Govt payment delays jeopardising businesses down to bureaucracy and corruption - Public Interest SA

The Money Show's Stephen Grootes interviews Tebogo Khaas from the Institute of Chartered Entrepreneurs and Public Interest SA.

On The Money Show's Monday edition, the MD of a construction consultancy firm relayed just how dire the consequences for businesses are of government payment delays.

CSM Consulting Services's Dolf Möhr said he may be forced to cut jobs due to these delays.

RELATED: Government payment delays could result in job cuts, warns construction consultancy firm

In a follow-up interview, Public Interest SA chairperson Tebogo Khaas notes that this is a recurring problem that is getting worse every year.

The global chief entrepreneur at the Institute of Chartered Entrepreneurs highlights National Treasury's report last year on noncompliance with payment of enterprise or suppliers within 30 days.

"You'll see the amounts ranging over R10 billion that are outstanding for more than 30 days. And with that you must understand it means somebody has to bear the cost of the interest penalties incurred by the business."

"It's often small businesses that bear the brunt of all this."

Tebogo Khaas, Global Chief Entrepreneur - Institute of Chartered Entrepreneurs

The extent of the bureaucracy involved in making payment on time is part of the problem, Khaas says. 

"It's a bit complicated, and for no reason."

"In most instances you'll find that the specific government department itself engages the service of an implementing agency like the Development Bank of Southern Africa (DBSA) to actually ensure this fulfilment of the contract - that in itself creates another added layer of bureaucracy which results in difficulty with decision-making and then a payment lag."

Tebogo Khaas, Global Chief Entrepreneur - Institute of Chartered Entrepreneurs

Another factor Khaas highlights is systemic corruption in the system - 'if you don't grease certain hands, sometimes the payment gets delayed'.

He cites the example of projects that have been running for over ten years at military hospitals under the Department of Defence.

"Contractors or suppliers had to be changed for various reasons, mostly non-performance on the part of government and corruption is at the forefront of that."

"Everybody rushes to the nearest mic to tell the public that  problems of nonpayment of government suppliers is a thing of the past when in fact that is not the case."

Tebogo Khaas, Global Chief Entrepreneur - Institute of Chartered Entrepreneurs

For more detail, listen to the interview audio at the top of the article