Ghana’s construction industry is facing a severe financial crisis due to unpaid government debts, leaving many road contractors unable to continue work.
The Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry, Mr. Emmanuel Cherry, has revealed that contractors are owed a staggering GHS 35 billion by the government, a situation that has left many businesses on the brink of collapse.
Mr. Cherry emphasized that successive governments have failed to address the mounting debt within the construction sector.
“As a government in power, your responsibility is to inherit both assets and liabilities. So, the debt portfolio is part of the assets and liabilities that have been inherited. All you need to do is to find out the best way of settling this outstanding amount that has been bequeathed to you.’’
Mr. Emmanuel Cherry Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry
He pointed out that contractors are forced to finance their own projects under the current system, a shift from previous arrangements where the government provided mobilization funds upfront.
Mr. Cherry described how the funding system for road contractors has drastically changed over the years, placing a heavier financial burden on contractors.
“You the contractor, after signing your contract, your responsibility is to go and look for funding. Your funding must cater for the contract terms. Some contracts dictate that if you should raise a certificate with a magnitude of 20%, 30%, or 50% of a contract sum, you show proof of work done on paper, signed or approved by the site engineer before you are eligible for payment.”
Mr. Emmanuel Cherry Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry
Prolonged Payment Delays, Consequences
Despite following due process and submitting their claims, Mr. Cherry revealed that payment delays have become alarmingly long.
“Instead of 91 days, which was extended to 180 days, today, certificates travel for one year, two years, three years…. and still counting.’’
“You go to the financial market to take money to refinance the project, but you end up losing because the financial market sells money to you with an interest. If you default, they start calculating penal interest upon that default.”
Mr. Emmanuel Cherry Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry
As a result, contractors are being forced to surrender valuable assets used as collateral for their loans.
“Most of them use their properties—houses, cars, lands—as collateral against these facilities. Because government is indebted to the contractor, who has also defaulted to the financial institution, the financial institution falls on the collateral and sells it to recover their money. Instead of a contractor moving forward in business, he goes backward.’’
Mr. Emmanuel Cherry Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry
Total Debt: GHS 35 billion and Rising
The CEO disclosed that the actual debt owed to contractors is far higher than previously reported.
“Our records initially showed that it was GHS 15 billion plus, but upon reviewing the handing-over notes after the change of government, we discovered that they were trying to [mask] the figures. The actual figure on the table now is GHS 35 billion.’’
Mr. Emmanuel Cherry Chief Executive Officer (CEO) of the Ghana Chamber of Construction Industry
The construction industry in Ghana is in crisis, with unpaid government debts pushing many contractors into financial ruin. Mr. Emmanuel Cherry’s revelations highlight the urgent need for the government to prioritize payments to road contractors to prevent further deterioration of the sector.
If the situation persists, road construction projects will continue to stall, and the economy will suffer from the ripple effects of a failing construction industry.
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