Gauteng entrepreneurs suffer great losses when government fails to pay them, but there is a fix

9 February 2022

Failure by Gauteng Provincial Government Departments to pay SMMEs has in many cases resulted in businesses shutting down and loss of employment. 

This is very concerning as often some SMMEs will have to borrow money to timeously deliver on the goods and services they have tendered. Instead of being paid within 30 days or less, they often need to wait much longer than that whilst drowning in debt or having to delay paying their employees who are dependent on this income to put food on the table.    

During a recent Portfolio Committee meeting I asked the Department of Provincial Treasury’s Head of Department (HOD), Ncumisa Mnyani, about the impact late payments have on the SMMEs that are dependent on government tenders to pay their employees.  In her response she said they don’t as they have not done the research on the matter. 

it is unacceptable shocking that the department which is tasked with a responsibility of making sure that all service providers are paid within 30 days does not know exactly how many small businesses are affected by late payments and how they are affected. 

The Department of Health is the main offender when it comes to paying invoices late. According to a presentation by Gauteng Treasury, 78% of the invoices were paid outside of the 30 days during the third quarter, while the Department of Infrastructure Development paid 14% of its invoices late and the Department of Education only 1%.  On the other hand, the Department of Agriculture, Premier’s Office and COGTA all paid within 30 days.   

According to the HOD, the SMMEs who receive tenders from government do not add any interest to their late invoices as this will change the entire process of invoicing government, which will ultimately change the total amount that has to be paid.    

Gauteng can have a thriving small business sector and government can enable this by employing a few simple fixes.  

Firstly, pay suppliers on time. We know this is possible because the Department of Agriculture is already doing it. Find out how they get it right and then copy them. 

Secondly, manage the consequences of non-payment. Is it a system fault? Is someone not doing their job? Or perhaps they do not know the job well enough? 

Find the answers to these questions in each instance and you will know which consequences to apply. Do it every time. 

And thirdly, do the research. If our officials have a clear and visceral understanding of the suffering they cause, and the personal heartache of failing as a start up, it will change their behaviour at work.  

We will continue to advocate for these fixes in every engagement with officials and we will monitor their progress to keep the Gauteng business sector updated.  

This is one-way in which we can ensure that we have a province that is committed to creating job opportunities for the unemployed particularly the youth.   

Are you a business owner who is owed money by a Gauteng government department or entity? Send an e-mail to: [email protected].  In this way we can help improve government payments to keep your business thriving.

Issued by Adriana Randall, DA Gauteng Shadow MEC for Finance and e-Government, 9 February 2022