Tackling a decade of financial mismanagement

Johannesburg Mayor Dada Morero has formally responded to Finance Minister Enoch Godongwana, addressing the city’s staggering R23.6 billion in unauthorised, irregular, and fruitless expenditure. The response, submitted within the 14-day deadline, lays out challenges inherited from previous administrations, steps taken to correct financial mismanagement, and a plan to strengthen accountability.

Speaking at a media briefing on 14 August 2025, Morero highlighted that while historical mismanagement—particularly under the DA-led coalition—has created these financial woes, his administration is implementing a series of interventions, including a newly established disciplinary board to investigate misconduct.

Background: A warning from National Treasury

Johannesburg, home to over five million residents and South Africa’s economic heartbeat, has struggled with poor financial governance for years. In a 30 July 2025 letter, Minister Godongwana flagged the city’s repeated failure to curb unauthorised, irregular, and wasteful spending, threatening to withhold conditional grants if recovery plans were not submitted.

The 2023/24 audit revealed R2.77 billion in new unauthorised expenditure, R1.98 billion irregular, and R1.47 million fruitless, adding to cumulative totals of R4.4 billion unauthorised, R7.9 billion irregular, and R81.9 million fruitless. Auditor-General Tsakani Maluleke criticised the city for lacking basic skills to compile accurate financial statements despite being the largest city in Africa, highlighting weak internal controls, inadequate infrastructure budgeting, and rising consumer debt.

Breakdown of the R23.6 billion

Morero provided a detailed breakdown:

• R13 billion (55%): Unauthorised expenditure, mainly bulk electricity and water purchases exceeding budget due to technical and non-technical losses (like theft and leaks).

• R9.9 billion (42%): Irregular expenditure, mostly procurement without full supply chain compliance.

• R735 million (3%): Fruitless and wasteful spending, including penalties and interest on late payments.

Government departments owe Johannesburg roughly R1 billion, and revenue losses from illegal connections and meter tampering continue to strain finances.

Measures to restore financial order

Morero outlined a multi-pronged approach:

• Enhanced Reduction Strategy: Timely investigations, consequence management, and regularisation of expenditures under MFMA Section 32(2).

• Disciplinary Board: Chaired by independent expert Dumisani Ramoni, including city officials and a Treasury representative. The board has already investigated R535 million across six preliminary matters, with 12 additional cases worth R2.5 billion under review.

• Presidential Support: A Presidential Working Group and rapid-response “Bomb Squad” were deployed to accelerate service delivery and support turnaround efforts.

• Finance War Room: Weekly monitoring of the turnaround strategy, boosting revenue collection to 87% for April–June 2025 and reaching R200 million daily in July.

• Governance Reforms: New entity boards, expenditure reduction KPIs for managers, legal recovery procedures, and monthly Section 71 reports to Treasury.

Morero noted that R12.9 billion of the R23.6 billion has been regularised, leaving R6.7 billion under investigation, with expectations of further reductions in the next audit.

Public and political reactions

While Gauteng Premier Panyaza Lesufi praised the administration for progress, opposition voices, including DA caucus leader Belinda Kayser-Echeozonjoku, warned that withholding Treasury funds could collapse essential services, from pothole repairs to water and electricity provision, potentially jeopardising Johannesburg’s preparations for the G20 summit in November 2025.

Journalists pressed Morero on disciplinary board transparency and whether the ANC-led coalition has done enough to address service delivery gaps. Morero reassured that the board operates independently, with Treasury oversight, and highlighted ongoing operations like Operation Vulindlela to recover government arrears and stabilize revenue.

The city’s roadmap includes reducing losses from bulk utilities by 10% this financial year, regularising all remaining unauthorised and irregular expenditure, and maintaining weekly progress reports to Treasury. Morero insists Johannesburg can overcome these inherited financial challenges while strengthening governance, improving service delivery, and preparing for international scrutiny during events like the G20 summit.

{Source: Central News}

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