Can Johannesburg fix its books before the doom loop wins?

Johannesburg’s financial problem is not simply that the city is short of cash. It has built a system around a dangerous assumption: money billed but not collected can still be spent.

The city issues invoices, records them as revenue, builds its budget on the expectation that payment will arrive, and then spends as though the cash were already in the bank. Increasingly, it is not. Over the three most recent years with audited financial statements, Johannesburg recorded R218 billion in revenue but collected only R205 billion in cash. Excluding R17 billion in borrowing, cash receipts were R30 billion below reported revenue.

The gap has widened alongside unpaid bills. Gross arrears owed to the city have grown from about R15 billion in 2014/15 to almost R72 billion, increasing at an annual compounded rate of 17% for a decade. By 2024/25, one in every six rand billed went unpaid. The article describes this not as ordinary municipal arrears, but as a structural failure of governance and budgeting.

That failure is feeding a “doom loop.” As more customers default, the city raises tariffs on those who still pay. Higher charges then push more households and businesses toward default or away from municipal services, leaving a smaller base to carry the cost. The pressure is particularly visible in electricity. Its share of city revenue has fallen from 34% to 28% over the past decade as reliable, high-volume customers invest in solar and other alternatives while reliability worsens and prices rise.

Johannesburg’s economy has grown by about 1% a year in real terms for more than a decade, while city revenue rose 6.8% annually and spending 7.6%, ahead of 4.8% inflation. The working-age population increased by more than 750,000 over a decade, but employment grew by only 30,000. Since 2017/18, the real cost of running the city has risen from about R33,000 to R41,000 per employed person. The Centre for Development and Enterprise report asks whether Johannesburg can repair its finances before that cycle becomes irreversible.