DURBAN – FED-UP service providers to the KwaZulu-Natal Human Settlements and Public Works Department have indicated their discontent with the department’s failure to settle invoices timeously and are threatening to take legal action against the department if the situation does not improve.
The department’s MEC, Ntuthuko Sibiya, revealed this when he delivered his department’s budget speech.
He said his department and the provincial treasury had met to deal with the problem of the non-payment of service providers within 30 days.
“Last week, we met with chief financial officers, managers of supply chain management (SCM) units in districts, regions and head office. In this meeting, we agreed on targets, key performance areas and consequences for shoddy performance across all categories of staff. We are also developing, with the assistance of the treasury, an invoice-tracking system in order to deal with this matter once and for all,” said Sibiya.
The MEC said that any delay in the processing of invoices either deliberately or due to demands for bribes would result in criminal charges being laid against any employee in the department. A corruption hotline had been set up to report corruption within the department.
“We will work with the treasury and OTP in this regard. I must hasten to point out that the majority of employees in our SCM now understand that they are the centre of government’s efforts aimed at ensuring economic recovery and creation of jobs for millions of people. We have agreed to isolate and marginalise those few bad apples within our ranks,” he said
In November 2019, during the SA Investment Conference in Soweto, President Cyril Ramaphosa made a call for the government to ensure that suppliers were paid for services rendered within 30 days.
The Public Service Commission (PSC), an independent and oversight institution mandated to promote and evaluate the constitutional values and principles and ensure effective and efficient performance in the public service, then noted that the failure to pay suppliers had dire consequences for the sustainability of small medium and micro enterprises, impacted negatively on the government’s job-creation initiatives, and compromised the government’s performance and service delivery.
According to the PSC, the non-payment of suppliers was in contravention of the treasury’s regulations and constitutional principles such as efficient, effective and economic use of resources, accountability and transparency.It added that it viewed the non-compliance viewed “as financial misconduct”.
Sibiya said that in the period under review, the overdraft limit for the department had been set at R350 million.
“While client departments were previously taking about 60 days to settle claims instituted by the department, this period further increased in the financial year 2020/21. By March, the department still had not received payments relating to claims older than 120 days. As such, this resulted in the department exhausting all the monies in its bank account. We can report that towards the end of March 2021, client departments owed the department about R56 million.”
The MEC said that this caused a strain in the cash resources and resulted in the department being unable to meet all financial obligations to service providers within the prescribed period as detailed in the Public Finance Management Act.
The department said that towards the end of April, invoices amounting to some R576m had been captured on BAS but not disbursed as a result of the cash flow challenges facing the department. This amount included some R236m due to municipalities relating to property rates.