By: Tebogo Mokwena
Provincial governments have come under fire from the Public Service Commission for owing SMMEs a shocking R5 billion in unpaid invoices between October and December last year. PSC CEO CEO Anele Gxoyiya said that the unpaid invoices had resulted in many small businesses collapsing and demanded that this practice came to an end. Gxoyiya made these remarks on Thursday today during the PSC’s “Pulse of the Public Service Commission” for the period between 1 October and 31 December 2022.
The findings revealed that provincial governments owed R5,084,030,030 with the Eastern Cape owing the highest amount at almost R2,095,391,159, followed by Gauteng and the Northern Cape. The provinces regressed by 31.6% compared to the previous period and the lack of consequence management was the main cause of departments failing to pay SMMEs, Gxoyiya noted. “We are of the view that the economy’s growth would have been bigger had departments complied with payments,” he said.
Meanwhile, Nafcoc Eastern Cape provincial president Cwayita Zituta told Vutivi News that SMMEs from the Eastern Cape were reeling under the pressure of not having enough cash flow. Zituta said that Nafcoc had been demanding answers from the Eastern Cape government, but a clear reason was forthcoming on why they were not paying invoices. “We need to put more pressure, lobby for support and engage the government so that we can see if there is some way to improve their payment mechanisms to pay SMMEs on time,” she said.
“SMMEs are still recovering from the Covid-19 pandemic and the energy crisis, and when you add the issue of late invoice payments you find that the SMMEs are not coping.” Nontombi Mjo, who runs a catering company called Amarhudulu Trading, told Vutivi News that the Amathole District Municipality still owed her R6000 for catering that she did for them in January last year. Multiple attempts at following up on the payment were unsuccessful, as each call she made to their offices was met with an excuse, she said.
The outstanding payment resulted in her not being able to pay her insurance policies and rent for her business for a few months. “This is very frustrating as it is a drawback for the business,” she said. Small Business Institute CEO John Dludlu said that the SBI welcomed the continued spotlight that was being shone on the subject of late or non-payments by the state. He noted that the SBI was concerned that the problem persisted even during a tough economic environment of low growth, red tape and high-interest rates.
He further called on the government to sanction those responsible for the nonpayment of invoices. “Even more worrying is that the perpetrators are not being held accountable,” Dludlu said. “This is grossly insensitive to an important segment of the economy, as SMEs are too important to be treated this way. We hope the office of the Presidency, which is coordinating red tape reduction efforts across government, picks up on this epidemic.” The national departments owe 2757 SMMEs a total of R90,807,367 for the same period. Provincial governments owe money to 34,689 SMMEs.