KZN transport MEC raises alarm over R1.5bn payment delays to service providers

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16-05-2025
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Timeslive
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More than 2,000 companies are waiting for their money

KwaZulu-Natal’s MEC for transport and human settlements Siboniso Duma has voiced concerns over payment delays amounting to more than R1.5bn, affecting more than 2,000 construction companies and service providers across the province.

In a media statement, Duma said the delays were the result of technical glitches stemming from the implementation of a new version of the Standard Chart of Accounts (SCOA V6), introduced by the National Treasury on April 1. The system replaces SCOA V5, which had been in use since 2017.

“In particular, we are extremely worried about the delays in the payment of service providers who are rendering services to the department across all corners of the province. To date, there are pending payments for more than 2,000 service providers in our system, totalling more than R1.5bn,” said Duma.

According to Duma, payments have been delayed since January, affecting road and bridge construction firms, public transport service providers and numerous small businesses that rely on government contracts for their livelihoods.

“About R600m is waiting to be cleared this week, and the balance of R700m is to be cleared over the next two weeks,” he said.

The delays are not only affecting cash flow for businesses but are also threatening to stall vital infrastructure projects.

“Admittedly, this transition is not only affecting suppliers but also has the potential to reverse the gains we have made in terms of accelerating the rollout of road construction projects. These delays will have severe implications for service delivery,” Duma warned.

He further acknowledged the breach of the government’s commitment to settle invoices within 30 days, calling it a “serious violation”.

“It is for these reasons that senior management, under the leadership of head of department Siboniso Mbhele spent the greater part of this morning discussing the implications of these delays and the radical intervention,” said Duma.

He said efforts are under way to resolve the issue. The department is working closely with both the National Treasury and the provincial treasury to address the technical challenges within the Basic Accounting System (BAS).

“Our CFO Thabani Nkosi and his dedicated team will continue to engage and update affected service providers. We once again apologise to our trusted contractors and service providers for this situation that is beyond our control,” said Duma.

He reaffirmed the department’s commitment to transparency and accountability. 

“We have an obligation to account for every cent we spend, for every challenge we face, and to reflect on every success we achieve as a result of ongoing support from the people of KwaZulu-Natal,” said Duma. 

The payment delays have triggered a ripple effect across the province’s economy, placing enormous financial strain on small suppliers and contractors.

KwaZulu-Natal finance MEC Francois Rodgers echoed the urgency of the situation, urging national leaders to act swiftly.

“Delayed payments to suppliers of the government are not desirable as they affect many small businesses and households. The minister of finance and the National Treasury must give the undertaking that this matter will be resolved sooner rather than later,” Rodgers said.