‘They have no money’

2014-11-12 00:00

THE Education Department is facing a cash crunch, struggling to pay many of its service providers.

Treasury head Simiso Magagula said the department was forced decide every month which suppliers it pays out and which have to wait for their money.

Among those affected are contractors responsible for the school nutrition programme and contractors for building schools.

Addressing the Finance Portfolio Committee yesterday, Magugula said: “The department has no money … At the end of the month, they have to rob somewhere to pay somewhere.”

The department has an annual budget of close to R40 billion.

It is expected to appear before the committee on Friday.

What has worsened the situation is the introduction of a “cash block” system.

This means the department can no longer access money meant to pay for other services to plug gaps in its cash flow. Committee members were also shocked to learn that the department has incurred more than R2 billion in ­irregular expenditure as a result of flouting supply chain management procedures.

“What I have also learnt … is that the department has been making two payments for one service.

“I was shocked by that because that was the first time I have heard of such a thing,” said the chairperson of the committee, Sipho “KK” Nkosi.

He said the department faced a crunch because of pressure from the staff wage bill, with little of its budget going towards infrastructure.

This was the result of wage increase decisions taken nationally.

“They are always a percentage short when it comes to wages. They would budget for a 6,3% increase and the wage agreement would be at 7,3%.

“In the Department of Education, a single percent is worth more than R300 million,” said Nkosi.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.