KZN education and health departments struggle with supplier payments as financial challenges mount

TimesLIVE

07-05-2025

The KwaZulu-Natal Treasury says the provincial government will have to do 'business unusual' if it is to navigate its ongoing financial crisis.
This comes as most of the departments, includingthe frontline departments of health and education, are falling behind in their financial commitments to service providers.
This week, unpaid service providers staged sit-ins in the provincial offices of both departments in Pietermaritzburg as they sought answers.
The provincial executive council met on Wednesday to discuss these and other governance and service delivery challenges.
The education department confirmed that it owed 22% of its suppliers payments for the National Schools Nutrition Programme for March and April, while the health department owes R1.7bn to its service providers.
Education MEC Sipho Hlomuka confirmed that the failure to make payments on time was mainly due to technical difficulties linked to the new financial system, a migration from BAS version 5 to BAS Version 6.
That has since been resolved, and the department said it made the payment to the affected suppliers on Tuesday, which will reflect on Friday.
However, he added that some of the suppliers were at fault for the payment delays through noncompliance with the submission standards.
'So far, we have paid all service providers that have complied with contracts in terms of submitting invoices with the supporting documents... We are certain that before May 10, as we're working with [National] Treasury, all the outstanding service providers that have submitted proper invoices will be paid.'
Some of the invoices were submitted without signatures from the schools, which is required as proof that the correct items were submitted. As a result, there are service providers who have not been paid for October and November, but the department is working with them to resolve that, Hlomuka said.
Health MEC Nomagugu Simelane said the upgrade to the new payment system was a factor but admitted that their challenges centre mainly around the financial limitations, which meant they couldn't pay all the service providers on time in this financial year.
She said they indicated as far back as November 2024 to both the provincial cabinet and the portfolio committee that they would not be able to pay all the service providers on time in this financial year because of the financial challenges facing the department.
She said they 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
'Spreading the payment over 60 days doesn't mean you write off the debt, it means at some point you will have to pay that amount, and that point was April 1 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 the service providers, but we were not able to pay in the manner that we should have for the last three weeks because of 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 over 1%, Rodgers said it will take a long time to reverse the situation if they don't change their approach to budgeting and spending.
'It's reprioritisation: while we're getting through this economic crises, 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 that we have.'
Premier Thami Ntuli said they have always been transparent with their financial limitations, and what is happening now is what their analysis and projections warned about, which they have communicated to the public.