South African Finance Minister Enoch Godongwana told Johannesburg Mayor Dada Morero that state funding to the city would be withheld unless a R10.3 billion wage settlement was cancelled.

Godongwana said in a letter dated April 23 and seen by Bloomberg that the two-year agreement with the South African Municipal Workers Union was signed illegally. When contacted through text message, the minister confirmed sending the letter.

“You are directed to desist from pursuing the implementation of this illegally signed agreement, which has the potential to destroy the stability of the City of Johannesburg,” Godongwana wrote.

“You know very well that this city cannot afford this compromise.”

The threat to halt government funding from July comes six months before municipal elections in November and has sparked a spate of mismanagement and corruption scandals in South Africa's largest city.

The development handed a campaign plank to the Democratic Alliance, South Africa's second-largest political party, which is trying to displace the African National Congress as the largest force in the city council.

Its mayoral candidate, former party leader and former Cape Town mayor Helen Zille, has called a press conference at 2pm local time. Godongwana and Morero are both ANC members.

A spokesperson for the City of Johannesburg did not respond to calls to his mobile phone.

In his sharply worded letter, Godongwana listed a series of regulatory and legislative violations that he says have been committed by the city of 4.8 million people.

These include non-meeting of revenue targets, non-payment of creditors on time and opaque city finances. He also said the city had failed to address unauthorized and wasteful spending about which his ministry had warned last year.

Johannesburg residents have suffered years of water and electricity outages, as well as potholed roads due to inadequate maintenance.

Source: bloomberg

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