Business leaders have sounded the alarm on Johannesburg's financial and governance crisis, warning that the city's decline undermines the national growth story at a critical moment. The city, which accounts for 16% of South Africa's GDP, is facing a national economic emergency, according to a joint statement from Business Unity South Africa president Mxolisi Mgojo, Business Leadership South Africa chair Adrian Gore, and Business for South Africa steering committee chair Martin Kingston.
Business leaders have sounded the alarm on Johannesburg's financial and governance crisis, warning that the city's decline undermines the national growth story at a critical moment.
The city, which accounts for 16% of South Africa's GDP, is facing a national economic emergency, according to a joint statement from Business Unity South Africa president Mxolisi Mgojo, Business Leadership South Africa chair Adrian Gore, and Business for South Africa steering committee chair Martin Kingston. The statement noted that Johannesburg's adjustment budget is unfunded, and its R8bn equitable share instalment for July is at risk due to a R10.3bn wage offer to municipal workers.
The business leaders warned that the city's fiscal and governance crisis has been building for years and is not a new or partisan issue, but rather a severe and urgent situation. They called on President Cyril Ramaphosa and the government to facilitate urgent reforms that city-level leadership has failed to deliver. Business is already contributing to infrastructure repair, including potholes, traffic signals, and inner-city maintenance, but the leaders want to systematise, co-ordinate, and scale these efforts.
They are prepared to deploy private sector resources to support Johannesburg's recovery, but only if there is a counterparty capable of governing scrupulously, delivering for the city, and being held to account. The business leaders also noted that Johannesburg's capital expenditure has collapsed to 6% of its budget, while maintenance spending stands at 0.5% of asset value. Despite rates and service charges soaring 124% in real terms over the past 15 years, service quality has deteriorated sharply.
The statement was addressed to all political parties, including those currently in government, opposition, and those contesting the upcoming local government elections. The business leaders urged parties to provide specific, costed commitments on how to fix the city's fiscal crisis, restore infrastructure, and re-establish functional governance. They also called on the government to enforce consequence management if standards aren't met.
In an interview with Business Day TV, Helen Zille, the DA's mayoral candidate for Johannesburg, said it would be difficult for any administration to turn the city around without help from business. She noted that public-private partnerships would be essential in addressing the city's problems, particularly in the trading services sector. Finance minister Enoch Godongwana has expressed serious concerns about the city's finances, warning Johannesburg mayor Dada Morero to halt a controversial R10.3bn wage deal with municipal workers.
The minister also accused the city of violating municipal finance laws and revealed that Johannesburg owed creditors R25.2bn while having only R3.9bn in cash. The business leaders' statement has been welcomed by some, including Rise Mzansi Johannesburg mayoral hopeful Lukhona Mnguni, who applauded the assessment of the city's problems.
However, the city's mayor, Dada Morero, has previously said his administration inherited a damaged city with deep-seated problems and has called for guidance from the government on reforming and strengthening municipal trading entities. The business leaders' call for urgent reforms and their offer to support Johannesburg's recovery have been seen as a critical moment in the city's history, with many believing that the city's decline can only be addressed through a concerted effort from all stakeholders
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