Monday, January 27, 2020

Warning: Don’t surcharge government departments for late payment

Those who do business with the government may, on the basis of what the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, recently said in parliament, be tempted to do something they will come to regret.Through a parliamentary question, Kanye North MP, Thapelo Letsholo, raised complaint about the late payment by government departments. This decades-long practice is actually one of the main reasons why small businesses, including those funded by the Citizen Entrepreneurial Development Agency, collapse. In his response the minister said that systems and processes are in place to ensure that suppliers are paid within 10 days, that accounting officers maintain oversight over the relevant departments (supplies, accounts and finance) to ensure that no party is paid late. He also stated that suppliers have an option of adding a surcharge to their bills if payment is made late.The latter might sound like something one should do but it is important to do it with your eyes wide open.

People who are familiar with the public procurement eco-system know that in-house criminal cartels have taken root in the Departments of Supplies, Accounts and Finance. Say you used your last money to buy merchandise to supply to a government department. You have been waiting for payment for two months now and decide to exercise the surcharge option. One very real possibility is that thereafter, you can kiss government jobs goodbye because you will be blacklisted by the same people who delayed your payment. If you somehow manage to get one, they will make it extremely difficult for you to do business with the government.A surcharge triggers a process to identify and take disciplinary action against culprits. In turn, those culprits would be inclined to punish suppliers they expect to have inexhaustible patience even as their bills pile up.There are many ways they can execute such punishment.

They can nitpick about the quality of your products and services, about the format of your paperwork, claim to not have received correspondence sent electronically and when they finally do, say that the paperwork is not in order etc. It is very easy for them to do this because when you have worked within a system for a long time, you perfect the art of gaming it. The civil service is also where there are as many policies and procedures as there are civil servants. Matsheka said payment should be made within 10 days but at some parastatal organisations officers will say 30 days. The point is that there are a million valid-sounding reasons that people in these departments can use to make it extremely difficult for suppliers to do business with the government.

On the whole, the government is in denial about what it would take to economically empower citizens. Empowerment is a long and multi-faceted process but its inflection point is literally putting money in the hands of citizens. All successive presidents and ministers have been able to do is wax lyrical about the need to do so and what policies and programmes the government will introduce to that end. The people who have real power in terms of actually putting money in the hands of citizens are civil servants in the Departments of Supplies, Accounts and Finance. The president and his ministers are in denial about the fact that officers in these departments have more power than they do in terms of economic empowerment and that a good many of these people are using such power in a corrupt manner.Secondly, there is denial about the extent to which the public procurement system has been deeply criminalised.

Through his question, Letsholo had sought to find out if it was not time to “criminalise” late payment. Blanket criminalisation would be mistaken but late payment should certainly be criminalised where crime has occurred. If the Directorate of Corruption and Economic Crime ever investigates late payment, it will discover that some invoices mysteriously leapfrog others – especially at the headquarters of one disciplined force. It will also find inconsistency in the application of procurement rules and if it carries out covert lifestyle audit, will discover that some of these officers live beyond their official means.

Thirdly, the government is in denial about the fact doing the same thing over and over again, is never going to produce a different outcome. This is not the first time that an MP has raised a complaint about late payment. As many years ago as when Baledzi Gaolathe was the Minister of Finance and Development Planning, the same issue came up through a parliamentary question. Guess what? Gaolathe gave the very same answer, which was that if payment is not made within the stipulated timeframe, companies had the option of claiming a 2 percent surcharge.

There is reason to believe that this answer is routinely microwaved and handed over steaming hot to an incumbent minister to serve in parliament. Meanwhile, nothing changes about the problem that MPs and the nation complain about. It remains unclear why the surcharge should not be added automatically than ask suppliers to risk being blacklisted by adding it to their bills themselves. 

There is an even more interesting tangential point: the answer that Gaolathe gave more than a decade ago and that Matsheka just gave comes from people who are responsible for managing a system that is impoverishing Batswana. Officially, a minister owns an answer that he gives in parliament but the answer comes from civil servants who are directly responsible for the complaint that parliamentary questions raise. It’s likely that the same civil servant who has not been able to solve the late payment problem during Gaolathe’s time is the very same one who provided the response for Letsholo’s question.  This is the equivalent of an accused person at the High Court getting to write the judgement.

In terms of parliament rules, there has to be a defined time lapse before the late payment issue can be raised again through a question. In the meantime, unpaid invoices will be piling up at government offices, businesses will be closing down as a result and those charged with the responsibility of ensuring that the systems functions smoothly will be sleeping on the job. If the question is asked again after that time lapse, the answer that Matsheka gave will once more be microwaved and served to parliament.

In an alternative universe where Matsheka had to give an honest answer, he would state that cabinet (including the president) is actually powerless with regard to the actual citizen economic empowerment, that the system is run by civil servants in the departments of supplies, accounts and finance and that bribery has been known to speed up payment without fail.

RELATED STORIES