The South African government’s failure to pay building contractors on time or to even pay them at all, sometimes, is one of the major causes of job losses in the construction sector, an industry executive said on Tuesday.
Databuild CE Morag Evans said many companies, particularly small, medium and micro-sized enterprises (SMMEs), were being forced to close their doors as a result, against the backdrop of an ailing economy.
Databuild is a knowledge hub for the construction and related industries which provides an online database of contacts, projects and tender opportunities available in South Africa and other African countries.
Evans noted that National Treasury regulations stipulated contractors should be paid no later than 30 days after invoicing, yet a report issued by the Construction Industry Development Board showed 60 percent of payments were made after the deadline.
“Most contractors and suppliers in the construction industry are entrepreneurs, operating as an SMME. Government cannot claim to support entrepreneurship, but then fail to pay the very business owners who play a crucial role in stimulating economic growth and job creation," she said.
“This creates the impression that government simply doesn’t care about the repercussions. Contractors are left with severe cash flow problems, which ultimately lead to financial ruin, adding further impetus to the nation’s burgeoning unemployment rate.”
Evans said infrastructure and public works minister Patricia de Lille had made progress in addressing this crisis, but more needed to be done.
"Government has a responsibility to adhere to its own regulations and needs to urgently put correct and efficient systems in place so that its suppliers can be paid accurately and timeously," she said.
Evans also urged contractors and suppliers to ensure that the documentation they submitted for payment was accurate and in accordance with government requirements to avoid payment delays.