Late payments: Treasury exposes Gauteng department that’s crippling service providers

National Treasury has released a report that shows national and provincial departments are still not paying services providers and suppliers within the stipulated 30-day period, with the Gauteng Department of Health being the entity most businesses are complaining about.

According to the report for the 2023-2024 financial year, departments overall had regressed in the number of invoices not paid within 30 days and this had led to service providers being negatively impacted in many ways, like being forced to “borrow to keep financially afloat and being unable to pay salaries”.

“The number of invoices paid after 30 days by national and provincial departments in the 2023-2024 financial year amounted to 362,068 invoices to the rand value of R35.1 billion,” said National Treasury in the report.

However, the report also highlighted that the number of invoices older than 30 days and still “not paid by national and provincial departments at the end of March 2024, amounted to 114,908”, with a rand value of R10.7 billion.

Gauteng Health Department: A thorn in the side of service providers

The Gauteng Department of Health is the most complained or queried about over non-payments.

According to the report, the department received the most non-payment queries through National Treasury’s non-payments queries mailbox.

“Majority of non-payment queries received in the 2023-2024 financial year were related to provincial departments of health, with the Gauteng Department of Health receiving the highest number complaints,” revealed the report.

Treasury also had to intervene in nearly half of non-payment queries received.

“Of the 245 queries received [totalling R198 million], 48% of the queries to the value of R95 million were resolved by National Treasury. [52%] of the queries to the value R103 million were escalated to provincial treasuries as queries were related to provincial institutions,” the report said.

The Gauteng Health Department is no stranger to controversy. In the past three years, the department has been dogged by criminality, with corrupt dealings with service providers, duplicated invoices and medical negligence claims bedevilling the department.

Late payments to suppliers worsens poverty, says PSC

The Public Service Commission (PSC) praised National Treasury for revealing the payment issues plaguing service providers but PSC commissioner Anele Gxoyiya expressed concern that Treasury was mum on consequences for offending departments and officials.

“Treasury should not only tell us that departments are owing money. There should be consequences for inaction. Those departments that are not paying service providers are failing the system because those service providers are at risk of losing their businesses,” Gxoyiya told anchor Masa Kekana on Newzroom Afrika.

Gxoyiya also stressed that not paying services providers timeously was pushing people deeper into poverty.

“Some of the people [business owners] borrow money in order to deliver services, with the hope that they will be paid and able to pay their debts.”

Where are the consequences? asks commissioner Gxoyiya

In the report, Treasury laid out recommendations for department officials at fault for the non-payment of invoices within the stipulated 30-day period.

“Disciplinary actions [must] be taken against officials who fail to comply with the requirements to pay invoices within 30 days and who undermine the systems of internal controls,” the report said.

Gxoyiya, however, said what “normally happens is that they [departments] would look for soft targets. Soft targets being those people down there at supply chain”.

“The people with the ultimate say are not done anything [sic]. It is our view that an accounting officer should take responsibility for the non-payment to service providers,” the commissioner said.

“That responsibility should not be shifted to the people below.”

Gxoyiya also bemoaned the 30-day stipulation, saying it was possible to pay service providers sooner.

“All the service providers of the Public Service Commission get paid within 14 days. This thing of 30 days is just leniency by the system.”

Have you been paid late or not at all? How did it affect your business?

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