The worsening financial crisis facing the City of Johannesburg has become a matter of national concern that rises far above party politics, labour disputes or electioneering, and all stakeholders now need to act with restraint, responsibility and a clear focus on protecting the metro's economic future.
So says Berry Everitt, CEO of the Chas Everitt International property group, who notes that the current standoff between the Finance Minister and the Mayor over the city’s finances and the controversial municipal wage agreement is stirring up uncertainty among investors, businesses, property owners and residents alike - at a time when the city can least afford a loss of confidence.
Finance Minister Enoch Godongwana warned this week that Johannesburg is in severe financial distress and that National Treasury could withhold grant funding unless urgent corrective action is taken. He also said the city could not afford the wage agreement reached with municipal workers late last year.
"This is clearly a volatile situation, especially in the light of the looming municipal elections, but at this point, the most important thing is for everyone involved to keep a cool head and do what is best for the city and South Africa as a whole," says Everitt.
“Johannesburg is not just another municipality. It is the economic engine room of South Africa and a major gateway for foreign investment into the country. If confidence in the City collapses, the effects will be felt throughout the national economy.”
He says that that frustration among municipal workers who believed they would receive promised wage increases must be acknowledged, and that any attempt to unwind the agreement will need to be handled extremely carefully and responsibly to avoid instability and disruption.
"At the same time, however, it the city cannot continue to make financial commitments that it is unable to afford or to sustain.
“This is exactly why calm, mature leadership is now required from all parties, including political leaders, unions, business organisations and civil society. Reckless decisions taken for short-term political reasons ahead of local elections could end up causing long-term damage to millions of people.”
Prolonged instability, service delivery failures, financial uncertainty and the threat of disruptive protest action will seriously undermine Johannesburg’s attractiveness as a place to live, work and invest, says Everitt.
"And the consequences for the residential and commercial property markets could also be severe, because property values are essentially are built on confidence.
"People invest in homes, developments and businesses when they believe a city has a stable future, functioning infrastructure and credible financial management. If that confidence is lost, property values can stagnate or even decline, which ultimately would har every homeowner, investor and business in the metro.”
He says Johannesburg still has enormous strengths, including its entrepreneurial base, financial institutions, established business districts and deep property market, but warns that these advantages cannot be taken for granted.
“What happens now matters enormously. South Africa cannot afford to see Johannesburg pushed into deeper financial distress through political brinkmanship, unaffordable commitments or social instability.
"Every stakeholder needs to put the long-term future of the city first, and if they do, the current crisis could ultimately serve as a turning point that encourages stronger financial discipline, better governance, improved service delivery and renewed co-operation between government, labour and the private sector."
