South Africa’s National Treasury has escalated pressure on the City of Johannesburg after Finance Minister Enoch Godongwana ordered Mayor Dada Morero to immediately suspend a controversial 10.3 billion rand wage agreement that officials believe the metro cannot afford.
The dispute has intensified concerns about governance, financial instability and the long-term sustainability of South Africa’s largest city, which remains the country’s economic hub.
In a strongly worded letter, Godongwana warned that the salary agreement could push Johannesburg deeper into financial distress and potentially create broader economic consequences beyond municipal government.
The wage deal was reportedly negotiated between the city administration and the South African Municipal Workers’ Union ahead of upcoming G20-related events, amid fears of labour unrest and protests.
Treasury officials, however, argue that Johannesburg’s finances are already under severe strain and that the municipality lacks the budget capacity to fund the agreement legally.
Treasury threatens funding action
Godongwana accused the city of approving expenditure despite an adjustment budget that is already considered unfunded under the Municipal Finance Management Act.
He described the decision as financially reckless and instructed the mayor to stop implementing what Treasury considers an unlawfully signed agreement.
The minister also warned that failure to comply could trigger constitutional measures that would directly affect Johannesburg’s future funding allocations from the national government.
According to Treasury, the city’s problems extend far beyond the wage dispute itself.
The letter outlines several concerns, including underperforming revenue collection, persistent weaknesses in cash flow reporting and failures to comply with municipal accounting regulations.
Officials also raised concerns about delays in paying creditors within the legally required 30-day period — an issue that has affected numerous suppliers and service providers working with the municipality.
Treasury further highlighted discrepancies in the city’s cash flow reporting, particularly involving opening balances and investment-related transactions, which officials say point to deeper governance and financial management failures.
Presidency monitoring Johannesburg’s governance problems
The growing crisis has now drawn attention from the Presidency.
Presidential spokesperson Vincent Magwenya confirmed that President Cyril Ramaphosa had been briefed on Treasury’s concerns.
Magwenya said the problems affecting Johannesburg are not limited to poor service delivery, but also involve broader governance failures that could threaten the city’s financial stability.
The concerns form part of the motivation behind the establishment of the Presidential Johannesburg Working Group, which was created to address infrastructure collapse, service delivery failures and institutional instability in the metro.
Johannesburg has faced mounting criticism in recent years over deteriorating roads, power disruptions, water shortages, rising debt levels and administrative dysfunction.
Economists and business groups have repeatedly warned that instability in Johannesburg poses risks beyond municipal borders because of the city’s role as South Africa’s financial and commercial centre.
The latest Treasury intervention signals growing frustration within national government over the city’s fiscal direction and leadership decisions.
It remains unclear how Mayor Morero and the city administration will respond as pressure from both Treasury and the Presidency continues to intensify.
Source: Adapted from Treasury correspondence and government briefings.
