SMD

Annual Report 2023/2024

The payment of invoices is embedded in the relevant officials’ performance agreements that are closely monitored on a monthly basis. An internal Supply Chain Management (SCM) Circular was also issued in January 2024 to all DSBD employees, providing guidance on the process that needs to be followed in receiving invoices in order to ensure that these are paid within 30 days. Similarly to the Department, the DSBD entities also pay invoices within 30 days. sefa ’s supplier invoices are paid within 30 days

Matters raised by the Portfolio Committee Department’s response

Seda continues to endeavour to attract and retain the best talent that will assist the organisation in achieving its mandate during and beyond the amalgamation process. Seda’s vacancy rate as of the end of the 2022/23 financial year was at 7%, which is below the acceptable maximum threshold of 10%. Currently, sefa has 55:45 fixed-term contract to permanent employment ratio as part of its establishment. The fixed-term

employment practice was introduced as part of the transition arrangements for the merger. However, this transitional merger is harming the performance of the organisation which primarily results in the loss of institutional knowledge, uncertainty regarding employment tenure, and the overall impact on organisational performance.

of receipt in line with Treasury Regulation 8.2.3 and the approved Contract Management Policy. The creditors’ payment days are measured and monitored on a quarterly basis to ensure adherence to PFMA (1999). Seda pays the supplier invoices within 30 days of receipt in line with Treasury Regulation 8.2.3. The creditors’ payment days are measured and monitored on a quarterly basis to ensure adherence to PFMA (1999).

Given the devastating impact of the non and late payment of small enterprise suppliers by government, the DSBD, following consultations with National Treasury and the Department of Planning, Monitoring and Evaluation (DPME) made recommendations to the Standing Committee on Appropriations and Appropriation Bill, to strengthen the enforcement of compliance to the 30-day payment obligation to ensure that all organs of state will pay invoices to small enterprises within the required timeframe of 30 days. The Department is also working with National Treasury to strengthen regulations on the reporting requirements for the late payment of legitimate supplier invoices to differentiate between small enterprise suppliers and large enterprise suppliers. This will enable the Department to specifically follow-up on the late payment of legitimate small enterprise suppliers.

Meanwhile, the agencies are well within the target threshold of 10 percent. In the 2022/23 financial year, Seda and sefa vacant positions were filled using fixed term contracts to ensure that the merger process is

not compromised. The annual targets for the vacancy rate, as outlined in the annual performance plans, were 10 percent and on average 7 percent vacancy rate management was achieved in 2022/23 financial year.

The Committee commends the Department for paying 100 percent of its invoices within the 30-day period as required by section 38(1)(f) of the Public

Finance Management Act (PFMA), which calls for the Department’s Accounting Officers to settle all

contractual obligations and pay all money due, including intergovernmental claims, within the prescribed or agreed period. Regulation 8.2.3 of the Treasury

Regulations stipulates that “unless determined otherwise in a contract or other agreement, all payments due to

creditors must be settled within 30 days from receipt of an invoice or, in the case of civil claims, the date of settlement or court judgment”.

The Committee is currently receiving a lot of complaints from small businesses many of which relates to non

payment or late payment of invoices for products and services rendered or delivered to the clients, mainly the state organs and big corporations. According to the National Treasury data published recently, the period

from 1 July 2022 to 30 June 2023 reveals R76 billion in outstanding payments to creditors by municipalities.

Section 65(2)(e) of the Local Government: Municipal Finance Management Act, 2003 (MFMA), requires the Accounting Officers/Municipal Managers to take all

reasonable steps to ensure that all money owing by the municipality be paid within 30 days of receiving the

relevant invoice or statement. An increase in outstanding creditors could indicate that municipalities are facing liquidity and cash issues and, as a result, are delaying

payment of outstanding creditors, majority of whom are small enterprises.

Part C • GOVERNANCE • Department of Small Business Development

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