DA-led Joburg metro was close to financial ruin, says Makhubo
Former mayor Herman Mashaba says the city was in good financial health when he left and Geoff Makhubo has a long history of 'crying wolf'
The Johannesburg metro, the economic hub of the Gauteng province, was on the brink of financial collapse during the administration of the DA-led coalition, mayor Geoff Makhubo said on Wednesday.
Makhubo, who has been in the mayoral office for just three months, said he can “confirm with certainty” that the previous DA-led administration had brought the city to “near financial collapse”. It had created an environment where maladministration, corruption and fraud thrived.
He was elected as mayor of Johannesburg late in 2019 after the resignation of his predecessor, Herman Mashaba. Mashaba resigned because of the DA’s internal politics. The coalition his party led effectively collapsed soon after his resignation.
The city held its budget meeting this week where it was considering the adjustment budget, and the principles and priorities of the coalition government for the 2020/21 budget.
Makhubo said the city was collecting about 89% of revenue for which they had invoiced consumers. This was 5% under the target of 94%.
He said the city’s efforts had to be focused on improving collections so that residents of Johannesburg can be better served.
He said City Power, the metro’s power utility which traditionally has been its cash cow, is losing money and has reduced its revenue budget by R720m. Makhubo said the entity was running an overdraft of R3bn for which money must be sourced from “somewhere”.
Adding to the financial woes, Makhubo said the city was at risk of losing grants given by the national government such as the public infrastructure grant and the urban settlement development grant.
He said the National Treasury has threatened to take back the public infrastructure grant due to underspending. The metro was reaching out to the Treasury and finance minister Tito Mboweni to plead their case so that they do not lose the grants. The metro was speeding up spending on human settlements to retain that grant, he said.
About R200m was at risk of being lost.
“Generally, we might be losing money we don’t have,” Makhubo said. He added that the focus of his administration was to turn about the metro’s finances.
“The time of milk and honey is gone. We are not belt tightening as yet ... We are managing the surpluses, (and) the margins of what we are taking into next year, and trying to mitigate cash flows and revenues into the outer year. The city will still be spending, but of course spending will be managed in such a way that it benefits especially the poor,” Makhubo said.
But Mashaba said in a statement released after Makhubo’s briefing that the mayor had a long history of “crying wolf” about the previous administration.
“From day one of the coalition government in 2016, Makhubo predicted the imminent financial collapse of the city citing an impending inability to make the next salary run. This never transpired,” Mashaba said.
He said contrary to these allegations, the pre-audit financial statements for the 2018/2019 financial year reflected a significant improvement in the city’s financial health and liquidity, with its closing cash balance increasing from R2.2bn at the end of 2017/2018 to R5.3bn by the end of 2018/2019.