Finance minister Enoch Godongwana has read the riot act to Johannesburg mayor Dada Morero over the city’s chaotic finances, threatening to partially withhold Treasury funding if he fails to take decisive remedial action.
The letter this week came as some of the smaller parties in the ANC-led coalition running the city demanded that Thapelo Amad of Al Jama-ah — who served a disastrous three-month term as mayor in 2023 — be put in charge of the metro’s purse strings as MMC for finance.
So parlous are the city’s finances that the council’s Johannesburg Property Co wants to review the leases of iconic greenbelt clubs such as Marks Park and the Killarney Country Club to “optimise” their use and squeeze more money out of them.
In a scathing letter to Morero on July 30, Godongwana slammed the mayor for “persistent noncompliance” with the Municipal Finance Management Act (MFMA) and failing to curb unauthorised, irregular, fruitless and wasteful expenditure.
Godongwana detailed how in financial 2024 the municipality racked up a whopping:
- R1.4bn in unauthorised expenditure;
- R22bn in irregular expenditure; and
- R705m in fruitless and wasteful expenditure.
The minister told Morero the metro, which has an annual budget of R89bn, had taken “little to no action” to address this problems.
The mayor has 14 days to come up with a plan to remedy the shortcomings and act against the officials responsible for the mess.
“I have been advised of numerous engagements between National Treasury and the municipality,” Godongwana said in his letter.
“However, despite these engagements, there has been no tangible reduction in the reported [unauthorised, irregular, fruitless and wasteful expenditure]. You are therefore required to provide reasons for the failure to comply with sections 32, 62 and 78 of the MFMA.
As a mayor, you are requested to take all the necessary steps to rectify the situation ... Officials from my department will continue to monitor actions taken by your municipality to address unauthorised, irregular, fruitless and wasteful expenditure
— Finance minister Enoch Godongwana to Joburg mayor Dada Morero
“As a mayor, you are requested to take all the necessary steps to rectify the situation. Your response must also outline a plan of action to address the failure to implement the necessary consequence management against the responsible officials, including any councillors who may have contributed to the failure.”
Godongwana told Morero that failure to act will have dire consequences.
“Officials from my department will continue to monitor actions taken by your municipality to address unauthorised, irregular, fruitless and wasteful expenditure. Failure to address these expenditures will prompt the National Treasury to invoke section 216(2) of the constitution due to the municipality’s persistent failure to comply with ... the MFMA.”
Section 216 (2) empowers the Treasury to stop the transfer of funds to an organ of state if it has committed “serious or persistent material breaches” of financial management legislation.
The minister also referred to the latest report on the metro’s financial statements by the auditor-general, for financial 2023, whose verdict was “unqualified with findings with eight material irregularities issued”.
Reports earlier this year quoted the AG as saying the city’s employees “are not capable, productive, or effective in managing the complexity of the issues ... Water and electricity infrastructure may deteriorate to such an extent that short- and long-term demands cannot be met.”
The AG’s report noted “the city has struggled with timely instituting of consequence management” for many years.
“As a result, there were instances where investigations were not performed at all and in other instances where investigations were performed, disciplinary action was not yet taken,” it said.
The city’s service delivery failings — which include frequent, widespread water supply cuts — have raised the concern of President Cyril Ramaphosa, who is due to host the G20 summit in Johannesburg in November. During a visit in March, Ramaphosa said he was “not very pleased” with what he had found.
Belinda Kayser-Echeozonjoku, head of the DA caucus in the council, told the Sunday Times the Treasury’s threat to withhold money had serious implications.
“Johannesburg’s budget is funded through a mix of grants, loans and conditional grants,” she said. “Conditional grants, which form a significant portion of the city’s funding, can only be spent on what they are intended for. If Treasury pulls back or suspends these funds, the city’s ability to deliver the little basic services it is currently able to deliver, will collapse entirely.”
Kayser-Echeozonjoku said her party had “consistently warned both the national government and mayor Morero about the financial rot” and provided “clear recommendations to restore fiscal discipline”.
“The DA has sent letters to the National Treasury, outlining that those heading up key departments were not doing their jobs, and warning of a total lack of consequence management in Joburg.
“Leaving the ANC in Joburg to do as they please will now come back to bite residents. We are pleased, however, to see that the minister of finance agreed with the DA’s summation of what’s been going on,” she said.
The mayor, who is running the the finance portfolio from his own office, has promised to announce a new finance MMC in the coming days
Morero had not responded to requests for comment at the time of publication.
Councillors from the ANC and its coalition partners are now squabbling over who should fill the post of finance MMC, which has been vacant for a month since the former incumbent, Margaret Arnolds of the African Independent Congress (AIC), was elected council speaker.
A faction of the ANC in Johannesburg wants Morero to appoint Loyiso Masuku as his new MMC. But he is said to be reluctant to elevate Masuku to the powerful position as he views her as a political rival ahead of the party’s upcoming regional conference.
The mayor, who is running the the finance portfolio from his own office, has promised to announce a new finance MMC in the coming days.
In a letter to Morero this week, coalition members including the AIC, UDM and Al Jama-ah urged him to appoint Amad to the post in line with their power-sharing agreement.
“While the minority governing parties welcome the recent election of [Arnolds as] the speaker, we wish to place on record that the speaker was nominated by the ANC and not the minority caucus,” the letter said. “As such, it cannot be construed as compensation or a replacement for the finance portfolio. We hereby recommend Thapelo Amad to be appointed as MMC for finance.”
Amad’s short-lived tenure as major ended in humiliation when he resigned in April 2023 days ahead of a no-confidence vote.
The DA said at the time the coalition then running the administration, combining the ANC, EFF and PA, had “sabotaged service delivery and placed their personal interests above the interest of Johannesburg residents” by backing the “puppet mayor”.
“They suspended investigations into corruption that had been initiated under the DA multiparty coalition and reinstated officials accused of corruption,” it said.
Another stain on the council’s image came last month when police found Kenny Kunene of the PA at the Sandton home of murder accused Katiso Molefe. Kunene, deputy president of the party, stepped down as transport MMC.
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