Johannesburg’s water crisis has taken a worrying financial turn, with auditors and National Treasury confirming that R4 billion attributed to Johannesburg Water exists only on paper, not in the city’s bank account.
The revelation raises serious concerns about the city’s ability to fund essential infrastructure projects and maintain reliable water services.
During a briefing by the Portfolio Committee on Water and Sanitation on Tuesday, the Office of the Auditor General South Africa (AGSA) and National Treasury presented findings on the City of Johannesburg’s longstanding cash-sweeping arrangement.
This system automatically transfers funds from municipal entities like Johannesburg Water into the city’s central account for redistribution, leaving the utility dependent on daily requests to access its own revenue.
“The cash balance of the city of Johannesburg is less than the R4 billion,” said an AGSA representative. “On the books, the city acknowledges that it owes Johannesburg Water this amount, but in reality, the funds are not immediately available to pay suppliers.”
National Treasury’s Sydney Maesela confirmed the assessment: “It is accounted for on the books, but Joburg Water did not receive that money. It’s sitting with the entity.”
While AGSA suggested only 30% of supplier payment delays were due to the sweeping arrangement, committee members challenged this, noting that Johannesburg Water’s inability to access its funds exacerbates service delivery issues.
Municipal ‘death spiral’
National Treasury highlighted a broader “municipal spiral” affecting Johannesburg Water and similar entities.
Chronic underinvestment and internal inefficiencies have left service providers struggling, with maintenance and operational funds insufficient to meet demand.
Maesela explained that municipalities often treat trading services like Johannesburg Water as departments rather than independent businesses, focusing on asset creation while neglecting corporate functions such as finance, HR, and customer satisfaction.
Treasury presented a reform programme aligned with the Medium-Term Development Plan 2024–29, which calls for a shift to a utility model with separate water service authority and service provider functions.
Performance indicators and accountability measures are central to the reforms, with severe consequences for non-compliance.
Economic implications
The committee stressed that Johannesburg’s water problems extend beyond the city, affecting investment and economic growth nationwide.
“If Joburg fails, South Africa will fail,” said committee chairperson Leonard Jones Basson. “Water is not optional—without it, the economy suffers, and service delivery collapses.”
Further meetings between Johannesburg Water, National Treasury, and the city are planned to develop a concrete action plan, with implementation timelines expected before the next financial year.
AGSA has also been asked to provide detailed reports on delayed invoices and whether the sweeping arrangement violates municipal finance laws.
The committee’s intervention comes as Johannesburg faces mounting pressure to secure reliable water services, maintain investor confidence, and safeguard the city’s critical infrastructure.