Johannesburg Mayor Dada Morero delivered his State of the City Address on Wednesday, making promises to fix the municipality's finances.
Image: Itumeleng English / Independent Newspapers
Johannesburg mayor Dada Morero has announced that the struggling municipality will sell its vacant valued at R3.2 billion as it seeks to stabilise its finances.
Delivering his last State of the City Address before the local government elections in November, Morero said as part of its immediate steps to stabilise its finances, the city will dispose of its non-strategic assets.
“This will include the sale of the vacant land portion of our debtor’s book. The vacant land debtors’ book is currently valued at R3.2bn,” he stated.
Addressing residents on Wednesday at the St. Mary’s Cathedral in the Desmond Tutu Precinct in downtown Johannesburg, the mayor said the ANC-led government of local unity (GLU) inherited a broke city when it took over in 2019 from a DA-led coalition.
“For us this meant, rebuilding financial systems and putting in place controls. We are grateful for the trust you have shown in us,” Morero added.
He continued: “In 2024, we asked for your patience in managing the city's finances. As required by legislation, we opened our books and demonstrated to the world that Johannesburg is experiencing financial challenges. Managing this task has not been easy”.
Morero also addressed threats by power utility Eskom to reduce, interrupt or cut electricity to parts of the city after the municipality and its entity City Power failed to pay more than R5bn in outstanding debt.
“We are concerned about Eskom's latest notice, and we are taking it seriously. This challenge is not only affecting the City of Johannesburg but several municipalities across the country.
"We will not fight Eskom. We will work with the Minister of Electricity and Energy (Dr. Kgosientsho Ramokgopa), and SALGA (SA Local Government Association) to resolve this challenge,” he promised.
According to Morero, City Power has a turnaround plan which addresses this challenge.
“Part of the solution is to implement National Treasury and Departments of Cooperative Governance and Traditional Affairs guidance to reform and strengthen Municipal Trading Entities.
"This reform agenda will assist the city to improve governance, financial sustainability, operational efficiency and accountability within entities that have historically operated under significant fiscal and infrastructure pressure,” he said.
In addition, the city has issued requests for proposals to approved development finance institutions, which has resulted into agreement in principle with German state-owned financial institution KfW Development Bank to provide a loan of €200 million (over R3.83bn) to fund energy-related projects.
Morero said the move was aligned with City Power’s project pipeline and infrastructure funding requirements.
“The city as the borrower and City Power as an execution agent are currently finalising a contract with KfW with the expectation that KfW will be disbursing the agreed loan amount before end of June 2026,” he added.
Morero also defended the GLU’s track record, saying the city forecasted revenue growth of 9.3% supported by tariff increases and an operational surplus of R4.1bn and to achieve its debt-to-revenue ratio target, which sits at 30% and a net operating surplus of 3%.
He said the city has managed to maintain employee costs within the threshold as the city is at 28% of its operating budget.