EC department owes firms R303m for low-cost housing

The Eastern Cape human settlements department owes contractors who have built low-cost housing in the province a whopping R303-million.

According to the DA, the massive debt, which has run far in excess of 30 days, has left small firms floundering, and led to the loss of hundreds of workers due to lay-offs.

The party has labelled the situation as “chaotic”.

Legislation states that businesses that have completed work for the government must be paid within 30 days, yet there are payments that have not been made after more than 90 days for work in the Alfred Nzo, Chris Hani, Joe Gqabi and OR Tambo municipalities.

The DA has called on the MEC for human settlements, Helen Sauls-August, to address the backlog in payments, which includes:

  • R81-million in Alfred Nzo Municipality;
  • R73-million in OR Tambo District Municipality;
  • R36-million in Nelson Mandela Bay Metro;
  • R11-million in Buffalo City Metro;
  • R7-million in Amathole District Municipality; and
  • R3-million in Sarah Baartman District Municipality.

“A well-run government would ensure contractors receive timely compensation for work done,” said DA MPL Sanele Magaqa. “It is unfair to contractors, employees and recipients of housing that the department is conducting its affairs in this chaotic manner.”

In a reply to a question by Magaqa in the Eastern Cape legislature, the human settlements department said it had experienced a shortfall of R396-million at the beginning of the current financial year. This was due to a reduction of R176-million in its allocation on January 28 2016, after the department had finalised its commitment for the year, as well as accruals of R220-million.

Some payments have not been made for 120 to 150 days, including invoices for R7-million in Alfred Nzo and OR Tambo.

The department promised to “prioritise” outstanding payments in the 2017/18 financial year.

Asked by Magaqa how failure to pay contractors would be avoided in future, the department said it would limit and prioritise the approval of beneficiaries, and enforce strict compliance from inspectors on all projects.

At present, to prevent job losses, it was processing contractors’ claims each month and “considering paying older claims first depending on available cash flow”.

“The department meets contractors on a quarterly basis to inform the current funding situation, and also to notify the arrangements the department is deploying to resolve the current situation.” A request had been made to the national department of human settlements for it to consider refunding money that was taken from the Eastern Cape.

The provincial department’s spokesman, Lwandile Sicwetsha declined to comment, saying answers provided to the portfolio committee at the legislature was a public document, and no further response was required. —


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