South Africa could be forced to place Johannesburg under government administration as years of financial mismanagement, political instability and deteriorating public services push the country’s commercial capital closer to a fiscal collapse that business leaders warn could undermine the national economy.
Bloomberg quoted Genesis Analytics partner Lael Bethlehem, who led a study commissioned by Business Leadership South Africa (BLSA) and Business for South Africa (B4SA), as saying “The City of Johannesburg is essentially bankrupt. We may have a situation where they may not be able to limp on until November and the government will have to implement” a takeover plan.
The warning comes as Finance Minister Enoch Godongwana has given Johannesburg until Friday to explain how it intends to address serious financial shortcomings or risk losing R8 billion ($486 million) in annual government funding, about one-tenth of the city’s budget. Mayor Dada Morero is expected to respond next week.
It is home to the Johannesburg Stock Exchange (JSE), Africa’s largest stock exchange, and serves as the headquarters or regional base for many of the continent’s biggest banks, mining companies, retailers and multinational corporations.
