Late payment of contractors ‘crippling economy’
DURBAN - THE government’s failure to pay service providers on time was crippling the domestic economy and posed a major threat to the multibillion-rand investment in local manufacturing.
So said KwaZulu-Natal Finance MEC Nomusa Dube-Ncube yesterday, who also called for sweeping changes in the public service, to sustain small contractors and improve domestic manufacturing and production. Unveiling a R3.3 billion budget to support local manufacturing, Dube-Ncube also announced a further R48.2bn for capital projects for infrastructure development.
She was speaking during a multi-stakeholder discussion, organised by Proudly SA, as part of a “buy local campaign” aimed at enhancing and sustaining local production.
Many emerging contractors, who should be major players in the production of goods locally, were forced out of business due to the failure by the public sector and municipalities to pay them on time, Dube-Ncube said.
Meanwhile, the government had lost R151 million which was paid in interest accrued due to delays in payments to service providers, the auditor-general revealed during the session.
As part of support for small-scale businesses, Dube-Ncube said, the public service’s working hours would have to be flexible to suit service providers.
“As public servants, we should consider even working in shifts to ensure we are available as and when required. This, we must embrace as part of providing support to local businesses, and thus growing local manufacturing and production,” Dube-Ncube said.
Mechanisms would be put in place to even assist emerging businesses with regard to paperwork, since many of them failed in the scramble for the market share, due to inadequate proposals.
“This is also in line with the radical economic transformation agenda of the government,” she said, adding that government services, mainly found at head offices, would have to be decentralised for easy access to small businesses.
The government was investing in domestic production and manufacturing, and the development and sustenance of small and medium enterprises, including co-operatives, was a key feature in this campaign, Dube-Ncube said.
Calling for a private-public partnership, she said if the private sector failed to support small businesses by purchasing local products, then efforts to upscale local manufacturing – through the multibillion-rand injection being made by the government – would be futile.
“The marginalised businesses and those in the informal economy must benefit from the R133bn provincial budget that the Treasury has allocated to various government departments. We have identified our procurement spend as a vehicle to transform our economy, in view of the fact that the Covid-19 pandemic has (ravaged) the economy, resulting in a worse form of economic downturn,” she said.
By the end of last year, the manufacturing sector had contributed 17.4% to the KZN Gross Value Added. A total of 334 714 people were employed in the sector, of which 295 557 and 39 200 were in the formal and informal sectors, respectively.
“We will enforce localisation and ensure government departments and municipalities procure goods and services locally, in line with government policies. We want enterprises, such as SMMEs and co-operatives, owned by Africans in particular, women, youth, disabled people ,and our (military) veterans, to benefit – as they remain excluded from the mainstream economy,” said Dube-Ncube.
As catalysts for manufacturing, the province has identified the Durban and Richards Bay ports, the Richards Bay Industrial Development Zone (IDZ), the Dube Trade Port, the new Clothing and Textile Economic Zone and the Automotive Supplier Park.
Proudly SA chief executive Eustace Mashimbye said: “Buying local is a good investment in the local economy and on social welfare development, as many people are able to fend for themselves, creating a stable society.”