Wednesday, December 1, 2021

Govt makes yet another promise to pay suppliers on time

As the invisible Covid-19 clouds enveloped Botswana last year, President Mokgweetsi Masisi went on Btv to assure the nation that the government would “give businesses some cash-flow relief.” In service of the latter, he announced that “the Ministry of Finance and Economic Development will provide more details on the criteria and guidelines” for implementation of measures to stabilize businesses.

A week later, the Permanent Secretary of the Ministry of Finance and Economic Development, Dr. Wilfred Mandlebe, notified the nation, through a public statement, about the Ministry’s economic response to the COVID-19 pandemic. Under the “Ease of Doing Business” sub-section, he stated the following: “All Government institutions to pay purchase orders within 5 days and parastatals to pay within 24 hours”; “Address GABS downtime related issues”; “Improve efficiency of procurement processes”; and “Government to pay all outstanding invoices (arrears) in 2 weeks (P530million).”

So more than a year later, who is getting paid within five days? Not hospitality establishments which, as Sunday Standard has reported, are complaining that payment for accommodating Covid-19 guest-restrictees takes long to come. These establishments have to use their own resources to cater for these guests and claim payment afterwards. When such payment takes long to come, these establishments can easily collapse on account of lack of income stability. 

In response to why the government is failing to fulfill its promise to the nation and why has the Ministry has not publicly communicated why it can’t fulfill this promise, the Head of Public Relations, Fenny Letshwiti, begins by citing one promise that the Ministry scored good marks on. Letshwiti says that within two weeks of Mandlebe’s statement, the Ministry paid a total of P 511, 051,402.31 of the P530 million of estimated outstanding government purchase orders at the time.

“These invoices originated from various ministries/departments across government who are the procuring entities,” he adds.

In apparent effort to distance MFED from the delay in paying suppliers, Letshwiti is keen to stress that the Ministry, through the Office of the Accountant General, is responsible for the payment of goods and services “on receipt of an instruction” from relevant procuring entities.

“Once the procurement process is complete and the line ministries/departments have provided an invoice, payment is then initiated by completing and submitting the required documentation to Banking Section within the Office of Accountant General for transfer of the funds to the supplier’s bank account,” he explains.

With particular regard to hospitality establishments that accommodate Covid-19 guest-restrictees, he referred us to the Ministry of Health and Wellness (MoHW). Nonetheless, he stated that “all COVID-19 invoices submitted to MFED by MoHW have been paid within the stipulated 48 hours, save for the period leading to year-end closure, where the Ministry was inundated with supplier payments resulting in some delays.”

Sunday Standard has actually sought explanation from the latter and the explanation from its spokesperson, Christopher Nyanga, was that the nature and peculiar exigencies of Covid-19 quarantining makes it impossible to make prompt payment. Indeed, a hotel can’t compile a quotation when a guest’s length of stay would be determined by his medical condition. While Nyanga’s explanation may make perfect sense, “all” (“All Government institutions to pay purchase order within 5 days) still means “all” and no exemptions have ever been made. Hospitality establishments themselves complain that payment still takes long even when everything is supposed to be in order – something we have been able to independently confirm.

In acknowledging that delays in paying suppliers do occur, Letshwiti says that the Ministry “regrets’ such delays. He adds that “in line with the MFED‘s economic response to the COVID-19 pandemic, and mitigation of the adverse effects on supplier’s cash flows and that all procuring entities”, all procuring entities are constantly engaged by MFED as way of monitoring; reminding them to prepare and present all payment requests well on time to avoid delays in processing payments.”

As part of effort to deliver on promises it has made to the nation, the Ministry is re-engineering payment processes across line ministries and independent departments. This process is aimed at reducing the existing 10 days’ generic payments standard that is currently in place, to five days.

“A Task Team was constituted in June 2021 (comprising of Directorate of Public Service Management and MFED officers with MFED spearheading) to undertake the re-engineering processes, as a project. So far, [the team] has completed a Project Charter, which is a document that will guide the entire process from initiation to completion,” says Letshwiti, adding that upon successful completion of the exercise, there will be a new Generic Public Service Standard that will be shared with the public. “This exercise is also intended to further shorten the current 10 days waiting period from the date of receipt of the invoice. In the meantime, MFED has been assisting aggrieved suppliers by engaging procuring entities to resolve all hiccups they encounter in preparing payments vouchers for payment.”

Going back to the presidency of Festus Mogae, there has always been grave concern about late payment which, in some instances, has caused some businesses to collapse. Former finance ministers in Baledzi Gaolathe, Kenneth Matambo and Dr. Thapelo Matsheka have been quizzed about this issue in parliament. That this issue keeps cropping up despite assurances that the Ministry is a problem on its own and portends a future in which more businesses collapse.

Letshwiti says that the Ministry “is aware of the frustrations raised by the media relating to failure by government to pay suppliers on time and that this may ultimately collapse businesses if not managed.” He adds that the Ministry continues to ensure that all payments are paid within the set standards with a view to minimize complaints from government suppliers.

“Contacts details of key staff of the Office of the Accountant General, including the Treasury Cashiers (Revenue) at the District level and Heads of Accounting Units at Ministry level have been provided to suppliers to afford them an opportunity to escalate their issues in case of delayed payments. MFED will from now, going forward, publicise key staff contact details in the Ministry website and social media pages in addition to print media houses and be updated every six months.”

Minimising complaints from suppliers also includes continuous engagement with line ministries and departments’ accounting officers to ensure that suppliers’ payments are processed and submitted for payment within the stipulated set standards; carrying out periodic inspections to ensure that line ministries and departments comply with the Public Finance Management Act, Financial Instructions and Procedures, Supplies Regulations, and any relevant directives and circulars issued from time to time in the utilization and custody of public finances and supplies; as well as coming up with initiatives to improve the procurement and payment process.

“The current financial management system is in the process of being upgraded to provide enhancement such as online invoicing and e-procurement. The Ministry has also introduced various online payment platforms, such as Electronic Funds Transfer (EFT) and Real Time Gross System (RTGS). Furthermore, the intention is to fully automate processes to facilitate online transacting with the view to improve service delivery and make it cost effective to the consumer. This is in line with the government’s transformation agenda,” says Letshwiti adding that suppliers can also invoke Regulation 91(9) of the Public Procurement and Asset Disposal Act and Regulations which “is intended to compensate suppliers on the negative impacts they may face in their cash flows due to delayed payments.”

The Regulation 91(9) reads: “A delay in payment to a provider shall attract interest at the prevailing commercial bank overdraft rate or such rate as may be stated in the bidding document, on a daily basis, for each day after the due date for payment.”

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