Minister of Small Business Development Calls for Immediate Action on Late Payments to Suppliers

The Minister of Small Business Development, Stella Ndabeni Abrahams, has expressed deep concern over the findings of the Annual Report for the 2023/2024 financial year on the Late Payment of Supplier Invoices by National Treasury. The report highlights significant non-compliance with Treasury Regulation 8.2.3, as stipulated in section 38(1)(f) of the Public Finance Management Act (PFMA) of 1999.

The report is particularly alarming with respect to compliance by Provincial Governments, with the Eastern Cape and Gauteng emerging as the worst offenders. The Eastern Cape failed to pay over R4.5 billion, while Gauteng failed to pay R2.7 billion to suppliers within the prescribed period.

Additionally, several National Departments have been consistently delinquent in submitting monthly exception reports as required by Treasury Instruction Number 34 issued in 2021. Notable offenders include the Department of Public Works and the Department of Employment and Labour.

“The failure by government departments to pay invoices for services rendered by suppliers is a matter of grave concern due to its detrimental impact on the cash flow of small businesses,” stated Minister Ndabeni Abrahams. “Our economy relies on a thriving small business sector to supply both government and the private sector, thus contributing to economic growth and job creation. Delays in payment threaten their existence by causing cash-flow and liquidity constraints.”

Minister Ndabeni Abrahams emphasized the critical role of government in creating an enabling environment for small businesses to flourish. “We must ensure that small businesses are paid on time for services rendered. As a department that champions the interests of small businesses, we are extremely concerned about this situation and are committed to finding solutions through engagement with non-compliant departments.”

To address the issue, the Department of Small Business Development is taking several measures. “We are committed to leading by example by ensuring all invoices are paid within the stipulated 30 days from the day of receipt,” she said. “Compliance with this 30-day payment stipulation forms part of our department’s performance reporting.”

Furthermore, the department is set to establish the Office of the Small Enterprise Ombud Service, enabled through amendments to the National Small Enterprise Act. The Bill, which has passed through Parliament and the National Council of Provinces, is currently awaiting the President’s signature to become law. This Ombud Service will serve as an impartial mediator in disputes, offering a cost-effective alternative to litigation for small businesses.

“We are confident that the establishment of the Ombud Service will begin to address the issue of non-payment to small businesses by both the public and private sectors,” concluded Minister Ndabeni Abrahams.

The Minister’s remarks underscore the government’s recognition of the vital role that timely payments play in sustaining the health and growth of small businesses, which are crucial to the overall economy.