Operation Khokha Ngeskathi (Operation Pay On Time)
 The Premier of KZN, Dr Mkize, addressed an audience at the ICC on 30 August which was convened to announce the introduction of Operation Khokha Ngeskathi. He acknowledged that there were ongoing problems concerning payment to service providers. He outlined the background to the problem as follows:
The global recession has had a negative impact on business and the resultant shrinkage of revenue has meant that budgets have needed to be adjusted downwards. Furthermore the unexpected increases in expenditure for HIV related needs and wages took Treasury by surprise resulting in cash flow difficulties and a 5 billion Rand over-expenditure. The seriousness of the situation is illustrated against a backdrop of monthly outflows of 2.5 billion Rand and a national over-expenditure of 10 billion Rand.
The Premier said that with the dreaded thought of national government taking control of provincial government in mind, austerity measures were implemented. He was proud to say that this has resulted in the province's finances being put back onto a sound footing again. This was achieved by curbing wasteful expenditure and with close inter-departmental co-operation including the re-allocation of budget amounts between them.
The Premier acknowledged that with tight budgets and a difficult business environment where margins are thin, timeous payment to service providers and suppliers had become crucial to their survival. He called for a return to ethical conduct on the part of both government and service providers and in this regard 1130 government employees have been charged with maladministration related offences.
The Premier views the timeous payment as an important aspect of poverty alleviation as a stable and reliable payment regime enables small businesses to prosper and grow.
The meeting was also addressed by the MEC for Finance, Mrs Cronje. She emphasised not only that public money must be spent wisely and for proper value but also that payment within 30 days is a requirement in terms of the regulations to the PFMA. She is concerned about an ever increasing public sector wage bill "crowding out" other services especially where about 48% of youths are unemployed and may have lost all hope for the future. She feels that the recent disturbances in Tunisia, Egypt, Libya and London resulted from discontent similar to that of our youth and therefore strongly urged business to focus on providing opportunities for them.
Referring to delays in payment the MEC said that the main reasons for such delays are:
- Invoices being delivered to the incorrect officials
- Proper procurement procedures not being followed
- Suppliers and service providers not being properly registered on the department's database
- Disputes arising as to the quality and/or quantity of supplies or services
- Invoices not complying with the required formalities and mistakes such as calculation errors.
- Disagreement or uncertainty as to which department should pay the invoice
Herman Conradie, the department's Accountant General indicated the size of the Department's undertaking by mentioning that there are 17000 service providers registered on the system and that 40 0000 payments are made by means of 2 "runs" each month. He also introduced the new operation scheduled to commence on 1 September 2011.
Please refer to the documentation provided by the Treasury Department which outlines the current challenges and the proposed modus operandi for dealing with late payments.
Operation Khokha Ngeskathi documentation download (PDF)
Bruce Lyle |
