Broken roads, broken promises - How delayed payments to contractors undermine Ghana’s progress

For years, Ghana’s infrastructure dreams have been haunted by a stubborn and persistent challenge: the government’s chronic delay in paying road contractors.

From the paved streets of Accra to the dusty corridors of rural Ghana, half-completed roads and abandoned construction sites stand as physical reminders of a problem that refuses to go away.

Despite successive governments’ promises to prioritise infrastructure, the cycle of awarding contracts without securing funds, delaying payments for certified works, and stalling projects has endured across political administrations.

This practice has weakened the construction industry, cost the nation millions in inflated project costs, and slowed the wheels of development to a frustrating crawl.

Today, the consequences are clearer and more damaging than ever: collapsing businesses, abandoned communities, eroded investor confidence, and a growing loss of faith in the government’s ability to deliver on its most basic promises.
 

The Invisible Price of Delay

For road contractors, delayed payments are not a mere inconvenience; they are a financial and operational nightmare.

Most contractors rely on loans to pre-finance their work, expecting that the government will honour its side of the contract.

When payments are late, interest on these loans accumulates, businesses falter, jobs are lost, and critical projects stall indefinitely.

Meanwhile, the cost of infrastructure escalates. Inflation raises the price of materials and labour.

Contractors build higher risk premiums into future bids.

Projects that could have been completed within budget spiral into multi-million-cedi burdens on the national purse.

Beyond the immediate financial costs to contractors and the economy, delayed payments hurt the government itself.

Under standard contractual terms, contractors are entitled to apply for interest on delayed payments.

Depending on the duration of the delay, the interest accrued can sometimes exceed the original contract sum, turning what could have been a manageable expenditure into a massive fiscal burden.

According to the Minister for Roads and Highways, Mr Governs Kwame Agbodza, as of 2025, the government owed road contractors a staggering GH₵25 billion, with outstanding commitments totalling over GH₵100 billion.

Shockingly, some Interim Payment Certificates (IPCs) dating as far back as 2018—over seven years ago—remain unpaid.

These figures illustrate the sheer scale of the crisis, and how deeply the practice of delayed payments has crippled both the construction sector and the government’s own financial position.

In an attempt to address this, the government amended the Contracts Act to stipulate that interest on delayed payments should be calculated using simple interest rather than compound interest.

However, while this amendment reduces the financial penalty somewhat, it does not fully address the underlying problem.

Delays still increase the cost of projects, strain government finances, and expose the government to avoidable financial risks.

Thus, the most effective solution remains timely payment—pay contractors on time, and the issue of mounting interest charges will not arise.

The Road Fund: Past Challenges and Recent Progress

One root cause of the payment delays has been the chronic underfunding of the road sector.

Although Ghana established a Road Fund—financed primarily through fuel levies and vehicle licensing fees—to guarantee a steady stream of revenue for road maintenance and construction, the previous administration imposed a cap on how much of the Fund could actually be used.

Under the Public Financial Management Act, “capping” allowed the Ministry of Finance to redirect portions of earmarked funds into the Consolidated Fund. As a result, much of the money meant for road works was withheld, starving contractors and leaving critical projects incomplete.

Fortunately, the current administration has removed the cap on the Road Fund, restoring its original purpose.

This welcome development must be protected moving forward to ensure that road infrastructure is sustainably financed without political interference.

However, even with the removal of the cap, the government must actively prioritise timely disbursement from the Fund and ensure that revenue streams feeding it—such as fuel levies—are efficiently collected and ring-fenced for roadworks only.

The abolition of road tolls in 2021 further compounded financing challenges.

Although politically motivated at the time, the removal left a significant gap in funding.

A new, transparent, and efficient road tolling system must now be considered to augment the Road Fund and support sustainable road development.

The Road to Redemption: What Must Be Done

To restore the integrity of Ghana’s road sector and avoid further damaging the economy, urgent action is needed:

1.  Protect and Utilise the Road Fund: Now that the cap has been removed it is critical that all monies collected for the Fund are channelled solely into maintaining and constructing roads—no diversions, no delays. 

2.  Reintroduce Road Tolls Smartly: Road tolls should be brought back, but modernised through electronic systems to ensure efficiency, transparency and minimal inconvenience to users.                    

3.  Strict Compliance with FIDIC Contractual Terms: Government agencies must respect the 28-day payment window stipulated in FIDIC contracts. Where interim certificates are issued, payments must follow without bureaucratic delays.              

4.  Ring-fence Infrastructure Budgets: Infrastructure allocations in the national budget should be protected from discretionary cuts and diversions.                  

5.  Introduce a Payment Guarantee Mechanism: An escrow arrangement could be introduced where payments for certified works are deposited in advance, ensuring that contractors are paid immediately upon certification.

6.  Pay Only for Contracts with Commencement Certificates: As rightly cautioned by the Minister for Finance, government should only honour payment obligations for contracts that have valid Commencement Certificates. This will prevent the widespread award of unauthorised projects without financial backing, eliminate ghost projects, and ensure that public funds are only committed to properly initiated and supervised works.                                                

7.  Contractors Must Also Act Responsibly:Contractors are advised to ensure they secure Commencement Certificates from the Ministry of Finance before mobilising to site.                        

Facilitate Discounting of IPCs:

At a recent meeting between the Minister for Roads and Highways, Mr Governs Kwame Agbodza, his directors, and the Executive Members of the Ghana Chamber of Construction Industry, the Group Chairman of Core Construction, Mr Frank Lartey, speaking on behalf of the Chamber, advocated  a strategic collaboration between contractors, the Bank of Ghana and the Ministry of Finance to guarantee the discounting of contractors’ IPCs.

The chamber maintains that such a mechanism would allow contractors to access financing more easily against certified works, ensuring that construction activities proceed smoothly even when government cashflows are delayed.

Conclusion: Keeping the Social Contract Alive

Every kilometer of unfinished road is a broken promise to the Ghanaian people.

When contractors are not paid, it is not just the private sector that suffers; the nation’s development grinds to a halt.

Jobs disappear, businesses collapse and public trust erodes.

Ghana’s vision for economic transformation depends heavily on quality infrastructure.

If we are serious about industrialisation, agricultural modernisation and regional integration, we must treat our builders as partners—not adversaries—and honour our obligations.

The writer is General Secretary, Ghana Chamber of Construction Industry