Treasury director-general Dondo Mogajane. Picture: ESA ALEXANDER
Treasury director-general Dondo Mogajane. Picture: ESA ALEXANDER

Small, medium and micro enterprises (SMMEs) — already under financial strain due to the Covid-19 pandemic — are owed billions of rand in unpaid invoices by national and provincial government departments, a report compiled by the Public Service Commission (PSC) has shown.

This is despite a law that valid invoices and claims should be paid within the stipulated 30-day period.

In a circular issued in March 2018, Treasury director-general Dondo Mogajane stated that accounting officers and authorities of institutions falling under the scope of the Public Finance Management Act or the Municipal Finance Management Act must ensure measures are in place to pay valid invoices and claims within 30 days as required by legislation or, where applicable, within the period contractually agreed with suppliers.

On Wednesday, the PSC, which promotes constitutional values and principles governing public administration, expressed concern about the non-payment of suppliers by departments.

PSC commissioner Michael Seloane said SMMEs were already struggling to keep afloat when the coronavirus pandemic started. These businesses are now “under further pressure due to the non-payment of invoices by government”.

Seloane made the remarks during the PSC’s virtual launch of its quarterly bulletin, The Pulse of the Public Service, in Pretoria on Wednesday, which focuses on the non-payment of invoices by state departments, service delivery during the lockdown, and complaints and grievances handled by the PSC, during the period January 1 to March 31 2020.

At the end of the fourth quarter of the 2019/2020 financial year in March 31, the departments of public works and infrastructure, and water and sanitation, had defaulted with 173 and 137 invoices, amounting to R19.2m and R505.7m, respectively.

Seloane said that though the PSC has previously noted these departments’ concerns, they were struggling with historic debt and have since engaged the National Treasury for assistance, “the PSC cannot over-emphasise the impact this non-compliance has on the operations of SMMEs, especially in the current economic climate”.

With regards to provinces, at the end of March, the Eastern Cape had with 23,795 outstanding invoices amounting to R2.4bn, followed by North West with R603.5m, Gauteng with R548.2m, Northern Cape with R399.2m, the Free State with R265,1m, KwaZulu-Natal with R101.2m, Limpopo with R1.01m, and the Western Cape with R358,732 Mpumalanga did not submit its report for end-March, but by February it had R2.4m in unpaid invoices.

Seloane said: “With the government’s dedicated efforts to stimulate and support SMMEs, departments must do their part and ensure that suppliers are paid on time, the failure of which may be detrimental to their survival and negate government’s job creation measures.” During the first quarter of 2020, the unemployment rate increased by 1% to 30.1%.

In April, the business sector commended President Cyril Ramaphosa’s R500bn economic and social support for SA for putting SMMEs at the heart of the stimulus package.

On service delivery, Seloane said the challenges experienced were due to most public servants working remotely. “Only a few officials in essential services and those in critical positions were allowed to work, and this has put a strain in the capacity of the state,” he said.

“Though the lockdown has affected the lives of South Africans, with some losing their jobs and income, the PSC has noted with appreciation the government’s commitment to put aside R500bn and the establishment of the Solidarity Fund which will be used for Covid-19 relief.”

mkentanel@businesslive.co.za