Johannesburg - National and provincial government departments have failed to pay their suppliers more than R7billion on time, and Gauteng - and its broke Health Department - account for most of the debt. The national Health Department has described the debt, which is spiralling out of control, as a great concern, while the Gauteng provincial government admitted that the provincial Health Department was experiencing serious cash-flow problems.
Figures from the Department of Planning, Monitoring and Evaluation (DPME) reveal that by the end of March this year, government departments had not paid more than 93000 invoices worth more than R7bn. Procurement regulations require departments and other state entities’ suppliers to be paid within 30 days of submitting invoices.
According to the DPME, provincial departments failed to pay 93330 invoices worth about R6.75bn, while in eight national departments, there were 14702 invoices totalling almost R335m which were unpaid for more than 30 days by the end of March. Gauteng departments accounted for more than R4bn of the R6.75bn owed.
The provincial Health Department accounted for only 58597 of the 62770 invoices that have been unpaid for over 30 days, the DPME’s figures show. Gauteng government spokesperson Thabo Masebe said that due to the Health Department being unable to pay invoices within 30 days, mainly due to serious cash-flow problems, the executive council had established an intervention team to assist in managing the problem.
Masebe said that in April and May, the Health Department was able to pay all the invoices below R10m and entered into agreements with creditors owed amounts exceeding R10m. The Gauteng Department of Education had not paid 3690 invoices, while Infrastructure Development accounted for 476.
According to Masebe, the Infrastructure Development Department has experienced delays in verifying some invoices because most of its projects are implemented on behalf of other departments. “The department is also responsible for the payment of municipal bills, and due to the challenges of incorrect billing by some municipalities, it is necessary to verify the accuracy of bills before effecting payment,” he said.
Masebe said the Gauteng Department of Education had improved its financial systems in the past year, and this had resulted in a remarkable improvement in the processing of invoices.
“The department is now able to pay 85% of its invoices in 30 days. With the help of the provincial treasury, the Education Department will during this financial year see further improvement in the processing of invoices,” he promised.
The DPME figures also show that the entire health sector is struggling to pay suppliers and that the number of outstanding invoices in KwaZulu-Natal, North West, Free State, Eastern Cape and Limpopo continues to increase. The nine provincial health departments account for 92% of the 93339 unpaid invoices, with Gauteng responsible for two-thirds of this.
Premier David Makhura receives monthly reports of the 30 days payment of invoices, and heads of department are held accountable for failure to meet the deadline, according to Masebe. The National Treasury has also threatened to stop allocations to departments failing to pay suppliers within 30 days and to have officials responsible for the delays and non-payment face disciplinary action.
Masebe said that with the provincial treasury’s help and modernisation of processes, the provincial government was confident that all departments would pay invoices within 30 days, with the exception of Health. The national Health Department’s spokesperson, Popo Maja, said the DPME revealed figures of great concern to the Ministry of Health. “Notwithstanding the fact that provision and management of health services is a provincial competency, the Ministry of Health has embarked on proactive provincial support,” he said.
Maja said that since last month, 200 employees, led by experienced senior managers from the national office, had been deployed to assist provinces in improving the provision of health services. He said financial and human resource management had been identified as areas that needed focus.
“This countrywide provincial support intervention project is part of bigger plans to improve hospital performance and health outcomes by addressing several challenges facing the country’s health system,” Maja added. The Black Information Technology Forum’s Morena Ntsika noted that the late and non-payment of invoices was across all industries and negatively affected small, medium and micro-sized enterprises.
He complained that invoices were “just not processed, sometimes for up to two years”. “Every Sona (State of the Nation Address) this issue gets mentioned but nothing is ever done and there is no punishment for government officials,” he said.
Late and non-payment, Ntsika explained, forced many small businesses to shut down “because cash is king”. Business people were rendered uncreditworthy, and their assets were repossessed.