The City of Johannesburg is on the brink of collapse due to the financial ruin it is in. This according to the African National Congress (ANC) which now speaks from the opposition benches in council.
The party held a media briefing on 6 August where they said they believe the City faces imminent collapse.
Jolidee Matongo, ANC Joburg Region spokesperson said the City has experienced a revenue under-billing of R2.4 billion – with an under-collection of over R3 billion by the end of June.
“This means the City is now only able to deliver services in the short term using borrowed funds.”
The party is also concerned about City Power operating in overdraft. They said the effects of this will show in a few months time when a drop in service delivery levels becomes obvious.
“On the expenditure side, we are concerned that the City has also significantly under spent capital grants from national and provincial government to the tune of R750 million.
“We are also concerned that the 2017/2018 budget has been inflated by R1 billion with no indication of where this will come from. This matter we raised in the budget debate and have still not received a response.”
The party went on to question the City’s liquidity. The National Treasury benchmark requires the City to maintain minimum cash levels to cover at least 30 days of operational expenditure, like salaries and interest on loans.
Matongo said, however, the City’s liquidity dropped by 30 per cent between last year June and this June.
“The liquidity of the City has been compromised, forcing the City to raise short term facilities to the tune of R3 billion in the first month of the financial year in order to pay for short term obligations.”
READ: City of Johannesburg’s R357-million billing crisis game plan
This situation places the City’s credit rating at the risk of being downgraded and thus increases the cost of borrowing, he said. The ANC will now request the national treasury to do a thorough analysis of the budget, ‘particularly as it relates to the dubious R1 billion in revenue which cannot be accounted for’.
The MEC for Human Settlements and Co-operative Governance will also be roped in to keep an eye on the financial position of the City over the next few months. “We cannot afford a situation where Africa’s pre-eminent City collapses without us intervening.”
In its statement, the ANC did not mention the infamous billing crisis. Herman Mashaba, the Executive Mayor of Johannesburg, has admitted that the City of Johannesburg is not doing its best to deal with the billing crisis, which he said he will now ‘personally take charge of’. The party did, however, say the City’s Finance MMC would be removed because of it.
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