State payment delays crushing small businesses

More than R2bn — this is what small businesses in the Eastern Cape are owed by the provincial government. And the main culprit in the delayed payments is the health department, which had already run out of money in February. Of the R2.3bn in outstanding payments to SMMEs, it owes the bulk — R2.1bn.

The second-worst performer is the department of education, owing just more than R154m.

The staggering amount owed to small businesses — the mainstay of our economy — is an absolute disgrace.

These small businesses all have bills to pay and employees who rely on their salaries to feed their families.

And the ripple effects of the non-payment are devastating, according to Eastern Cape Black Contractors chair Sakhele Skenjana.

These SMMEs must watch as failing state-owned enterprises receive billions of rands in bailouts time and again, while their pleas to be paid what they are owed fall on deaf ears.

Small businesses are struggling against all the odds to stay afloat during the tough times of the lockdown and the government’s failure to pay them for services rendered is, for many, the final nail in the coffin.

“This is a serious injustice,” Skenjana said.

In response to a parliamentary question by DA MPL Bobby Stevenson, finance MEC Mlungisi Mvoko said 18,174 invoices — totalling R2.3bn — were more than 30 days in arrears. “There is no place for a job-crushing administration in these times,” Stevenson said.

According to the black contractors’ organisation, in other provinces SMMEs are paid within seven days.

It says the premier’s much-vaunted app to track payments which was launched two years ago has not changed things much.

Despite the many promises that contractors would be paid within 30 days, this has remained a pipe-dream in the Eastern Cape.

If our government is serious about building up the province’s economy, it should start by ensuring that it pays its bills on time.

Small businesses are the bread and butter of most economies and the government can ill-afford to have them collapse.

By not honouring its payment obligations, however, it is fuelling their demise.