Contractors seek faster payments, fairer terms amid industry strain

For years, Abraham Muragijimana has relied on bank loans to finance labour and operations while executing construction projects. But delayed payments often leave him struggling to meet loan obligations. We often work under larger companies that win public tenders. The government pays them, but sometimes the money does not reach us on time, said Muragijimana, a subcontractor based in Bugesera District. Many subcontractors, he explained, depend on bank financing to execute projects, making them particularly vulnerable when payments are delayed. ALSO READ: Delays, inflated costs 'hit public projects' under new system When loan repayment deadlines arrive before we have been paid, banks begin recovery processes and some contractors risk losing their property. It creates major financial and social challenges, he said. His experience reflects concerns across Rwanda's construction sector, where delayed payments, lengthy approval procedures and rising costs continue to strain businesses, especially small and medium-sized enterprises. The concerns come as Rwanda accelerates infrastructure development under Vision 2050. Industry players argue that stronger payment discipline and fairer contract terms would improve project delivery while strengthening the sector's contribution to national development. The issue has also drawn attention from the highest levels of government. During the 20th National Umushyikirano in February, President Paul Kagame criticised public institutions over stalled projects and unpaid workers, calling for greater accountability in managing public resources. Cash-flow pressures The Association of Construction Companies in Rwanda says delayed payments remain one of the industry's biggest challenges. The biggest challenge is cash flow. Delayed payments from public and private clients force contractors to pre-finance labour, materials and equipment for months, said the association's president, Sadate Munyakazi. He noted that payment certificates often remain pending for extended periods, delaying compensation for completed work. When payment certificates take 60 to 120 days or more, thin margins disappear into financing costs. Bank guarantees remain tied up and small and medium-sized contractors risk bankruptcy on a single project, he said. Munyakazi added that slow decision-making and lengthy administrative procedures frequently increase project costs, while access to affordable financing remains difficult for many firms due to stringent collateral requirements. ALSO READ: Public procurement still marred by payment delays Subcontractors hit hardest Subcontractors often bear the brunt of payment delays because they lack direct relationships with project owners. Most of us are subcontracted, so we don't have direct contact with the client, whether it is the City of Kigali or another government institution. Sometimes the main company may have already been paid and we do not know, said Immaculée Mugabekazi, a contractor specialising in drainage and pavement works. Industry players say greater transparency throughout the payment chain would help ensure that funds released to principal contractors reach subcontractors on time. Muragijimana called for stronger safeguards to guarantee that payments made by government institutions are promptly passed on to subcontractors. Push for fairer contracts Beyond payment delays, contractors are seeking contract terms that distribute risks more evenly. ALSO READ: Kigali: Contractor, budget woes delay key infrastructure projects According to Munyakazi, prices of cement, steel, fuel and skilled labour can rise significantly during project implementation, yet many contracts remain fixed-price agreements. Contractors often carry all of the inflation risk, he said, noting that construction input costs can increase by 15 to 30 per cent over a project's lifespan. To address this, the association is proposing mandatory price-adjustment clauses linked to official market indices, advance payments of 20 to 30 per cent at project commencement, and faster approval of project variations arising from changes in scope or site conditions. The association is also calling for stricter enforcement of payment deadlines, including interest penalties for unjustified delays. If contractors face penalties for delays, clients should equally compensate for client-caused delays and pay interest on late payments. Risk must be shared more fairly between all parties, Munyakazi said. ALSO READ: Transporters decry delayed gov’t subsidy payments While acknowledging gains made through the Umucyo e-procurement system, he said further improvements are needed in contract administration and project monitoring. Rwanda's contractors are committed to delivering Vision 2050 infrastructure. To do that, we need predictability: predictable payments, predictable decisions and predictable risk-sharing. Government points to reforms Jimmy Christian Byukusenge, Director General of the Rwanda Public Procurement Authority (RPPA), acknowledged that delayed payments remain a challenge despite existing legal safeguards. He said delays often stem from lengthy internal approval processes, non-compliance by responsible officials, and incomplete documentation submitted by contractors. Article 144 of the Public Procurement Law requires that invoices be paid within 45 days from the date of submission, provided all supporting documents are attached, he said. ALSO READ: Govt revamps tender system to prioritise innovation RPPA says it continues to enforce payment provisions and sanction officials who unjustifiably delay payments. The authority is also upgrading the Umucyo e-Procurement System to Version 2.0, introducing electronic invoicing tools designed to improve invoice tracking, verification and accountability. Byukusenge noted that Rwanda's procurement framework already provides for price adjustments under specific circumstances and encourages realistic market assessments during project planning. Ripple effects across the supply chain The impact of delayed payments extends beyond contractors to suppliers of construction materials. Mahmoud Elshafei, Founder and CEO of Sawa African Ltd, said supply-chain disruptions, exchange-rate fluctuations and lengthy payment timelines continue to create operational challenges. Supply delays, particularly for imported construction materials, can affect project schedules and lead times. Price fluctuations linked to international markets and foreign exchange rates make it difficult to provide long-term fixed quotations, he said. Extended payment timelines, he added, create cash-flow pressures that affect procurement planning and inventory management. The risk should not fall entirely on one party. Greater flexibility and better planning would improve sustainability across the entire supply chain. Elshafei nevertheless praised Rwanda's progress in procurement transparency and digitalisation, saying the country's regulatory environment continues to inspire investor confidence. Need for greater predictability Despite ongoing challenges, stakeholders agree that Rwanda has made notable progress in strengthening procurement systems and improving the business environment. However, contractors and suppliers say faster payments, fairer risk-sharing and more efficient contract administration are needed to support the country's infrastructure ambitions. As Rwanda advances toward Vision 2050, they argue that a more predictable operating environment will encourage investment, improve project delivery and deepen private-sector participation in national development.

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Contractors seek faster payments, fairer terms amid industry strain