Thousands of businesses in the Eastern Cape are squeezed financially by delayed payments from the provincial government. Small businesses are the most effective form of job creation and the province must pull out all stops to ensure their growth and survival. They cannot be the cash cow that is being milked while government delays payments from one financial year to the next to hide financial mismanagement.
According to a question for written reply by me to the MEC for Finance, Phumulo Masualle, a total of 12 731 businesses were owed an amount of R1, 455,232 billion by provincial departments in excess of 30 days as at the end of the financial year (31 March 2012). There were still 40 525 invoices due for payment to these 12 731 suppliers. The worst performing department was Health which owed suppliers a total of R865, 715 million followed by Education, R247 million, and Roads and Public Works, R218 million. For the reply, click here:
This amounts to an average of R114 270 per supplier. Delayed payments of these amounts can be crippling for a small business and drive them under.
Of the 12 731 businesses that were owed money, 6 716 were owed by Education and 3 983 were owed by Health. Some departments performed very well and had less than 50 creditors outstanding. (Legislature 6, Economic Development 15, Transport 41).
It is quite clear that the Health Department is deliberately delaying payment so as to deal with its financial crisis. This merely compounds the problem as last year’s financial shortages are simply rolled over into the next year.
The DA welcomes the detailed response from the Provincial Treasury. It shows they have the information at hand to monitor the situation. However, they urgently need to intervene with departments to ensure that they don’t use small business to finance their debt from one year to the next. A Democratic Alliance-led provincial government would ensure the right climate is created for businesses to grow and create jobs.