State’s nonpayment of SMMEs is a ‘national disgrace’, PSC says

The government’s failure to pay small and medium businesses within the stipulated 30-day period was a "national disgrace", the Public Service Commission (PSC) says.

Outstanding debt of departments to businesses has been a perennial problem for years and has contributed to the failure of numerous small and medium-sized enterprises (SMMEs). It is not immediately clear to what extent departments have eliminated this debt as part of the government’s initiatives to support business during the Covid-19 pandemic, as this information will only become available later.

Deputy director-general Irene Mathenjwa made the hard-hitting comments against the government during a presentation on the appropriation bill on Monday before parliament’s standing committee on appropriations.

The PSC is an independent entity established in terms of the constitution to promote constitutional values and principles particularly those governing the public administration. It also provides advice, makes recommendations, proposes measures and gives direction to government departments.

In her presentation to the committee, Mathenjwa highlighted the fact that by the end of December, the three main transgressing departments with unpaid invoices of more than R500,000 were water and sanitation, with 513 invoices unpaid worth R539m; agriculture, with 71 invoices worth R76.8m; and public works, with 485 invoices unpaid worth R48.2m.

She said this nonpayment could be attributed to the nonavailability of funds; a lack of internal controls; and/or incorrect banking details provided by suppliers.

However, she added that “underlining this could be purely corruption and stubbornness of departments to eradicate the challenge of nonpayment of suppliers.”

“A clear directive should be provided to all departments by the National Treasury pertaining to actions to be taken by departments [against] officials responsible for the nonpayment of service providers within the stipulated time frame,” Mathenjwa said.

She said the failure by government to pay the businesses was a “national disgrace”, at the heart of which was a failure of management.

“Never mind the shameful corruption that is associated with it that people demand brown envelopes to pay. Even that shame could really be reduced if management were doing what they are supposed to do — just training fit-for-purpose managers who are able to crack the whip and monitor their teams to do their work. I think we are failing dismally to do that,” she said.

Mathenjwa stressed the importance of not allowing Covid-19 to open the way for the looting of state resources, especially when procurement was fast-tracked.

“Strategies should be put in place to deal with the aftermath of the lockdown in terms of unprofessional and unethical conduct of public servants, with particular emphasis on litigation,” she said.

The pandemic had worsened the pressure on state resources and highlighted the need to reduce the cost by the government of doing business.

Mathenjwa believed that the virtual meetings that are now being held by parliamentary committees during the lockdown could continue afterwards, to save on the costs of teams of officials flying down to Cape Town and possibly spending on a night of hotel accommodation. Covid-19, she said, had provided lessons in flexibility and agility

“Covid-19 has forced our hand in using ICT to improve service delivery and the function of public-sector institutions, and has shown that we are not prepared for the fourth industrial revolution. Online service delivery channels must be increased and enhanced. For this purpose, departments must ensure their readiness to capacitate employees to deliver services online with efficiency,” she told MPs.

ensorl@businesslive.co.za