Abstract
Background: The Republic of South Africa [RSA] (2000) establishes the regulatory framework for the operation of South African municipalities, highlighting their duty to deliver services to the community and manage both service provision and debt collection. Currently, outstanding debts owed by households and businesses to municipalities nationwide are estimated at R416.1 billion (2025), with the City of Johannesburg accounting for approximately R50 billion to R63 billion of this total. The continued increase in municipal debt undermines long-term financial stability and negatively impacts the effectiveness of public service delivery.
Problem Statement: Despite the escalating fiscal challenges posed by consumer indebtedness, a significant gap remains in quantitative research examining its implications for the financial sustainability of municipalities, particularly in the case of the City of Johannesburg.
Aim: To investigate the effect of consumer debt on organisational financial sustainability in the City of Johannesburg.
Research Methodology: Primary information was collected through a structured questionnaire, which was officially distributed and completed individually by 131 respondents. The collected data were analysed using SPSS version 29.0, with findings reported through descriptive statistics, exploratory factor analysis, Spearman’s rank-order correlation, and multiple linear regression techniques. Secondary data were gathered through the review of existing literature.
Key Findings: Descriptive results identified inflation (M = 4.56), poor service delivery (M = 4.50), municipal inefficiencies (M = 4.50), and unemployment (M = 4.47) as key drivers of consumer debt. Respondents strongly supported mitigation strategies, such as flexible payment plans (M = 4.60), smart metering (M = 4.49), and improved billing systems (M = 4.45). Moreover, exploratory factor analysis revealed six latent factors with strong validity (KMO > 0.800; Bartlett’s Test, p < 0.001) and reliability (Cronbach’s α > 0.70). Spearman’s correlation demonstrated significant positive associations between financial sustainability and consumer engagement strategies (ρ = 0.566, p < 0.001), debt management practices (ρ = 0.519, p < 0.001), technology and data-driven approaches (ρ = 0.479, p < 0.001), and socioeconomic pressures (ρ = 0.351, p < 0.001). Regression analysis explained 49.7% of the variance in financial sustainability (R² = 0.497, Adjusted R² = 0.464; F (8,122) = 15.054, p < 0.001), with consumer...