THE government owes its suppliers an estimated M800 million for goods and services supplied in the 2017/18 financial year.
This was revealed by the Private Sector Foundation of Lesotho (PSFL) in an interview with the Lesotho Times this week.
PSFL says 64 companies have so far come forward with claims that they are owed M7 300 479, 89 for an assortment of goods and services supplied to the government in the 2017/18 financial year. The PSFL however, estimates that the figure goes up to M800 million as they are still collating the information.
Chief executive of PSFL, Thabo Qhesi, said the figures they have collected over the past two months were just “a tip of the iceberg”.
“We believe the figures we have now represent only a fraction of what the government actually owes,” Mr Qhesi said.
“Our estimations tell us that the figure is around M800 million.”
He said his organisation was concerned by the negative impact of the government’s late payment on the private sector.
“Most suppliers borrow money from financial institutions to render services to the government and late payment can mean that their loans accumulate interest which is going to eat into their profits, Mr Qhesi said.
In June this year the PSFL invited all suppliers who have outstanding payments from the government to come forward with details of the debts so that they could take up the matter.
The organisation said it would engage the ministry of Finance over the matter and required evidence to build their case upon.
Mr Qhesi also lamented that the payment delays have cost the suppliers productive labour as they end up failing to pay them.
He further indicated that due to the resultant shortages in cash flow, suppliers lose productive labour force since they cannot afford to pay them their regular wages and salaries.
He said local business lose credibility, fail to compete and develop a bad reputation in the market for delaying to fulfil their contractual obligations due to late payments.
Mr Qhesi believes however, that the on-going reforms in the public finance system will eventually address the issue of late payments.
“There is some improvement in certain aspects of the public finance system. So, I would like to think things will soon get better with regards to late payment of government suppliers.”
The Public Financial Management Reform Programme is a direct response to the need for strengthening and restoring the public’s confidence in the government’s financial management system. It also aims to transform Lesotho’s public finance management systems to attain long-term sustainable development.
In his 2017/18 budget speech Finance minister Moeketsi Majoro expressed government’s wish to improve its payment record, although it is not yet clear how far it has progressed in that regard.
“Government will improve its payment record with principal secretaries being surcharged for each late payment.”
For her part, information officer in the ministry of Finance, Keneuoe Mojaki, said government faces several challenges in processing supplier payments.
She said these include late submission of purchase invoices by suppliers. She said this late submission can be exacerbated by queries that may arise from the submitted invoice.
“Sometimes the account numbers into which a payment is to be made in the commercial bank are incorrect. So, to correct that you have to follow all the steps that the payment claim went through before it was made,” Ms Mojaki said.
She indicated that purchase invoices are submitted to the procuring ministry. The respective that ministry then forwards the information to the treasury department for processing which in turn relays information to the Central Bank to pay. The Central Bank then forwards the money to the commercial bank which will then pass it to the supplier.
Ms Mojaki said in the case of incorrect banking details, they have to reverse the process following all the steps.
She also noted that in some instances government ministries procure services before issuing purchase orders, which can lead to delays in the processing of payments.
“There are some services which are procured as a matter of emergency and in such cases, there are often no purchase orders issued prior to rendering of services. This can cause delays in processing the payment if there is no money in the government coffers.”
She however, indicated that the government was impressing upon financial controllers of ministries to ensure that all relevant information is correct on the suppliers’ invoice when a payment claim is submitted.