Gauteng MEC for Finance, Nkululeko Dunga, aims to turn things around in the City of Johannesburg as Treasury raises concerns over wage deal
Image: X/EFF Gauteng
The Gauteng Provincial Treasury has formally intervened in the deepening financial crisis at the City of Johannesburg after National Finance Minister Enoch Godongwana threatened to withhold critical national funding from the metro due to repeated breaches of budget regulations as reported by IOL.
The intervention, led by Gauteng MEC for Finance Nkululeko Dunga, follows mounting concern over Johannesburg’s deteriorating financial position, including ballooning debt, cash flow pressures and what National Treasury describes as unlawful and unfunded expenditure commitments.
At the centre of the dispute is a controversial R10.3 billion wage agreement concluded with the South African Municipal Workers Union (Samwu), which Treasury has reportedly described as “illegally signed” and “unfunded”.
Minister Godongwana has warned Johannesburg Mayor Dada Morero that the city risks losing its equitable share allocation, a key national grant relied upon to fund basic municipal services.
The warning comes as Johannesburg’s finances appear to be under severe strain. Reports indicate that the metro owes creditors approximately R25.2 billion while holding only R3.9 billion in cash and cash equivalents.
Dunga’s spokesperson, Makatisha Reeva Mphulwane, said the MEC acknowledged the seriousness of the crisis and its growing impact on residents and businesses.
“The MEC fully appreciates the gravity of the situation and the direct impact that deteriorating municipal finances have on service delivery, infrastructure maintenance, payment of service providers, investor confidence, and the daily lives of residents across Gauteng,” Mphulwane said.
Provincial Treasury has identified several areas of concern within the city’s financial administration. These include weak revenue collection, persistent failures to pay suppliers within the legally required 30-day period, ongoing non-compliance with Municipal Standard Chart of Accounts regulations, and broader weaknesses in financial reporting systems.
Treasury also raised alarm over what it described as unaffordable financial commitments that “may further worsen the financial position of the City”.
Dunga, who was appointed in April as part of a provincial cabinet reshuffle, has placed Johannesburg’s financial recovery at the centre of his first 100 days in office.
Working through the Premier’s Coordinating Forum, the Gauteng government is now preparing a package of interventions aimed at stabilising municipal finances across the province, with Johannesburg expected to be the immediate priority.
“These interventions will focus on improving financial governance, revenue management, compliance with the MFMA, cash flow management, and restoring institutional stability,” Mphulwane said.
The threat to suspend Johannesburg's equitable share allocation could have devastating implications for the city’s nearly five million residents, many of whom are already dealing with collapsing infrastructure, deteriorating roads, power interruptions and ongoing service delivery failures.
MEC Dunga is expected to outline the province’s recovery plan and the extent of provincial financial oversight during a forthcoming media briefing as consultations with key stakeholders continue.
IOL News