South Africa: Eastern Cape Govt Departments Owe Suppliers R2.3 Billion in Outstanding Payments

Eastern Cape provincial government departments owe businesses a combined R2.3bn in outstanding payments.

This was revealed this week by the province's Finance MEC Mlungisi Mvoko while responding to questions from DA provincial leader Bobby Stevenson.

Mvoko revealed that these were outstanding payments in excess of 30 days owed by Eastern Cape government departments to suppliers for goods and services rendered, as at the end of February this year.

Mvoko said that the 18 174 invoices were more than 30 days in arrears, and still needed to be paid.

The biggest defaulters are the department of health, owing in excess of R2.1bn to its suppliers that submitted 17 470 out of 18 174 invoices.

The second worst performer was the department of education, which owes just over R154m to its suppliers.

'Job-crushing'

Altogether 10 out of the 14 departments in the province are experiencing problems in making timeous payments to their suppliers, said Stevenson.

Stevenson has accused the "job-crushing" provincial government of crippling businesses.

"There is no place for a job-crushing administration in these times. In a period like this, where businesses are battling to make ends meet and pay their staff, the non-payment for work runs contrary to any commitment to economic recovery. This uncaring approach to paying timeously, is crippling businesses and destroying jobs. We need to get the money owed flowing into the economy as fast as possible."

The DA MPL said the reasons given for the health department's non-payment of suppliers was that funds were depleted.

"This means that as at the end of February 2020, the department no longer had any funds left in their budget to pay suppliers. This is simply unacceptable," he said.

Stevenson said the provincial treasury needs to urgently intervene to ensure that suppliers are paid within 30 days, with a special focus on addressing the backlog in the Department of Health.

Eastern Cape Black Business Forum secretary Luthando Bara described the non-payment as the "primary assassination" of small businesses.

On behalf of the BBF, Bara said: "The government has been choking businesses to death even before Covid-19. Politicians are paying lip service to it and pretending to care."

Bara said no government official has been charged or lost a job for this "behaviour which causes hundreds in job losses monthly".

Even more than ever before small businesses need predictable cash flow to survive, pay their employees and suppliers, market their products and services, and invest in their businesses, said Bara.

The Eastern Cape finance and economic development MEC's spokesperson Mzukisi Solani said: "The executive committee of the province had mandated provincial treasury to form war-rooms to address both the departments of health and education on supplier payments. In this regard, additional to other interventions, engagements were held in the last financial year with both departments.

"It needs to be added that some of these delayed payments are for infrastructure projects, which by their very nature requires extensive verification for accountability before payment disbursement. The public requires money's worth for every cent the government pays out."

Stevenson said the entire health sector could end up being crippled if service providers withhold their services due to non-payment.

He added: "I welcome the commitment of the MEC that provincial treasury and the Office of the Premier have agreed to set up a team to look at both the department of health and education to see how these problems can be overcome. I will continue to fight for businesses to be paid so that they can survive in this difficult time."

Source: News24

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