Johannesburg's turnaround: fixing finances, services and inequality

A municipal turnaround is the work of fixing a distressed city's finances and services together, so that valid revenue is collected and spent on repairs that last.

For Johannesburg, that work now has an owner-in-waiting. The city's local government elections on 4 November 2026 returned a hung council, and the coalition negotiations that follow will decide who inherits a budget under strain and services residents cannot rely on.

Johannesburg's next administration will inherit a city where financial pressure and unreliable services reinforce each other. Residents are expected to pay their accounts, yet many struggle with incorrect bills, interruptions and repairs that do not last. Businesses face the same problems, often with the added cost of backup power, water storage and lost working time.

A Johannesburg municipal turnaround has to address both sides of this problem. The city must collect valid charges and use the money to improve services. Residents need to see repairs completed, complaints resolved and assistance reaching households that cannot afford basic services. Neither a tougher collection campaign nor a new spending plan will be enough on its own.

The practical question is where to start, what to fund and how to make the improvements last. This review examines the financial evidence, the service failures and the choices available to the incoming administration.

Collect the revenue that is validly owed, and spend it on repairs that last. Neither a tougher collection drive nor a bigger budget will do it alone.

What Johannesburg's financial results tell us

The latest audited accounts are for the year ended 30 June 2025. They show a consolidated after-tax surplus of about R1.64 billion, but current liabilities of R30.06 billion against current assets of R22.04 billion — an approximately R8.02 billion working-capital deficit, a current ratio of about 0.73, and reported cash of about R3.97 billion that is not all available for day-to-day use.

An accounting surplus does not mean there is cash available for repairs. Revenue may still be unpaid, some customer debt may be difficult to recover, and capital grants cannot simply be spent on operating costs. The administration must establish how much money is actually available, what is already committed and which payments are due.

The audit result needs careful reading too. For 2024/25 the city received an unqualified audit opinion with findings — a result it has held for more than a decade — yet the same audit recorded about R3.69 billion in irregular expenditure, R2.38 billion in unauthorised expenditure and R943 million in fruitless and wasteful expenditure. An unqualified opinion confirms that the financial statements are fairly presented; it does not establish that spending was lawful, that the city's finances are healthy or that its services are reliable.

The first financial step is practical, not political. Start with a 13-week cash forecast, updated every week. Reconcile bank balances, verify supplier debts and use realistic collection assumptions. Separate restricted funds from cash available for operations, and test major spending decisions against that forecast.

How Johannesburg's position developed over ten years

The decade was not a period of uninterrupted decline. A 2020 credit assessment described improving liquidity and operating performance through 2019, alongside pressure from infrastructure needs and population growth. That is a historical reading of the city's finances, not its current credit rating.

Later results show a weaker position. Independent analysis for the Gauteng City-Region Observatory, which excludes capital grants from recurring revenue, identifies operating deficits in 2021/22, 2022/23 and 2023/24. It also shows why capital accounting entries have to be distinguished from infrastructure actually delivered.

A bigger budget is therefore a poor test of recovery. The city's 2026/27 budget runs to roughly R97.1 billion, but only about 3.2% of its R8.78 billion capital programme is funded from the city's own revenue — the rest depends on grants and borrowing that have to be confirmed. Better questions are whether regular revenue covers regular costs, whether projects are ready to proceed and whether the city can maintain the assets it builds.

Political instability can interrupt decisions and weaken accountability, but it does not explain every failure. Billing, affordability, bulk prices, procurement and asset condition need attention regardless of who holds office.

Fix the service failures that cause the most harm

A household can have a water connection and still go days without water. A pothole can be recorded as repaired and reopen after rain. A refuse route can be marked complete while some streets are missed.

Measure what residents actually experience: the length of interruptions, repeat faults, missed collections, working sanitation and the time taken to resolve valid billing complaints. Publish results by area, because citywide averages can hide serious problems in the worst-served communities.

The city's 2024/25 reporting puts non-revenue water at 44.79%. That figure combines physical losses of about 23.72%, commercial losses of about 9.22% and authorised unbilled use of about 11.85%. It cannot all be treated as leaking water, theft or money that could be recovered.

Each cause needs a different response. Repair leaks and manage pressure. Correct faulty meters and missing accounts. Measure and fund legitimate free services. Cutting household support merely to improve the non-revenue-water figure would defeat the purpose of the turnaround.

The same care is needed elsewhere. Electricity losses require separate engineering and revenue work. Repeated road damage calls for drainage and proper reinstatement, not another temporary patch. Waste collection needs dependable vehicles, crews and disposal arrangements throughout the year.

How can Johannesburg serve both rich and poor residents?

Provide a reliable basic service for everyone, with clear and fair rules for paying for it. Households unable to afford basic services need assistance that is funded and easy to access. Those able to pay should receive accurate bills and contribute fairly to shared infrastructure. Every area needs a minimum service standard and useful information when supply fails.

The alternative is a widening divide: households with money buy their own backup services while others depend on a deteriorating municipal network. Tariffs and investment decisions should avoid deepening that divide.

Support must reach tenants, backyard households and people sharing a meter. One connection does not necessarily mean one household, and a rates rebate for a property owner may not help the tenant. Set clear eligibility rules, make registration practical and provide a way to appeal mistakes. Some households earn too much for full indigent support but still struggle with repeated increases; assistance that reduces gradually as income rises may be fairer than a sudden cut-off, provided its cost is calculated and funded before it is promised.

Tariffs and debt collection must comply with the relevant law, including the safeguards for people unable to pay for basic water services set out in the Water Services Act and the Municipal Systems Act. Distinguish genuine inability to pay, a disputed bill and deliberate non-payment of valid charges — these cases should not all receive the same treatment.

Protect water and electricity funding while keeping fair subsidies

Utilities need cash to buy bulk supply, maintain networks and replace failing assets. An amount due from the municipal group does not help pay a supplier until it is transferred. Parliament has raised concern about how cross-subsidisation affects Johannesburg Water's funding, and that warning deserves attention.

Subsidies should remain, but their cost and funding must be clear. The council should approve the support and pay the utility for providing it. Before transferring utility income to other municipal uses, check that bulk supply, maintenance, loan payments and essential renewal are covered — and identify replacement funding for other services if those transfers fall, or protecting a utility simply moves the shortfall elsewhere.

Electricity tariffs need to account for solar, storage and wheeling. Customers should pay a reasonable share of the network costs they create, under approved rules, with the effect on low-use and low-income households tested first. Charges that drive paying customers away can leave the remaining customers supporting a more expensive system.

Attract investment with reliable services and predictable decisions

Investment promotion starts with the conditions a business needs to operate. A brochure or an announced incentive cannot compensate for uncertain water supply, delayed connections or approvals that remain unresolved.

An applicant should be able to establish the land rights, development permissions, available services and likely approval times for a factory, office, housing project or workshop. Assign one official to coordinate the application and provide a timetable — making the process easier without bypassing legal requirements. Publish a manageable list of prepared projects, each with confirmed land rights, service requirements, evidence of demand, a funding plan, a procurement process and a named municipal decision-maker.

Assess incentives only after those basics are in place, and include the cost of public infrastructure and revenue forgone. A discount that leaves existing residents paying more may cost the city more than the development brings in. Measure money actually invested, connections provided, assets brought into use and jobs sustained; report enquiries and signed agreements separately.

Reduce inequality through better access to jobs and services

Subsidies are only part of the answer. Travel time, fares, safe trading spaces, street lighting and the cost of buying emergency water also affect what households can afford and the opportunities available to them.

Prioritise capital projects using basic-service needs, poverty, network risk and access to jobs. Areas with high property values matter to municipal revenue, but serious health and safety failures elsewhere must not be overlooked. Plan employment areas and underserved communities together: provide dependable services to township workshops and traders, support affordable rental housing near jobs, improve public-transport links and repair drainage and access in vulnerable settlements.

Poorer areas should not lose out indefinitely because their projects lack designs or settled land arrangements. Fund the preparation needed to make high-need projects ready for construction.

Three possible futures for Johannesburg

The high road assumes better collection of valid bills, verified savings on bulk purchases, protected maintenance and improved project delivery. It produces about R50.2 billion of capital spending over five years, compared with about R37.0 billion on the medium road, and allows some additional cash to be retained.

The medium road shows partial improvement. Costs absorb much of the gain in collections, leaving too little for renewal and some obligations unpaid; it still needs corrective action to become a fully funded plan. The low road combines falling collections, higher costs and poor delivery: capital spending totals about R29.7 billion while unpaid obligations accumulate to a modelled year-five shortfall of about R47.34 billion. The model does not assume a bailout or automatic overdraft to cover them.

Small changes matter. On the assumed R70 billion billing base, a one-percentage-point change in collections changes annual cash by about R700 million. That is a sensitivity calculation, not guaranteed income — the city must establish which collection improvements are achievable, what they cost and how they affect households.

What should the new administration do in its first 100 days?

The chief financial officer should first verify cash, restricted funds, major supplier debts and loan obligations, then prepare a realistic weekly forecast and stop new commitments where funding has not been identified.

Utility and service managers should identify the failures causing the most harm, secure essential spares and protect maintenance. Concentrate initial work on the worst water zones, electricity feeders and missed refuse routes, and give residents realistic restoration information. The revenue team should correct major billing errors, separate current charges from historic disputes, and make support applications and appeals accessible.

The city manager should publish verified starting figures and a delivery schedule, give each priority a responsible official, budget and clear completion check, and report missed deadlines and the action being taken. The city will not reverse a decade of infrastructure deterioration in 100 days — but it can establish control of its money, complete urgent repairs and demonstrate that managers are being held responsible for results.

What a credible turnaround looks like

Begin with a manageable set of funded actions, verify the results and expand what works. Keep the skills, records and responsibility within the municipality so progress can continue when leadership changes. Judge progress by the things residents and businesses can see: correct bills, paid suppliers, maintained assets, and support that reaches the households entitled to it. That is also what businesses need before committing to investment.

Related insights

• The Kettle Municipal Finance Index: 2026 Methodology
• Municipal Governance Report Card 2026
• MFMA Section 71 quarterly reporting in 2026
• Municipal revenue enhancement: connecting customer data, billing and collections
• Municipal Budgets and the Electricity Revenue Cliff