Late payments undercut efforts to ignite economy

In the same week that President Cyril Ramaphosa gave parliament a glowing rundown of all the moves the government has made to ignite the economy, small business minister Khumbudzo Ntshavheni revealed that government departments owe small businesses a whopping R7bn for work done. In a written reply to a parliamentary question from the DA, Ntshavheni said provincial departments were responsible for the bulk of this, R6.5bn. Gauteng is top of the offenders at R2.6bn, with the Eastern Cape close behind at R2.1bn. The impact of this tardy and careless behaviour is massive. Creating a supportive and nurturing environment for businesses to grow in is a vital component of Ramaphosa’s jobs drive, and a key ingredient in kick-starting any ailing economy.

Instead, some spheres of government are doing the exact opposite, thanks to a bunch of technocrats who seem not to understand — or care — that their incompetence is pushing SA closer to the abyss.

Many small businesses report that they have had to retrench staff because they have not received money owed to them by government departments. This has a wide-reaching knock-on effect on communities and suppliers. It is also a major stumbling block to job creation — something SA cannot afford considering its 29% unemployment rate.

The fact that the informal sector added 219,000 jobs in the past year — making it SA’s fastest-growing job creator — is a clear sign that the formal sector is in deep trouble.

What good are changes to visa regulations, financial support for black farmers and industrialists, and the construction of industrial parks if the government doesn’t bother to pay the companies that have been created by these projects?

Ramaphosa says the new Competition Amendment Act will give competition authorities the ability to halt the dominance that keeps small and emerging companies out of the economy. This is all well and good, but he needs to clean up his own backyard with the same vigour he displays when targeting monopolies.

The government has shot itself in the foot and Ramaphosa needs to take strong action against these departments, which are effectively sabotaging his efforts to grow jobs.