Over the years government has developed a number of policies and strategies to support the small, medium and micro enterprise (SMME) sector. Based on these strategies, institutions that provide support services including funding, were established.
One of the government strategies to support small businesses is the leveraging of government procurement opportunities. However, the decentralisation of government procurement to individual state departments, provinces and local government has come with its own bureaucratic systems and some of these created a delay in paying government suppliers within the prescribed period of thirty (30) days upon receipt of the invoice.
“SMMEs carry the heaviest burden as a result of late payments by government and big business, which creates numerous cash flow difficulties for the SMMEs. These late payments are distracting the owner from focusing on business growth opportunities. SMMEs cannot afford to go through a month without being paid for the services they rendered. Unlike big business, they cannot absorb the burden of not being paid on time, since their overheads and staff costs are largely dependent on the payment of service rendered on monthly basis,” says the Minister of Trade and Industry, Dr Rob Davies.
Since this challenge is more prevalent in the public sector especially at the local level of government, to address this challenge, government issued a directive to all state departments and entities in 2007 in line with the provisions of the Public Finance Management Act (PFMA) to pay SMMEs within the prescribed 30-day period.
Further to this, Cabinet approved the establishment of an instrument in the form of a hotline to be managed by the Small Enterprise Development Agency (Seda) to trace incidents of late payment. The hotline was officially launched in September 2009. and since its inception, the Hotline has taken up 7 109 late payment queries with public sector institutions on behalf of SMMEs, and of these 5 155 have been successfully resolved resulting in payments worth R300 million to SMMEs.
Minister Davies says despite the success achieved by the hotline, there is still room for improvement to a level where non-compliance does not exist since the number of unresolved cases is still too high.
The Director-General of the Department Trade and Industry, Mr Lionel October has further communicated to state departments to reinvigorate the call for timely payment to SMMEs by government institutions.
The Public Sector SMME Payment Assistance Hotline can be reached on 0860 7663 729 (0860 SMME PAY) or through its website at http://www.acall.co.za/.
Enquiries:
Sidwell Medupe
Departmental Spokesperson
Tel: 012 394 1650
Cell: 079 492 1774
E-mail: MSMedupe@thedti.gov.za
