Analysts warn Joburg service delivery crisis threatens SA’s economy

Political analysts have warned that the collapse of service delivery in Johannesburg, South Africa’s economic and financial hub, poses a threat to the country’s economic stability.

They say the upcoming municipal elections on November 4 will serve as a referendum on whether coalition governments can deliver or merely accelerate urban decay.

This comes after strike action by casual workers employed by Pikitup service providers, who last week demanded permanent employment contracts from the Johannesburg metro’s waste removal entity.

Waste removal services are affected across the city, including suburbs in Sandton, Africa’s richest square mile.

Pikitup spokesperson Anthony Selepe said on Monday the backlog in waste removal was being dealt with and should be cleared by the end of the week.

“The problem is casual workers contracted to Pikitup service providers. We don’t have a budget to absorb them, they must talk to their employers,” Selepe said, stressing that this was the second strike of 2026.

Johannesburg, which has a budget of R97.1bn for 2026/27, is battling a debilitating financial crisis that is threatening to cut the city’s power supply. The municipality owes Eskom R5.3bn.

The metro is technically insolvent as revenue collection levels do not meet budgeted targets, and it has an overexpenditure of about R3.9bn on employee-related costs, bulk electricity purchases, inventory consumed and operational costs.

The council’s finances are severely constricted, with poor revenue collection resulting in its failure to meet service delivery targets.

In April, GCR Ratings revised the city’s ratings outlook from stable to “rating watch negative” because of the metro’s delays in finalising its annual financial statements. The city, which has been battling water challenges, has an infrastructure backlog of more than R200bn. It owes Eskom R5.3bn plus a current account of R1.6bn.

The coalition choices that they [ANC] made are costing them dearly ... We have seen the effects of patronage, and the ANC has to be honest and make a shift from that to basic fiscal discipline.

—  Kelvin David Knowles

Business Day reported recently that Johannesburg’s financial challenges were starting to affect its bus services, as temporary service reductions on city routes will be implemented due to what it calls “sustained” budget reductions over several financial years.

Metrobus, which transports 12,000 to 16,000 passengers a day and was allocated an operating budget of R779m in the 2025/26 financial year, also blamed the rise in diesel costs.

The reductions came into effect on June 1. The metro has also hit residents with sharp tariff increases from July 1.

Political analyst Dr Kelvin David Knowles said the metro is in a quagmire of its own making as it has sacrificed “administrative stability for political horse-trading”.

“The coalition choices that they [ANC] made are costing them dearly. They are not trying to lose the upcoming election, but they are trapped in survival mode. We have seen the effects of patronage, and the ANC has to be honest and make a shift from that to basic fiscal discipline,” Knowles said.

The city’s current administration is “too politicised” and there needs to be a “complete financial reset. “We know Treasury has threatened to halt funding if the city goes ahead with its R10.3bn salary increase."

Finance minister Enoch Godongwana has threatened to withhold the July 2026 equitable share instalment of R8bn if the metro’s politically facilitated agreement with the South African Municipal Workers’ Union (Samwu) late in 2025 was not scrapped. The deal was aimed at aligning staff salaries with those in other metropolitan municipalities.

Knowles said revenue leaks, where billions are lost due to nonpayment of municipal bills, leaking pipes and illegal connections, must be addressed, “and the city cannot be turned around when half of its commercial products are stolen or wasted”.

Years of structural neglect have been worsened by the “chaos brought by coalitions”, he said.

“Joburg is one of the biggest contributors to GDP in South Africa. It’s rightfully labelled the economic hub of South Africa, when that fails, South Africa fails. Poor service delivery deters investment. What we are seeing in Joburg now is not just a municipal service hiccup. It is a critical threat to economic stability, not only for Gauteng itself but also [for the rest of country], so the upcoming elections that we are going to have are essentially a referendum on whether voters believe coalitions can govern or accelerate decay,” Knowles said.

Tshwane University of Technology political analyst Prof Levy Ndou said the city’s finances are largely attributable to the culture of nonpayment of municipal services, especially in the townships.

“How do you expect the city to generate revenue if people are not paying for services? It then becomes risky for Pikitup to just absorb people if you can’t sustain them,” he said. Political parties in a coalition had a tendency of “sabotaging each other”.

The lack of service delivery in the metro will have “serious implications on how people vote on November 4”, he said.

Political analyst Thabiso Maphosa said political parties in the Johannesburg coalition are now positioning themselves ahead of the elections and have already unveiled their preferred mayoral candidates.

“The coalition government must focus on service delivery rather than electioneering,” he said.

Johannesburg’s mayoral candidates include the DA’s Helen Zille, ActionSA’s Herman Mashaba, Rise Mzansi’s Lukhona Mnguni and the IFP’s Mlungisi Mabaso.

Mnguni said: “Rise Mzansi is contesting the local election in Joburg because the city is too big and important to fail. Its failure will have a negative effect on both the country and the continent. One of the issues we are putting forward is that of leadership and coalition stability — as Rise Mzansi, we believe we can play an important role in both leading the city and the inevitable 2026 coalition government. We are reliable and trustworthy and put residents first. We are the answer to the question of ‘what comes after the ANC?’”

The Gauteng department of co-operative governance and traditional affairs has been allocated a budget of R680.5m for the 2026/27 financial year, with the biggest slice of R295.9m directed at fixing local government.

Gauteng Cogta MEC Jacob Mamabolo told Business Day recently he will not put the Johannesburg metro under administration because it is working “hard” to tackle its governance failures and financial challenges.

Johannesburg metro group finance communications director Kgamanyane Maphologela said the city’s 2025/26 third-quarter performance report demonstrates steady improvements in key financial indicators, stronger departmental performance and improved revenue collection. It also shows the implementation of a comprehensive financial turnaround framework “designed to restore long-term financial sustainability and strengthen service delivery”.

“The city collected approximately R15.38bn during the third quarter, while the collection rate increased from 82% to 83%. Average daily revenue collections exceeded target at approximately R205.1m per day, and year-to-date billing reached 100.4% of budget. Property rates revenue also outperformed budget by approximately R495m, representing a positive variance of 3.64%,” Maphologela said.

“The city is also implementing structural reforms through metro trading services reform, phased ring-fencing and revenue sharing agreements to improve financial transparency and operational efficiency.”

UPDATE: July 6 2026

This article has been updated with comment from Rise Mzansi.