Managing road contract payments in Ghana

Why many bad roads?

For several years now the pressure on the road network in Ghana has increased tremendously but maintenance works have not been swiftly done enough to mitigate the effects of the load on the roads. This is caused by the inability of the Roads and Highways Ministry to ensure the flow of maintenance works.

Governments’ indebtedness to road contractors is what has accounted for the situation. Contractors awarded routine maintenance works who have raised certificates for payments can’t go back to project sites to continue with the second and third phases of the projects because they have not been paid.

Chairman of Ghana Chamber of Construction Industries, Emmanuel Martey, confirmed that, for five years now, some road contractors are yet to be paid for work done on public roads. This has led to several demonstrations and protests by the road contractors intending to put pressure on government to pay them.

Since 2017 government has paid a total of 2.2 billion Ghana Cedis to Road Contractors. A report by the Parliamentary Select Committee on Roads and Transport reveals that more than GHS 3.69 billion is needed from the Consolidated and Road Funds to fully finance the rest of contract payments.

The Road Fund Act, 1997 (Act 536) mandates the Fund to finance routine, periodic maintenance and rehabilitation of public roads. Road and bridge tolls, vehicle registration, international transit fees are some of the sources of revenue for the Fund.

Several hidden issues that are neglected could account for the heavy financial burden on government:

It should be anticipated that contract certificates that have been delayed for five years without payment could attract extremely high percentages (up to more than 70%) of the original contract sum as penalty for delayed payment; indicating that if government must clear all indebtedness to contractors, it needs nothing less than 6 billion Ghana Cedis to be paid at once. Road Fund alone can’t service road maintenance cost. According to statistics from the Road Fund Secretariat, about 300 million Ghana Cedis is generated every year but the amount of money needed for National Road Maintenance alone is around 850 million Ghana Cedis.

It means there’s going to be a recurring debt situation if money is not reined from other sources to support the Fund. Bad supervision by some maintenance, quantities and materials engineers makes the projects executed appear far below quality. The Otuuku Street in New Fadama for example had been resurfaced in April, 2014 but by March, 2016 it had become extremely deplorable.

So in less than two years a resurfaced road had lost its value to the unprofessional decision of some officers. Within that period, the payment for the project might not have been done and its certificate for delayed payment would have been on the way.

What should be done?

There must be value for money audit of selected projects in every category of works awarded. The value of work done by the contractors usually fall far below the amount quoted in certificates for payment. The real contract amount could be bloated up to about two hundred per cent or more.

Chairman of Ghana Chamber of Construction Industries suggests that government should stop awarding new contracts, excerpt for emergency ones, and pay all indebtedness to contractors including certificates for delayed payments. Otherwise, the burden of always paying contract certificates repeatedly will continue to exist.

Upgrade most roads to bitumen to make them economically viable and avoid numerous maintenance phases. Supervision should be key. Engineers who supervise shoddy work must be surcharged for unprofessional conduct.

The continues cycle of delay in payments to road contractors resulting in huge debt responsibilities on the neck of government has existed since the year 2000, justifying that no political party is able to properly handle the problem. That is why there’s the need to look at it with an unbiased lens and call for an all-hands-on-deck approach to solving the matter.