Expert: Joburg budget exposes deep financial crisis

Added: 2026-05-28

[00:00:00]Johannesburg Finance MMC, Loyiso Masuku, today presented a 97.1 billion rand budget for the 2026-2027 financial year. This was during a council sitting this afternoon. This marks a notable increase from last year's 89.4 billion budget.

[00:00:19]Masuku says the city is expecting a healthy operating surplus with revenue exceeding spending. She adds that the capital budget stands at 8.8 billion rand and is expected to grow significantly over the medium term to support infrastructure investment.

[00:00:40]Our operating revenue is at 90.4 billion.

[00:00:45]Operating expenditure 88.3 billion.

[00:00:49]Projected surplus 2.1 billion.

[00:00:52]Capital budget 8.8 billion, which will rise to 2.5 2.5 25.3 billion over the medium term.

[00:01:03]Madam Speaker, we are tabling a total budget of 97.1 billion for the 2026-2027 financial year for the residents of Johannesburg.

[00:01:19]Let's speak now to a governance expert from the Vaal University of Technology, Vuk'ani Masungwini. Vuk'ani, a very good afternoon to you. Thanks very much uh for your time. Well, the MMC for finance in the city of Johannesburg projecting a rather positive image of both the current state of affairs, but also of uh the future.

[00:01:48]Uh yes, yes. Good afternoon, uh Vuyo, once more, and good afternoon to the viewers at home. Um a very important day for the residents of Johannesburg and the stakeholders within the city of Johannesburg.

[00:02:03]Uh the budget speech has outlined, you know, a number of characteristics. So, you would um have acknowledged that um the budget speech or the mayor at the time when she was articulating, she touched on the basis that uh the city, you know, has a debt obligation of that exceeds about 220 billion.

[00:02:25]Uh that is no old to Eskom, Renault, and other infrastructure backlogs. So, this tells you that the city has, in fact, serious financial constraints and financial instabilities. From this, uh it's a strong message to society that the municipality is not able to manage its finances very well.

[00:02:46]And um you would see that they have high, you know, financial pressure and liquidity risk coming from the fact that um their cash or cost uh coverage is sitting at about, I think, 9.8 days with a benchmark of um uh 30 to 90 days. You have issues such as, you know, your your large infrastructure uh backlogs, you have heavy credit obligations, you have also uh constraints on borrowing capacity.

[00:03:19]So, this tells you that uh the city, in fact, has high financial pressure and financial constraints. But, the most interesting part is that they have also outlined a number of, you know, uh governance reforms that the budget speech has outlined. For example, your procurement discipline, your anti-corruption measures, uh your consequence management, your performance monitoring uh processes, and also strengthening internal controls to ensure that the uh you know, governance processes are strengthened within the municipality.

[00:03:54]So, uh, I was I was also very interested on the issue of the revenue outlook. So, it has projected revenue outlook of about 90.4 billion with the projected also the projected, um, the projected, uh, operating expenditure of 88.4 billion. This tells you that the municipality uh, projects to spend about uh, 97% of its operating revenue on operating expense. That tells you that most capital budgets uh, would suffer because they would channel most of their uh, you know, operating uh, uh, expenses or operating revenue towards operating expenses.

[00:04:42]But on a can we on the basis of, uh, I mean, those reforms um, you are talking about and the projections, um, that, uh, the MMC spoke to. Can is it realistic or will it be realistic to expect, um, a healthy operating surplus uh, with revenue exceeding spending?

[00:05:08]Given the history of this of this municipality.

[00:05:12]Yes, you can tell even from the numbers that some of, you know, the commitments that are made by the city are not feasible or they're not achievable on the basis that uh, you would see that most of their revenue, in fact, in terms of revenue collection, they are very low.

[00:05:29]Uh, they would not be able to achieve any surplus. This budget speech, in fact, sets a political tone and sort of a manifesto towards these elections because most of their outlined commitments would not be achieved. Look, you look at their capital budget.

[00:05:47]Approximately 39.9% of their capital budget is loan funded, whereas they have you know, borrowing constraints in terms of capacity. So, this tells you that the municipality in fact might have tabled a budget speech that perhaps would speak a political or set out a political tone, but from the feasibility prospect, it's not achievable most of the things that they have said. I mean, you can't have about 97% of your of your operating revenue channeled on operating expenses. What happens to capital expenditures that you're supposed to carry throughout? And capital expenditures we're speaking about infrastructure development, human settlement development, and other infrastructure-related projects. Cuz if you look at for example, I'll show you a general example. If you look at your townships such as Ivory Park and Alexandra, those townships are squalor's total. And the the the municipality or the city has never outlined a clear program on how to address the problems in those squalor's. They would continue to have high crime rate. They would continue to have dilapidated infrastructure from road and housing.

[00:07:04]You would continuously have a high crime rate in those townships because the city does not pay special attention in developing a infrastructure and also dealing with the human capital question in those townships.

[00:07:20]I mean, there's there's when you read out this budget, there's no clear commitment in addressing, you know, challenges in in in Alexandra and many other underdeveloped, you know, townships within the Joburg metro metro or city. So, Vuyo, most the the the the biggest problem we have with municipalities it's a politically orientated space where commitment are made, but when you look at the financial feasibility, it's impossible to achieve some of these things. They are sitting with a wage bill agreement with uh organized labor of about uh 10.3 billion for 2026.

[00:08:07]That is not achievable with the outlook of their projected budget.

[00:08:11]So, this tells you that it's it's it's just setting a political statement, but when you look at their financial viability, some of these things will not be achieved and will go back to these things of having municipalities not being able to deliver basic services.

[00:08:32]Now, doesn't this I mean create a problem or is it uh what's the way to put it? Is it not going to uh uh come back and bite the the the administration because if as you say um it's a bit um unrealistic, commitments are made that the municipality will in all likelihood not be able to deliver on? Do we then get surprised when people rise up um demanding uh that um the the municipality deliver the services that it is often unable um to deliver on? And mind you, there's elephants in the room here.

[00:09:15]Um your Eskom situation, which the municipality or the city is yet to negotiate and agree upon with um with your with your with your with with your with your Eskom. And uh such issues uh do pose a a a serious problem, don't they?

[00:09:35]Yes, true. They Indeed, they do that because the municipality in fact from what you could see when they outlined that they have an exceeding, you know, a debt obligation of about 220 billion.

[00:09:48]It shows that the municipality does not have a clear plan or the city does not have a clear plan on how to best service their debts, which would result to some of their accounts being attached if it pushes to that extent. And again, you also look at how they have attributed or allocated the 7.2 billion into safety and law enforcement. Uh John, the city of Johannesburg, it's the harbor of illegal trading, you know, where counterfeit products are sold, where buildings are hijacked, less collection of revenue when it comes to certain properties. This shows you that the municipality matter in fact has allocated a limited budget to deal with major problems within the city. I mean, the issue of illegal trading and not being able to collect, you know, revenue from different premises or properties within the Joburg city tells you that the municipality does not have a clear plan on how they are going to deal with law enforcement, and they have financial constraints to deploy enough law enforcers such as JMPD to enforce bylaws, to also deal with hijacked buildings. It's It's very sad, and it's going to lead to a situation where at the end of the financial year, the city has not achieved its commitments.

[00:11:10]Well, we shall see as the situation develops what will become of the promises that were made today by the MMC in her speech. There's still the wage agreement that Treasury has told the city it is unable to afford, yet the city did enter into agreement with SAMWU on that matter.