'Already strangled' businesses owed more than R2bn by Eastern Cape government departments

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Eastern Cape Premier Oscar Mabuyane
Eastern Cape Premier Oscar Mabuyane
PHOTO: Lubabalo Ngcukana/City Press
  • Eastern Cape government departments collectively owe suppliers outstanding payments in excess of R2 billion.
  • As of September 2020, departments had 11 184 outstanding invoices that were older than 30 days.
  • The Black Business Forum said the province was adding to the cash flow woes of small businesses, which were already strangled by the crippling effects of the Covid-19 lockdown.

Small businesses in the Eastern Cape are being crippled by the provincial government's failure to pay them on time, with the debt to suppliers amounting to more than R2 billion.

Eastern Cape Premier Oscar Mabuyane revealed this week that outstanding invoices that were older than 30 days amounted to more than R2 billion in the province.

Mabuyane was responding to a written parliamentary question from DA MPL Kobus Botha in the Eastern Cape legislature.

The premier confirmed that as of September 2020, departments had 11 184 outstanding invoices that were older than 30 days.

Ace Ncobo, the CEO of the Black Business Forum (BBF), said:

At a time when small businesses are already strangled by the crippling effects of the lockdown, it is saddening that the state itself is compounding these cash flow woes.

Ncobo added that the forum would continue to speak strongly against the tendency of government officials to adopt a casual approach to the 30-day payment period.

"We call upon their political principals to implement strict consequence management remedies," Ncobo said.

Botha added: "SMMEs can turn provincial economies around, but if they are not paid on time, these small businesses can run into cash flow issues, which could lead to them being forced to close their doors, resulting in job losses. Non-payment of suppliers also adversely impacts service delivery in the province."

Key economic, 'job creation drivers'

"A capable state knows that small, medium and micro enterprises have the potential to be key economic and job creation drivers in turning around a contracting provincial economy," said Botha.

Botha added that in contrast, the DA-run Western Cape reported that departments paid, on average, 99.4% of all invoices for goods and services within 30 days for the 2017/18 and 2018/19 financial years.

He said despite launching the Have-I-Been-Paid (HIBP) online system for service providers to query their outstanding invoices, the number of suppliers not paid within 30 days, was extremely high in the Eastern Cape.

"The purpose of the HIBP system is to expedite the process and to ensure that suppliers have a direct link to query their invoices and to track payments. However, the online system does not seem to have had the intended impact. There has not been much of a decline in unpaid invoices. The premier must do more to ensure that departments pay their suppliers on time," said Botha.

Ncobo added that the BBF previously held numerous discussions with the provincial administration and was instrumental in advising the government to launch the electronic invoice payment tracking system. The system was meant to enable service providers to track their payments and for the treasury to monitor delinquent departments and municipalities.

Botha said:

The premier must make sure that accounting officers in the departments ensure compliance with Section 38 of the Public Finance Management Act (PFMA), which requires them to settle all outstanding invoices within the prescribed period of 30 days. Failing which, effective and appropriate disciplinary action must be taken.

Botha added that the premier must take a firm stand against the culture of non-payment, which had become the norm in recent years.

To prevent job losses and turn the economy around, suppliers must be paid on time, Botha said, adding that the DA would continue to fight for the survival of small businesses in the province.

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