Top CEOs send a warning to the government about Johannesburg’s collapse

South African business leaders warned that Johannesburg’s deepening fiscal and governance crisis risks undermining the country’s improving economic outlook, calling for urgent action to rebuild the nation’s commercial capital.

The city’s decline has become a national emergency because it accounts for about 16% of gross domestic product and is central to domestic and foreign investment decisions, Business Leadership South Africa said in a statement on Thursday.

Its deterioration risks weakening investor confidence just as South Africa’s economic recovery story gains traction, the lobby group said.

“The situation is urgent and critical,” BLSA said.

The warning comes after Finance Minister Enoch Godongwana in April threatened to cut crucial state funding to Johannesburg unless the city addresses R23 billion of wasteful spending and cancels plans to raise municipal wages by more than R10 billion by next year.

State power utility Eskom has also signalled it may suspend power supplies to the city over unpaid debt.

The crisis in Johannesburg reflects years of accumulated failures across successive administrations, BLSA said.

Capital expenditure has fallen to 6% of the city’s budget, and maintenance spending is about 0.5% of asset value.

Simultaneously, rates and service charges have more than doubled in real terms over the past 15 years, even as property values have fallen and service quality has deteriorated.

The private sector is prepared to work with the city and national government to help stabilise Johannesburg by providing expertise in governance, infrastructure delivery, financial management and anti-corruption measures.

That offer is contingent on there being “a counterparty capable of governing scrupulously, delivering for the City, and being held to account,” BLSA said.

Such an approach would mirror the business’s collaboration with the national government, under a partnership founded three years ago, in which private-sector support helped the state tackle power shortages, logistics bottlenecks, and crime.

Such a model would help restore confidence in Johannesburg, the lobby group said.