Financial alarm bells ring across seven of SA’s eight metros

South Africa’s metropolitan municipalities are sinking deeper into financial trouble, with the lone exception of Cape Town, according to an analysis by Ratings Afrika.

All but Cape Town spent more than they earned in 2025, with the remaining seven racking up combined liquidity shortfalls of nearly R12.6 billion.

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Cape Town scored 71 out of 100 on the Ratings Afrika Municipal Financial Sustainability Index (MFSI), well ahead of second-placed Nelson Mandela Bay on 48 and Buffalo City on 43.

The average score across the eight metros was just under 40.

Joburg’s finances worsen

The picture for Johannesburg is bleak and getting worse, with four consecutive years of operating losses boring a jumbo-sized hole into the city’s finances.

A liquidity surplus of R2.6 billion in 2021 had deteriorated into a liquidity shortfall of R10.1 billion by 2025.

Another contributor to Johannesburg’s financial difficulties is its poor revenue collection rate of only 84.4%, which is more than 10 percentage points below the generally accepted benchmark of 95%.

“Unless revenue collection improves substantially, Johannesburg is likely to remain on a downward financial trajectory, with the risk of a serious financial crisis becoming increasingly pronounced,” says Ratings Afrika.

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Johannesburg will continue to rely on borrowing to finance infrastructure development. Its borrowings increased to R22.9 billion in 2025, the highest level among all metros and equivalent to more than 34% of operating revenue.

The MFSI scores each municipality out of 100 using information from its audited financial statements. It evaluates six areas: operating performance, liquidity management, debt governance, budget practices, affordability and infrastructure development.

“The City of Gold has unfortunately lost much of its shine,” says Leon Claassen, managing executive at Ratings Afrika.

“Restoring Johannesburg to its former economic and urban stature will require an extraordinary and sustained effort. Above all, this will depend on rebuilding the City’s financial sustainability, strengthening governance and ensuring that available resources are used efficiently to restore service delivery and support long-term infrastructure investment.”

The Ratings Afrika assessment of Joburg mirrors recent reports from the Centre for Development and Enterprise (CDE), depicting a city peering into the abyss.

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It has had nine mayors and eight coalition administrations since 2016, while political allegiance has taken precedence over competence in key appointments.

Tshwane’s race to the bottom

Tshwane is in the weakest financial position of any metro, with a financial sustainability score of just 25.

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Its financial problems stem from weak operating performance, with the metro spending well beyond its means. Its liquidity shortfall spiked to R8.4 billion in 2025, while revenue collection (the percentage of invoices actually collected) was 88%.

This puts Tshwane under pressure to increase rates and tariffs, but doing so could make these services unaffordable for many residents.

Tshwane’s capital expenditure of just R1.5 billion in 2025 is far too low for a city of its size, giving it an infrastructure development score of just 16.

Its debt burden, at 31.8% of operating revenue, is considered moderate, but as debt increases so does its risk profile. This means it has limited capacity to take on additional borrowing should this become necessary.

Cape Town bucks the trend

Cape Town is no stranger to the gold medal podium.

An operating surplus of R2.9 billion, together with government grants of R2.3 billion, enabled the city to invest R9.6 billion in infrastructure in 2025.

It has consistently maintained a high level of infrastructure investment over the past three years, with cumulative expenditure of R25.2 billion. Ratings Afrika says this is well above average and is reflected in Cape Town’s very high infrastructure development score of 79.

The operating surpluses generated by Cape Town over the past three years have been sufficient to limit the city’s borrowing requirements to about R1 billion in 2025.

The city’s long-term borrowings increased modestly, from R5.6 billion in 2024 to R6.5 billion in 2025.

“With borrowings equivalent to only 11.8% of operating revenue, Cape Town’s debt burden remains low, reflecting a low level of financial risk,” says the report.

The sustainability of SA’s metros

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Metro
Sustainability score
Operating surplus/(loss)
Liquidity surplus/(shortfall)

Cape Town
71
R3.0bn
R12.3bn

Nelson Mandela Bay
48
(R1.2bn)
R4.2bn

Buffalo City
43
(R1.0bn)
R608m

eThekwini
36
(R3.3bn)
(R5.0bn)

Johannesburg
35
(R2.8bn)
(R10.2bn)

Ekurhuleni
31
(R2.5bn)
(R4.6bn)

Mangaung
30
(R510m)
(R1.3bn)

Tshwane
25
(R1.3bn)
(R8.4bn)

Source: Ratings Afrika

Nelson Mandela Bay

Nelson Mandela Bay enjoys a “fair” level of financial sustainability, reporting an operating loss of R1 billion in 2025, an improvement on the R1.3 billion loss recorded the previous year.

Five years of operating losses have weakened its liquidity position.

But perhaps most alarming is the revenue collection rate of just 71%.

If this does not improve, the metro’s ability to maintain effective service delivery will be constrained.

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The city will need to address losses arising from service delivery, particularly electricity. Its long-term borrowings remained low at R800 million, equivalent to 5.3% of operating revenue.

Ekurhuleni

Ekurhuleni is another metro in trouble, scoring just 31 on the MFSI.

This is due largely to five consecutive years of operating deficits, which have weakened its capacity to invest in the infrastructure required to support a rapidly growing metro.

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This is reflected in the declining score for the infrastructure development component, which fell from 62 in 2021 to just 40 in 2025.

If this trend continues, it could, over time, adversely affect the functionality and sustainability of the metro, says the report.

Mangaung

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Mangaung, long regarded as one of the worst-run metros in SA, continues to struggle with persistent operating losses, the result of weak budgetary practices and poor financial discipline.

Maintenance has been deferred due to a lack of funds, as has investment in infrastructure.

Capital expenditure has been financed largely from the municipality’s own resources and capital grants received. Over the past two years, Mangaung has not raised any new loans.

Consequently, its outstanding borrowings have declined to R384 million, equivalent to only 4.5% of operating revenue.

While the low level of borrowing limits debt-related financial pressures, it also highlights the municipality’s constrained capacity to finance infrastructure investment through debt.

Buffalo City

Buffalo City’s financial sustainability is considered fair but has been on the decline since 2021. The city’s operating expenditure is running well ahead of revenue, while revenue collection of 85% over the past two years is placing it under severe liquidity pressure.

The city spent R3.7 billion on infrastructure over the previous three years, which is considered adequate given its size and revenue base.

Buffalo City’s borrowings as a percentage of revenue are extremely low at 1%, giving it capacity to increase debt should it want to accelerate infrastructure expansion.

eThekwini

eThekwini is likewise considered to have a “fair” MFSI score of 36, but its position has deteriorated over the last decade.

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Investment in infrastructure over the last three years amounted to R18.7 billion, giving it an infrastructure development score of 75.

The metro raised R4 billion in new loans over the last three years, bringing total debt to R8.9 billion.

Its debt burden relative to operating income, at 18%, is moderate, but unless it gets a tighter grip on operating expenditure and liquidity, services are likely to suffer.

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