By: Tebogo Mokwena
The Public Service Commission (PSC) has warned that if government departments continue to not pay small businesses on time, many of them will have to shut their doors. It has called on the Portfolio Committee on Small Business Development to hold national and provincial departments to account for not paying SMMEs. The PSC met committee members to present a five-year overview of how national and provincial departments performed on paying SMMEs their invoices within 30 days.
The PSC painted a grim picture, with Chief Director of Executive Support and Stakeholder Relations, Cameron Jacobs, also warning that this practice was deterring would-be entrepreneurs from starting businesses. According to Jacobs’ presentation, the number of invoices not paid over the period had increased, which indicated a worrying trend of non-compliance. It was revealed that national departments did not pay 134 invoices from small businesses during the first quarter of the 2021/22 financial year.
For the same period this year, 959 invoices were not paid by national departments. Jacobs also revealed that the value of invoices not paid by the provincial departments increased from over R4 billion in the 2019/20 financial year to R5 billion in 2020/21, to just over R6 billion in 2021/22. He noted that the delayed payment of invoices has had a profound impact on small businesses.
“Salaries do not get paid on time, and they cannot purchase raw materials,” Jacobs told the committee. “You are dealing with a David and Goliath situation where the small businesses do not have the financial muscle or legal expertise to go up against the government, and so they are often at the mercy of, and held at ransom to the whims of government departments that are not honouring their constitutional and legislative obligations.” Jacobs warned that the non-payments had other alarming implications.
“If the country is aspiring to become an entrepreneurial economy, the government acts as a deterrent for would-be entrepreneurs because they can see in the media or with their colleagues the challenges faced by small business,” he said. Jacobs called on the committee to hold departments to account, and also suggested that sections of the Public Finance Management Act be amended to include non-compliance as financial misconduct.
Committee members were outraged by the lack of compliance and agreed that government departments needed to comply with the 30-day payment rule. “The Public Finance Management Act is clear on how we are supposed to conduct ourselves,” said committee chairperson Violet Siwela. The committee undertook to hold meetings with the departments.
