The Eastern Cape Department of Human Settlements owes contractors assigned to build low-cost housing more than R300 million.
That's according to Human Settlements MEC, Helen Sauls-August, in a written reply to questions by DA MPL, Sanele Magaqa.
According to the reply, the conditional grant allocated for projects in the 2015/2016 financial year exceeded R2.2 billion.
Sauls-August explained that the reasons behind the delays payment were due to short falls of R396 million as at the beginning of the current financial year.
"Reduction in allocation by R176 million after the department had finalised its commitment to the financial year and the province was subsequently only informed on the 28th January 2016," Sauls-August wrote.
She added that there were also accruals of R220 million.
"Reductions of funds prior to commencement of the financial year has had negative consequences on the current projects, since they are multi-year projects and there are existing contractual obligations with the contractors in terms of signed service level agreements," she said.
Magaqa said the late payments have dire consequences for the contractors, "This severe backlog in payments has dire consequences for small business owners and their employees as it has led to the retrenchment of hundreds of employees and it could result in the total collapse of affected companies."
He added that the failure of the department to pay these contractors is destroying jobs and is impacting negatively on the local economy.
Magaqa said that the legislation clearly states that any business that has done work for the government must be paid within 30 days.
However, he said there were still invoices for Alfred Nzo, Chris Hani, Joe Gqabi and OR Tambo district municipalities that were over 90 days old.
In her written reply, MEC Sauls August said that the outstanding invoices will be prioritised for the 2017/2018 financial year.
Magaqa, however, said he is not so sure that this will happen as he has noted that every financial year contractors "do not get paid."
