Small businesses across South Africa are struggling to survive as government departments sit on unpaid invoices worth R15.5 billion, violating the law and driving suppliers into financial ruin.

Public Service Commission Commissioner Anele Gxoyiya delivered a stark warning on Wednesday, revealing that 90 856 invoices remain unpaid beyond the legal 30-day limit at the end of the third quarter of the 2025/26 financial year.

Speaking during a media conferencea, Gxoyiya said the crisis is destroying Small, Medium and Micro Enterprises (SMMEs) that form the backbone of the country’s economy.

“The non-payment of invoices by government departments is a contributing factor to the lack of sustainability in the small businesses environment,” he said.

The impact on ordinary South Africans is devastating. Suppliers are forced to borrow money just to meet their contractual obligations, while others have no choice but to retrench workers or shut down completely.

Provincial departments worst offenders

Provincial departments are the biggest culprits, accounting for 98% of the overdue invoices and 98% of the R15.5 billion owed to suppliers.

The situation has actually worsened, with unpaid invoices increasing by 25% – or 4 543 additional invoices – compared to the previous quarter when 95 399 invoices worth R12.4 billion remained outstanding.

During the third quarter alone, departments paid 89 499 invoices late, worth R10.8 billion – money that should have reached businesses within 30 days as required by the Public Finance Management Act.

Defence department leads late payers

Among national departments, Defence recorded the highest number of late payments with 15 769 invoices – representing 80% of all invoices – worth R450 million.

The Department of Public Works and Infrastructure came second with 1 391 overdue invoices worth R216 million.

Other problem departments include Home Affairs, Land Reform and Rural Development, Water and Sanitation, Forestry, Fisheries and the Environment, and Justice and Constitutional Development.

Culture of complacency

Gxoyiya blamed structural weaknesses including poor consequence management and inadequate monitoring at operational levels for the persistent problem.

“In the absence of clear accountability frameworks or enforcement mechanisms, delayed or ignored payments often remain unresolved, fostering a culture of complacency,” he warned.

The commissioner highlighted how weak oversight among junior supply chain staff contributes to poor tracking, ineffective follow-up and limited escalation of outstanding payments.

Manual processes, skills gaps and inefficient internal controls further compound the delays, creating a system that erodes supplier confidence and undermines business relationships.

Economic damage

The crisis directly contradicts government’s stated goals of economic development, job creation and poverty alleviation.

For small business owners who depend on government contracts, the delayed payments create a vicious cycle where they must borrow money to stay afloat, often at high interest rates that eat into already slim profit margins.

Many suppliers have been forced to close their doors permanently, taking jobs and economic opportunities with them – exactly the opposite of what government policy aims to achieve.

The R15.5 billion sitting in departmental accounts while businesses struggle represents a massive failure of the state to support the very entrepreneurs it claims to champion.

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