses, and government entities have ballooned from approximately R15 billion to nearly R72 billion over the past decade. This mounting debt places severe pressure on an already shrinking rates base and a fragile local economy.
Ann Bernstein, executive director at the CDE, highlighted the severe misalignment in municipal spending priorities. Over the last ten years, employee-related costs have surged by 9% annually, jumping from R8.6 billion to R20.7 billion. These costs now absorb roughly 40% of all cash collected from customers. Bernstein noted that residents are entirely justified in questioning why the city continues to increase spending on employees and contractors while roads deteriorate, substations fail, and basic services become increasingly unreliable.
The report also exposes a growing pattern of delayed payments to critical utility suppliers. Outstanding debts to entities like Eskom and Rand Water have climbed to more than R28 billion. Although the city recently settled just over R5 billion of its Eskom debt last Friday, with another R1.8 billion payment due by the end of this week, Bernstein raised critical questions about the funding source. She emphasized that it remains entirely unclear what municipal services or budgetary lines are being cut to facilitate these payments, demanding greater transparency from city officials.
This financial dysfunction is especially visible in the city’s electricity sector. City Power is grappling with declining sales, a shrinking contribution to municipal revenue, and rapidly growing unpaid accounts. The utility’s formal customer base has contracted from 414,000 to 383,000. Furthermore, an estimated 20% to 30% of the electricity purchased by the city generates no revenue due to illegal connections, theft, and other systemic losses.
While residents have historically learned to tolerate potholes and unreliable electricity, Bernstein warned that the deteriorating water infrastructure poses a far greater danger. She stressed that a lack of water is not merely a service delivery inconvenience, but an “existential crisis” for both local businesses and households.
To avert total systemic failure, the CDE is calling for immediate, decisive administrative action. The institute’s core recommendations include a dramatic improvement in revenue collection, tighter controls over employee and contractor expenditures, increased targeted infrastructure spending, and an aggressive, structured strategy to reduce mounting supplier debt.
