Gov departments, provinces owe service providers billions

At least 10 government departments owe a number of their service providers almost R100 million, while provinces owe their contractors billions, despite supposed measures implemented to cut red tape and make payments within 30 days.

The Public Service Commission (PSC), which is tasked with championing good governance across the state, on Thursday released its quarterly report covering the period between October and December 2022.

Leading the pack with outstanding payments at national government is the Department of Health, which owes service providers R56 million.

These are the businesses that ensure that clinics and hospitals have medicines, personal protection equipment and many other essential services.

The public works department is yet to pay out R23 million, while Statistics SA owes R9.3 million.

No report from defence department

South Africa has more than 20 national departments after they were reconstituted and reduced by President Cyril Ramaphosa in 2019.

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According to the report, departments that are not on the list, including basic education, the Presidency and police, among others, have no outstanding invoices.

“The departments of Health, Tourism and Public Works and Infrastructure and Statistics South Africa contributed the most to the number of unpaid invoices with more than 250 invoices.

“Of concern is the Department of Health with 1 997 invoices to the value of R56 million as of the end of quarter three of 2022/23,” read the report.

The PSC further expressed “disconcert” after the Department of Defence and Military Veterans failed to submit its report to National Treasury by November 2022 as required, while some made submissions late.

“The late and non-submission of the exception reports by departments shows disregard for their legal obligations and the late or non-payment by departments demonstrates little care for the plight of small businesses and their struggles.

“Although the number of unpaid invoices reduced slightly, it is encouraging that the number of national
departments that reported unpaid invoices older than 30 days reduced from 16 during quarter 2 to 11 during quarter three of 2022/23.”

Provinces worst offenders

Small businesses constitute most of the service providers doing business with government, and many end up closing shop because payments are either stopped or paid out very late.

The worst offenders are the provinces, which owe businesses more than R5 billion combined.

The Eastern Cape owes R2 billion, followed by Gauteng with R1.6 billion. The third is KwaZulu-Natal with an outstanding R652 million.

The non-payment of invoices by provinces worsened as at the end of December 2022, said the PSC.

The overall number of unpaid invoices that are more than 30 days increased from 27 068 at the end of September 2022 to 35 632 at the end of December 2022, a regression of 31.6%.

The PSC said following its recommendation, the portfolio committee on public service and administration in Parliament held a meeting with defaulting departments and officials from the nine premiers’ offices in November last year.

“Some of the issues raised by the departments were challenges pertaining to financial management. The
Department of Public Works and Infrastructure indicated that a turnaround and financial recovery plan has been developed and was currently being implemented.

“The said department has also established a high-drive initiative called ‘Operation Re Ya Patala’ (Operation We Pay) aimed at clearing all the payment backlogs. Furthermore, a dedicated hotline has been set up at the dedicated call centre to facilitate.”

Limpopo failed to submit its report to National Treasury.

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