JOHANNESBURG — Johannesburg Mayor Dada Morero has moved to resolve ongoing National Treasury compliance issues that threatened to withhold crucial municipal funding, following a productive engagement with the national finance department regarding the City of Johannesburg’s financial management practices.
The intervention comes after National Treasury issued a statement citing “persistent and serious non-compliance” with the Municipal Finance Management Act (MFMA) and its supporting regulations. According to Morero, the city’s officials held a highly productive meeting with Treasury representatives to address the grievances and find a way forward.
A major sticking point in the dispute was the city’s outstanding payment arrangements with key creditors, specifically Eskom and Randwater. Morero confirmed that the city’s Group CFO has been actively engaging with Eskom, and acknowledgement letters from both utilities are expected to be signed by Friday. Once these agreements are submitted to National Treasury, the department will be comfortable transferring the withheld allocations due to the metro, potentially unlocking funds by mid-July.
Addressing the core of Treasury’s concerns regarding unauthorized, irregular, fruitless, and wasteful expenditure, Morero provided crucial context on municipal accounting. He clarified that unauthorized expenditure does not inherently mean funds were stolen or lost; rather, it often stems from unbudgeted emergency responses that the city is forced to address. Similarly, irregular expenditure usually indicates missed procurement steps, though the intended services were still received by the municipality.
To enforce consequence management—echoing the South African Local Government Association’s (SALGA) zero-tolerance policy for financial misconduct and persistent non-compliance—the city has established a dedicated disciplinary board. Morero revealed that out of R23 billion in flagged irregular and unauthorized expenditure, R12 billion has already been successfully regularized. Furthermore, over R700 million in wasteful expenditure has been referred to the disciplinary board for investigation. Comprehensive reports and recommendations, which will also be submitted to the Auditor-General to ensure compliance, are slated for presentation at the July city council meeting via the Municipal Accounts Committee.
Beyond expenditure management, the metro is navigating severe revenue collection challenges driven by widespread job losses and economic pressure on residents. Morero urged unemployed residents to register on the city’s indigent support programme to receive relief on rates and taxes. For those struggling with monthly bills, he advised managing utility consumption, suggesting practical measures like using blankets or gas heaters instead of electrical heaters during the winter months to reduce municipal debt.
To assist residents with historical debt, the city has introduced a debt rehabilitation program that can write off 50% of outstanding balances, provided the resident demonstrates a willingness and ability to pay the remaining half.
Revenue leakage is further exacerbated by rampant illegal electricity connections. Morero highlighted that joint task teams comprising city technicians and Metro Police are conducting continuous cut-offs. However, he noted the frustrating trend of rapid reconnections occurring just days later. The mayor also pointed out that meter bypasses and electricity theft are not confined to informal settlements but are increasingly occurring in affluent estates, requiring enhanced detection and enforcement.
Addressing resident concerns that the Treasury dispute could impact municipal services, Morero assured the public that service delivery would not be interrupted. While he acknowledged that emergencies might occasionally result in unauthorized expenditure, he emphasized the city’s steadfast commitment to operating within the legal frameworks of the MFMA.
“We are committed to ensuring that we are able to run our finances much better, respond to issues of creditors, respond to issues of our customers, and maintain service delivery,” Morero stated, expressing satisfaction with the progress made in aligning the city’s financial practices with National Treasury’s requirements.
