The Public Service Commission (PSC) says provincial government departments across the country continue defaulting on payments to small businesses, owing them nearly R5bn.
It said these departments were sitting with unpaid invoices worth a staggering R4.8bn for the first quarter of the 2022/2023 financial year.
This translates to roughly 24,242 outstanding invoices.
The biggest defaulter and repeat offender was identified as the Eastern Cape, which owes businesses R2.5bn, followed by Gauteng with R1.3bn and in third place is the North West with R392m in unpaid invoices.
PSC deputy director-general for monitoring and evaluation, Irene Mathenjwa, said while the figures had gone down compared to the same period in the previous financial year, the outstanding invoices were unacceptably high.
“The majority of these invoices are sitting in the health sector, education followed by human settlements.
“The first challenge is a systems issue. We still struggle with IT and how we track invoices and sometimes have systems issues such as logins for payment of suppliers. Unrecorded, unresolved and incomplete invoices,” she said.
Mathenjwa said unpaid invoices had a profound impact on a small business which often meant salaries don't get paid on time, raw materials can't be acquired, existing projects suffer, and new ones can't be taken on.
“Late and nonpayment of suppliers is a huge deterrent for entrepreneurs who aspire to establish their own businesses in future, thus perpetually discouraging business to flourish and job creation. Often, SMMEs have no recourse as they do not have financial muscle to litigate against the government while others are mindful that they may not be considered in future if they fight for their payment,” she said.
Mathenjwa said although provinces submitted their reports for the period under review, some like Limpopo did not submit their reports on time.
For national departments, the number of unpaid invoices was 959 for the value of R4,108,388 as of June 30 2022.
Mathenjwa said the department of water & sanitation as well as the department of tourism were the biggest contributors to the number of unpaid invoices.
DA MP Leon Schreiber said the problem seemed to be getting worse, adding the amounts mentioned were “absolutely devastating”.
“This is happening in a context of an already struggling economy and 10-hour electricity cuts that small businesses and many businesses are trying to confront. It’s kicking businesses while they are down. You can’t explain. South African small businesses are folding by the dozen and if we don’t get to a point of appointing officials on merit, then this picture will not improve,” he said.
IFP MP Russel Cebekhulu said officials did not care what happened to businesses or how they were affected by late payments.
“If one looks at how departments perform in provinces, these people are very relaxed because they know at the end of the month, they'll be getting salaries. They don’t care about the lives of those employed by these SMMEs.”
The EFF's Rosina Nkomane said public officials were a law unto themselves, and were “untouchables.”
“They know nothing will be done and to say the least, the AG has pointed out these challenges and nothing happens to the departments to correct these challenges.
“This impacts on the economy of the country, the capacity of small and medium enterprises because they'll be unable to grow and pay the people working for them. That's why poverty in the country is so high,” Nkomane said.
Eastern Cape provincial treasury spokesperson Pumelele Godongwana at the end of August said the rand value in outstanding invoices was R2.1bn and of that, R1.7bn was owed by health followed by the departments of education and transport.
Godongwana said medico-legal claims consumed the bulk of provincial health's equitable share.
“These are not budgeted for, and because we have to comply to court orders, we are then forced to use the budget that was intended for other items. Working with the office of the premier and health, provincial treasury is currently implementing an intervention to improve efficiencies across the system.
“These measures, in a nutshell, seek to address the department’s cost of employment, their infrastructure and their supply chain processes. They also seek to decrease clinical risks, deal with fraud and corruption, digitalisation of systems and widen their revenue sources.”
nkosin@sowetan.co.za
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