A detailed quarterly report from the Public Service Commission (PSC) reveals that no provincial government has paid its suppliers within the prescribed 30 days of receipt of an invoice or, in the case of civil lawsuits, the date of the settlement or judgment of the court – in accordance with the PFMA.
The North West Provincial Government is among the top five contributors to non-payment of suppliers, as of the end of December 2021. The province has recorded 5,296 invoices, which amount to R416,519,583 which have not been paid within 30 days.
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The Free State Provincial Government recorded 731 bills amounting to R38,547,043 at the end of December 2021. Some of the Provincial Government offices had previously had their water and electricity cut off due to non-payment of their bills at the cash-strapped Mangaung. Municipality of the Metro.
The Free State government is currently paying 90 million rand per month – in line with the agreement with the metro’s electricity utility, Centlec – in a bid to pay off its debt. It remains unclear how the provincial government will service its debt to the metro, as its water bill runs into billions of rand.
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However, the Northern Cape provincial government – compared to other provincial governments in the country – recorded the lowest amount of money it failed to pay on time. They failed to settle 20 bills at the end of December 2021, which amounted to over R595,200.
The report further indicates that late or non-payment of invoices have disastrous consequences on the financial health of companies. Late payments are particularly damaging for small, medium and micro-enterprises (SMMEs). SMEs play a central role in contributing to government initiatives for job creation and poverty reduction.
Therefore, delay and non-payment of suppliers is counterproductive to the government’s job creation and poverty reduction initiatives, as employees lose their jobs and contribute to unemployment.
“Delay and non-payment by suppliers can expose departments to costly litigation for non-payment, including being ordered to pay interest on late payments, which diverts already scarce financial resources from priority areas,” indicates the report.
OFM News/Mais Koteli and Kekeletso Mosebetsi