{"id":864921,"date":"2026-06-29T14:30:00","date_gmt":"2026-06-29T12:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=864921"},"modified":"2026-06-29T14:03:23","modified_gmt":"2026-06-29T12:03:23","slug":"5-days-away-from-disaster","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/864921\/5-days-away-from-disaster\/","title":{"rendered":"5 days away from disaster"},"content":{"rendered":"\n

The City of Johannesburg’s cash coverage has slipped to around 5 days\u2014and declining\u2014against the National Treasury’s norm of one to three months (30 to 90 days).<\/p>\n\n\n\n

Broadly, cash coverage in budgeting measures financial resilience, indicating how many days operations can be funded using only available cash and investments.<\/p>\n\n\n\n

In 2024\/25, the city was already falling behind at 17 days. <\/p>\n\n\n\n

By March 2026, this had deteriorated even further to approximately 5 days, with the city indicating that this was still declining.<\/strong><\/p>\n\n\n\n

The information was flagged in the city’s Financial Turnaround Framework, which the city council has prioritised and fast-tracked to address various issues flagged by the National Treasury.<\/p>\n\n\n\n

In the document’s summary of the city’s financial position, it laid bare the realities facing South Africa’s richest city\u2014including a R2.1 billion unfunded gap in its budget flagged by Treasury for 2026\/27.<\/strong><\/p>\n\n\n\n

While the city has highlighted “headline” progress on its finances over the years, it conceded that this comes with a long list of caveats.<\/p>\n\n\n\n

The 2024\/25 financial year showed that the city recorded a net surplus of R1.643 billion and total revenue of R81.1 billion, reflecting 10% year-on-year growth.<\/p>\n\n\n\n

This came with a collection rate of 85.9%, and cash and cash equivalents improved to approximately R4.0 billion from R2.2 billion in the prior year. <\/p>\n\n\n\n

These results showed that the city has a significant revenue base, and that “targeted intervention can produce measurable fiscal improvement within a single financial year,” it said.<\/p>\n\n\n\n

However, the report added that the surplus was achieved in part through the drawdown of a R2.5 billion short-term facility from the Development Bank of Southern Africa and a R412.7 million deferred tax credit.<\/p>\n\n\n\n

Neither of these is sustainable cash generation, it said.<\/p>\n\n\n\n

In 2024\/25, repairs and maintenance remained at approximately 4% of property, plant and equipment\u2014half the 8% norm. <\/p>\n\n\n\n

The gross consumer debtors’ book grew by R10.2 billion in a single year to R71.8 billion, with 90% aged beyond 91 days. <\/p>\n\n\n\n

Non-revenue water stood at 45%, representing approximately R3.8 billion in lost water revenue annually. Electricity losses remain at approximately 30%, representing approximately R5.7 billion in lost value.<\/p>\n\n\n\n

In the 2025\/26 financial year, the situation continued to decline. <\/p>\n\n\n\n

“By February 2026, the city was carrying an operating deficit of R418 million against a budgeted surplus of R1.1 billion,” it said.<\/p>\n\n\n\n

“Total expenditure [is] running R2.3 billion above budget and cash declining from R1.8 billion to approximately R1.4 billion,” it said.<\/p>\n\n\n\n

Notably, the National Treasury’s formal assessment of the 2026\/27 Draft MTREF identified a R2.1 billion unfunded budget gap.<\/p>\n\n\n\n

The national finance department has now placed the city under formal corrective scrutiny\u2014and rating agency Moody’s has placed the city’s Ba3 rating under review for possible downgrade.<\/p>\n\n\n\n

The city is at risk of losing billions of rands in national grants if it does not turn things around.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Rush to comply<\/h2>\n\n\n\n

During its 24-25 June Council meeting, the city prioritised the adoption of several documents requested by National Treasury, to avoid being cut off.<\/p>\n\n\n\n

These include:<\/p>\n\n\n\n

    \n
  • A revised strategy to reduce unauthorised, irregular, fruitless and wasteful expenditure (UIFWE);<\/li>\n\n\n\n
  • The regularisation of almost R920 million in historical irregular and unauthorised expenditure;<\/li>\n\n\n\n
  • The Financial Turnaround Framework for 2026\/27 to 2028\/29; and<\/li>\n\n\n\n
  • Governance reforms required under Treasury’s Metro Trading Services Reform Programme.<\/li>\n<\/ul>\n\n\n\n

    However, according to civil action groups, Joburg Crisis Alliance (JCA), WaterCAN and JoburgCAN, the fast-tracking of policies to assuage National Treasury is not the same as actually turning things around.<\/p>\n\n\n\n

    “The City has already declared R3.636 billion in new unauthorised, irregular, fruitless and wasteful expenditure during the current financial year,” the groups said.<\/p>\n\n\n\n

    “Simply regularising past expenditure does not improve governance or remove the obligation to hold those responsible accountable.”<\/p>\n\n\n\n

    Business Leadership South Africa (BLSA) chief executive, Busi Mavuso, has also cast doubt on the city’s seriousness in addressing its growing crisis.<\/p>\n\n\n\n

    Mavuso noted that business groups, including BLSA and BUSA, reached out to the city’s executive and the provincial government, looking for ways to support Joburg’s turnaround.<\/p>\n\n\n\n

    However, this was not acknowledged, nor any response given.<\/p>\n\n\n\n

    “I have raised the alarm directly. Sadly, there wasn’t even the basic decency to acknowledge my letter, let alone respond to it,” she said.<\/p>\n\n\n\n

    “BUSA reached out to Johannesburg mayor Dada Morero, and that effort was also not successful.”<\/p>\n\n\n\n

    Mavuso stressed that the city is a “national economic asset of the first order”, and that its collapse would constitute a national emergency.<\/p>\n\n\n\n

    “The city is home to 70% of South African company head offices and produces 16% of national GDP. When Johannesburg falters, the whole economy feels it,” she said.<\/p>\n\n\n\n

    She added that the city is not poor\u2014it is poorly managed. <\/p>\n\n\n\n

    Fixing it requires stable and honest leadership, a focused effort to root out criminal syndicates, the restoration of water and electricity services, and a credible financial recovery plan, she said.<\/p>\n\n\n\n

    “It can be done. Johannesburg has faced crises before and emerged from them. Business is ready to support that turnaround. What we need now is a government partner willing to show up.”<\/p>\n\n\n\n

    The full Financial Turnaround Framework can be read below:<\/p>\n\n\n\n