Joburg takes an average of 311 days instead of a maximum of 30 days to pay its creditors, according to the auditor-general.
The City of Joburg is South Africa’s second-worst municipality when it comes to settling debts with contractors.
The city takes an average of 10.3 months to pay its contractors, while Mangaung holds the title for the worst payment record with 10.6 months.
Auditor-general findings and the sweeping system
This is based on the auditorgeneral’s Consolidated General Report on Local Government Audit Outcomes 2023-2024, which was updated in August.
Joburg’s payment problems stem from both a liquidity crunch and the “sweeping” arrangement employed across all departments and entities of the city.
Sweeping refers to the pooling of the money generated by the entities into a central bank account – meaning that they do not have control over their finances and leads to them not being able to pay contractors.
The result of these late payments or non-payments is evident across all Joburg’s entities, but particularly so at Joburg Water.
The payment problems have led to delays in the completion of crucial projects and the suspension of work on various sites.
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This reputation for late payment has also seen many engineering contractors and suppliers unwilling to tender for contracts because they know the city has a poor record of managing and paying service providers.
Mounting debt and worsening operational challenges
In October, City Power acknowledged that it owed contractors more than R1.2 billion, which it said was largely due to funding challenges in Joburg.
Municipalities are supposed to pay service providers within 30 days. Joburg takes an average of 311 days to pay its creditors, according to the auditor-general.
In the past few weeks, residents of the informal settlements of Nana’s Farm, Phumla-Mqashi, Veggie Land and Precast went without water as contractors delivering water to informal settlements walked off the job because they had not been paid.
It was the fourth time that this happened this year.
Water outages escalate community frustration
Joburg Water Ennerdale put out a statement saying: “The provision of water supply services to the informal settlements in the Deep South has been disrupted following the suspension of operations by the appointed service provider.”
Phumla-Mqashi community leader DJ Phaka said the community was only informed this week and questioned why residents were not told earlier.
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“There are about 5 000 households here and no water. The [water] truck drivers stopped working because they have not been paid. It’s now the sixth day without water for us.”
In response to a query about this, Joburg Water said: “The matter has been addressed with the service provider and the service is expected to resume. Johannesburg Water currently has five internal trucks deployed to assist with supplying water to the affected informal settlements.”
Contractors halt major construction as payments stall
The contractor of the new Brixton tower and reservoir closed the site on 27 November because it had not been paid.
Work has since resumed, although Joburg Water has not provided answers to questions put to them.
This is despite Joburg Water asking for an extension to respond to questions about payments to the contractor.
In response to questions from the DA’s Stephen Moore about late or outstanding payments to Joburg Water contractors, the department of water and sanitation listed the following as outstanding at the end of September:
- Bezuidenhout Valley sewer pipe replacement phase R4 064 779.42.
- Dube Hostel water reticulation project R2 214 048.76.
- Brixton Reservoir tower and pump station R2 587 034.49.
- Crosby bulk infrastructure R3 826 059.78.
- Supply and installation of prepayment water meters in Cosmo City phase 2 R7 405 069.55.
- Hector Norris water pump station refurbishment R8 184 955.30.
- Basic sanitation Wilgespruit R1 247 607.10
- Stretford Ex 6,7 and 8 bulk sewer pipe replacement R1 037 554.90.
- Village Deep water pipe replacement phase 2 R1 458 245.03.
- Blairgowrie water pipe replacement phase 3 R319 295.36.
- East Rand tower and pump station R2 182 790.08.
- Deep South extreme emergency sewer pipe replacement R1 575 435.72.
This story is produced by Our City News, a non-profit newsroom that serves the people of Joburg
