Pay the state’s suppliers or get f ired

Public servants are squeezing the life out of small businesses

YEAR in, year out, we hear about the government’s plans to improve its ability to pay suppliers within the prescribed 30-day period.

It seems to be a standing item in every state of the nation address by President Jacob Zuma, and features in almost every speech delivered by Small Business Development Minister Lindiwe Zulu.

Just last month, Gauteng infrastructure development MEC Jacob Mamabolo announced the establishment of yet another task team — this time to deal with delays in the payment of companies that provide services to his department.

He even committed himself to dealing directly with suppliers on issues related to late payment via a dedicated e-mail address.

It is commendable that the MEC is willing to put himself in the firing line of small businesses that face closure because of the government’s nonpayment. I guess this is what they call “political will”.

Unfortunately, this will not solve the problem. All it will really do is make the MEC the highest-paid creditors clerk in the land.

The National Treasury has already employed Mamabolo’s e-mail strategy, and although it failed to solve the problem, it did, at least, clearly identify it.

This week, the office of the chief procurement officer presented to parliament’s standing committee on public accounts the outcomes of its recent initiative to assist suppliers to be paid on time by government departments.

According to chief director for stakeholder and client management Rakgadi Motseto, the office had facilitated the payment of only 228 (R16.8-million) of the 1 680 (R199-million) long-outstanding invoices sent by suppliers via an e-mail-based initiative to the Department of Planning, Monitoring and Evaluation, as well as the Treasury, for investigation.

The 8.4% success rate in monetary terms is hardly a glowing endorsement of the initiative.

Almost everyone agrees that entrepreneurship is a vital ingredient of sustainable and inclusive economic growth.

We also know that every big idea started out as a small business. Furthermore, it is common cause that many black-owned small businesses have the government as a key client, thanks to corporate South Africa’s snail’s pace, and blunt resistance to preferential procurement.

How, then, does the government expect to support the development of small businesses if it fails to pay them on time?

Cash flow is the oxygen of every business. It’s the only way businesses breathe. When payments are not received on time, it is no different to the brain not receiving oxygen. Death is the only outcome.

And the demise of each business leads to further unemployment, entrenched poverty and compromised dignity.

But what really disturbed me in the report to Scopa is what Motseto identified as the main reason for nonpayment: “It’s not as if departments don’t have money to pay; they don’t want to pay.”

So there you have it. Your business is not getting paid on time because some creditors clerk just couldn’t be bothered to process your payment. The last time I checked, people got fired for not doing their jobs properly.

In the wake of the report, Scopa has given the go-ahead for the Treasury to name and shame those departments and entities that fail to pay within the stipulated 30-day period.

And, other than fielding e-mails, Gauteng’s infrastructure development MEC also said his department was in the process of issuing a circular to all staff who deal with invoices urging them to process them in time “or face disciplinary action”.

I hope the circular has been distributed.

And I hope that those who simply refuse to pay suppliers on time get fired.

Khumalo is chief investment officer of MSG Afrika Group, and presents “Power Business” on Power 98.7 at 5pm, Monday to Thursday

It’s not as if departments don’t have money to pay; they don’t want to pay