Ghana’s construction sector may soon collapse if issues such as delayed payments to contractors are not addressed.
This is the warning from the construction wing of the Association of Ghana Industries (AGI).
The wing’s chair, Rockson Dogbegah argues that, the persistent delay in the payment for projects done for the government, has left majority of them handicapped.
The situation, according to him, has also made local contractors lose credibility to potential clients as they are not able to guarantee the execution of projects.
He maintained that most of the local contractors are struggling to secure funds since they have not been able to repay old loans due to debts owed them by government.
He pointed out that local contractors in the country are owed millions of cedis, with interests on the debts growing each day.
Speaking to Citi Business News on the matter, Mr. Dogbegah said the situation has reached an alarming level that requires that government legislate interest payments for public construction works so as to sustain the construction sector.
“I think it is time we have a law on interest on delayed payments. The whole process is challenging, and it is difficult to have Ghanaian contractors claim interest on the delayed payments even though it is sometimes on the contracts,” he said.
More worrying, he disclosed that contractors who seek to be paid for interest on delayed payments for projects executed are often victimized.
“If you are a local contractor and you claim interest you are victimized, some consultants are not championing this aspect of making sure Ghanaian contractors are paid interest on delayed payments and that is one major challenge to deal with”.
He added, “What other countries have done is to legislate the payment. Once it is legislated it becomes an offence by law if a service provider works and you delay in paying. Elsewhere, you have a certain timeline to make payments and if you don’t make the payments you pay interest on delayed payments without any hassle”.
Government promises to clear all debts owed contractors by 2019
Government earlier announced that it has set an ambitious target to complete payments of all arrears owed contractors by 2019.
The announcement came after a validation process to audit the arrears bequeathed the NPP by the erstwhile NDC administration.
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By: Anita Arthur/citibusinessnews.com/Ghana