Masuku in Wonderland over Joburg’s crisis

If cognitive dissonance were a person, it wouldn’t be a stretch to suggest that it might be the City of Joburg’s deputy mayor, Loyiso Masuku. 

Masuku also happens to be the head of Joburg’s finances and, most likely, the ANC candidate to replace Dada Morero as mayor in the November local government elections. She is a lifer in the party, with stints in various municipalities and Women’s League roles and, last year, she defeated Morero to become regional chair of the ANC in Joburg. 

Yet the prospect of her heading any city administration is frightening when you consider how she seems to regard it as a laudable and exceptional achievement that the city has finally got its act together to publish its (much belated) annual report and financials.

In her Alice in Wonderland view, the dismal financials – which received a qualified audit and were so behind schedule that the JSE had to suspend trade in Joburg bonds – somehow “signals to rating agencies, investors and residents that the City of Joburg is stabilising governance, strengthening financial reporting, and accountability”.

This, Masuku claimed loftily, is a “step forward in restoring investor confidence and market credibility”, while the focus remains on “ensuring every rand delivers value for the residents of Joburg”.

That is some heavy lifting that those belated financials are doing. But she is evidently living in la-la land if she truly believes her administration has been a careful custodian of public funds.

The sad story is laid bare in those financial statements. Let’s start with “unauthorised expenditure” – spending that either blows through the budget or falls outside the approved budget. This comes to a dizzying R9.1bn for Joburg for the year ended June 2025 – more than 10% of the metro’s entire budget. 

Now, some “unauthorised expenditure” in any year may later be “regularised”, or it can be certified as “irrecoverable” and written off. Which is just as well for the city because in those most recent financials, Joburg wrote off no less than R18.5bn in unauthorised expenditure, having entered the year with a balance of R13bn.

Then, of course, there is “irregular expenditure” – spending that’s not in line with legislation and is not condoned by the Municipal Finance Management Act, a gap in which many a corrupt deal can lurk. For 2024/25, that came in at about R3bn. But after a R4.4bn write-off, the cumulative total sits at R9.3bn.

The silver lining you might argue is that “fruitless and wasteful expenditure” – just sommer wasting ratepayers’ money – came in at only R938m for the year.

On these three measures, the city played fast and loose with R13bn of public funds. So remind us, Loyiso, about that public finance management.

And that’s only the beginning. Elsewhere, there is the R2bn cost of the physical losses of water due to leaks (no less than 23.7% of the water bought from Rand Water), and R790m lost thanks to illegal water connections and metering issues. As it is, Joburg loses north of R5.6bn (30%) of the electricity it buys from Eskom (when the city actually pays the utility, that is, bearing in mind the outstanding R5.2bn bill.)

So, taken together, water and electricity losses accounted for a round 10% of the 2024/25 budget. Consider that when you get your new utilities bill, and see that water has been hiked 12.5% and electricity 8.6%.

Given this gruesome picture, it’s no wonder that the auditor-general (AG) has found the city is hitting just 36% of its infrastructure development and refurbishment targets, and 40% of its sustainable service delivery targets. Colour me surprised.

Collection crisis

These aren’t the only horrors. Much of the city’s parlous position – other than the hoary old beasts of corruption, inefficiency and ineptitude – is also due to its inability to collect revenue. It is, put politely, about as effective as a square wheel.

Consumer debt owed to Joburg sits at R71bn – R10.9bn of which is over a year old. And of this, the city expects it won’t be able to recoup R59bn, since this is classified as the “allowance for impairment”.

The disaster, at least in part, can be attributed to leadership instability that has weakening accountability in the metro, according to an AG presentation to parliament this week. 

“While the city has implemented financial stabilisation and recovery initiatives … these interventions have not yet resulted in material improvement,” the presentation notes. “Its financial health remained concerning due to liquidity pressures, high debt and inability to timeously collect revenue. Ongoing lapses in budget discipline, revenue and asset management continued to put pressure on cash flows and constrained the city’s ability to fund service delivery and infrastructure adequately.”

So it is no surprise, really, that Joburg is suffering liquidity problems, leading AG Tsakani Maluleke to express doubt over its ability to continue as a going concern in her audit of the metro. By way of example, she highlights the fact that debt exceeds 45% of the city’s total operating revenue.

You’d think that, as finance MMC, Masuku would have a more astute handle on the enormity of the problem than most. Apparently not. Instead, she appears to be emblematic of the politicians that have driven Joburg into the ground: stubbornly trying to sell the fiction that this is a stable and thriving city when all indicators suggest the opposite. 

ALSO READ:

• Who wants to be Joburg mayor?
• Why Godongwana had to rebuke Morero on Joburg’s debt crisis
• State of the city: thoughts and prayers for Joburg

_{Top image collage: Pexels/sherissa; Rawpixel; Currency.}