Uganda’s construction sector, once the heartbeat of infrastructure growth and job creation, is now gasping for financial oxygen.
Contractors across the country say delayed government payments, limited financing, and dominance by foreign firms have crippled operations, threatening local players.
The industry contributes about 13 percent to GDP, directly employing tens of thousands and driving growth in allied sectors such as cement, steel, transport, and real estate.
Yet, despite its importance, the sector is struggling to survive under the weight of unpaid arrears.
‘Delayed payments remain a big challenge, constraining the construction sector. Some contractors have certificates dating as far back as 2013 that remain unpaid,’ said Uganda National Association of Building and Civil Engineering Contractors (UNABSEC) president Ms Kiara Binta Nkuranga.
The backlog of government arrears, she said, has disrupted cash flow, prevented timely tax and NSSF remittances, and forced contractors into expensive loans.
‘Construction is capital-intensive, requiring heavy upfront investment long before returns come in. When you have to borrow to complete a project while still waiting for arrears from previous ones, you are operating in survival mode,’ Nkuranga said.
The result has been a vicious cycle of debt and delay, with contractors cutting costs, postponing work, and in some cases compromising quality.
Government has previously committed to clear arrears, but industry players say the financial scars run deep.
Ms Mable Nimwesiga, the UNABSEC executive director, said apart from delayed payments, local contractors face stiff competition from well-financed foreign companies that dominate major infrastructure projects due to superior access to capital.
‘Most of the work is going to foreign companies. Yet, if local contractors were supported, especially through low-interest financing, they could deliver competitively,’ she said.
Sector players also cited the rising compliance pressures resulting from tax and mandatory contributory schemes such as NSSF.
‘Contractors are expected to remit taxes and NSSF contributions monthly, yet they can go months or even years without payment for completed work. This mismatch creates unbearable financial stress,’ said Nkuranga.
However, Works Minister Edward Katumba Wamala acknowledged the sector’s pain but promised reforms, noting that ‘payment delays stifle business growth’.
‘As a government, we are committed to addressing these arrears to restore confidence in the sector,’ he said.