Government fails to pay R11 billion to service providers

National and provincial government departments have failed to pay R11 billion of invoices from service providers due to a lack of capacity, budget constraints, and poor financial controls. 

This is feedback from the Public Service Commission (PSC), which released its quarterly bulletin earlier this week. 

The PSC aims to monitor public administration in South Africa and ensure that government departments uphold the constitution. 

Its bulletin outlines both the instances of delayed payments to suppliers beyond the 30-day timeframe and the complaints and grievances received during the period from 1 July to 30 September 2023

Commissioner Anele Gxoyiya, in announcing the bulletin’s launch, emphasised the impact of the government’s nonpayment on businesses, particularly small and medium enterprises. 

Paying suppliers on time “will assist small businesses to stay afloat and also minimise the closing of businesses, which add to the already high rate of unemployment”, he said. 

Gxoyiya said the number of invoices paid after 30 days by the national and provincial departments amounted to 117,158, totalling R11.1 billion.

This is worse than the same period last year, which saw 104,937 invoices unpaid with a value of R8.6 billion. 

Only 15 of the government’s 40 national departments managed to pay their invoices on time. 

According to the PSC, the main culprits at the national level are home affairs, correctional services, defence, police, agriculture, transport, water and sanitation, public works and infrastructure, health, and tourism.

“The most common reasons provided by both the national and provincial departments for the late or nonpayment of invoices are interruptions caused by poor internal controls, internal capacity and budget constraints,” said Gxoyiya.

South Africa’s provinces have substantial procurement budgets and are amongst the worst culprits for failure to pay their invoices. 

The number of unpaid invoices paid after 30 days by provincial departments amounted to 90,973, valued at R9.9 billion.

The country’s economic hub, Gauteng, was the worst culprit among the country’s provinces in terms of nonpayment, with 45,538 unpaid invoices worth R3.5 billion. 

The Eastern Cape was second with R2.3 billion worth of invoices outstanding, followed by the North-West with R880 million of unpaid invoices.