How To Fix The City Of Johannesburg’s Financial Crisis
Johannesburg stands at a crossroads. More loans, higher tariffs, and expanded government will only deepen the crisis.
The City of Johannesburg is in deep financial trouble. Unfunded budgets, with a gap of R2.1 billion in the 2026/2027 financial year, building on the previous year’s unrealistic revenue targets that led to 2.38 in unauthorized expenditure, plague the city. Ballooning debt to utilities like Eskom (Over R6 billion in debt) and massive infrastructure backlogs, have pushed the municipality to the brink. Residents face rising tariffs for deteriorating services, frequent blackouts, water disruptions, pothole-ridden roads, and unreliable waste collection, while the city’s wage bill swells and cash reserves dwindle.
This is not mere bad luck or temporary shortfall; it is the predictable outcome of decades of overextended government, poor fiscal discipline, and a refusal to let markets and private enterprise play their proper role.
South Africans in Johannesburg, like elsewhere, are entrepreneurial by nature. Township businesses, informal traders, and small firms adapt daily to challenges that central planners cannot foresee. Yet municipal policy treats residents and businesses primarily as revenue sources to be squeezed rather than partners in prosperity. Punitive tariff hikes – even for those going off-grid – unrealistic collection targets, and a bloated public sector wage bill that prioritises above-inflation increases over performance have created a vicious cycle: higher costs drive away paying customers and investment, worsening revenue shortfalls and service failures.
The economic insights of the Austrian school applies powerfully here. Economic knowledge is dispersed. Local entrepreneurs and residents understand their needs far better than officials crafting one-size-fits-all budgets in the mayoral offices. Central planning and bureaucratic expansion cannot replicate the discovery process of markets, where prices, profits, and losses signal what works and direct resources accordingly.
Instead, Johannesburg’s approach exemplifies the fatal conceit: assuming officials can engineer outcomes through ever-larger expenditure, more regulations, and higher extraction from a shrinking formal base. The result is a governance-driven death spiral of debt, decay, and declining trust.
Fixing this requires rejecting the instinct for bigger, more interventionist local government. The Free Market Foundation has consistently advocated practical, liberty-oriented solutions that align with fiscal reality and individual enterprise.
First, fiscal responsibility: the city must live within its means. This means slashing wasteful expenditure, streamlining the executive (do we truly need an MMC for every minor portfolio and layers of deputies?), reducing an oversized, overpaid bureaucracy focused on core functions: protecting life, liberty, and property; maintaining essential infrastructure; and delivering basic services. Unrealistic revenue forecasts that lead to unauthorised spending must end. Budgets should reflect actual collection trends, not optimistic projections that burden future residents with debt.
Second, tax and tariff reform. Continually hiking rates and service charges while delivery collapses is self-defeating. It punishes compliant payers, encourages evasion or off-grid migration, and shrinks the tax base. Lower, simpler, more predictable tariffs would broaden the base by making Johannesburg more attractive for businesses and residents. Stop penalising those who invest in solar or other alternatives; reward efficiency instead of extracting administrative fees for unused services. Sound money principles and restraint in municipal borrowing would prevent loading unsustainable debt onto ratepayers.
Third, embrace markets and privatisation. Services like electricity (City Power), water, waste management, and even aspects of infrastructure maintenance have failed under the municipal monopoly. Greater private sector involvement, through competitive tendering, public-private partnerships, or outright privatisation where feasible, would introduce efficiency, innovation, and accountability. Private operators responsive to consumer demand and profit signals outperform politicised entities burdened by cadre deployment and union pressures. Johannesburg’s residents already show resilience in informal solutions; formalising and unleashing this energy through deregulation would accelerate recovery.
Individualism, rightly understood, supports this shift. It affirms each person’s right to pursue their own ends through voluntary cooperation, not coerced extraction by an overweening state. A leaner municipality focused on protecting rights rather than providing everything would free individuals and businesses to create value, employ others, and solve problems locally. Coerced “collective” solutions via ever-higher taxes have delivered dependency and decay; voluntary exchange and competition deliver coordination and progress.
Johannesburg stands at a crossroads. More loans, higher tariffs, and expanded government will only deepen the crisis. The path to renewal lies in humility before market forces, respect for dispersed knowledge, and policies that unleash entrepreneurship rather than suppress it.
By adopting fiscal discipline, tariff relief, and private sector solutions, the City of Johannesburg can escape its financial troubles and become a beacon of urban vitality once more. If not, the city and its residents will continue their march down the road to serfdom.
Zakhele Mthembu, BA Law LLB (Wits), is a Policy Officer at the Free Market Foundation.