Late Payment in Developing Countries
This note collects the academic evidence base for the Construction Payment Problem — the peer-reviewed counterweight to the vendor surveys that dominate US data and the law-firm briefings that dominate the legal picture. The recurring finding across this literature is consistent and important for the vault’s thesis: late and non-payment is “an increasing global trend”, and small- and medium-sized construction firms in developing countries are the most exposed.
Late Payment in Developing Countries [supports] Construction Payment Problem Late Payment in Developing Countries [relates] Global Subcontractor Payment Delays
The anchor study is Peters, Subar and Martin, “Late Payment and Nonpayment within the Construction Industry: Causes, Effects, and Solutions” (Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 2019), based on Trinidad and Tobago, which found the problem had “not much improved” over the previous decade — contractors waited 2–6 months, sometimes years, to be paid — and identified the state of the economy and payment culture as two leading causes. Parallel studies reach the same conclusions in Ghana (where payment delays are described as widespread and local contractors are worst affected), Guyana, Malaysia (pre-CIPAA baseline studies), Nigeria, and Saudi Arabia. A broad review of construction delay in developing countries ranks “delay in progress payment by owner” and “contractors’ cash flow problem” among the critical causes of project delay generally.
Late Payment in Developing Countries [causes] Contractor Insolvency and Subcontractor Risk Late Payment in Developing Countries [relates] South Africa
Three points make this body of work decisive for the vault. First, it is methodologically independent — academic surveys and interviews across many countries and authors converging on the same pattern, which is far stronger evidence than any single vendor report. Second, it identifies payment culture as a cause: the problem is partly behavioural and normalised, not purely structural, which is why a statute alone (as in Malaysia or NZ’s first regime) does not erase it. Third, it consistently finds the same effects — reduced profitability, supply-chain knock-on, work suspension, and insolvency — and the same victims: the SMEs and subcontractors at the base of the Construction Payment Pyramid.
Late Payment in Developing Countries [relates] Construction Payment Pyramid
Connections
- Construction Payment Problem — academic confirmation of the thesis, source: 2019
- Global Subcontractor Payment Delays — peer-reviewed cross-country evidence, source: 2019
- Contractor Insolvency and Subcontractor Risk — documented end-effect of delay, source: 2019
- South Africa — one of many developing markets studied, source: 2019
- Construction Payment Pyramid — SMEs at the base are worst hit, source: 2017