The Eastern Cape Health Department is placing thousands of jobs on the line by not paying their suppliers on time, with debts in excess of 30 days amounting to close on R1bn by the middle of the financial year.
Jane Cowley, shadow minister of health in the Eastern Cape says: “In response to a parliamentary question, Health MEC, Helen Sauls-August confirmed that the department was in arrears by R929.9m in September last year. This is money that is owed to suppliers who have delivered services to the department, and who have incurred expenses that they are now forced to cover while they wait for payment.
“Unfortunately, this is nothing new for the department, which has got into the habit of rolling funds owed to suppliers over to the new financial year, with suppliers forced to wait for payment until the new budget is allocated. This has a major impact on the department’s long-term sustainability, as funds earmarked for projects in the new financial year have to be diverted to service existing debt.
“Suppliers are also hesitant to do work with the department, and those who do, inflate their costs to compensate for the lengthy delays. The worst affected are the SMMEs, who face the very real possibility of closure, as the lack of payment destroys their cash flow.
What is also extremely disconcerting is the huge discrepancy between what the department has reported as their outstanding payments, compared to what the Provincial Treasury has reported for the province over the same time frame.
“Treasury reported that the total amount owed to suppliers in September last year was R500m, how then is it possible that the Health Department, on its own, is nearly double that? Clearly there are problems with the financial reporting from departments, which is extremely worrying.”