How Johannesburg can be pulled back from financial collapse: Helen Zille

Key topics:Credit downgrade and bond suspension halt new loans, raise interest costsLate audits, weak finances and R220bn backlog, falling capex spendingPoor revenue collection and political spending worsen service delivery.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Helen Zille.Just how bad is Johannesburg’s financial situation? On the face of it, bad, but not terminal. However, a deeper examination shows an unstoppable slide towards severe decline.The prospect looms of the city defaulting on its debt. While the national government is unlikely to let the city collapse completely, it does mean that services for residents are likely to get even worse.The latest move by the Global Credit Rating Company to downgrade the credit rating, even deeper into junk bond territory, came as the Johannesburg Stock Exchange suspended trading in the city’s bonds. The suspension means no new loans for the city. The downgrade means any loans that we do get thereafter will be at even higher rates of interest because the risk of collapse is seen as so much greater.The administration was supposed to have published its audited annual financial statements for the financial year ending June 2025 at the end of February. They did not appear, reportedly because of an argument with the Auditor General over the correct way to account for assets. There’s no clarity on when those statements will appear. Whether that is indeed why the statements are late or whether there is a deeper, more ominous reason, is something we don’t know. The problem is that even if this is correct, the credibility of Johannesburg as an entity that it is worth doing business with (and in) is further eroded..Read more:.Helen Zille’s high-stakes gamble: Can the DA take Johannesburg? - Nicholas Lorimer.Johannesburg cannot be fixed without money. The city is a massive undertaking with a budget of almost R90 billion. The financial position has steadily worsened under the ANC-led coalition. Underinvestment, aging infrastructure and poor spending performance have resulted in an infrastructure backlog of more than R220 billion. Despite this, the administration’s spending on capex is less now than it was seven years ago, with a roughly 22% decline since 2018.More and more tenuousThe overall position has become more and more tenuous since then. In 2018 the city’s creditors waited an average of 63 days for payment. The latest figures show that has continued to worsen and creditors now wait an average of 130 to 150 days for payment. Who wants to do business with a city where you have to wait nearly five months to get paid?The interest on these late payments has become a significant expenditure item on its own. The city incurred penalty interest charges of R720 million in the 2025 financial year due to creditors being aid late. The bulk of that interest on late payment relates to Eskom invoices.All this leads to a growing maintenance and expansion backlog and less and less cash to pay for it. In recent weeks the effect of this has been felt in water projects not completed on schedule because contractors were not paid, garbage going uncollected because there’ve been problems paying the landfill sites, and bus services being suspended because of non-payment. These are just a few of multiple examples.There are two big problems: Reckless spending, and poor revenue and debt collection.Johannesburg’s budget is packed with unnecessary items. Seven hundred political staff were simply absorbed onto the city payroll when they should have had their contracts terminated, because the parties they were working for lost power. They were given permanent jobs because they were affiliated to the ANC and its coalition partners.That type of free-spending is replicated in the expensive council catering, luxury vehicles and legions of bodyguards for even the least important politicians.There are also indications that the city is overpaying contractors who win tenders because of their political connections. This will require a full audit by an incoming administration.Collection is also weak. In December, residents, businesses, and government entities owed the city R71.9 billion in unpaid bills. More than 85% of that debt was more than a year old and at high risk of non-recovery.Far short of targetsIn the first half of 2025/26, the city billed R37.2 billion but collected only R31.9 billion. Collection rates fall far short of targets. The financial position continues to get worse with the shortfall requiring to be funded with increased borrowings at escalating interest rates.There’s no prospect of a turnaround under the current administration.The ANC/EFF/PA/Al-Jamah (+fractions) coalition just neatly demonstrated how it will use city money to stay in power. It approved a ten billion Rand payout to unionized workers to secure support for the coalition in the elections..Read more:.David Ansara: Despair (and hope) in downtown Johannesburg.It the face of such profligacy it is clear the only way to get Johannesburg out of this reckless spiral is to change the management of the city. That starts with a change in its politics, in other words a DA-led administration. Residents of Johannesburg will decide the fate of their city when they decide whether or not to vote, and who to vote for in the local government elections, most likely in November.If they opt for more of the same from the parties that rule currently, they can bid farewell to a city that has the money to maintain, repair and expand services. It is a stark choice..*Helen Zille is the DA’s 2026 Mayoral Candidate for Johannesburg..This article was first published by Daily Friend and is republished with permission.

How Johannesburg can be pulled back from financial collapse: Helen Zille

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