Borrow now, pay later: Joburg’s budgetary balancing act

Three months ago, the City of Joburg took out a R3bn short-term loan to pay salaries and operational costs. Only, the loan – due in June – was not approved by council.

Were it not for that loan, the city would have been bankrupt; a December balance sheet shows more money going out than coming in. It’s indicative of the precarity of Joburg’s finances.

On February 26, a report on the loan was tabled in council, along with financial statements for September, October, November and December.

That same day, most city councillors voted salary increases for themselves, with executive mayor Dada Morero getting an extra R64,987 per annum – from R1,585,052 to R1,650,039.

The vote to increase salaries was supported by 98 councillors from the ANC, African Heart Congress and African Independent Congress. Eighty-five councillors from the DA, Freedom Front Plus and EFF voted against it, while 30 ActionSA councillors abstained from the vote.

‘Deliberately withholding information’

Freedom Front Plus councillor Cor Boer has questioned the terms of the loan and the interest rate, as the meeting was the first time the councillors saw the loan details.

“You cannot save a city from bankruptcy by just borrowing more money,” he said. Still, he noted: “If it was not for the loan, the city’s bank account would have been empty, and it would not have been able to even pay salaries at the end of December.”

Boer serves on the council’s section 79 oversight committee, which monitors the executive, reports on performance and holds departments accountable. Despite the central role it plays, the committee had not been informed of the loan.

“I am convinced that the leadership of the municipality is deliberately withholding information from the section 79 committee. The committee met a week before the council meeting and none of the financial reports were made available to us. What is the purpose of discussing a September report five months later, in February,” Boer asked.

“The MMC for finance [Loyiso Masuku] claims that the R3bn loan was approved by the council last year. This is not true. A three-year capital spending and loan plan was approved in council last year, but that does not give anyone a blank cheque to incur loans as and when they deem fit. Every loan, and the terms and conditions thereof, must be approved by council.”

A city under strain

The R3bn loan for operational expenses highlights the fragility of the city’s financial position. At the end of December 2025, this was the financial picture for some City of Joburg entities:

City Power: R19.6bn in the red
Joburg Development Agency (JDA): R2bn in the red
Joburg Social Housing Company: R2bn in the red
Metrobus: R695m in the red
Metropolitan Trading Company: R871m in the red

The city is spending just over R1bn more than it collects in income – which explains why its bank balance decreased from R3.3bn at end-November to R2.1bn at end-December.

According to the city’s business model, key cash generators are City Power, Joburg Water, Pikitup, and rates and taxes. These fund the overall operations of the city. But seven of Joburg’s entities were already over budget by the end of December.

December was also the halfway mark in the current financial year, and financial statements show that only 26% of the capital expenditure budget had been spent so far. This despite the capex budget financing crucial items like new reservoirs, bridges and buildings. The 2025/26 budget is R89.4bn.

City Power has spent 39% of its budget, Joburg Water 37%, Pikitup 18%, Joburg Roads Agency 35% and Metrobus 4%. The JDA has spent 111% of its budget.

Under-collecting

According to Boer, the city is not collecting all the revenue that is billed. The collection rate for December 2025 was only 82.7% – way below the target of 88%. In November it was even worse, at 80.3%.

“Non-revenue water and electricity expenses are going up. The cost of buying electricity in bulk is much more than the increase in revenue from electricity. For water there is a decrease in revenue, but an increase in costs,” he said.

The statements also show just how much is owed to the city, with consumers owing R57.7bn, commercial enterprises R11.5bn and state organisations R2.4bn.

To try and claw back what it is owed, the city identified 4,146 electricity accounts for disconnection. These accounts collectively owed R2.7bn. There were 2,070 accounts paid up, amounting to R99m in revenue for City Power.

More than 5,000 water accounts, owing R1.8bn, were identified for disconnection. A total 1,096 accounts were paid up, amounting to R40.6m in revenue for the city.

Joburg Water’s revenue collection was 6% below budget, which the city attributes to reduced water consumption, “likely resulting from water throttling, prevailing economic pressures, increased conservation behaviour, and persistently high levels of non-revenue water”.

In addition, growth in the customer base remains constrained by limited water availability, which continues to impede new developments, the statements noted.

A major cost driver was public safety VIP salaries and overtime payments made to employees across the city. Additional over-expenditure was also incurred within the department of public safety due to increased overtime allowances during the period.

This story was produced by Our City News, a non-profit newsroom that serves the people of Joburg.