The National Treasury was correct to sound alarm bells about Johannesburg’s chaotic finances. Now it needs to take appropriate action against those responsible for the deterioration in governance.
Last week, Enoch Godongwana, the finance minister, wrote a strong letter to Dada Morero, the embattled mayor of Johannesburg, warning against increasing governance deviations and threatening to withhold a grant to the city in July. A major concern for Godongwana was a wage increase deal entered into with the South African Municipal Workers Union (Samwu) last year.
Specifically, Godongwana is concerned that the wage agreement may be deemed unfunded. Samwu, which is aligned to the ANC, has labelled the minister a cowboy who has to be stopped.
The politically facilitated wage settlement was struck on the eve of the G20 leaders’ summit in Johannesburg to avert a threatened strike.
The city’s messy finances have already resulted in a credit rating downgrade. As well as the incidence of irregular, wasteful and fruitless expenditure, the city’s financial problems include its failure to collect revenues from residents and businesses. January’s collections were the lowest and there is no credible plan on the table.
Morero, who has yet to formally respond to the Treasury letter, claims Godongwana’s concerns were based on outdated financials from last year. He argues the latest financials show a better picture.
According to Morero, the R25bn owed to the city’s suppliers is now standing at R6.8bn. He also blames the economy’s underperformance for the city’s financial woes.
Since the letter was leaked, the two parties have met to begin finding each other. Only a written response from the city can address Godongwana’s concerns.
But residents and businesses of Johannesburg cannot be fooled by spin. Their lived experiences are real: poor service delivery, collapsing infrastructure, a water crisis and an unreliable electricity supply.
The letter has come at an inopportune time for the ANC as its electoral fortunes are continuing to dwindle ahead of the November 4 local government elections.
Morero, who lost his position as chair of the ANC in the Johannesburg region, is facing constant threats that he might be recalled.
The DA, which has been excluded from power-sharing arrangements in Gauteng, has seized upon Godongwana’s letter as campaign material.
Through Helen Zille, its mayoral candidate, the DA has filed court papers to get the city to release funds earmarked for its water strategy.
The government ― provincial and national ― has several levers it can use to get Johannesburg to mend its ways. Not all are ideal.
Already, the city is under some form of administration, albeit a lighter version. Months before the G20 meetings, President Cyril Ramaphosa appointed an intervention team to help Johannesburg.
The ANC also deployed a “bomb squad” to assist.
The two teams ought to have raised alarm bells much earlier before the house caught fire.
Godongwana’s threats to withhold further allocations to Johannesburg in July will only hurt long-suffering residents and businesses.
Equally, it will be disastrous for the government to dissolve the council a few months before the elections.
However, a compelling case for placing Johannesburg’s financial management under administration has been made by the ANC-led council. This will be a much more sensible path to take than disbanding the council and calling for fresh elections before scheduled ones.
If it turns out that Morero’s council is in the wrong and Godongwana is right, then action against him and his finance MMC should be taken. But residents and businesses should be spared from sanction.
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