“It is clear the health department was deliberately delaying payment” — Bobby Stevenson
MORE than 12 000 Eastern Cape small businesses are being squeezed financially because the provincial government has failed to pay them more than R1.4-billion for services rendered.
In a written reply to a parliamentary question lodged by the Democratic Alliance, Finance MEC Phumulo Masualle admitted the province had failed to pay 40 525 invoices submitted by 12 735 suppliers by March 31 – a debt amounting to R1.45-billion.
Masualle said the department of health was the biggest culprit in non-payment to suppliers as it owed close to R900-million to 3 983 suppliers who had submitted 15 126 invoices.
The troubled provincial education department had failed to settle 13 348 invoices submitted by 6 716 of their suppliers, a debt more than 30 days old and amounting to R247-million.
Policy stipulates government departments are supposed to settle debts 30 days after an invoice has been submitted by service providers.
Yesterday Dumisani Mpafa, provincial chairman of the Black Management Forum, slammed the nonpayment by government departments – a growing trend his organisation had been fighting unsuccessfully.
“It’s killing the entrepreneurship skills we want in this country. It presents black people as bad businesspeople and it destroys our credibility,” said Mpafa.
“It will only change once someone litigates but people are reluctant to do so for fear of losing future deals.”
The DA warned delayed payments could force small businesses to close.
“Thousands of businesses in the province are squeezed financially by these delayed payments which could drive some under,” said DA MPL and finance shadow MEC Bobby Stevenson.
Urging the province to pull out all stops to ensure their growth and survival, Stevenson said small businesses were the most effective form of job creation.
“They cannot be the cash cow that is being milked while government delays payments from one financial year to the next in order to hide financial mismanagement,” he said.
“It is quite clear the health department was deliberately delaying payment to deal with its crisis. “This merely compounds the problem as last year’s financial shortages are simply rolled over to the next year.”
An East London landscaper owed close to R5-million by various provincial departments shut down his 11year business in November.
He had 285 employees on his payroll. In what could be the country’s first action of its kind against the government, the East London businessman approached the Human Rights Commission to intervene.
President Jacob Zuma recently expressed unhappiness about the non-compliance of government departments with regard to the timely payment of service providers.
Speaking at the Soweto International Conference on Entrepreneurship and Small Business Development Conference in May, Zuma said the delay in making payments needed to stop as it was crippling the country’s emerging and established entrepreneurs alike.
He later announced performance contracts for senior managers and accounting offices would be enforced with a clause that forces them to pay suppliers on time.
A breakdown of the outstanding payments per department in the Eastern Cape includes:
Health department owing 3 983 suppliers a total of R865.7-million.
Roads and public works owing 766 suppliers an amount of R218-million.
Transport with 251 creditors who are owed R49million.
Local government and traditional Affairs owes 228 suppliers an amount of R15-million.
Social development has 243 suppliers and owes R10-million.
The premier’s office, the legislature, sports arts and culture, safety and economic development departments who owe suppliers just over R2-million each, and
Treasury and agriculture departments owe close to 200 suppliers a combined R10.4-million.
Stevenson pleaded with Masualle’s department to intervene and ensure provincial departments settle their debts in time so as to avoid putting a strain on small businesses.