MALAIKA MAHLATSI | Ruling party's failure to pay its debt a red flag

On Monday, December 4, South Africans bore witness to the state of the ANC in all its shame. On the said day, a truck of the Sheriff was seen parked outside Luthuli House, the party’s headquarters in Joburg.

The party had been served a writ of execution to attach and take all its movable goods that would later be sold at auction to recover millions of rand owed to Ezulweni Investments, a Durban-based company that was awarded the contract for printing the organisation’s election banners and other campaigning material for the 2019 general election.

The ANC would go on to win that election. Ezulweni is a small company based in the KwaZulu-Natal city of Newcastle. According to its owner, like all small businesses, at the time of being awarded the contract, it did not have adequate resources to produce the ANC ’s request for election material.

This resullted in the incurring of debt as it had to borrow money to fulfil the massive order. The practice is common. Many small companies have limited cashflow and as such, borrow money to fulfil large orders that are guaranteed to bring insizeable profits.

With an order amount to just over R100m, for an institution as big as the ANC, Ezulweni had every reason to believe that it had hit the jackpot. Instead of this big jackpot, the company has been going from court to court in an effort to force the ANC to pay the debt. In every court, Ezulweni has won its case and the ANC has been instructed to pay the money, with interest.

The amount owed now stands at a mind-numbing R150m. But the ANC refuses to abide by court rulings –including the recent Supreme Court of Appeal judgment that arrived at the same conclusion as lower courts, that the ANC must pay Ezulweni.

The party is now taking thecase to the ConstitutionalCourt. The likelihood that the apex court will arrive at a different conclusion to that ofl ower courts is very slim, but the ruling party is prepared to take that chance rather than pay a small business what is due to it.

This is not a story about the ANC ’s unwillingness to pay its debtors, though that is certainly a significant part of it. Indeed, a governing party that is unable to pay its debtors should concern all of us because the question must arise: Can we trust an organisation that cannot handle its own financial affairs to handle the economy of our country?

After all, those who preside over the party’s finances are also occupying important positions in government, including in the cabinet. But the bigger story here is about the ways in which small businesses, the lifeline of SA’s economy, are being decimated by those who are mandated to develop them. Small businesses in SA are the very heartbeat of our economy.

According to Statistics SA, they account for over 90% of all registered businesses in the country. They provide essential goods and services to local communities, create jobs (they employ an estimated 60% of the workforce) and stimulate economic growth.

A recent report published by the International Finance Corporation estimates that small businesses contribute up to 35% of the total gross domestic product of the country.

And yet, small businesses face huge challenges that include late payments of invoices, which have a devastating effect on their cashflow, impacting their ability to pay the salaries of employees and operational costs. This has led to the closure of many businesses. The fact that the ANC, a governing party, is contributing to the killing of small businesses in an economy that is in tatters speaks volumes about its capacity to lead SA to prosperity.