New research into the crisis afflicting the City of Johannesburg warns that the widening structural imbalance between the metro’s operating expenditure and capital expenditure (capex) poses a threat to long-term service delivery.

Produced by Genesis Analytics, and presented recently to Business Leadership South Africa (BLSA) by Lael Bethlehem, the analysis shows that, in real terms, the city’s operating expenditure had grown by 92.5% since 2010, while capital investment had contracted by 12.8%.

Capex as a share of total spending had fallen from about 17% in 2010 to about 7% in 2025, on the back of budgets that have been heavily skewed towards operating expenditure, especially expenditure on personnel.

The City of Johannesburg passed a R97.1-billion budget for the 2026/27 financial year on May 28, amid deepening concerns over outstanding debt and salary adjustments that were flagged as unsustainable.

The latter issue was also raised by Finance Minister Enoch Godongwana in his well-publicised April 23 letter to Mayor Dada Morero, in which Godongwana warned that the National Treasury might halt the transfer of funds to the city because of its noncompliance with the Municipal Finance Management Act.

A follow-up letter was sent on June 19, asking the city to give reasons why the Equitable Share should not be withheld and detailing additional information required on debts owed to Eskom and Rand Water.

For its part, Eskom, which is owed arrear debt of R5.3-billion, is proceeding with consultations with residents and businesses that would be affected should it decide to interrupt supply, owing to non-payment.

The City of Johannesburg, the research states, also trails the City of Cape Town and eThekwini in capex per capita, while having the highest number of municipal employees per 1 000 residents.

“Operating expenditure will have to be cut. This will be painful and will generate conflict, but there is no choice [as] current levels are utterly unsustainable,” the analysis concludes.

The research paints a grim picture of “political and administrative chaos” over the past ten years, during which there have been eight mayors and constant shifts in political coalitions.

It also states that criminal syndicates have become embedded in the city, and that centres of power have been carved up and distributed between different parties and individuals, influencing procurement, budgeting and hiring.

Simultaneously, there has been an exodus of skilled personnel.

The research, which follows on from a formal offer by organised business to assist the city, which has as yet not been accepted, outlines four priorities for turning the city around, including:

• Installing determined, honest and accountable political leadership under a stable coalition capable of taking on established interests and syndicates, alongside capable administrative leadership;
• Rooting out criminal syndicates by pursuing forensic investigations and revised human-resources conditions, together with disciplinary processes and the replacement of corrupt officials;
• Reorganising water and electricity services by fully ring-fencing City Power and Joburg Water and maximising capex from internal resources and grants. The National Treasury’s Metro Trading Services programme could be supportive of this process, but the research suggests that the entities should also consider partnering with international utilities and entering into long-term concessions to attract investment and improve management. It also argues that renewable power should be purchased from independent power producers to reduce costs and environmental impact; and
• The creation of a credible financial plan, which could involve revising the three-year budgets and devising a ten-year recovery plan. The research argues that new sources of funding will have to be found either from the National Treasury or through private concessions, while operating expenditure will have to be cut.

In her weekly newsletter, BLSA CEO Busisiwe Mavuso reiterated that organised business viewed the city's crisis as an urgent priority and that it was ready to pursue a partnership with the city akin to that which had helped bring stability to electricity and logistics.

However, she indicated that business had not received a response, describing the city’s silence as “not acceptable”.

In an opinion article, meanwhile, City of Johannesburg CFO Tebogo Moraka argued that the metro’s financial difficulties were not unique to Johannesburg and reflected broader economic conditions affecting households, businesses, and communities nationwide.

“Johannesburg, as the country's economic hub and largest metropolitan municipality, faces the added responsibility of maintaining extensive infrastructure networks while accommodating continued urbanisation and population growth.

“The demands placed on the city are immense and continue to increase annually,” Moraka wrote, while adding that the solutions required collective action from all spheres of government, as well as from the private sector, communities, and organised civil society.