How government is destroying business in the Eastern Cape

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

Instead of helping businesses weather the COVID-19 pandemic and the economic fallout of the subsequent lockdown, the Eastern Cape government appears dead set in driving the final nail into the coffin, by withholding billions of rands owed to their service suppliers.

This came to light during a briefing from the Eastern Cape Provincial Treasury to the Finance Portfolio Committee on the state of the provincial fiscus yesterday, ahead of the adjustments budget next week.

During the meeting shocking revelations about how provincial departments have failed to pay service providers timeously were made.

At the end of the previous financial year, 31 March 2020, provincial departments owed service providers a combined R3.2 billion in outstanding payments. What is worse is that, by 30 June 2020, only R1.7 billion of this debt had been paid.

This means that there are businesses that were already owed money in March have been waiting for at least another three months, during the middle of some of the worst economic conditions to have hit this province, for over R1,5 billion for services rendered to the State.

It is small wonder that so many of our companies are closing their doors and retrenching staff.

When we consider that the Eastern Cape provincial departments have underspent on their budgets by R2,364 billion as of the first quarter of the new financial year, it is simply unfathomable that these suppliers have not yet been paid!

Unfortunately, provincial departments are not the only culprits that are failing to pay their dues.

As of 31 March 2020, municipalities in the Eastern Cape had outstanding debt owed to creditors totalling R2.8 billion!

Some R1,01 billion of that outstanding debt being due and payable by the Nelson Mandela Bay Metropolitan Municipality, the biggest municipality in the province.

More than R1,6 billion of that debt has been outstanding for over 90 days!

I have tabled several proposals to the Portfolio Committee on how we can assist businesses through this economic crisis.

Government must create an enabling environment for business, and ensure that they pay their suppliers on time, rather than wilfully sabotaging them.

I am once again calling on any business, which has not been paid by a government department in the last 60 days or more, to contact me directly.

We cannot afford to have businesses closing their doors, and retrenching thousands of breadwinners in this province, when it could easily be avoided by paying them on time.