{"id":806568,"date":"2025-01-14T17:00:00","date_gmt":"2025-01-14T15:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=806568"},"modified":"2025-01-14T17:09:54","modified_gmt":"2025-01-14T15:09:54","slug":"south-africas-richest-city-bankrupt-joburg-mayor-and-finance-mec-respond","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/806568\/south-africas-richest-city-bankrupt-joburg-mayor-and-finance-mec-respond\/","title":{"rendered":"South Africa’s richest city bankrupt \u2013 Joburg mayor and finance MEC respond"},"content":{"rendered":"\n

Gauteng\u2019s financial troubles have sparked widespread concern, with both the provincial government and Johannesburg\u2019s leadership urging prudent budget management to avert potential disaster. <\/p>\n\n\n\n

Although fears of bankruptcy have been downplayed, the region faces significant challenges that demand immediate and sustained attention.<\/p>\n\n\n\n

In September 2024, Gauteng MEC of Finance Lebogang Maile issued a sobering warning about the province\u2019s financial state, highlighting the possibility of bankruptcy as early as June 2025 if fiscal discipline is not enforced. <\/p>\n\n\n\n

At the heart of the crisis is the Department of Health, identified as a major contributor to Gauteng\u2019s financial woes. <\/p>\n\n\n\n

The department\u2019s persistent non-compliance across several critical areas\u2014including grant management, revenue management, procurement, and asset management\u2014has created a substantial drain on the province\u2019s resources. <\/p>\n\n\n\n

These issues are further compounded by population growth, urbanisation, and migration, which exacerbate the strain on healthcare and education.<\/p>\n\n\n\n

Maile acknowledged that the province\u2019s financial outlook is dire, with Gauteng\u2019s budget expected to shrink by R50 billion over the next five years. <\/p>\n\n\n\n

The influx of 230,000 people annually\u2014placing additional demands on schools, hospitals, and other essential services\u2014has made the situation even more challenging. <\/p>\n\n\n\n

He emphasised that while Gauteng\u2019s R169 billion budget is substantial, it must be managed wisely to address these pressures effectively.<\/p>\n\n\n\n

Speaking with SABC News<\/a>, Maile sought to clarify that Gauteng is not on the brink of bankruptcy\u2014despite his earlier warnings. <\/strong><\/p>\n\n\n\n

He stressed the importance of contextualising the province\u2019s financial challenges, noting that while insolvency is not imminent, urgent measures are required to ensure fiscal sustainability. <\/p>\n\n\n\n

Proposed strategies include improving revenue collection, exploring new investments, and enhancing asset management to bolster the province\u2019s financial position. <\/p>\n\n\n\n

Maile\u2019s frank acknowledgement of the crisis, coupled with his proposed solutions, has been met with cautious optimism. <\/p>\n\n\n\n

However, the depth of the problems, particularly in the Department of Health, remains a significant hurdle.<\/p>\n\n\n\n

Adding to the financial challenges are lingering issues such as the e-toll debt and broader national budget cuts, which have further strained provincial resources. <\/p>\n\n\n\n

Maile warned that without decisive action, Gauteng could face a budget deficit of R6 billion by next year, underscoring the need for a clear understanding of the root causes of the crisis before implementing solutions.<\/p>\n\n\n

\n
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Johannesburg\u2019s mayor, Dada Morero<\/em>.<\/figcaption><\/figure><\/div>\n\n\n

Johannesburg\u2019s mayor, Dada Morero, has also weighed in on the financial difficulties the city is facing.<\/strong><\/p>\n\n\n\n

Speaking to eNCA<\/a>, he refuted claims that Johannesburg is bankrupt, emphasising that the city consistently meets its financial obligations, including paying salaries and medical aid contributions. <\/strong><\/p>\n\n\n\n

However, Morero acknowledged that the city\u2019s expenditure currently exceeds its income, with a revenue collection rate that has dipped to 86%. <\/p>\n\n\n\n

This imbalance, he noted, necessitates immediate action to stabilise the city\u2019s finances. Departmental CFOs have been urged to reduce expenditure, and efforts to enhance revenue collection are underway.<\/p>\n\n\n\n

While the city\u2019s financial position is not ideal, Morero maintained that Johannesburg remains financially stable and is actively working to address its fiscal challenges.<\/p>\n\n\n\n

Experts like Professor Mark Swilling of Stellenbosch University have pointed out that Gauteng\u2019s financial troubles are not new but have reached a critical juncture. <\/p>\n\n\n\n

Swilling highlighted entrenched corruption within the Department of Health, describing it as a deeply rooted issue linked to what he called a \u201csyndicate.\u201d <\/p>\n\n\n\n

This corruption has had severe consequences, including the loss of whistle-blowers\u2019 lives, and represents a form of state capture that continues to undermine the province\u2019s financial stability.<\/p>\n\n\n\n

Despite these challenges, Maile remains confident that Gauteng can avoid financial collapse. <\/p>\n\n\n\n

He cited promising strategies for increasing revenue, such as improved tax collection and new investment initiatives, as potential lifelines for the province. <\/p>\n\n\n\n

While these assurances have provided some relief, they come against a backdrop of escalating public concern. <\/p>\n\n\n\n

Gauteng\u2014home to South Africa\u2019s economic hub\u2014cannot afford a collapse in service delivery, making the stakes of the current financial crisis extraordinarily high.<\/p>\n\n\n\n

Both Maile and Morero have called for disciplined and strategic budget management to navigate these turbulent times. <\/p>\n\n\n\n

The financial challenges facing Gauteng and Johannesburg are steep, but with careful planning and decisive action, they believe a path to stability remains achievable. <\/p>\n\n\n\n

However, restoring public trust and addressing systemic issues, particularly in the health sector, will be crucial for the long-term sustainability of the province and its municipalities.<\/p>\n\n\n\n

\n\n\n\n

Read: Government\u2019s plan to save 100,000 jobs in South Africa<\/a><\/strong><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Gauteng\u2019s financial troubles have sparked concern, with the provincial leadership commenting on whether the province faces bankruptcy.<\/p>\n","protected":false},"author":92,"featured_media":806612,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[541,21400,21401,853],"class_list":["post-806568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-bankruptcy","tag-gauteng-mec-of-finance","tag-johannesburg-mayor","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/806568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=806568"}],"version-history":[{"count":12,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/806568\/revisions"}],"predecessor-version":[{"id":806862,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/806568\/revisions\/806862"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/806612"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=806568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=806568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=806568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}