Members of Parliament
Representatives of Business
Honoured guests
Ladies and gentlemen
I have been looking forward to this event because it is long overdue and I am pleased that we have reached this juncture which promises now, to improve the payment arrangements for small businesses. When in 2005, Cabinet approved the integrated strategy on the promotion of entrepreneurship and small enterprises it envisaged several key objectives to be met.
These objectives included improving access to business support information and business finance, creating opportunities that provide small business access to markets, the building of partnerships for the establishment of business support infrastructure, and creating an enabling regulatory environment.
Since then, the dti has been involved in implementing the necessary programmes through its implementing agencies, including Small Enterprise Development Agency (SEDA). It is true that in implementing our small business support programmes that we have experienced several and varying challenges, none more so than in SEDA.
I am however most encouraged by the steps the leadership has taken to bring stability to the organisation and trust that the organisation will soon live up to its full potential. The key point I wish to make though is through the experience of implementing our small business strategies, we found that even when small businesses were up and running and viable; those with dealings with the State were often subject to significant delays in payment.
This happened despite the provisions in the Public Finance Management Act (PFMA) which calls for all contractual obligations and accounts to be settled within 30 days of receiving an invoice. In addition the National Treasury issued guidelines to all departments prescribing that all payments of state accounts be settled within 30 days.
Notwithstanding these measures, it is our experience that small enterprises are still being paid in some instances after 90 days and longer thereby adversely affecting liquidity. These kinds of delays can be absorbed by larger firms with access to credit but for small firms and especially start-up operations, similar access to credit does not exist and can therefore be devastating.
In committing to address this serious problem our research revealed that that the bottlenecks for procurement were not to be found in legislation but rather that the payment processes and procedures in government inordinately prolong turnaround times for the administration of payments. In fact, these procedures and processes remain a stumbling block for easy and timely payment to small enterprises.
At the same time processes and procedures remain necessary to ensure control and proper, efficient use of resources. We therefore need to find ways and means of eliminating delays in payments administration without compromising the control systems. To this end a number of government departments have indeed tried different systems to improve payments turnaround time to a maximum of 30 days, however, these have not been as effective as we would like.
It is in this context that the hotline is being launched today. The objectives of the hotline are to follow up on outstanding SMME invoices with government department and municipalities, and at the same time this will provide encouragement for all spheres of government to streamline systems and processes for payments to SMMEs. The hotline will also allow us to gather data regarding the extent of the problem, with a view to continual improvements.
We have therefore embarked on an extensive communication exercise and alerted SMMEs, government supply chain managers, organised business, government departments and agencies, the general public and media.
We do hope that whatever teething problems may occur, these issues are quickly dealt with. We are also well aware of the danger of creating expectations that are difficult to meet and have therefore done extensive preparation to ensure that we have a functioning hot-line that will make a difference.
Ladies and gentlemen, in the build-up to this launch a total of 760 government departments have been contacted and we also received calls from some small businesses that seem to have unofficially got hold of the number. Well, I suppose they were just being entrepreneurial! These pilot experiences taught us two lessons; that we can launch with some confidence that this service will make a difference as we were able to resolve payment problems and secondly, that coordination across and co-operation from, all spheres of government is going to be critical.
What does this mean? Simply, I believe, that we must closely monitor a 2007 Cabinet decision that accounting officers be required to incorporate the timely payment of small enterprises as one of their Key Performance Areas and their performance measured accordingly and that annual and mid-term reports by the Auditor-General will include a schedule of complaints and corrective measures taken by each department. In addition, pursuant to this launch we will brief Cabinet on progress and I will seek the assistance of my colleagues, if necessary.
In ending off I must mention that SEDA was tasked with the implementation of this hotline and I wish to thank the Board, the Chief Executive Officer and staff who worked on this project and finally I am pleased to officially launch the SMME late payment assistance hotline: 0860 SMMEPAY OR 0860 766 3729
Issued by: Department of Trade and Industry
21 September 2009
Source: Department of Trade and Industry (http://www.thedti.gov.za)
