Morero says political instability to blame for Joburg's financial woes
The finance minister recently wrote a scathing letter to Morero, threatening to cut off National Treasury funding if the city does not curb its excessive unauthorised, irregular, and wasteful expenditure.
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Since the 2021 local government elections, Johannesburg has had four different mayors, each with their own administration.
In an interview with EWN , Morero said things are expected to improve now that the city has a stable coalition government.
"We have also responded to the minister to say yes, the plans have always been there, except that there have been some weaknesses in implementation. For example, it took us longer to appoint a disciplinary committee, which we have now appointed and this was a result of change and instability of government, where you had changes that were happening constantly. Now that we have got a stable coalition, we are able to establish the disciplinary committee.'
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The Star
3 days ago
- The Star
Joburg mayor blames DA-led coalition as city faces R24. 4bn wasteful spending crisis
Simon Majadibodu | Published 7 hours ago Joburg Mayor Dada Morero has blamed the previous DA-led administration for the city's ballooning unauthorised, irregular, fruitless and wasteful expenditure, which has reached R24.4 billion over the past year. Speaking at a media briefing on Thursday, Morero confirmed he had submitted a comprehensive financial recovery plan to Finance Minister Enoch Godongwana, who had given the City of Johannesburg 14 days to respond after raising alarm over its financial mismanagement. This comes after Auditor-General, Tsakani Maluleke, flagged serious governance failures, including poor financial controls, weak revenue collection and chronic underinvestment. The National Treasury has cautioned that failure to resolve the crisis could result in the withholding of national grants. Morero said he received the letter from Godongwana on July 30, 2025, outlining the minister's concern over the city's ongoing non-compliance with the Municipal Finance Management Act (MFMA), specifically relating to unauthorised and irregular expenditure. 'The Honourable Minister requested that I respond within 14 days. I can confirm that I have now submitted a comprehensive response on behalf of the City of Johannesburg,' Morero said. The response, he said, includes a full account of the issues behind the R23.6 billion in unauthorised, irregular, fruitless and wasteful expenditure as reported in the city's 2023–2024 financial statements. Morero, who has served as mayor since August 2022, again blamed the Democratic Alliance-led coalition, which governed the city between 2016 and 2021. He previously served as an MMC for Finance at the metro in 2023. 'Our beloved city endured a period of mismanagement and poor leadership under the DA-led coalition. The R23.6 billion is a cumulative figure that increased progressively over several years, largely unaddressed and not regularised as required by the MFMA,' he said. He broke down the R23.6 billion figure, which includes R13 billion (55%) in unauthorised expenditure, R9.9 billion (42%) in irregular expenditure, and R735 million (3%) in fruitless and wasteful expenditure. Morero said most of the unauthorised spending, comes from bulk purchases of electricity and water that exceeded the approved budget. 'These bulk purchases are driven by resident consumption as well as both technical and non-technical losses during service delivery,' he said. Irregular expenditure mainly arose from procurement processes that failed to comply with supply chain regulations. 'It's important to clarify that irregular or unauthorised expenditure doesn't necessarily mean that the goods or services weren't received. It points to non-compliance in procurement procedures,' he said. Morero said to address these issues, he implemented key interventions including an enhanced expenditure reduction strategy focused on investigations, consequence management, and regularisation of non-compliant spending in line with MFMA Section 32.2. He said he also re-established the city's disciplinary board for financial misconduct and initiated criminal proceedings where necessary. 'In February 2025, I approached President Cyril Ramaphosa for technical support through the Presidential Working Group,' Morero added. He said the city also established a 'War Room' and introduced a 'Bomb Squad' to oversee financial recovery and monitor service delivery progress weekly. These interventions, he claimed, are beginning to show results. 'As of June 30, 2025, R12.9 billion of the R23.6 billion has been regularised. The balance of R6.7 billion is under investigation. The remainder has been investigated and is now being processed by municipal committees,' he said. Morero said he expects a 'significant reduction' in irregular expenditure in the city's 2024–2025 annual financial statements. He said the disciplinary board has completed preliminary investigations into six matters totalling R535 million, with outcomes to be presented to the Council during its next ordinary sitting. On July 31, the Council approved 12 further matters for investigation, amounting to R2.5 billion. These relate to alleged financial misconduct and unresolved unauthorised expenditure. Morero also claimed there were improvements in revenue collection through the War Room initiative, with the city achieving an 87% collection rate between April and June 2025 - a 2.7% increase from the same period last year. He said the city is now targeting a sustainable daily revenue collection of R200 million. 'The impact of the Presidential Working Group and Bomb Squad is beginning to be visible through accelerated service delivery,' he said. He said a new board has been appointed to oversee municipal entities, while oversight through the Group Audit Committees and the Mayoral Committee is being strengthened. He added, 'Reducing unauthorised, irregular and fruitless expenditure is now a key performance indicator for senior managers. The disciplinary board will continue expediting investigations into allegations of financial misconduct.' [email protected] IOL Politics
Daily Maverick
3 days ago
- Daily Maverick
Why foreign loans are a self-imposed straitjacket for SA's economy
Loans from international financial institutions are often celebrated as victories. But we need to ask what these loans are actually financing – and to whose benefit. The increased presence of international financial institutions in South Africa since 2020 should not be seen simply as a turn to cheaper lending. Rather, they are playing a key role in legitimising policy reforms that are aimed at dismantling state power over key economic resources, benefiting domestic and international capital. At first glance, it may seem like South Africa has caught a break. International financial institutions, most recently the World Bank and the African Development Bank (AfDB), have funnelled billions of dollars and euros in loans into the public purse. These loans have been provided at below market interest rates and with generous grace periods, at a time when the debt markets are charging the government a premium to borrow money. These loans are often celebrated in headlines as victories: ' South Africa secures World Bank funding ' or ' AfDB backs green growth reforms '. But we need to ask what these loans are actually financing – and to whose benefit. Curiously, these loans are not for the construction of bridges, roads, rail or tied to mega infrastructure projects such as Medupi. Moreover, according to the media statements and project documents published by the institutions, these loans are not intended to help South Africa refinance foreign currency-denominated debts. In other words, they cannot be regarded as an alternative to the high cost of market borrowing. Instead, these loans are meant to finance the legal and regulatory infrastructure deemed necessary to dismantle the state's control over key economic resources and often include policy conditions in their terms. National Treasury is therefore voluntarily approaching international financial institutions for money it could otherwise acquire elsewhere without the conditionality and political baggage associated with such borrowing. Reading the clues The first clue lies in how these loans are structured. They are neither earmarked nor set aside for a particular infrastructure project, as is often suggested by media reports. Instead, National Treasury classifies these loans as 'general budget support'. This means they are lumped together with all the taxes, market debt and government income generated in a fiscal year. While it is good for the government to have discretion on spending, as is allowed by general budget support loans, this is problematic where there is a hidden or contentious agenda behind the lending. Fortunately, reports provided by international financial institutions provide some more clues: in assessing South Africa's readiness for new loans, institutions evaluate the extent and speed at which the government has been undertaking policy reforms. Let's take the 2025 World Bank loan as an example. The loan agreement document explicitly states that the release of the $1.5-billion is conditional on the World Bank's satisfaction with the 'programme being carried out by the Borrower [Republic of South Africa]'. This 'programme' comprises several pillars largely related to legislative and regulatory changes that are designed to increase the role of the private sector. In the energy sector (pillar one), the World Bank cites the government's mandate for the National Transmission Company of South Africa (NTCSA) to enter into electricity transmission services agreements with independent transmission providers. This, it says, is to promote 'private sector participation' and acts as proof of South Africa's adherence to 'the programme'. Similarly, in the transport sector (pillar two), the government is commended for expediting the unbundling of Transnet through the Transport Economic Regulator Act of 2024. Self-imposed straitjacket That World Bank loan is not an isolated case. The recently approved $476.6-million loan from the AfDB follows the same pattern. The AfDB board was thrilled with the success of the previous $300-million 2023 loan, which they say 'delivered key reforms that bolstered financial stability and increased renewable energy capacity'. The project appraisal for the 2023 AfDB loan outlined the bank's specific contribution. It included its support for the Electricity Regulation Act, which, in their view, would 'provide the legislative framework to restructure and unbundle the electricity industry to create a modern and competitive sector, crowd in large investment into renewable energy, and establish a transmission system operator'. Unlike the classic 'structural adjustment' loans prevalent in the Global South following the 1980s, these loans are a self-imposed straitjacket on economic policymaking as well as an undoing of the developmental principles underpinning the establishment of the South African democratic movement. Government commitments to international financial institutions, as argued by the IMF, are viewed by global capital as a stamp of approval for a country's 'readiness' for investment. It assures the private sector that the government will not reverse its policy stance. No surprises Greater policy certainty is viewed as a precondition for crowding in private sector commitments. The push by the National Treasury and the Presidency to pass these reforms, all of which fall under the banner of Operation Vulindlela, should come as no surprise. Civil society and organised labour have consistently raised the alarm about the nature of these reforms and about whose interests they serve. The South African Federation of Trade Unions views Operation Vulindlela as 'a neoliberal structural reform agenda that is accelerating the privatisation of South Africa's public infrastructure'. The Congress of South African Trade Unions has also expressed concern about the ongoing unbundling of Eskom. Meanwhile, the Alternative Information and Development Centre has noted the link between the acquisition of these loans from international bodies and the acceleration of reforms proposed in Operation Vulindlela. It argues that it serves 'to satisfy the narrow interests of private investors and business elites at the expense of the public good'. In sum, for the National Treasury, the proliferation of foreign loans not only provides certainty to the market that reforms will be carried through and maintained, but also makes it difficult for dissenting voices to trigger policy changes. Ultimately, protecting South Africa's economic sovereignty means ensuring that the vision for our economy is shaped by the people the economy is meant to serve – that is the general public. This would necessitate opening up the space for Parliament and the public to scrutinise and debate the uptake of loans granted by international financial institutions, including their terms, conditions and long-term consequences. It is about ensuring that economic decisions reflect the needs and voices of the people above the preferences of markets or the priorities of lenders. The call by Parliament's Standing Committee on Finance for greater transparency – despite resistance from the National Treasury – must now be taken up more widely. Decisions about who controls our electricity grid, our ports, our budgets, and our future cannot be made behind closed doors. The time for making lending decisions that foreground the interests of South Africans is now. DM
eNCA
3 days ago
- eNCA
Joburg mayor blames billions in wasteful spending on utility costs
JOHANNESBURG - City of Johannesburg mayor Dada Morero blames the R23 billion irregular expenditure on electricity and water costs. The City is under pressure to get its finances in order and start delivering proper services to its residents. Finance Minister Enoch Godongwana wrote a scathing letter to the mayor, warning him to turn things around or face national intervention. "The R23.6 billion in unauthorised, irregular, and fruitless expenditure is a cumulative figure that has progressively increased in the City's financial statements over the years," he says. "During this time, these expenditures were largely unaddressed and not regularised as required by the MFMA," he added. Morero goes on to explain that most of the unauthorised expenditure is due to bulk purchases of electricity and water that exceeded the approved budget.
