Saturday, July 4, 2020

NOTHING: That’s what happens if you pay small businesses late in Botswana

Small businesses have been identified as the backbone of the local economy – and face challenges that larger firms do not usually deal with – yet so many of their clients’, including government procurement agents and private entities still think it’s okay to pay their invoices late.

While in some countries governments have moved to protect the small businesses through enactment of some laws, in Botswana a clampdown on late payers is still at fantasy stage.

The government says it has no plans to make it a criminal offence failure by procuring entities in processing payments for goods and services rendered by small businesses.

The new Minister of finance and economic development – Dr Thapelo Matsheka this week brushed aside suggestions to use the law against procuring officers, who delayed paying small businesses on time.

My ministry does not have plans to criminalise late payment of suppliers, as this is considered to be an administrative matter.” Matsheka said in Parliament.

In the service delivery chain Line ministries and independent department are the procuring entities, which procure goods and services in terms of the Public Procurement and Asset Disposal Act. While the Ministry of Finance and Economic Development through the office of the Accountant General would be responsible for facilitating the payments.

With regards to payment, the requirement is that suppliers of goods and services should be paid within ten working days from date of receipt of an invoice.

The minister of finance explained that “once the procurement process is complete and line ministries/departments have been provided with an invoice. Payment is then initiated by completing and submitting the required documentation to Revenue Offices and Accountant General`s banking section for transfer of funds to the supplier`s account.”

The minister was answering a question in parliament this past from Member of Parliament for Kanye North Thapelo Letsholo, among them if the minister is aware that late payments to suppliers sabotages and collapses small businesses in Botswana.

MP Letsholo also asked that the minister of finance consider penalising or criminalising late payments of suppliers.

I am aware that late payments to suppliers may ultimately lead to collapse of businesses if not properly managed. Government in realisation of this undesirable situation has re-engineered processes across line Ministries and independent departments, and came up with Generic Public Service Standards which were widely shared with the public,” Dr Matsheka said.

Matsheka said in an endeavour to improve service delivery, MFED has come up with initiatives to improve payment process through various online platforms, such as Electronic Funds transfer (Eft), Real time Gross system and Pula card. The intention is to automate more processes to facilitate online transacting with the view to improve efficiency and automation process will allow for more accurate data responding to issues of performance and late payment of suppliers.

Dr Matsheka shared that “in addition to the function of Internal Audit in each Ministry, my ministry has established a standards and inspection section in the office of the Accountant General to carry out inspections to ensure line ministries or departments comply with Public finance management act and any relevant directives.”

While Matsheka has turned down suggestion to put up a law that could protect small businesses from late payment, going to court is rarely seen as an option for them either. Fingers point to legal fees associated with it as many small businesses are unable to afford it.

In the meantime, Matsheka said efforts are continuously made to sensitise the public on the same through a press release and radio announcement to emphasise that no customer or supplier payment should be unduly delayed for whatever reason.

RELATED STORIES

Read this week's paper

Sunday Standard June 28 – 4 July

Digital copy of Sunday Standard issue of June 28 - 4 July, 2020.