South Africa’s largest economic hub, Johannesburg, is taking urgent steps to restore billions of rand in suspended government funding while preparing to raise additional capital through the bond market to finance critical infrastructure projects.
The city administration announced plans to begin settling outstanding debts owed to major creditors next week in an effort to secure the release of R3.6 billion in government funds that were temporarily withheld.
The funding suspension followed a decision by South Africa’s National Treasury to halt allocations to 69 municipalities over concerns about financial mismanagement and poor fiscal discipline ahead of the country’s local government elections.
The measure is part of a broader initiative aimed at strengthening accountability, reducing irregular expenditure and ensuring municipalities meet their financial obligations before receiving additional public funds.
According to the Treasury, the suspended funds will be released in stages once affected municipalities submit credible repayment plans and demonstrate improvements in their financial management systems.
Johannesburg Mayor Dada Morero said the city intends to clear nearly R2.4 billion in outstanding debts owed to key service providers, including Eskom and Rand Water, by the middle of July.
To qualify for the remaining government funding, the city must also reduce unauthorised, irregular, fruitless and wasteful expenditure by at least 25 per cent before the end of September and formalise repayment agreements with its creditors.
National Treasury estimates show that South African municipalities have accumulated R24.1 billion in irregular and wasteful expenditure since the 2021/22 financial year.
In addition to addressing its financial obligations, Johannesburg is moving ahead with plans to issue municipal bonds to finance the rehabilitation of ageing infrastructure, including roads, electricity networks, water systems and other essential public facilities.
The proposed bond issuance is expected to provide funding for long-overdue infrastructure upgrades as the city works to address persistent electricity outages, water supply challenges and declining public services caused by years of underinvestment.
