South Africa

Johannesburg Water spends R1.5 billion on salaries and only R860 million on capex

Over the last seven years, Johannesburg Water has increased salaries from R840 million to R1.5 billion, while capital expenditure has risen only from R772 million to R861 million.

The City of Johannesburg’s citizens are experiencing severe water problems caused by ageing infrastructure, illegal connections, and an overloaded system.

The water crisis is so severe that experts warned that taps could run dry unless the underlying problems are addressed.

Apart from municipal mismanagement, the city has seen a big population increase without a proportionate increase in water supply.

The crisis has been looming for years, with little maintenance on water infrastructure and minimal planning to ensure adequate supply for a growing population.

Johannesburg Water had to invest in additional infrastructure through higher capital expenditure (capex) to keep up with the higher demand. This did not happen.

Capital expenditure in a water authority refers to the funds allocated for acquiring, upgrading, or replacing physical assets.

These assets include water treatment plants, pipelines, reservoirs, pumping stations, and other infrastructure needed to deliver water services.

Simply put, capex is the amount a water authority, like Johannesburg Water, invests in long-term improvements to the water system.

In 2016, Johannesburg Water spent R840 million on employee costs and R772 million on capital expenditure.

In 2023, employee costs increased by 82% to R1.53 billion, while capital expenditure only increased by 11% to R861 million.

In real terms, considering inflation, Johannesburg Water’s employee costs and salaries significantly increased while capex decreased.

Johannesburg Water’s exorbitant salary bill, which is emblematic of South Africa’s government, is out of sync with global standards.

Johannesburg Water’s employee costs to capex ratio of 1.8 is much higher than global standards.

A first-world city like Boston Water and Sewage has an employee-cost-to-capex ratio of 0.7, less than half that of Johannesburg.

Boston Water and Sewage spends 3.5 times more on its operating expenses than it does on capital expenditure.

Johannesburg Water spends 11.2 times more on operating expenses than it does on its capital expenditure.

With infrastructure entities, like water and road authorities, most of the money should go towards building and maintaining the infrastructure.

However, in South Africa, most of the money goes towards state employees, leaving little money to build and maintain infrastructure.

Even more concerning is that many state employees are not skilled in the work, which means much of it is outsourced.

The result is what is seen in Johannesburg, with collapsing infrastructure and citizens experiencing severe water problems.


Johannesburg Water employee costs versus capital expenditure


Johannesburg Water employee costs versus contractors’ maintenance service


Johannesburg Water operating expenditure versus capital expenditure


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