South African Government to Police Payments to Suppliers

South Africa is to introduce a new system next year to crack down on government officials who fail to pay service providers on time.

Minister in the Presidency for Performance Modelling and Evaluation, Collins Chabane, said that in future government heads of department and accounting officers will be required to sign agreements that will ensure suppliers are paid within 30 days. He added that 90% of provincial and national departments and other state institutions had registered on the system, which was set up at National Treasury.

“There was a general complaint that government is killing entrepreneurs because they’re not paid within the prescribed period, and they asked me to search for a solution,” Chabane said.

The Public Finance Management Act (PFMA) requires all government departments to make payments within 30 days for all services rendered, unless reasons can be provided for the delay. Chabane said that the new system would enable the government to monitor which “are the genuine cases where payments could not be made”.

Chabane said that the scheme was not yet fully functional as some departments were still in the process of data capturing. The process was being slowed down by irrelevant or incomplete data being captured, such as incomplete invoices.

He also admitted, in a written reply to a parliamentary question that in July the Presidency had itself failed to pay more than South African rand (ZAR) 230,000 to eight service providers within 30 days. Chabane said payments had not been made promptly due to the late submission of invoices by suppliers and, in some instances, the rejection of banking details provided by the National Treasury Safe Net System.

According to reports a number of South African businesses, particularly smaller companies, have gone bankrupt or been forced to cut jobs as a result of late payment by the government.


Related reading