SACCI SURVEY ON LATE PAYMENT BY GOVERNMENT
The South African Chamber of Commerce and Industry (SACCI) conducted a survey of our members regarding the problem of late payments by government to service providers. The broad findings of the survey are:
- All providers of goods or services to government have had some experience of delays of more than 30 days in being paid. However, some providers experience that the majority of the payments are made on time.
- The delays in payments mostly affect the cash flow of the firms and places a temporary constraint on operations, but a fair amount are relatively unaffected.
- As a proposed solution, firms would most likely halt the further provision of goods or services until a payment that is in arrears has been made.
The prompt payment of government has been highlighted in various official discussions by senior government officials. However, the survey shows clearly that late payment is the norm rather than the exception. The question is therefore not so much on government committing to prompt payment, but rather the actual implementation of processes that ensure government meets this commitment. In this regard, the following tentative proposals can be made:
- The prompt payment by government should be a primary mandate of the proposed Chief Procurement Officer (CPO) as announced in the 2012 National Budget.
- All Government departments should be audited on adherence to the 30-day rule and such assessments should be included in their annual reports.
- The promptness of payment should become part of government leaders's performance agreements.
- An immediate system of referral to an independent Government Procurement Ombud where the government payments is in arrears of 60 days or more.
The prompt payment by government to providers of goods and services is crucial to ensuring the stability and growth of South Africa's business sector, especially the SME sector that has less of a cash buffer to withstand protracted periods of delayed payments. SACCI commends those sections of government which are successful in abiding by the 30-day rule and appeals to those who are challenged in doing to address such challenge with urgency in the national economic interest. SACCI will continue to engage with government on the issue in order to find a workable solution.
Statement issued by Neren Rau, SACCI CEO, September 12 2012
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