Gauteng owes Microsoft R344 million

The Gauteng Department of e-Government owes Microsoft more than a third of a billion rand in unpaid license fees for its 2022-2025 licence agreement.

This is according to the Democratic Alliance’s spokesperson for e-Government, Michael Waters, who said that the arrears of R344 million was revealed during a recent e-Government portfolio committee meeting.

“This debt stems from the 2022-2025 licence agreement, where the Department of e-Government failed to pay invoices, citing ‘untimely billing’ and ‘late invoices,’” Waters said.

“Gauteng residents suffer when IT systems fail, hospital files are lost, schools are unable to operate, and departments are paralysed. This isn’t just about numbers; it’s about services, safety, and stability.”

He said that at its peak, the debt amounted R631 million and has since been reduced by just under R300 million through partial payments.

Waters highlighted that despite its outstanding debt, the Department signed a new three-year contract with Microsoft from 2025 until 2028 worth $53.2 million or R915.9 million.

This is a R228 million (33%) increase in the cost of the licence agreement from the previous three years, despite still being in arrears.

Newsday contacted Microsoft and the Gauteng Department of e-Government for comment about the debt as well as the new agreement.

Microsoft told Newsday that “as a matter of policy, Microsoft does not disclose or comment on the commercial terms of customer agreements, as these are subject to strict confidentiality.”

The Gauteng Department of e-Government did not respond to Newsday’s questions.

According to the Department’s 2024 annual report, “Computer services” cost R1.01 billion in the 2023/24 financial year, an increase from R823 million the previous year.

It said this was due to “payment for subscriptions for Microsoft Smart Solution and payments for software licenses.”

These included licenses for Open Text, Microsoft defender endpoint detection and response solution, Archiving Platform Integration for email security, and Firewall implementation and configuration.

This expenditure for computer services sat at R537 million in the 2020/21 financial year, a decrease from R675 million the year before.

Waters said that the DA has written to Gauteng MEC for Finance, Lebogang Maile, demanding a full breakdown of the debt, a list of departments affected, and clarity on who failed to make the payments.

He also asked what plans exist to avoid service shutdowns.

“A modern government cannot function without digital systems, and Lesufi’s administration has placed core services, from healthcare to education, at risk,” Waters added.

“Gauteng cannot afford a digital blackout.”

The Department of e-Government’s R344 million-debt is not the first time the provincial government has had issues regarding payments to Microsoft.

In 2021, the DA revealed that the Department of e-Government paid $21 million (R318.3 million at the time) instead of R21 million, according to a TechCentral report.

While the province was able to recall the funds, it only received R311.5 million due to exchange rate losses, a shortfall of R6.8 million.

In 2016, MyBroadband reported that the Gauteng Department of Education (GDE) received complaints from public schools that they were struggling to install new Microsoft products.

This was because they did not receive new licenses from the Department, limiting users from installing certain software to new PCs or fix old Windows systems.

Microsoft putting down roots in South Africa

In March 2025, Microsoft President Brad Smith announced that the company planned to invest R5.4 billion to expand data centre capacity in South Africa.

He said this investment will build on Microsoft’s existing R20.4 billion infrastructure investment.

Smith was joined by President Cyril Ramaphosa at the announcment.

This is part of the company’s drive to expand Artificial Intelligence usage in the country and build an AI economy.

“Just like you can’t have electricity without a power station, you can’t have AI without data centres,” Smith said during the announcement.

“You build the infrastructure so that people will build models, you use the models to build applications, and when you use the applications, then you can expand further,” he added.