The City of Johannesburg is facing a deepening financial crisis as Finance Minister Enoch Godongwana warns Mayor Dada Morero about the deteriorating state of the municipality's finances.
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Finance Minister Enoch Godongwana has written to Johannesburg Mayor Dada Morero over the municipality’s continued violations of the Municipal Finance Management Act (MFMA) and the failure to prevent and address unauthorised, irregular, fruitless, and wasteful expenditure.
In a letter dated April 23, 2026, Godongwana told Morero that he had observed serious violations of various legislative and regulatory compliance requirements under the MFMA, suggesting deterioration in the City of Johannesburg's governance and overall financial health.
Godongwana said the outstanding amount owed to creditors has increased from R17 billion in 2022/23 to R25.2bn in 2024/25, while the city's cash and cash equivalents of R3.9bn in 2024/25 are insufficient to repay the outstanding creditors of R25.2bn.
“This is a marker of severe financial distress, indicating that the city does not have the liquidity required to pay its creditors,” he said.
In addition, Godongwana warned that there is an imminent unsustainable salary adjustment after the city signed an agreement with the SA Municipal Workers’ Union (Samwu) in November 2025, committing to R10.3bn in salary increases over the next two years to address a wage dispute.
“Given that the city is in financial distress, it is unclear how it intends to fund these salary increases over the medium-term expenditure framework,” he said.
Samwu raised serious concerns about the recent intervention by the Treasury regarding the implementation of the politically facilitated agreement concluded between the union and the municipality.
“The union rejects both the substance and political posture underpinning this intervention, which amounts to a dangerous encroachment into collective bargaining and municipal labour relations,” Samwu stated.
According to the minister, there was over expenditure of R3.9bn by the end of January this year that was spent on employee-related costs, bulk purchases of electricity, inventory consumed, and operational costs.
He said the projected revenue improvements are not being sustained, thereby putting at risk any expenditure matched against such revenue.
Godongwana also stated the Johannesburg Roads Agency (JRA) spent R708.6m on engineering services and bulk services, which is not backed by cash in the agency’s bank account.
He said the reduction of R979.6 million in the equitable share allocation (not included in the draft adjustments budget approved by council in March), in the National Treasury letter to City Manager Dr. Floyd Brink in November last year, the amount has been amended to R455.9m and the letter to the city manager dated March 19.
Godongwana raised concerns over the continued non-compliance of the city with municipal regulations on Municipal Standard Chart of Accounts (mSCOA).
“The city remains unable to transact and report fully through an mSCOA-compliant financial management system, as required by the mSCOA regulatory framework,” he said.
The minister continued: “The National Treasury notes with concern the continued non-compliance of the city with mSCOA Regulations. The city remains unable to transact and report fully through an mSCOA-compliant financial management system, as required by the mSCOA regulatory framework.”
Godongwana said it must be emphasised that an annual budget in terms of the MFMA may only be funded from realistically anticipated revenues to be collected and cash-backed accumulated funds from previous years' surpluses not committed for other purposes.
“The adjustments budget was assessed by the National Treasury to be unfunded, revenue collection was overstated, while expenditure was understated. The understating of expenditure will mostly result in unauthorised expenditure by June 2026, which will put further financial strain on the municipality,” he explained.
DA Joburg mayoral candidate Helen Zille said the party will first have to put together an adjustment budget that is funded and realistic.
“I will call in senior officials in the Treasury who are responsible for municipal finance to help us,” she said.
Morero said he had a conversation with Godongwana last Friday and will have a formal engagement with him.
“The minister has a responsibility to from time to engage municipalities,” he said.