Late government payments killing SME’s



Gauteng Infrastructure MEC Qedani Mahlangu addressing the media during a press conference at the 2nd Project and Construction Management Professions Conference in Midrand.
Gauteng Infrastructure MEC Qedani Mahlangu (left) during a press conference at the 2nd Project and Construction Management Professions Conference in Midrand.
Gauteng Infrastructure MEC Qedani Mahlangu came under fire at the second Council for the Project and Construction Management Professions (SACPCMP) Conference in Midrand on 21 October over apparently rife non- and late payments by government to black-owned small and medium enterprises (SME’s) for services rendered.

The secretary general of the Black Business Council in the Built Environment, Gregory Mofokeng, said that late payments and non-payments by government, especially at provincial and local levels, is killing small businesses in the sector.

According to Mofokeng, around 5% of the roughly 5 000 strong membership of the Black Business Council in the Built Environment is severely affected by government’s inability to keep to its 30-day payment schedule, which causes some companies to fall behind on their wages, default on loans and in some cases results in them not being able to obtain tax clearance certificates from the South African Revenue Services, without which they are unable to tender for further projects. Mofokeng emphasised that these figures were for work completed and signed off and did not include late- or non-payments with regard to disputed invoices.

Mahlangu gave assurances that the problem is being addressed. “New legislation is being prepared to deal with the many issues currently being experienced in the industry, specifically pertaining to the timely payments and interest accumulation on outstanding amounts to contractors” said Mahlangu, who acknowledged that late payments could easily mean the end for a small to medium sized company.

According to the chief director of construction policy development in the Department of Public Works, Devan Pillay, late- and non-payment by government is sometimes unavoidable, due to unforseen changes to the scope of work that sometimes happens in the construction industry.

He also stressed that poor workmanship and incomplete paperwork submissions by contractors were often to blame, citing these as instances of valid late payments.

Pillay indicated that the department was working on the implementation of what he termed an arbitration mechanism, that he says will assist in the speedy resolution of such matters. Pillay would not go into the details, but said that it would address many of the serious concerns raised by the industry.
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