‘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.

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