Finance Minister Orders Johannesburg Mayor to Halt R10.3 billion Wage Deal
Finance Minister Enoch Godongwana has instructed Johannesburg Mayor Dada Morero to immediately stop the implementation of a R10.3 billion wage‑increase agreement that the city cannot afford. The directive follows revelations that the agreement was reached with the South African Municipal Workers’ Union (Samwu) last year as a tactic to quell worker protests ahead of the G20 summit.
Background of the Agreement
In 2023, TimesLIVE reported that the Morero administration had negotiated a multi‑year salary hike with Samwu, aiming to pre‑empt industrial action during the high‑profile G20 meetings hosted in Johannesburg. The deal, valued at roughly R10.3 billion over its term, was signed without securing the necessary budgetary approvals under the Municipal Finance Management Act (MFMA).
According to the finance ministry, the city’s current adjustment budget remains unfunded in terms of Section 18 of the MFMA, meaning that any additional expenditure of this magnitude would jeopardise Johannesburg’s fiscal sustainability.
Treasury’s Concerns and Legal Basis
In a scathing letter to the mayor, Minister Godongwana highlighted several regulatory breaches:
- Revenue collection consistently falls short of budgeted targets.
- Persistent weaknesses in cash‑flow reporting, with notable discrepancies in opening balances and cash from investing activities.
- Non‑compliance with the municipal standard chart of accounts.
- Failure to settle creditor invoices within the 30‑day window required by the MFMA.
The minister warned that the wage deal “has the potential to destroy the sustainability of the city of Johannesburg beyond this term, with negative impacts on the national economy.” He cited Section 216(2) of the Constitution, which allows the National Treasury to intervene and adjust a municipality’s equitable share if financial mismanagement persists.
Potential Consequences of Non‑Compliance
Godongwana stated that if Johannesburg does not remedy the situation immediately, the Treasury will invoke the constitutional provision and seek a reduction in the city’s equitable share rate effective July 2026. Such a move would directly affect the municipality’s ability to fund essential services and infrastructure projects.
Additionally, the minister noted that punitive measures could include restrictions on future borrowing and heightened oversight by provincial and national treasury officials.
Presidential Awareness and Response
Presidential spokesperson Vincent Magwenya confirmed that President Cyril Ramaphosa is aware of the unfolding fiscal crisis. Magwenya reiterated that the issues raised by the Treasury formed part of the rationale for establishing the presidential working group tasked with overseeing Johannesburg’s governance and service‑delivery challenges.
“It’s not just about poor service delivery. There are concerns about governance failures and issues that could impact the financial stability of the City of Johannesburg,” Magwenya said.
Outlook and Next Steps
As of the latest update, Mayor Morero has not publicly responded to the minister’s directive. Analysts warn that continued non‑compliance could trigger a cascade of fiscal interventions, affecting not only Johannesburg’s budget but also investor confidence in South Africa’s metropolitan economies.
The situation remains developing, and stakeholders—including civil‑society groups, labour unions, and financial institutions—are watching closely for any signs of resolution or escalation.
Sources: TimesLIVE investigative report (2023); National Treasury letter to Johannesburg Mayor (2024); Presidential spokesperson statement (2024); Municipal Finance Management Act, Sections 18 and 216(2).
