Retrenchments loom as gov’t fails to pay major contractors
Spira Tlhankane | Tuesday June 3, 2025 10:08
As a result, most of the major billion pula works contract projects across the country have been affected by the government’s non-payment, contractors have revealed. The concerned contractors say it is just a matter of time before retrenchments hit the fan in the construction industry. The contractors say they have lost confidence that the government can be counted upon to pay its legitimate bills.
It is said that the last time the government paid the contractors was in the December/January period. Now, the major contractors are crying foul because they cannot service their bank loans. One affected contractor, who spoke to Mmegi on condition of anonymity, painted a grim picture of the situation. “The banks are chasing us away because we cannot service our existing loans. They refuse to lend us money to pay employees,” one of the big contractors explained.
The contractor said the situation is getting out of control, and they will soon be forced to retrench staff. The contractor said they could face legal action from the staff that has been without pay for months. “We cannot continue like this. Government is failing to tell the people that there is no money,” he said. Another contractor said if the situation persists, they will have to close shop, and many companies will do the same. He pointed out that they may have to shut down. The contractor disclosed that banks would not lend them more money over concerns that the government would not honour its funding commitments.
“Lawyers and deputy sheriffs acting for financial institutions keep on serving some of us with court papers. We cannot pay the loans we took out to finance these tenders,” he said. The contractor further said companies are paying a lot of penalties because the government is defaulting on paying for the jobs done. He said they are now risking fines and penalties.
Contacted for comment, Tshipidi Badiri Builders Association (TBBA) chairperson, Tshotlego Kagiso confirmed that the prolonged payment delays have left many contractors unable to complete government projects.
He said, despite the worsening situation, the association has not yet engaged the government to ensure that its members receive their payments. Kagiso also reiterated what the contractors said many contractors are in distress, and are unable to complete projects due to capital constraints. Kagiso said they are waiting and relying on the government to act swiftly to prevent further disruptions.
There are also reports that some contractors have been forced to go to non-banking lenders that specialise in distressed situations as a result of the government not paying what it owes. Besides contractors, SMEs are also suffering the brunt of the government’s financial crunch.
Contacted for comment, the Minister of Transport and Infrastructure Noah Salakae said construction payments are done by the Ministry of Finance. “We manage the construction work, and the payments are done at the Treasury ministry,” Salakae clarified. Efforts to reach the Ministry of Finance were futile at press time.
Ministry of Transport and Infrastructure Permanent Secretary Kgakgamalo Ketshajwang told the Public Accounts Committee (PAC) recently that when it comes to projects, his ministry has a specific role that it plays in the supply chain of facilities management. He said that as a result, they have to involve other ministries, which then have to provide budgeting. “This arrangement has its challenges since funds are not often readily available as they would have been redirected and therefore not accessible to the ministry for purposes of honouring payments,” he said. Ketshajwang highlighted that it is a problem that is even experienced at the moment by the Transport and Infrastructure Ministry.
Earlier this month, this publication reported that inflows and outflows within the government have become strained, as expenses associated with the new financial year shot up. It is said revenues, which were already weak from the prolonged diamond slump, remain at low, inconsistent levels. Also government’s debt pile is ballooning, and authorities are even tapping the Botswana Public Officers Pension Fund directly for P3 billion. The debt stampede is said to be threatening to push the government to its set limits quicker than expected. The government’s desperation for funds to meet its running costs has seen it drain the capital market of funds, causing it to increasingly fail to secure the amounts it is seeking, while paying ever-climbing interest rates.
The government currently owes billions to contractors as of early February, according to the contractors, and the latter are at risk of going out of business. It is said that affected projects across the country could lead to hundreds of job losses.