Democratic Alliance Johannesburg mayoral candidate Helen Zille has revealed a leaked letter from Finance Minister Enoch Godongwana warning that the City of Johannesburg is effectively bankrupt and faces having more than R8-billion in national funding withheld unless it immediately addresses serious financial violations.

In the letter to Johannesburg Mayor Dada Morero dated 23 April, Godongwana revealed that the city owes creditors R25.2-billion whilst holding only R3.9-billion in cash and cash equivalents, leaving a R21.3-billion shortfall.

The minister’s letter states that the city has violated laws governing municipal finances and that these illegal actions have the “potential to destroy the sustainability of the City of Johannesburg beyond this term of Office as well as the negative impact on the national economy at large.”

Godongwana has given formal notice that National Treasury will invoke Section 216 (2) of the constitution and withhold Johannesburg’s allocation under the Division of Revenue Act if the city fails to “remedy this situation with immediate effect”. The move would particularly affect subsidised service delivery to the poor.

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Major financial crisis

The financial crisis has crippled the city’s ability to repair and maintain infrastructure, resulting in consistent power and water outages and the steady collapse of service provision.

Zille said the minister’s intervention vindicated her party’s warnings. “The Democratic Alliance has been warning for more than three years that the City was headed for a major financial crisis,” she said.

The minister’s letter follows several recent financial setbacks for the city. The Agence Française de Développement refused a second loan of R2.5-billion after the city failed to comply with conditions attached to an earlier loan granted in 2024. The Johannesburg Stock Exchange suspended the city’s bonds for failing to submit audited annual financial statements on time, whilst Moody’s has warned of further credit rating downgrades.

In his letter, Godongwana detailed specific financial transgressions, including:

• The March adjustment budget being unfunded, constituting unauthorised expenditure despite Treasury warnings.
• Failure to comply with Municipal Regulations on the Municipal Standard Chart of Accounts.
• Failure to prevent unauthorised, irregular, fruitless and wasteful expenditure.
• Violation of the Municipal Finance Management Act by not paying creditors within 30 days of receiving invoices.
• Unlawful introduction of a politically facilitated agreement on wage adjustments into the adjustment budget, which the minister instructed the city to stop implementing.

Zille said the DA would pursue corrective measures under Section 32 of the Municipal Finance Management Act and seek to hold councillors who supported the illegal decisions personally responsible for recovering money lost to the city.

Section 21 (1) of the MFMA states that “political office-bearers or officials who deliberately or negligently permit such expenditures are personally liable.”

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