Clear Road Contractors’ Outstanding Payments Before Launching New Projects – Osei Nyarko Urges Ghana’s Government

Introduction

Ghana’s road infrastructure funding has become a hot‑topic in Parliament after Ranking Member Kennedy Osei Nyarko of the Roads and Transport Committee warned that the federal government must settle the massive arrears owed to street contractors before approving any new road‑building initiatives. In a televised interview with PleasureNews on 2 December 2025, Nyarko highlighted a GH₵ 40 billion backlog despite a GH₵ 5.3 billion allocation for the Ministry of Roads and Highways in the 2026 budget. This article examines the implications of those unpaid contracts, analyses the policy options suggested by the MP, and offers practical guidance for stakeholders.

Analysis

Current Financial Landscape

The Ghanaian government’s 2026 fiscal plan earmarked GH₵ 5.3 billion for road construction and maintenance. Yet, according to Nyarko, the actual outstanding debt to contractors stands at roughly GH₵ 40 billion. This discrepancy indicates that the current payment system—described by the MP as “digital tools of paying contractors little by little”—is insufficient to clear the backlog. The piecemeal approach has forced several contractors to invoke contractual penalty clauses, sometimes incurring penalties up to three times the original invoice amount.

Why the Arrears Matter

Unpaid invoices directly affect the cash flow of construction firms, many of which are small‑to‑medium enterprises that rely on timely payments to meet payroll, purchase materials, and sustain operations. Prolonged arrears can lead to:

• Project delays and cost overruns.
• Legal disputes over contract enforcement.
• Reduced confidence among local and foreign investors in Ghana’s road development sector.
• Potential deterioration of existing road networks due to delayed maintenance.

Policy Recommendations from Osei Nyarko

Nyarko proposes a two‑step solution:

1. Transparent clearance of all outstanding payments to contractors before any new contract is awarded.
2. Strict adherence to the annual budget allocation for roads—no new projects should be launched without guaranteed funding.

He also emphasizes a shift in priorities toward road maintenance if fiscal constraints limit new construction. In his words: “If the government is not going to commit the state to constructing new projects, then the state has to maintain the existing roads.”

Summary

In summary, the Parliament’s Roads and Transport Committee highlights a critical funding gap that threatens the delivery of Ghana’s road‑building agenda. The MP’s call for clearing arrears and aligning future projects with the annual budget seeks to restore fiscal discipline, protect contractors’ cash flow, and safeguard the nation’s existing road network.

Key Points

Practical Advice

For Government Officials

1. Audit the debt ledger: Conduct a comprehensive audit of all unpaid invoices to quantify the exact amount owed.
2. Establish a payment timetable: Create a realistic schedule that aligns with cash‑flow projections and ensures regular disbursements.
3. Use escrow accounts: Allocate a portion of the annual road budget to an escrow account dedicated solely to clearing past arrears.

For Contractors

1. Document all invoices: Keep detailed records of all contract milestones, invoices, and communications to support any future claims.
2. Review penalty clauses: Understand the contractual provisions that may trigger penalties for delayed payments and factor them into budgeting.
3. Engage legal counsel early: If payments remain overdue, seek legal advice promptly to evaluate enforcement options.

For Investors and Stakeholders

1. Monitor fiscal policy: Track the government’s budget announcements and payment reforms to assess project risk.
2. Demand transparency: Insist on regular reporting of payment status and project progress from both the Ministry and contractors.

Points of Caution

While the MP’s recommendations are well‑intentioned, stakeholders should be aware of potential pitfalls:

• Budget rigidity: Strictly tying new projects to the annual allocation may limit flexibility to respond to urgent infrastructure needs.
• Legal exposure: Over‑reliance on penalty clauses could lead to costly litigation if contractors challenge the interpretation of “behind‑schedule” penalties.
• Economic impact: Delaying new road projects could affect broader economic growth, especially in regions dependent on improved transport links.

Comparison

Ghana vs. Regional Practices

Many African nations face similar challenges in road‑funding management. For instance:

Kenya’s escrow‑based model, which earmarks funds specifically for clearing past debts before new contracts, has proven effective in reducing arrears. Uganda’s milestone‑linked system ties payments directly to project completion stages, encouraging timely work and reducing disputes.

Legal Implications

Contract law in Ghana, particularly the Public Procurement Act, 2003 (Act 663), mandates that public agencies honor payment terms stipulated in contracts. Failure to do so can constitute a breach of contract, exposing the government to:

• Damages claims: Contractors may seek compensation for delayed payments, including interest and penalty fees.
• Contract termination: Persistent non‑payment could give contractors the right to terminate contracts, leading to project abandonment.
• Reputational damage: Legal disputes may deter future bidders, reducing competition and potentially inflating project costs.

Nyarko’s call for “transparent clearance” aligns with the legal requirement to maintain a clear audit trail and to settle debts within the contractual period. Implementing an escrow or dedicated payment fund would also satisfy statutory obligations and mitigate litigation risk.

Conclusion

The pressing issue of GH₵ 40 billion in unpaid contractor invoices threatens Ghana’s road development agenda. By prioritising the settlement of these arrears and aligning new projects with the annual budget, the government can restore confidence among contractors, reduce legal exposure, and ensure that existing road networks receive the maintenance they need. While the proposed fiscal discipline may limit the pace of new construction, it offers a sustainable pathway to a healthier, more reliable road‑building ecosystem.

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