Payment plan in place to pay suppliers

Wednesday, March 28, 2018

The Gauteng Department of Health (GDoH) says while it is on a path to financial recovery, a payment plan is in place to prioritise funds and pay suppliers.

“As part of its supplier’s payment plan, the Gauteng Department of Health continues to pay suppliers through arranged manifold approaches. Since April 2017 to 19 March 2018, the department has paid R17 billion to 7 513 suppliers,” said the department.

The department said tough economic conditions and the technical recession experienced in South Africa in 2017 were just some of the challenges it faced.

In 2017, Health Minister Aaron Motsoaledi, Gauteng Premier David Makhura and Gauteng Health MEC Gwen Ramokgopa established the Health Intervention Task Team (ITT) to tackle the financial woes faced by the department.

In February 2018, the ITT presented its recommendations to the Executive Council Lekgotla which were accepted and they have since become the mandate of the GDoH to implement.

The ITT recommended that the 2018/2019 budget be ring-fenced only to 2018/2019 expenditure.

“This meant that a method had to be found of dealing and settling the large accrued liabilities that built over time. The Gauteng Provincial Treasury came on board and has made R4.8 billion available to settle accrued liabilities over the Medium Term Expenditure Framework. R1.5 billion of these funds will be made available in the new financial year,” said the department.

As of 31 March 2018, projected accrued liabilities of the department stood at least R7 billion.

With this in mind, a decision was made to use the R1.5 billion available to pay small businesses.

“In the interest of saving small businesses, for most of whom the department is their biggest customer, the department has made an undertaking to settle all confirmed historic debt owed to these suppliers. These are suppliers that are owed R5 million and less,” said the department.

Payment plan interventions


According to the department, engagements with major suppliers, some of which are providers of critical goods and services are underway.

The GDoH has since proposed the following payment plan which will be predicated on a legally binding contract:

  • As from 1 April 2018, the department will settle all confirmed invoices within 30 days of receipt of a valid invoice.
  • Only verified and reconciled outstanding balances will be considered.
  • Payment period will be a maximum of four years. This means where the department owes a supplier in excess of R10 million as at 31 March 2018, a payment plan will be signed off with the supplier to settle this debt over a period of time to a maximum of 4 years.
  • No interest will be charged on the outstanding balances.
  • Payment instalments will be incremental, with the smallest payment to be expected in year one. 
  • The Prescription Act will not apply. After a period of time when an invoice prescribes, it means that the invoice/debt is no longer payable. We have committed to suppliers that invoices for which we have agreed is owing as at 31 March 2018 will be exempt from the Prescription Act.

“The above interventions will be coupled with measures to contain the generation of commitments including identifying areas of wastage and inefficiencies and strict adherence to clinical protocols,” said the department.

Furthermore, the department has committed to reprioritise savings realised during the 2018/2019 and to fund accruals and where necessary Provincial Treasury will be called to assist.

“It is business unusual at the GDoH and we hope that our suppliers, who are our valued stakeholders, will walk with us on this journey to financial recovery,” said the department. –

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