Treasury is right to hold back Joburg's funding. Now the City must prove it can deliver

The Organisation Undoing Tax Abuse (OUTA) welcomes National Treasury’s decision to temporarily withhold grant funding from the City of Johannesburg and other municipalities that have repeatedly failed to comply with the Municipal Finance Management Act (MFMA). Treasury’s action demonstrates that persistent financial mismanagement can no longer be tolerated and that municipalities must meet the standards of sound financial governance before receiving further public funds.

Treasury has made it clear that the withheld allocations will only be released once municipalities demonstrate that they have credible funded budgets, realistic financial recovery plans, payment arrangements with major creditors such as Eskom and Rand Water, and tangible measures to address unauthorised, irregular, fruitless and wasteful expenditure.

Following Mayor Dada Morero’s media briefing today, OUTA notes the City’s assurance that it is now meeting Treasury’s conditions and that its revised budget is fully funded. The Mayor further stated that, once the withheld grant funding is released, the City will immediately settle outstanding debts owed to Eskom and Rand Water while implementing stronger financial controls and governance reforms.

While these commitments by Mayor Morero are encouraging, they are merely words. The City has made similar assurances before, while its financial position has continued to deteriorate.

“The Mayor has outlined what appears to be a sensible roadmap, but Johannesburg residents have heard similar commitments over several years while service delivery has steadily declined and the City’s financial position has worsened,” said Wayne Duvenage, OUTA CEO.

OUTA remains unconvinced that the City has demonstrated the political will required to implement the difficult reforms necessary to restore financial stability, more so in light of the fact that Dada Morero has his eye on the exit door, regardless of who comes into power to manage the City of Joburg after November 4th.

Of particular concern is the absence of meaningful consequence management. Despite Treasury again identifying Johannesburg’s budget as unfunded and highlighting ongoing governance failures, there has been no announcement of changes to executive leadership, utility boards or senior management structures that have presided over this decline.

“One cannot continue to promise a different outcome while leaving the same governance structures and leadership entirely intact,” said Duvenage. “Restoring confidence requires more than revised budgets and recovery plans. It requires visible accountability for those responsible for the decisions that brought the City to this position.”

OUTA is also concerned that the City’s proposed recovery remains heavily dependent on the release of Treasury’s withheld grant funding to settle overdue debts. Sustainable financial recovery will require far more than an injection of cash and additional loans which will plunge the city into a deeper debt crisis. It demands structural reforms to revenue collection, expenditure controls, procurement oversight, contract management, maintenance planning and transparent financial reporting.

Residents have borne the consequences of the City’s deteriorating finances through worsening infrastructure, recurring electricity and water disruptions, declining road maintenance, unpaid service providers and increasingly unreliable municipal services.

“The real measure of success will not be today’s announcements, but whether residents begin to experience a municipality that pays its creditors on time, maintains its infrastructure, spends public money responsibly, tackles corruption in many of its departments and delivers reliable services,” said Duvenage.

OUTA therefore welcomes Treasury’s decision to maintain firm oversight and urges National Treasury not to release the withheld funding until it is fully satisfied that Johannesburg has demonstrated genuine compliance with all of the prescribed conditions.

“This cannot become another exercise in producing recovery plans that look impressive on paper but fail in implementation,” said Duvenage.

“Johannesburg has reached the point where transparency, decisive leadership and real consequence management are no longer optional—they are essential if the City is to regain the confidence of residents, investors, creditors and National Treasury.”

Supporting Documents

A soundclip from Wayne Duvenage, OUTA CEO is here in English and Julius Kleynhans, OUTA  Executive Manager: Support Services here in Afrikaans 

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