A financial spiral has left Joburg Metropolitan Trading Services trapped in a cycle of underinvestment, infrastructure decay and declining revenue, undermining the city’s water security, parliament heard.
The portfolio committee on water and sanitation heard from National Treasury and the Auditor‑General SA (AGSA) that municipalities receive less than 10% of national revenue, yet inefficiencies in metros are estimated at more than R25bn. In Johannesburg, the situation is compounded by a sweeping arrangement dating back to 2002, under which surpluses generated by Johannesburg Water are transferred into the city’s main account. While the city’s books reflect a R4bn loan owed to the utility, this is not liquid cash, leaving Johannesburg Water unable to pay contractors or sustain capital projects.
AGSA reported that in its audit sample, about 30% of payment delays were attributable to the sweeping mechanism, while 70% were linked to internal inefficiencies within Johannesburg Water. Officials stressed that these figures were sample‑based and not a full‑system measure. The consequences are visible in halted infrastructure upgrades, delayed payments to emerging contractors and communities reliant on water tankers. Treasury officials characterised the current grant system as “tantamount to putting money into a leaking bucket”, noting that more than R60bn in grants directed to the sector had yielded poor value for money. They emphasised that trading services such as water, electricity, sanitation and solid waste must be managed as integrated utilities capable of generating surpluses for reinvestment, rather than fragmented entities with split responsibilities between municipal corporate functions and operational units.
The committee was told that Johannesburg Water has begun implementing reforms by reintegrating staff and functions previously absorbed into the city’s core administration, resulting in improved collection rates. However, its liquidity remains constrained. At the end of June, Johannesburg Water reported outstanding creditors of R25bn, while the city later reported R11bn in September. Treasury flagged these figures as inconsistent, and MPs called for clarification. The Treasury conceded that no national policy currently governed sweeping arrangements, and guidelines were still being developed to regulate such practices. The absence of ring‑fenced funding has left contractors unpaid and projects stalled, with direct implications for service reliability.
The DA alleged that mayor Dada Morero diverted R10bn from essential water and roads projects to fund a wage agreement with the SA Municipal Workers’ Union. This claim has been reported in the media but was not part of Treasury’s or AGSA’s formal briefing to the committee. Opposition MPs argued that such decisions compounded the city’s fiscal risks and widened the financial black hole already created by the sweeping arrangement. The DA has written to the Treasury requesting a full breakdown of diverted funds, an investigation into legality, and an assessment of stalled projects. The mayor has not responded to repeated parliamentary questions on whether R4bn was redirected from Johannesburg Water, further fuelling concerns about transparency and accountability.
Ministerial representatives reminded the committee that amendments to the Water Services Act were intended to professionalise utilities and introduce licensing and performance‑based contracts. They stressed that Johannesburg’s infrastructure decay posed risks not only to residents, but also to investor confidence, with the Treasury warning that poor water performance detered international investment in the city.
The department of water and sanitation confirmed that the revival of the Blue Drop and Green Drop reports, alongside institutional reforms, was central to restoring service reliability.
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