Government departments ranked for late payment to suppliers

The departments of health and tourism have been ranked as the worst in the country when it comes to paying suppliers on time. 

A report published by the Public Service Commission (PSC) looked at the late payments and nonpayment of suppliers by national departments in SA between July and September. 

According to the findings, the department of health had 2,929 unpaid invoices by September, amounting to R73,778,042, while the department of tourism had 468 unpaid invoices totalling R3,242,445.

The departments of public enterprises, social development, sports, arts & culture, transport and women, youth & persons with disabilities failed to provide figures. 

According to the report, late payments and nonpayment of suppliers by departments has been an ongoing problem in the public service resulting in non-compliance with the regulations.

“The nonpayment of invoices on time affects the small, medium and micro enterprises (SMME) severely to an extent that it threatens their survival. Some cannot honour their financial obligations, as they mostly do not have financial reserves to use. This results in some of them closing down, some being blacklisted, which in turn creates difficulties in securing future assistance from financial institutions.”

The PSC said the department of agriculture, land reform and rural development as well as the department of health, submitted reports late for the entire second quarter of the 2022/23 financial year.

“The department of agriculture, land reform and rural development is a repeat offender for late submission. The late submission of the exception reports by departments shows disregard for their legal obligations and the late or nonpayment by departments demonstrates little care for the plight of small businesses and their struggles.”

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In terms of provincial departments, the report found the Eastern Cape, Gauteng and the North West to be the main contributors to nonpayment of suppliers for the second quarter.

“Of great concern is Limpopo, which submitted the reports to Treasury late for the first quarter (two months) and also during the second quarter (all three months).”

In October the PSC held a meeting with the portfolio committee on public service and administration during which it briefed the committee on the nonpayment of suppliers. 

The PSC presented varied reasons for late and nonpayment of invoices, which included systematic challenges — a lack of an IT system to track invoices, a lack of financial delegations, and unrecorded invoices, among others.

Of great concern was the poor financial planning by departments, particularly the lack of alignment between the budget and procurement plans.

There were also poorly drafted contracts, where some of the clauses had different interpretations, which indicated inadequate capacity in contract management.

The PSC recommended that parliament assist in holding departments accountable, especially accounting officers, for failure to meet their statutory obligations in terms of the Public Finance Management Act.

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