The continued late payment of service providers within 30-days is counterproductive to both the National Development Plan (NDP) and the National Growth Path (NGP), Public Service and Administration Deputy Minister, Dr Chana Pilane-Majake said on Friday.
Dr Pilane-Majake was speaking at the breakfast session with entrepreneurs and Young Women in Business running SMMEs affiliated to the National African Federated Chamber of Commerce and Industry (NAFCOC) in Pretoria’s Protea Hotel’s ANew.
“The closing down of Small, Medium and Micro Enterprises (SMMEs) due to non-compliance to pay them within the prescribed 30-days period is also seen as counterproductive of the NDP and the NGP which are aimed at improving economic growth and reduce poverty, inequality, and unemployment.
“Our message to the national and provincial departments who are still not complying with the National Treasury instruction is very clear…. that payments should be done within the prescribed period for us to manage to support the SMMEs in a manner that will sustain those businesses.
“As government, if we don’t pay service providers timeously, it is also the violation of the Batho Pele principles, and this non-compliance often results in most of those SMMEs being liquidated.
The Deputy Minister who also described the session as a success further said: “Today, we were able to see the interests of business on this issue of no-compliance to pay service providers in terms of the turn-out of entrepreneurs who made significance contribution to this session led by NAFCOC.
“We value the fact that service providers who are mostly referred to as SMMEs came to listen to government’s intervention to enforce the 30-days payment requirements for invoices…we hope that our engagements created hope, but not false hope because as government, we hope that our recommendations and commitments will be adhered to in order to unblock this late or non-payment to service providers,” she said.
Key to those recommendations according to the Deputy Minister was really ensuring that accounting officers should have this critical matter of paying suppliers within 30-days as part of their Key Performance Indicators for their contracts.
“We are saying Chief Financial Officers should ensure that these payments are made within the prescribed period…what is important for us is to serve in the manner that complies with the Batho Pele Principles which are all about putting people first.
“It was very encouraging to listen to those in the business sector not complaining nor making negative opinions about this non-compliance…we appreciate the fact that they were able to put forward ideas and solutions to resolve this challenge as government, this is the kind of social compact that we always look forward to,” she said.
As part of the way forward, NAFCOC put a proposal of working with government is setting up a central payment system-that is technology kind of system, that will drastically help in facilitating the adherence of payments within the prescribed period.
The SMMEs also vowed to put money into setting up the central payment.
NAFCOC President in Gauteng, Mr Themba Ndlovu said the late payment or no-payment of invoices has a serious adverse impact on the financial health of suppliers who are often forced to borrow money to stay afloat financially.
“As NAFCOC, we are excited by the commitment of the Deputy Minister to initiate the process which will see us resolving this matter. With this breakfast session, government was able to gain the confidence of the business sector, for us as NAFCOC, it means that you are taking us seriously… hence, we believe from here, the future looks bright.
“Our friendly reminder to those national and provincial departments who are failing to pay service providers within the prescribed time is that they must know that the country is currently in distress, so, it is either they commit to what they are employed to do, or they resign and go where there will have nothing to do with service delivery,” he said.
According to Mr Ndlovu, the late or non-payment is affecting their members so bad.
“This is not a joke, the non-compliance is affecting our members in a bad way…in that some of them have lost houses, vehicles, some members were divorced while others resorted to alcohol. This is a pandemic, the country cannot ignore it, but the good news is that now there is an effort to address the issue.
“For the Deputy Minister to start this conversation with the view to find a lasting solution, to us, it demonstrates that government is serious about service delivery, and we know that our country is going somewhere,” he said.
Both national and provincial departments are expected to implement mechanisms to ensure that payments to service providers are paid within 30 days from the date of receiving an invoice.
