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Treasury delays cripple Zimbabwe projects
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A new generation of Zimbabwean contractors who once carried the promise of empowerment through the government's Emergency Road Rehabilitation Programme (ERRP) are now staring at bankruptcy, lawsuits, and total collapse - victims of chronic payment delays and currency distortions by the Ministry of Finance.
Dozens of small and medium contractors, who took on major road rehabilitation projects across the country, say they have not been paid for nearly a year. Some received only partial payments converted into local currency at unfavourable exchange rates, wiping out the value of their earnings and leaving them unable to service United States dollar-denominated debts.
For many, the ERRP - launched as a flagship national infrastructure drive - has turned from opportunity to financial ruin.
"We pumped out all our resources to make the government projects come to fruition," said Tawanda Mangoma, director of Ngomla Investments (Pvt) Ltd, whose company worked on Alko Road in Mwenezi and Sean Rebeiro Road in Chiredzi. "We were optimistic that when the projects got finished, we would celebrate. But payment delays gave us a heavy blow."
Mangoma said his company invested over US$500,000, borrowed from banks, relatives, and friends, expecting prompt payment from Treasury. Ten months later, he says he received only US$50,000 worth of RTGS, a fraction of what was owed. "We are battling serious legal reparations and court cases just to stay afloat," he lamented.
The crisis has crippled dozens of small firms that formed the backbone of the ERRP. Many have laid off workers, sold equipment, or shuttered operations altogether.
Economists say the problem lies in Treasury's liquidity crunch. The Reserve Bank of Zimbabwe's tight monetary policy has cut off quasi-fiscal funding for government programmes, leaving ministries cash-starved. While the policy aims to curb inflation, it has also strangled payment flows to service providers.
"The myth that government contracts guarantee prompt payment has been exposed," said one industry executive who declined to be named. "Treasury is overwhelmed, but even partial payments could have saved many firms."
According to Zimbabwe Building Contractors Association president, Tinashe Manzungu, the delays have devastated the sector. "Some of our members are owed huge sums - invoices dating back to early 2024. Companies have shut down, and some owners have lost their homes," he said.
Muchapiwa Mazarura, secretary-general of the Zimbabwe Construction and Allied Trade Workers Union, confirmed that the knock-on effects have reached workers. "Employers tell us government hasn't paid. Negotiating wages is now impossible when companies have no cash flow," he told The Independent.
A recent Auditor-General's report intensified scrutiny, revealing that more than US$500 million in Treasury disbursements for 2024 were not recorded in the Public Finance Management System, raising alarm over accountability in public fund management.
In March, Finance Minister Mthuli Ncube announced that Treasury had cleared about US$30 million in arrears - mainly for the Harare–Masvingo–Beitbridge Road - but industry experts say that barely scratches the surface of what is owed nationwide.
Deputy Minister of Transport and Infrastructure Development Joshua Sacco said the government is working to "stabilise relations" with contractors through new payment plans and stronger oversight.
"We are working well with our contractors and have established payment plans," Sacco told The Independent. "We are also encouraging them to take on only the work they can handle."
He said the government was moving toward public-private partnerships (PPPs), where private investors finance projects upfront, and the state repays over time. "You are then assured that you are paying off a loan over time, but the infrastructure has already been put in place," Sacco said.
He also confirmed that the government is phasing out upfront payments to contractors, which often led to inflated costs and poor workmanship. "We are moving away from paying contractors in advance. These projects must be fully funded before commencement."
With the government battling a public debt of over US$21 billion, the fate of smaller contractors remains precarious. Many are now blacklisted by banks, entangled in litigation, and stripped of the very equipment they once used to build the nation's roads.
Industry leaders are calling for urgent reforms - including structured, milestone-based payment systems, US dollar-indexed contracts to preserve value, and full disclosure of Treasury arrears - to restore confidence and prevent a total collapse of the construction sector.
For now, however, Zimbabwe's road to recovery remains paved with broken promises and unpaid debts.
Dozens of small and medium contractors, who took on major road rehabilitation projects across the country, say they have not been paid for nearly a year. Some received only partial payments converted into local currency at unfavourable exchange rates, wiping out the value of their earnings and leaving them unable to service United States dollar-denominated debts.
For many, the ERRP - launched as a flagship national infrastructure drive - has turned from opportunity to financial ruin.
"We pumped out all our resources to make the government projects come to fruition," said Tawanda Mangoma, director of Ngomla Investments (Pvt) Ltd, whose company worked on Alko Road in Mwenezi and Sean Rebeiro Road in Chiredzi. "We were optimistic that when the projects got finished, we would celebrate. But payment delays gave us a heavy blow."
Mangoma said his company invested over US$500,000, borrowed from banks, relatives, and friends, expecting prompt payment from Treasury. Ten months later, he says he received only US$50,000 worth of RTGS, a fraction of what was owed. "We are battling serious legal reparations and court cases just to stay afloat," he lamented.
The crisis has crippled dozens of small firms that formed the backbone of the ERRP. Many have laid off workers, sold equipment, or shuttered operations altogether.
Economists say the problem lies in Treasury's liquidity crunch. The Reserve Bank of Zimbabwe's tight monetary policy has cut off quasi-fiscal funding for government programmes, leaving ministries cash-starved. While the policy aims to curb inflation, it has also strangled payment flows to service providers.
"The myth that government contracts guarantee prompt payment has been exposed," said one industry executive who declined to be named. "Treasury is overwhelmed, but even partial payments could have saved many firms."
According to Zimbabwe Building Contractors Association president, Tinashe Manzungu, the delays have devastated the sector. "Some of our members are owed huge sums - invoices dating back to early 2024. Companies have shut down, and some owners have lost their homes," he said.
A recent Auditor-General's report intensified scrutiny, revealing that more than US$500 million in Treasury disbursements for 2024 were not recorded in the Public Finance Management System, raising alarm over accountability in public fund management.
In March, Finance Minister Mthuli Ncube announced that Treasury had cleared about US$30 million in arrears - mainly for the Harare–Masvingo–Beitbridge Road - but industry experts say that barely scratches the surface of what is owed nationwide.
Deputy Minister of Transport and Infrastructure Development Joshua Sacco said the government is working to "stabilise relations" with contractors through new payment plans and stronger oversight.
"We are working well with our contractors and have established payment plans," Sacco told The Independent. "We are also encouraging them to take on only the work they can handle."
He said the government was moving toward public-private partnerships (PPPs), where private investors finance projects upfront, and the state repays over time. "You are then assured that you are paying off a loan over time, but the infrastructure has already been put in place," Sacco said.
He also confirmed that the government is phasing out upfront payments to contractors, which often led to inflated costs and poor workmanship. "We are moving away from paying contractors in advance. These projects must be fully funded before commencement."
With the government battling a public debt of over US$21 billion, the fate of smaller contractors remains precarious. Many are now blacklisted by banks, entangled in litigation, and stripped of the very equipment they once used to build the nation's roads.
Industry leaders are calling for urgent reforms - including structured, milestone-based payment systems, US dollar-indexed contracts to preserve value, and full disclosure of Treasury arrears - to restore confidence and prevent a total collapse of the construction sector.
For now, however, Zimbabwe's road to recovery remains paved with broken promises and unpaid debts.
Source - The Independent
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