Reports are filtering through that government has not paid a single cent to companies in the hospitality business, that provide quarantine facilities to Covid-19 suspects/patients.
This follows hot on the heels of our story last week that government owes service providers about M1.6billion in unpaid dues.
This problem affects all businesses, large and small. One industry where it is apparent that large companies can be impacted in a major way is in the construction sector.
But by far, SMMEs are disproportionally affected as they usually do not have the reserves that many large companies have.
But we would like to focus on the government in this article for two reasons. Firstly, government is responsible for regulatory and policy interventions that help grow the economy. Secondly government is the largest procurer of goods.
The government is aware of the problem of late payments. This much has been acknowledged by the office of the accountant general.
The political heads may want the government policy to be implemented but officials who are interacting with suppliers at various levels, seem for the most part completely indifferent to such policies. The main reason for this is that there are no consequences for officials who flout these policies and therefore non-compliance continues.
What makes the conduct of these officials particularly immoral is that whilst denying suppliers payment for work done, they get their salaries on the same day every month. Even more reprehensible is that they and the particular entity enjoy the benefit of the goods or services the supplier has rendered, often for years before they pay, if they pay.
Suppliers who are victims of such conduct are caught between pleading with officials for payment and after trying this for some time, resorting to litigation. The problem is that any action such as litigation or even just escalating the matter to more senior officials might expose such suppliers to victimisation. They fear they might not get work again, all the while hoping that they might yet get paid. It’s a soul destroying cycle of hope and despair.