Why JOBURG is on the edge of collapse

No matter the sums, the City of Joburg is in the grip of its worst financial crisis in living memory. It is a metropolitan government that is, by any possible measure, insolvent. Here are the raw numbers:

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• A clandestine R3-billion emergency loan to keep the doors open.
• R5.2 billion in debt to Eskom that has put the city’s electricity supply at risk.
• Controversial R10-billion wage deal condemned as illegal by the Finance Minister.
• And a creditor’s bill that’s ballooned to R25 billion.

JOBURG IS IN TROUBLE

That’s right, earlier this year, Joburg quietly took out a R3-billion short-term loan to pay salaries and keep the lights on. Worse still, the loan was never approved by council and was only revealed matter-of-fact through audited financial statements. Aforementioned financial statements, when finally made public, were grim reading.

At the end of December 2025, the City of Joburg was spending just over R1 billion-more per month than it was collecting. Its bank balance fell from R3.3 billion in November to R2.1 billion in December 2025. And only 26% of its capital expenditure budget had been spent by then, despite several entities burning through their budgets at alarming rates.

MASSIVE DEFICITS REMAIN

For example, several City of Joburg entities sit deeply in the red:

• City Power sits R19 billion in deficit.
• Johannesburg Development Agency is R2 billion in the red
• The Joburg Social Housing Company is also R2 billion in the red.
• Metrobus is R695 million in deficit.
• The Metropolitan Trading Company is R871 million in arrears.

As such, revenue collection remains a chronic problem in the city, with the collection rate falling well below its 88% target:

• Consumers owe R57 billion in total.
• While commercial enterprises owe R11.5 billion.
• And even state entities are behind by R2.4 billion.

ESKOM ULTIMATUM TO JOBURG

Eskom is extremely serious about disrupting the flow of electricity of debt arrears are not paid. Image: File

Worse still, the financial crisis took a fresh twist last month when Eskom issued a formal notice to City Power. It warned it would interrupt or terminate bulk electricity supply to parts of Johannesburg unless debts are resolved. In turn, Eskom confirmed that the city owes R5.2 billion in arrears. This is on top of a further R1.5-billion current account due this month, June 2026.

Only a last-minute intervention by Electricity and Energy Minister Kgosientsho Ramokgopa produced a short-term resolution. The arrangement is, from 1 July 2026, all electricity revenue collected by the City of Joburg will be ring-fenced and channelled directly to the state entity of Eskom. Thus, the city has until 8 July 2026 to clear its arrears, or face disconnections. Meanwhile, City Power blames its financial dysfunction on a culture of non-payment, billing failures and illegal connections.

CONTROVERSIAL WAGE DEAL COULD SEAL JOBURG’S FATE

However, the final nail in the coffin may be an ‘illegal’ wage deal signed back in November 2025. The South African Municipal Workers’ Union (SAMWU) threatened to disrupt the G20 Leaders’ Summit in Johannesburg last year. As such, the city of Joburg hastily signed a wage agreement worth R10.3 billion over two years.

Finance Minister Enoch Godongwana response was scathing. In a letter from April 2026, he directed the city to stop the implementation immediately. He described it as having the “potential to destroy the sustainability of Johannesburg and negatively impact the national economy at large.” The minister threatened to invoke section 216(2) of the Constitution to withhold Johannesburg’s R8-billion July 2026 equitable share instalment.

So, what happens next for Africa’s once-wealthiest city? Well, a full collapse of the City of Joburg would have consequences far beyond its borders. But what do you think can be done to save it? Let us know in the comments section below …

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