Online Reporter
Sikhulekelani Moyo [email protected]
LATE payments to sub-contractors are threatening Zimbabwe’s infrastructure development drive, with industry players warning that small construction firms are being pushed to the brink despite Government and private players mobilising billions of dollars for major projects.
The warning was made during a high-level dialogue on “Unlocking Infrastructure Investment Through PPPs and Procurement Reforms” at the recent Construction Industry Federation of Zimbabwe (Cifoz) Annual General Meeting and Congress recently held in Bulawayo.
While Government and private players are pursuing big-ticket infrastructure projects through structured Public-Private Partnerships (PPPs), industry players have said the success of such investments ultimately depends on the small contractors at the bottom of the construction chain who physically build roads, buildings and other infrastructure.
Masimba Holdings chief executive officer, Eng Fungai Matahwa, told the panel discussion that sub-contractors were small players who could not survive without receiving their payments on time.
“Big companies can survive three to six months without payment, but sub-contractors cannot bear a month. Late payment can cripple these small players,” he said.
The event brought together policymakers, urban planners, technical designers, local Government and private sector players in the construction sector, with discussions focusing on structured PPPs and modernised, efficient procurement frameworks to de-risk projects and attract private capital while safeguarding public interest.
However, industry players said de-risking infrastructure projects would remain theoretical if the payment chain was not fixed.
While mega-deals can take years to structure, they said sub-contractors were often expected to deliver without being paid on time, resulting in severe cash-flow challenges for small, labour-intensive firms that often have no overdraft facilities.
“When certificates take 60-90-120 days to be honoured, they fail to pay workers, hire equipment or buy materials. Projects stall,” the panel heard.
Experts also said small players had no capacity to pre-finance PPP feasibility studies, with Eng Matahwa noting that feasibility alone requires huge upfront investment.
He said if subcontractors were not paid on time on current jobs, they could not build reserves to participate in future PPPs as local partners.
He also said the whole point of the currency framework agreement and concession agreement is to protect tolling and repatriation for external funders.
“But if that protection does not cascade to timely payments for local sub-contractors, funders see implementation risk and local content suffers,” said Eng Matahwa.
The payment challenge, industry players warned, could also have wider consequences for infrastructure quality, safety and employment.
“Quality and safety compromised: Unpaid subcontractors cut corners, abandon sites or use cheaper materials, leading to defects on roads, buildings and water projects that the Government will have to pay twice to fix.
“Construction employs thousands of casual workers in Bulawayo, Harare and beyond. When a sub-contractor is not paid, the first to suffer are bricklayers, steel fixers, electricians and truck drivers,” he said.
Participants called for modernised procurement frameworks that include mandatory 30-day payment terms for sub-contractors, with interest penalties for late payment, Escrow accounts and direct payment mechanisms in PPP concession agreements to protect downstream players and transparency on payment certificates through ZIDA and local authorities.
They also called for recognition of payment history as a criteria for awarding future PPPs and public contracts.
“How do we de-risk infrastructure projects to attract private capital safeguarding public interest? We cannot attract private capital if the local supply chain that actually builds the road is broken.
De-risking must mean paying the builder on time,” said another delegate.
As Zimbabwe pushes to close its infrastructure gap, experts have said procurement reform must therefore go beyond how projects are approved in Harare to how money flows through the construction chain to the last sub-contractor in Gwanda, Mutare or Bulawayo.
