12 000 companies owed R370 million by government

Replies to parliamentary questions to 24 national departments and their entities have revealed that government owes a total of R370 million to more than 12 000 suppliers. 

On average these payments are more than 70 days overdue representing a large-scale breach of the Public Finance Management Act that compels national departments and their entities to pay suppliers in full within 30 days of receiving an invoice. 

The worst offenders are the Department of Arts and Culture, Rural Development & Land Reform, Social Development, Communications and Home Affairs. Late payment is clearly an endemic problem in the public sector and makes a mockery of government's attempts at promoting small enterprise development. 

Delayed payments from government departments put an enormous strain on the cash flow of South African companies, especially small businesses, and a number of companies have had to either downsize or close shop as a direct consequence of late payments from government departments. 

The most high profile company closure in 2012 was construction firm Sanyati who was owed R60 million by the Free State Roads department but, despite National Treasury's intervention, payment was not made in time to save 2000 jobs.

If government departments do not urgently start paying suppliers promptly then thousands of South Africans who work for some of the 12 000 firms owed money by the state will also find their jobs at risk. The DA calls on Finance Minister Pravin Gordhan to take swift and immediate action and ensure that all suppliers are paid in full and on time. 

Statement issued by Tim Harris MP, DA Shadow Minister of Finance, December 16 2012

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