JOHANNESBURG: The mayor of Johannesburg has been asked to explain how South Africa’s richest city will recoup 24.4 billion rand of funds squandered in “unauthorised, irregular, fruitless and wasteful expenditure”.
Minister of Finance Enoch Godongwana has given Dada Morero 14 days to explain how he plans to fix the city’s finances, according to a letter dated July 30, and seen by Bloomberg.
The city may lose part of the funding it receives from the central government if Morero doesn’t comply with the request.
Home to some of the continent’s biggest companies and its largest stock exchange, Johannesburg has been struggling to maintain basic services.
Losing financing will further hit the city, poised to host leaders from the world’s biggest economies in November, where roads are riddled with potholes and its five million inhabitants have to suffer regular water and power outages as well as high levels of crime.
“The city has been exceptionally badly run,” said Tracy Ledger, a senior researcher at Johannesburg’s Public Affairs Research Institute. Johannesburg isn’t “spending the money where it is required. Against that standard, the city has failed”, she said.
President Cyril Ramaphosa’s government accounts for 15% of Johannesburg’s 89 billion rand budget, according to Chris Santana, a councilor for the Democratic Alliance (DA), the biggest opposition party in the municipal council.
Johannesburg is governed by a coalition led by Ramaphosa’s African National Congress and has been in disarray for years.
The city has had nine mayors since 2016, including two from the DA. “Johannesburg is now facing the gravest financial threat in its democratic history,” the DA said.
“If Treasury pulls back or suspends these funds, as the minister warns in his letter, the city’s ability to deliver the little basic services it is currently able to deliver, will collapse entirely.”
Godongwana didn’t specify when all the funds were wasted in his letter, but said that more than three billion rand pertained to the year that ended March 31, 2024. — Bloomberg
