Contractors in limbo

LIVINGSTONE MARUFU

Local contractors are facing mounting uncertainty as the Treasury grapples with a worsening liquidity crisis, leaving some invoices unpaid for nearly a year.

The government’s constrained fiscal position has made it difficult to meet even basic obligations, including civil servant salaries, further deepening economic instability.

Speaking to Business Times, a market leader in business, financial and economic reportage, the Zimbabwe Building Contractors Association (ZBCA) CEO, Joyline Zindaga, confirmed that prolonged payment delays have left many contractors unable to complete government projects.

“We are engaging the Treasury to ensure our members receive their payments. Many contractors are in distress, unable to complete projects due to capital constraints. The authorities must act swiftly to prevent further disruptions,” Zindaga said.

One affected contractor, who spoke on condition of anonymity, painted a grim picture of the fallout from the government’s failure to settle debts.

“I have not been paid for over a year. We are expected to complete projects, but how do we do that when we can’t pay workers, suppliers, or service our loans? Many employees have already left, and some are threatening legal action,” she lamented.

Adding to contractors’ frustrations, the government has been accused of engaging in financial manipulation. The last major payment to contractors, made on September 27, 2024, was in Zimbabwe Gold (ZiG)—only for the local currency to be devalued hours later.

“How do you pay contractors in local currency and then immediately devalue it? This is blatant financial manipulation that pushes businesses into deeper trouble,” fumed one contractor.

Despite repeated attempts to obtain an official response, George Guvamatanga, permanent secretary in the Ministry of Finance, Economic Development, and Investment Promotion, had not responded to questions sent by Business Times  last week onTuesday.

Efforts to contact Finance , Economic Development and Investment Promotion Minister Professor Mthuli Ncube were also unsuccessful.

However, Treasury insiders, speaking anonymously, confirmed that the government is prioritizing civil servant salaries over contractor payments, exacerbating liquidity shortages in the private sector.

“Since November, we have struggled to pay civil servants, let alone contractors and service providers. The choice is between settling 30 contractors or ensuring salaries for over 300,000 government workers. Treasury is simply not in a position to commit to additional payments at this time,” a senior Treasury official revealed.

Industry estimates suggest the government owes service providers over US$1.8bn in outstanding payments dating back to August 2024.

Economists and business leaders warn that these delays could push the economy deeper into crisis,rising unemployment, and further erosion of confidence in the financial system.

Consumer Council of Zimbabwe (CCZ) CEO Rosemary Mpofu cautioned that non-payment of service providers is already suppressing aggregate demand, worsening economic conditions.

“We understand the need for fiscal discipline, but these prolonged delays are causing unnecessary distress. More companies are on the brink of collapse, and unemployment is set to rise unless urgent action is taken,” Mpofu said.

Zimbabwe National Chamber of Commerce (ZNCC) President Tapiwa Karoro added that liquidity shortages are being worsened by the government’s decision to freeze payments.

“Delaying payments to service providers is draining liquidity from the market. If this continues, the government will be forced to fund its fiscal deficit through borrowing or printing money—both of which have dire consequences,” Karoro warned.

With fiscal space shrinking and contractors demanding payment, the government faces a tough balancing act.

Options under consideration include issuing Treasury Bills, restructuring debt with contractors, or seeking alternative revenue sources.

However, experts caution that without a solid economic recovery plan, Zimbabwe could be heading toward another financial crisis.

For now, contractors remain in limbo, civil servants brace for possible salary delays, and businesses struggle to navigate an increasingly unstable economic landscape.

The government’s response in the coming weeks will determine whether this crisis deepens or if a workable solution emerges.