Johannesburg is stuck in a ‘debt doom loop,’ new study shows

The City of Johannesburg is stuck in a “debt doom loop,” because its failure to collect outstanding obligations has forced it to raise tariffs to the point where fewer and fewer customers are willing or able to pay for services, a new study has found.

South Africa’s biggest city has accumulated R72 billion ($4.5 billion) in unpaid bills, up from R15 billion a decade ago, the Centre for Development and Enterprise said in a report published Tuesday.

That, the research organisation said, is the root cause of collapsing infrastructure.

“The city has become dangerously disconnected from financial reality,” said Ann Bernstein, the CDE’s executive director. “It bills residents and businesses, records those bills as revenue and spends on the assumption that the money will arrive. Increasingly, it doesn’t.”

The CDE described the situation as “a structural governance failure that constitutes a fundamental obstacle to delivering municipal services.”

The report is