GENERAL

South African provincial government is terrible at paying its bills

Mzansi’s new GNU dawn is being put to the test early on, as South African provincial government grapples with a spiralling debt burden. According to Daily Investor, the National Treasury has revealed in an annual report that South African provincial government boasts R35 billion in late-payment invoices.

As required by the Public Finance Management Act (PFMA), South African provincial government has 30 days to honour its debts. But most remain unpaid well after a month. The treasury report also says that South African provincial government generally pay fewer invoices within the stipulated 30-day period as their financial health weakens. Similarly, only 15 out of 40 national government departments pay their invoices on time.

SOUTH AFRICAN PROVINCIAL GOVERNMENT

Unsurprisingly, Gauteng has one of the worst track records for paying its bills on time under Premier Panyaza Lesufi. Image: File

In the 2023/24 financial year, 362 068 invoices went unpaid within the specified month. These invoices were worth R35 billion and were only settled at year end. Provincial departments only paid 30% of their bills within the month. While more litigious than provincial departments, the biggest culprit among national departments was the Department of Defence. It had 84 934 unpaid invoices to the value of R1.4 billion. Followed closely by the Department of Agriculture with R1.37 billion owing.

Finance Minister Enoch Godongwana says the failure to pay invoices on time has a massive impact on businesses that provide goods and services to South African provincial government and national departments. Most don’t have the luxury to wait more than 30 days to be paid for goods/services rendered. Clearly there are poor financial and accounting controls in place that, combined with budget constraints, result in nonpayment of invoices.

ENFORCE DEBT MANAGEMENT

South African provincial government
The Union Buildings in Pretoria. Image: File

Godgongwana called on municipalities to enforce their debt management policies. Municipalities have bylaws to force state entities to pay their bills. Existing legislation like the PFMA allows municipalities to halt services to state entities if they do not settle their bills within 30 days.

Furthermore, the National Treasury flagged the nonpayment of invoices in its latest local government revenue and expenditure report. It said it is deeply concerned about the financial health of 257 South African municipalities. It also said municipalities misuse funds, preferring to spend money on salaries and consumption rather than investing in infrastructure and service delivery.

WILL COALITION GOVERNMENT BE BETTER?

South African provincial government
Why not let us know how you feel? Image: File

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