CDE warns that the non-payment of rates and utility bills, rising costs and collapsing infrastructure investment are pushing South Africa’s most important city into a dangerous financial spiral.

Johannesburg’s budget is increasingly disconnected from reality. The City spends money it does not collect, imposing ever-higher costs on a shrinking rates base and stagnant economy, while squeezing infrastructure investment and turning its suppliers into de facto lenders.

This is the central finding of a new report from the Centre for Development and Enterprise (CDE), Joburg’s Broken Budget, the second report in CDE’s Johannesburg Matters: Fixing South Africa’s growth engine series.

“Johannesburg’s financial crisis is much more serious than an annual budget deficit,” said CDE executive director Ann Bernstein. “The City has become dangerously disconnected from financial reality. It bills residents and businesses, records those bills as revenue and spends on the assumption that the money will arrive. Increasingly, it doesn’t.”

The scale of the problem is stark:

• Gross unpaid bills owed to Johannesburg have risen from about R15 billion in 2014/15 to nearly R72 billion in 2024/25 – an increase of almost 17 per cent a year for more than a decade.
• By 2024/25, the annual increase in unpaid debt was equivalent to around one rand in every six the City billed for rates and services.
• In inflation-adjusted terms, infrastructure investment has fallen by about 50 per cent since 2014/15 and by close to 70 per cent per resident.
• Employee related costs have risen by 9 per cent a year, from R8.6 billion to R20.7 billion, over the decade and now absorb about 40 per cent of the cash collected from customers.
• Unpaid debts to suppliers (mainly Eskom and Rand Water) have climbed to more than R28 billion, compared with R12 billion a decade ago (June 2025).

“This is a classic municipal doom loop,” said Bernstein. “Residents receive deteriorating services and become less willing or able to pay. The City responds by increasing rates and tariffs on those who do pay. More customers then struggle to pay or find ways to reduce their use of municipal services. Revenue weakens further, maintenance is postponed and services deteriorate again.”

The financial squeeze is occurring against the background of an exceptionally weak Johannesburg economy. Over the past decade the city’s economy has grown by about 1 per cent a year in real terms. Between 2015 and 2025, Johannesburg’s working-age population increased by more than 760 000 people, while the number of employed people rose by only about 30 000.

Over the same period, however, the City’s spending has increased much faster than its stagnant economy can support.

“A city cannot indefinitely increase the cost of poor and declining services for an economy that is barely growing,” said Bernstein. “Johannesburg increasingly expects a shrinking group of compliant households and businesses to carry an ever-larger financial burden. And this in a context in which infrastructural deterioration is undermining the prospects for growth.”

The problem is especially visible in electricity. Electricity once provided a crucial source of revenue for the City. Its share of total municipal revenue has fallen from 34 per cent in 2014/15 to 28 per cent in 2024/25, while the amount of electricity purchased and sold has declined significantly. Electricity losses, however, have continued to account for 30 per cent of all the megawatts the City buys, double the amount of the City of Cape Town.

Customers who can afford alternatives are increasingly reducing their dependence on the municipal grid. As they leave, the cost of maintaining the electricity network falls on a smaller and financially weaker customer base.

Water poses an even greater danger. Between 2014/15 and 2024/25, unpaid water bills grew by 20 per cent a year. This is occurring in a city where water failures – dry taps, burst pipes, leaking infrastructure and failing reservoirs – are already part of daily life.

“The City needs revenue to maintain and upgrade water infrastructure,” says Bernstein. “But the more unreliable the infrastructure becomes, the harder it is to bill accurately, collect consistently and persuade residents that payment is justified by the quality of the service they receive.”

“Johannesburg can survive potholes and poor refuse collection for a while. It cannot survive without reliable water,” says Bernstein. Households need water, firms need reliable supplies of water. The deterioration of the water system is an existential threat to the city.”

At the same time, infrastructure investment has collapsed while employee and contractor costs have risen rapidly. Johannesburg is consuming its future to finance its present. Residents are therefore entitled to ask a simple question: if Johannesburg is spending much more on employees and contractors, why are roads deteriorating, substations failing, water services becoming less reliable and public spaces decaying?

The City has increasingly dealt with its cash shortage by delaying payments to suppliers. Trade payables (i.e., unpaid debts to suppliers) breached more than R28 billion in 2024/25, with substantial amounts owed to Eskom and Rand Water.

“This means Johannesburg is forcing its suppliers to finance its operations,” said Bernstein. “That is not a sustainable financing model. It also shifts the costs of Johannesburg’s failure onto institutions that are themselves important to the national economy.”

There are worrying indications that conventional lenders are becoming more cautious about financing the City. The French development finance agency, AFD, recently declined to extend a R2.5 billion loan to Johannesburg, citing governance concerns, despite having made such a loan as recently as 2024.

Johannesburg is too large to fail without national consequences. (See Report 1 in the CDE Johannesburg Matters series; Joburg in Jeopardy, here).

“There is no solution without pain. Johannesburg must dramatically improve collections while protecting indigent households. It must restrain employee and contractor costs, expand infrastructure spending, reduce supplier arrears and rebuild confidence in the accuracy of its billing and financial management,” said Bernstein.

External financial support is probably necessary. But CDE warns strongly against an unconditional bailout.

“Johannesburg is too important to the country to be allowed to collapse,” said Bernstein. “But national government must not write a cheque that allows the same political and financial practices to continue. Any assistance must form part of a fundamental restructuring of the way the City is governed and financed.”

The City has spent years behaving as though billed revenue is the same as cash, rising costs can indefinitely be imposed on a stagnant economy, and infrastructure can be neglected without consequences. That fiscal fiction is now crumbling.

The forthcoming local government elections provide a critical opportunity to change course.

“Johannesburg does not need another budget speech promising a turnaround,” Bernstein says. “It needs a reckoning.”

Joburg’s Broken Budget is available here.

For media enquiries and interview requests, please contact Refiloe Benjamin: media@cde.org.za | 079 863 6134

Media materials

• Ann Bernstein’s picture, here.
• Joburg’s Broken Budget cover image, here.
• Image used on the cover (please credit Mark Lewis), here.

ABOUT JOHANNESBURG MATTERS: Fixing South Africa’s growth engine

Johannesburg Matters: Fixing South Africa’s growth engine is a new series of reports from the Centre for Development and Enterprise, based on a large research programme into the major challenges confronting the city. The series will provide analysis and recommendations that a new political leadership and reformed administration could implement after the elections as they commence the difficult job of rebuilding South Africa’s most important urban centre.

ABOUT THE CENTRE FOR DEVELOPMENT AND ENTERPRISE

CDE is an independent policy research and advocacy organisation. It is South Africa’s leading development think tank, focusing on critical development issues and their relationship to economic growth and democratic consolidation. Through examining South African realities and international experience, coupled with high-level forums, workshops and roundtables, CDE formulates practical policy proposals outlining ways in which South Africa can tackle major social and economic challenges. CDE has a special focus on the role of business and markets in development.