Late pay­ment ‘killing busi­nesses’

Small en­ter­prises fail be­cause they can­not get their money out of the Depart­ment of Health

Weekend Post (South Africa) - - NEWS - Estelle Ellis el­lise@ti­soblack­ COM­MENT ON THIS Text your opin­ion to 32391 R1 per SMS. Er­rors billed

THE Eastern Cape Depart­ment of Health has been ac­cused of hav­ing a stran­gle­hold on small busi­ness own­ers in the prov­ince af­ter it emerged that it owed 6 577 sup­pli­ers a to­tal of R431-mil­lion.

These fig­ures were con­tained in a writ­ten an­swer pro­vided by the MEC for Fi­nance, Sakhumzi Somyo, in the pro­vin­cial leg­is­la­ture this week. Ac­cord­ing to Somyo, the bulk of the pay­ments have been out­stand­ing for be­tween 30 and 60 days, with 551 over­due for be­tween two and three months.

There are 181 in­voices that have re­mained un­paid for the past six months.

The un­paid debts by the Depart­ment of Health are 30 times more than the sec­ond high­est out­stand­ing amount, R14.4 -mil­lion, owed by the Depart­ment of So­cial Devel­op­ment.

The health depart­ment’s rea­sons for the non-pay­ment of in­voices within 30 days, sup­plied to Somyo, in­cluded con­trac­tors chang­ing their bank­ing de­tails, the late sub­mis­sion of in­voices, in­cor­rect billing by sup­pli­ers, a dis­pute about rates and bud­get shift­ing re­quests.

He said in the past 30 days the depart­ment had paid 7 059 in­voices, to­talling R261 656 022.

Leader of the DA in the Eastern Cape Leg­is­la­ture Bobby Steven­son, who re­quested the writ­ten an­swer from Somyo, said the pro­vin­cial gov­ern­ment was killing small busi­nesses by not pay­ing them within 30 days.

“Small busi­nesses are the back­bone of grow­ing the econ­omy and have the po­ten­tial to cre­ate 90% of new jobs. The slow pay­ments to busi­nesses that sup­ply the Eastern Cape gov­ern­ment de­part­ments are ex­tremely detri­men­tal to the econ­omy as they re­sult in the fail­ure of busi­nesses as well as hav­ing a neg- ative im­pact on their credit rat­ings.

“These slow pay­ments are one of the rea­sons why the Eastern Cape has the high­est un­em­ploy­ment rate in South Africa at 35.1%.”

Sec­re­tary for the Nel­son Man­dela Branch of the Na­tional African Fed­er­a­tion Cham­ber of Com­merce (Naf­coc) Mandla Msizi said the health depart­ment was the big­gest of­fender when it came to pay­ing small busi­nesses late.

“Many small and medium busi­nesses do­ing busi­ness with the pro­vin­cial gov­ern­ment face le­gal ac­tion be­cause they are not paid in time.

“Busi­ness own­ers even lose their per­sonal prop­erty when it is re­pos­sessed but none of the de­part­ments takes re­spon­si­bil­ity. It is a ma­jor rea­son why small and medium busi­nesses shut down.”

He said they did not be­lieve the rea­sons ad­vanced by the Depart­ment of Health for non-pay­ment.

“I think of­fi­cials from the health depart­ment should get train­ing in how to pay their ser­vice providers on time. All gov­ern­ment de­part­ments have the same in­voic­ing re­quire­ments but we only ex­pe­ri­ence the prob­lem on this scale with the Depart­ment of Health.”

Nolokhulo Sayis, a small busi­ness owner in Nel­son Man­dela Bay who sup­plies ap­pli­ances to the Depart­ment of Health, said the depart­ment’s habit of pay­ing late af­fected her busi­ness neg­a­tively.

“As a black small busi­ness owner I do not have cap­i­tal. I am try­ing what­ever I can to get money to cre­ate a sup­ply.

“If the Depart­ment of Health does not pay me in time I have to bor­row money. My profit then goes into pay­ing in­ter­est.

“I also can’t pay those who are help­ing me in the busi­ness. At the mo­ment I have been wait­ing for a pay­ment from Dora Nginza Hos­pi­tal for more than a month.

“When I ask them they say Bisho didn’t ap­prove my pay­ment.

“To me it seems that they are se­lect­ing who is to be paid. I am sure this is re­tard­ing ev­ery sup­plier’s progress to suc­ceed and grow.

“We end up clos­ing our busi­nesses be­cause of these de­lays in our pay­ments be­cause it be­comes im­pos­si­ble to run a busi­ness with­out money,” Sayis said.

Health spokesman Sizwe Ku­pelo said the depart­ment’s goods and ser­vices bud­get was very tight as they took cash to set­tle medico-le­gal claims from this bud­get.

“We are cur­rently en­gaged with the pro­vin­cial trea­sury to find a so­lu­tion,” he added.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.