There is a growing contradiction between South Africa's infrastructure ambitions and the way the construction industry is financed, according to construction law specialist MDA Attorneys.
Source: Supplied. Michelle Kerr, director at MDA Attorneys.
South Africa’s infrastructure ambitions are running into a less visible obstacle: the way construction projects are financed. As government pushes to create jobs, empower contractors and revive the construction economy, late payments are leaving contractors to shoulder costs that should not be theirs.
Michelle Kerr, director at MDA Attorneys, says contractors are increasingly becoming the “unwitting financier” of projects when project initiators delay payment. With cash-flow critical to keeping sites operating, prolonged delays can squeeze smaller firms, disrupt projects and ultimately undermine the very construction drive government hopes will fuel economic growth.
"Delayed payments have become normalised, particularly in the public sector," says Kerr.
Government's delay in paying invoices has recently made headlines, with Public Service Commissioner Anele Gxoyiya attributing the persistent non-payment to structural weaknesses, including a lack of consequences.
National Treasury's latest figures show that by the end of the third quarter of 2025/26, national and provincial departments owed a total R15.5bn across 90,856 invoices unpaid for more than 30 days across various sectors.
The Department of Public Works and Infrastructure, the very department leading government's infrastructure push, was among the worst offenders.
Cash-flow problem
Kerr says late payment is a key stumbling block for the construction sector. "Construction is cash-flow dependent. The contractor pays wages, suppliers, subcontractors, plant and often materials before recovering those costs through interim payments. When an employer does not pay or pays late, contractors lower on the chain effectively carry the financing costs of the project."
Large contractors with substantial working-capital facilities may be able to absorb this for a period, but smaller contractors struggle. "Sub-contractors go unpaid. Projects slow down. Claims proliferate. Many businesses fail," says Kerr.
Employers do not escape the consequences, she notes. Contractors price payment risk into their tenders, driving up the cost of future projects, while the pool of contractors capable of delivering shrinks.
Waiting too long
Kerr says contractors frequently compound the problem by treating payment as a purely commercial issue for too long. "They continue working, sending increasingly frustrated emails, attending meetings and accepting promises that payment is 'being processed', while failing to use the contractual machinery available to them."
The response to non-payment should begin with the contract itself, she advises. The GCC, JBCC, NEC and FIDIC forms of contract all set out processes for dealing with non-payment. Depending on the contract, non-payment may trigger rights to interest, suspension and, in sufficiently serious cases, termination — though each form carries its own procedural requirements and notice provisions that must be properly complied with to secure these entitlements.
Parallel to these contractual processes, contractors also have recourse to court proceedings to enforce payment of amounts certified in a payment certificate, says Kerr.
