The Gauteng Department of Health still owes service providers R367m, having paid just 21% of its invoices between January and March because of “significant cash flow constraints”, yet it had underspent by a significant R724m, it was revealed during the provincial Treasury’s briefing this week.
Spokesperson Motalatale Modiba said it was forced it to “prioritise payments to the most critical and non-negotiable services” affecting service delivery, and that “a rollover request for R367m has been submitted to cover these commitments”.
He said that during the 2024/25 financial year, the department spent R65.29bn of its adjusted budget of R66.01bn, translating to an expenditure of 99% of the total allocation, News24 reports.
“The other unspent 1% – R724m – primarily stems from the prioritisation of payment of invoices and delays in filling funded posts.”
“The approval of the rollover request will ensure the continuation of essential services and address the financial commitments that were unfulfilled during the previous financial year, further reducing the overall underspending to 0.5%, of which R171m is money that was set aside for compensation of employees and cannot be rolled over under the PFMA (Public Finance Management Act) prescripts,” he added.
The reported 21% invoice payment rate for the fourth quarter of the financial year “reflects the performance related to supplier payments within 30 days”.
Modiba added that the department is evaluating its financial management strategies to enhance cash flow and ensure timely payments.
“This includes better forecasting of expenses and seeking additional budgetary support, where necessary, to avoid similar issues in the future,” he said.
Irate and unpaid in KZN
Meanwhile, in KwaZulu-Natal, scores of unpaid suppliers to the provincial Department of Health, who said they are sick and tired of waiting for their money, gathered outside the department’s headquarters last week in protest to demand payment, which has been delayed for various reasons.
To eliminate future similar challenges, the provincial Finance MEC has said a new procurement system would now be introduced in which departments would no longer be able to procure if they don’t have the cash to back up their orders.
Currently, around R1.7bn is outstanding, coming on the heels of recent headlines regarding alleged medicine shortages.
A number of the suppliers said the department had not paid them for more than a year, reports TimesLIVE, including some SMMEs, which are, according to legislation, supposed to be paid within a month of rendering services.
DA KZN Health spokesperson Dr Imran Keeka called for consequences, saying that of the estimated R1.7bn, R1.33bn fell within the 60-day to 90-day payment period.
There were 1 519 unpaid invoices in the over 90-day period, amounting to just more than R71m.
“The DA notes that KZN Health MEC Nomagugu Simelane-Mngadi has always been open and forthright about her department’s financial woes during portfolio committee meetings, but such a situation – the non-payment of suppliers on time – should not have arisen in the first place or to the point where they are affecting services,” he said, adding that usually, small businesses were the worst affected.
Keeka described the situation as dire and in need of urgent attention.
Upgrade blamed
The MEC said the upgrade to the new payment system was a factor in the delay but admitted that their challenges centred mainly around “financial limitations”.
While the Health MEC said the upgrade to the new payment system was a factor, she admitted that their challenges were mainly due to financial limitations, which meant they couldn’t pay all of the service providers on time in this financial year.
She told TimesLIVE they had indicated – as far back as November 2024 – to both the provincial Cabinet and the Portfolio Committee that they would be unable to pay all of their service providers on time.
They had, she added, presented a plan to negotiate with the bigger suppliers, whose invoices exceed R500 000 a month, to spread their payments over 60 days, instead of paying within 30 days.
“This doesn’t mean you write off the debt, it means at some point you will have to pay that amount, and that point was 1 April, when we were expecting our full allocation to come in.
“As soon as we were able to get the allocation in April we started the process of paying …but …for the past three weeks we have had challenges with BAS.”
Finance MEC Francois Rodgers said the frontline departments have been the worst affected by budget cuts, which is why he tried to focus on them in his Budget allocation.
The new administration inherited budget cuts of R70bn over four years, which is almost 50% of their current allocation of R158bn.
With economic growth projected at just more than 1%, he said it would take a long time to reverse the situation if they don’t change their approach to budgeting and spending.
“While we’re getting through this economic crisis, we have to do business unusual when it comes to finance… We have to change, (and) that is what we’re going to do in 2026/27; our frontline departments must be our priority and then we have to look at the balance of the funding for the province,” he said.
“We’ve been given permission by National Treasury for a procurement system which is going to align the supply chain with BAS and payments – and departments will no longer be able to procure if they don’t have the cash to back it, which is also going to address some of the challenges we have.”
TimesLIVE article – KZN health department says it owes service providers R1.7bn (Restricted access)
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