Economic ‘doom loop’ threatens Johannesburg, report says
The city is “living off a fiscal fiction,” said the Centre for Development and Enterprise think tank.
Johannesburg's finances are in dire straits, according to a recent report from the Centre for Development and Enterprise. The city is "living off a fiscal fiction" as it struggles to pay its bills, leaving South Africa's economic capital cash-strapped and politically unstable. The report highlights that unpaid invoices have surged, creating a vicious financial cycle where rising defaults force the city to hike rates on those who do pay, causing them to stop payment altogether.
This self-perpetuating situation has been exacerbated by a sharp increase in wage costs, with employment expenses growing by more than 9% annually over the past decade. Additionally, spending on infrastructure has plummeted, leading to serious issues such as extensive water leaks and potholed roads.
The report's timing is particularly pressing, as it falls just weeks before South Africa's local government elections in November. Johannesburg, which accounts for 16% of South Africa's GDP and hosts the majority of Africa's corporate headquarters, is the focal point of the country's electoral showdown. The city's financial woes are seen as a critical factor in the national vote, with the outcome potentially having far-reaching implications for the region.
Written by urgent.news from Semafor's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
