Govt to introduce new law to tackle late payments to SMMEs – Ntshavheni

The government will soon introduce a Small Enterprise Ombudsman Services Bill in Parliament to establish a cheaper dispute resolution mechanism for South Africa’s small businesses.

This is according to Minister of Small Business Development Khumbudzo Ntshavheni, who tabled her Department’s budget vote to Parliament on Tuesday.

She said, “South African small enterprises lose billions of rand annually due to late and non-payment by both government and the private sector.

“The non-payment has resulted in some small enterprises closing down because they have no appropriate, effective and efficient mechanism to use to resolve disputes such as non-payment.”

Costly court processes

Approaching courts of law is costly, cumbersome and time-consuming for small enterprises, Ntshavheni said. “We firmly believe that the Small Enterprise Ombuds Service remains a necessity even in the new normal,” she added.

The State of Late Payments report by small business platform Xero found that in 2019, 91 percent of SMEs experienced late payments. This impacted on their ability to pay staff and suppliers, the report found.

Ntshavheni said the lockdown exacerbated late payments and thus worsened SMEs’ liquidity challenges. Affected businesses can lodge queries by emailing the National Treasury at 30daysqueries@treasury.gov.za.

The Minister added, “A dedicated team in the office of the chief procurement office (OCPO) deals with queries lodged and that there is already an improvement of around 20 percent with national Departments

“I want to thank the CEO initiative and Business 4 South Africa who mobilised large businesses to pay SMME suppliers during the hard lockdown within a month.  This can however not be a once off initiative; it needs to be embedded in the culture of doing business in South Africa.”

SMME debt relief

Ntshavheni said the government’s R530 million SMME debt relief facility is being disbursed to SMMEs as soft loans to cushion them against COVID-19’s economic impact.

“This facility is assisting the majority of SMMEs and cooperatives who were experiencing severe reduction in demand and subsequent reduction in revenues due to the pandemic,” she said.

Funding per entity is capped at R350,000 and covers working capital requirements such as utilities bills, rental payments and salaries.

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