The mayor of Johannesburg, Dada Morelo, warned that the municipality has enough cash on hand to maintain operational activities for only twelve days in case of unforeseen financial difficulties. This is because billions of rand remain unpaid to major service providers—Eskom and Rand Water.
Morelo stated that the current cash reserve covers expenses for only 12 days. He noted that municipalities often face fluctuations in cash coverage because they rely on self-generated revenue to fund operations. According to him, it is normal in the public sector that due to self-financing, it is sometimes not possible to accumulate a sufficient monthly reserve.
Despite the current situation, Morelo emphasized that this does not mean Johannesburg is out of money. Municipalities are required to maintain a cash coverage level of at least 32 days, and the city is working to increase revenue collection to strengthen its financial position.
The mayor specified that the city is awaiting the receipt of its fair share from the National Treasury, which, according to his forecasts, may arrive this week. These funds are necessary to settle outstanding bills with Eskom and Rand Water. Morelo stated that the received funds will be distributed between the two suppliers: approximately 2.6 or 2.4 billion rand for Eskom and 960 million rand for Rand Water.
These payments occur against the backdrop of ongoing financial pressure related to service costs and revenue collection issues. Previously, Morelo pointed to electricity costs from Eskom as one of the biggest financial burdens for Johannesburg. He also acknowledged that the city's billing and revenue collection systems need improvement to stabilize cash flow and meet financial obligations.
The City of Johannesburg was among 69 municipalities whose fair share transfers for July 2026 were temporarily suspended by the National Treasury due to concerns about compliance with the Municipal Finance Management Act and financial management requirements. However, Morelo previously reported that this issue was resolved after meetings with the National Treasury. The Treasury confirmed that Johannesburg's budget for 2026/27 is funded, and the unfunded budget problem is closed. The city continues to work on timely bill settlement while improving financial control and revenue metrics.
The Mayor of the Johannesburg municipality, Dada Morelo, has presented new plans aimed at repaying debt to Eskom and settling other outstanding debts facing the city.
These steps are being taken against a backdrop of a series of administrative and managerial failures that have drawn criticism from the National Treasury. Finance Minister Enoch Godongwana criticized Morelo regarding an agreement on municipal employee salaries amounting to 10.3 billion rand.
In May, Godongwana threatened to cease financial support to Johannesburg if this agreement was not revoked. This week, the National Treasury attempted to temporarily withhold 13.5 billion rand as a fair distribution among municipalities, of which 3.6 billion rand pertains to the city of Johannesburg.
During a press briefing on Wednesday, Morelo detailed ongoing discussions with the National Treasury concerning financial mismanagement and other pressing issues. He expressed confidence in joint efforts with government structures, emphasizing that engagement with the Presidential Working Group on Finance has been key to stabilizing the city's financial position.
Morelo stated that following a meeting with the Finance Minister, they developed a process for managing the concerns. He noted that the decision to invoke Article 216 of the Constitution of the Republic was made in this context.
Morelo also defended the municipality's decision to secure a loan of 3.8 billion rand (200 million euros) from the German development bank KfW, arguing that the city is borrowing responsibly and that this funding is necessary to address financial and service delivery challenges. He specified that once the funds are received, the city will be able to pay Eskom approximately 1.4 billion rand, which will free it from the repayment process agreed upon with Eskom.
These assurances came two months after Eskom threatened to cut off power to the city due to unpaid bills totaling 6.8 billion rand owed by Johannesburg and its utility company, City Power.
Regarding issues with the water utility Rand Water, Morelo clarified that the city has no difficulties with Rand Water, stating: 'We have no problems with Rand Water. Everything between the city and Rand Water has gone well. We will pay them an amount of about 960 million rand.'
Responding to recent difficulties at Thuso House, where the service center was closed, Morelo expressed dissatisfaction with the incident. He added that the debt of 3.4 million rand arose mainly from internal failures related to officials neglecting their duties. The closure of the customer service center, reports indicate, affected access to vital municipal services and followed the recent seizure of city assets by a sheriff due to unpaid creditors amounting to 3.4 million rand.
The city of Johannesburg has been included among 67 local government entities whose funding has been temporarily suspended by the National Treasury. The reason for this measure is failures in financial and corporate governance related to the distribution of the equitable share for July 2026.
This intervention was announced by the Treasury on Tuesday and aims to strengthen financial discipline, enhance accountability, and compel municipalities to eliminate unauthorized, irregular, fruitless, and wasteful expenditure (UIFWE). Furthermore, it seeks to ensure that officials responsible for financial irregularities are held accountable.
Among other municipalities in the Gauteng province affected by this decision are Emfuleni, Lesedi, Sedibeng District Municipality, Maropeng City, and Rand West City.
The Treasury stated that the decision was made following 'stubborn and serious non-compliance' with the Municipal Finance Management Act (MFMA), despite years of support, including guidance, training, and direct engagement with the municipalities. The department emphasized that this decision is corrective, not punitive, and since the fund freeze will be temporary, the Treasury does not foresee a negative impact on service delivery.
The Treasury noted that many municipalities continue to operate with unpaid budgets, fail to investigate unauthorized, irregular, fruitless, and wasteful expenditure, and do not apply consequences to officials responsible for financial misconduct. It was also warned that poor financial management creates growing pressure on Eskom, water boards, and other state institutions.
Recent audits by the Auditor-General of South Africa demonstrate the scale of the problem. Since the 2021/22 financial year, municipalities have accumulated R145.21 billion in irregular expenditure, R118.13 billion in unauthorized expenditure, and R24.12 billion in fruitless and wasteful expenditure.
The South African Local Government Association (SALGA) urged the Treasury to find a balance between financial oversight and the realities faced by municipalities. While SALGA supports efforts to improve accountability, it pointed to deeply entrenched structural and systemic financial problems within the local government sector. The association cautioned that the freezing of the equitable share should not come at the expense of municipal sustainability or the quality of services provided.
SALGA also expressed concern over municipalities that failed to pay contributions to pension funds, UIF, and PAYE deductions from employee salaries, noting that such practices undermine workers' rights, public trust, and expose municipalities to financial and legal risks.
Meanwhile, the South African Municipal Workers Union (SAMWU) criticized the Treasury's decision, warning that it could exacerbate the financial crisis. The union rejected the Treasury's assurances that service delivery would remain unaffected, arguing that without necessary financial resources, municipalities cannot provide water, sanitation, electricity, waste removal, or road maintenance.
SAMWU added that with the continued freeze on the equitable share, municipalities may face difficulties in paying staff salaries, pension contributions and medical aid, as well as payments to third parties and service providers. The union described this not as a corrective intervention, but rather as a recipe for deepening the municipal financial crisis.
Executive Mayor Dada Morelo addressed the press to assure residents and investors of Johannesburg's financial stability, despite increased scrutiny from the National Treasury. He emphasized that the metropolis' budget is funded, and critical services will be protected during the resolution of cash flow and management issues.
Speaking on Wednesday, Morelo stated that the city is fully cooperating with the National Treasury following the application of Section 216(2) of the Constitution and Section 38(1) of the Municipal Finance Management Act (MFMA), which aim to enhance financial accountability. Morelo quoted a letter received from the National Treasury confirming that the city's Annual Budget for 2026/27 is secured by funds.
He noted that this information is encouraging as it confirms adequate financial management and the absence of a crisis. Nevertheless, he added that additional steps are required to manage revenue collection and income indicators.
Morelo detailed current interactions between the city and the National Treasury, including discussions in intergovernmental structures and the President's Finance Working Group, which have already yielded positive results. The Mayor presented a recovery plan focused on transparency, accountability, and improving financial control mechanisms. Among the priorities is settling debts owed to essential service providers.
He specified that payments to Rand Water and Eskom will be made by mid-July. Furthermore, the city has revised its strategy to reduce unauthorized, irregular, wasteful, and inefficient expenditures (UIFWE) in line with National Treasury recommendations.
According to Morelo, approximately R1.8 billion in historical expenses have been brought into compliance through management processes, and another R6.4 billion is under review by municipal enterprise boards. He identified City Power electricity procurement as the main driver of new overspending, which reached R2.1 billion by the end of the third quarter. The Mayor also acknowledged financial difficulties within the waste management company Pikitup but assured that measures are being taken to stabilize its operations.
Morelo stressed that under the metropolis' Transport Services Reform Programme, funding for fleet maintenance, fuel, landfill operations, and other necessary needs for garbage trucks is protected. He confirmed the resumption of waste collection on Tuesday after disruptions related to the organization's cash flow constraints. However, he admitted that deficiencies remain in the city's revenue collection systems that require modernization.
Despite existing challenges, Morelo highlighted that residents will continue to receive essential municipal services. He stated that service delivery remains the priority, and funds obtained through improved collections and cost reductions are directed towards protecting water supply, electricity, waste disposal, and public safety services.
The city is also attracting external funding for infrastructure investments. Specifically, for the modernization of City Power's infrastructure, a facility of €200 million (approximately R3.8 billion) has been secured from the German development bank KfW, and about R1.75 billion has been allocated for capital projects at Johannesburg Water.
Meanwhile, Morelo warned residents about a scheduled Rand Water maintenance shutdown on July 17th, which will affect water supply in a significant part of Johannesburg. The maintenance, planned from 7 am to 7 pm, may lead to reduced inflow into several Johannesburg Water systems, potentially causing low pressure or interruptions in areas including Sandton, Midrand, Randburg, Roodepoort, Soweto, Lenasia, and parts of the city center.
The Mayor frankly warned residents that recovery after the work concludes at 7 pm will not be immediate, as reservoirs and towers must be filled before normal distribution resumes. Therefore, residents should expect restoration over the next few days. He urged households to store sufficient water before the shutdown and conserve it to aid in restoring reservoir levels. Morelo concluded that Johannesburg is the country's economic hub, and while problems are real, they are surmountable, with the current situation characterized by discipline, transparency, and accountability.
