Who wants to be Joburg mayor?

If you were about to take over as the CEO of a major enterprise with a R90bn budget, wouldn’t you do some due diligence before applying for the job? You’d want to know (in some detail) what you’re dealing with, who you report to, what their plans are and who your team is likely to be. Most importantly, though, you’d want to know that you’re joining a going concern with a future – and, if it’s broken now, you’d want to agree on what it will take to fix it, and whether it can be fixed at all.

A recent letter sent by the finance minister to Joburg mayor Dada Morero suggested that the city is bankrupt. That’s pretty serious stuff. The mayor denied this on the grounds that the figures on which the assessment was based were a year out of date. I doubt the figures have got any better. I’ll bet they’ve got worse.

In the 2024/25 financial year, with liabilities of R25.2bn and R3.9bn cash on hand, Joburg was not in a position to settle its amounts due. Now, Eskom is threatening to cut electricity supply if the R5bn-odd owed to it is not settled. Of course they’ll cut a deal, because Joburg is too big to fail – but it may also be too broken to fix. So what then? Joburg is already controlled by its creditors. Even the smallest creditor can precipitate bankruptcy, in the same way that even the smallest political coalition partner can hold sway, exercise undue influence and block or enable decisions.

Joburg appears bereft of competent expertise and leadership, and it cannot meet its financial obligations as they fall due – it is both politically and economically bankrupt.

An overindebted entity

To avoid actually filing for bankruptcy, you can  – before resorting to such desperate measures as compromising creditors, like they did at the Post Office – approach your shareholders, for which National Treasury is the proxy here. Or you could borrow more money to pay your bills. It seems unlikely that Joburg would be successful in trying either.

When we talk about over-indebted government entities – be they state-owned entities, municipalities or whatever – the discussion usually centres around their debt pile, its cost to service and the likelihood of it ever being repaid, rather than the root cause. And it seldom centres on the future prospects for the entity’s primary source of capital: profit on revenue.

Joburg’s conundrum is that it isn’t providing its citizens with primary goods and services at a standard they feel is worth paying for, and it is unable to differentiate between (or discipline) good and bad customers. This leads to a mixed bag of ballooning debtors (which have to be funded with debt), and it doesn’t provide the city with the revenue necessary to maintain and build the infrastructure and repair services to a level that the people (who could) would be willing to pay. Just another death spiral among the many Joburg has to deal with. I’m afraid the upgrades will have to come before people will be happy to pay.

Behind the numbers

The picture is bleak, as just a small selection of numbers bandied about will confirm.

Joburg’s 2025/26 budget is R89.4bn (R80.7bn operations; R8.7bn capital). The total infrastructure backlog is R220bn, according to Morero (Helen Zille reckons it could be as high as R300bn). This includes water infrastructure at about R30bn and fixing roads at R115bn. R80bn has been spent so far on the bus rapid transit system (launched in 2009, presumably to be ready for the 2010 Soccer World Cup – and still going nowhere) … and so on.

Not only is the list endless, but the numbers, on even the most superficial reckoning, don’t make sense or bear any semblance to logical analysis applied at fair market values. Politicians nonetheless seem to just accept them at face value. Maybe they just don’t know better? And these numbers are supposedly before corruption, skewed tenders (to incompetent or fictitious suppliers), outright stealing and the displays of downright ignorance by council on how to run a sustainable business enterprise.

Show me a forecast that works. Calculations – not promises.

Beyond party politics

Worse still, if the numbers are actually right, then Joburg will never, ever, earn its way out of this mess. We do not even have a funded budget for next year, let alone a surplus to start applying to the backlogs.

I don’t understand how anyone can take on the job of major without a due diligence on the practical possibility of its rescue and sustainability while standing on a box promising prosperity? If you don’t have such a plan within your understanding and execution capacity, then why are you up for the job?

Get a very smart finance team to do the homework and cut a deal with National Treasury before you start, and then go out and get the top professionals across a variety of disciplines that you’ll need to have a hope in hell of executing the plan.

Joburg will not survive a party-political coalition government made up of politicians who aren’t qualified to do the job and who spend most of their time focused on arguing with and blaming each other for the mess they inherited, instead of getting on with tidying it up.

ALSO READ:

• Why Godongwana had to rebuke Morero on Joburg’s debt crisis
• Political suicide for the ANC in Joburg
• State of the city: thoughts and prayers for Joburg

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