South Africa’s economic powerhouse in deep trouble
Gauteng Finance and Economic Development MEC Lebogang Maile says the province faces bankruptcy by as early as June 2025 if the government isn’t careful following R15 billion in budget cuts.
In a recent media briefing on Wednesday (25 September), Maile laid bare the financial crisis gripping Gauteng, singling out the Department of Health as the most significant contributor to the province’s monetary woes.
Maile made it clear that the department’s consistent non-compliance across all critical areas has pushed it to the forefront of financial mismanagement in the region.
The issues extend to grant management, revenue management, procurement, contract management, asset management, and human resources.
According to Maile, each of these failures is symptomatic of a larger problem: corruption.
Maile voiced his frustration, identifying corruption as a root cause of the health department’s dire financial situation.
This is not a new problem for Gauteng’s government, but its seriousness now threatens to unravel the province’s entire financial stability.
Despite this department being flagged as particularly problematic, Maile admitted that other fiscal threats loom large, including the lingering e-tolls debt and broader national budget cuts.
For the 2024/25 fiscal year, Gauteng’s budget stands at R165.8 billion. However, this figure is expected to shrink as national budget cuts deepen.
According to Maile, the province faces immediate reductions of around R15 billion, with long-term cuts possibly totalling as much as R35 billion over the next five years.
These cuts alone significantly strain the provincial purse, but the situation is exacerbated by the R20 billion debt the provincial government owes for e-tolls, with the first instalment due imminently.
In his briefing, Maile explained the weight of these pressures, stating, “That is what we are dealing with. I thought I should explain the dilemma that we are in; there are difficulties, and we have to deal with these things.”
The financial outlook is so severe that Maile warned of a potential collapse, suggesting that if the provincial government does not exercise caution and vigilance, Gauteng could be running a deficit as large as R6 billion by next year.
He issued a stark warning about the possibility of bankruptcy if urgent measures aren’t taken to rein in spending and improve revenue collection.
Mark Swilling, a professor of Sustainable Development at Stellenbosch University, also weighed in on the province’s predicament.
Speaking to Newzroom Afrika, Swilling explained that Gauteng’s financial troubles have been festering for years, and the province is now reaching a critical juncture where national government bailouts are no longer an option.
However, Swilling also noted that Maile’s frank acknowledgement of the crisis was a refreshing change from the usual evasions of responsibility, saying, “Maile is acknowledging the problem, that something needs to be done, and issuing a warning that the writing’s on the wall.”
Swilling didn’t mince words about the scale of the corruption within the Department of Health, describing it as an entrenched problem deeply tied to what he referred to as a “syndicate” at large.
He went so far as to characterise this as another form of state capture, one that has already cost the lives of whistle-blowers and threatens the safety of others.
The revelations of endemic corruption within the department only add to the daunting task facing Gauteng’s leadership as they try to restore financial order.
Despite the grim warnings of a potential financial “day zero” next June, Maile remains confident that the provincial finances can be brought under control.
He emphasised that Gauteng is not on a completely unsalvageable course, highlighting that there are still avenues for increasing revenue.
“We [the provincial government] are running a tight ship; there are several promising collection proposals and investments that seem promising with respect to generating the money that we need,” Maile said.
These include proposed strategies to improve tax collection, explore new investments, and manage assets more efficiently, all of which could help cushion the province against further economic shocks.
While Maile’s assurances have provided some relief, they come against a backdrop of escalating public concern.
Gauteng, home to South Africa’s economic hub, cannot afford to experience a collapse in service delivery.
Maile was quick to reassure the public that the provincial government was doing everything within its power to avoid such a catastrophe.
The financial challenges are steep, but the MEC maintained that his administration is working diligently to ensure that the crisis does not derail essential services or lead to a complete financial collapse.
Read: One of the big SOEs declares massive dividend in South Africa
Loading ...
