African Governmental Response Survey Reveals A Multi-pronged Approach To Tackling Socio-Economic Challenges Presented By COVID-19

Nowhere in the world will the global humanitarian challenge of COVID-19 be felt more acutely than in Africa. In a continent of approximately 1.2 billion people, almost all of its 54 countries have confirmed cases of coronavirus, with numbers likely to continue rising into the future.

While a number of African governments have moved quickly to introduce some of the most stringent lockdown restrictions, there are question marks over whether these will be effective in countries where social distancing may be largely impossible or where access to water for hand washing and other basic sanitation can be a daily challenge. Combine this with a chronic lack of essential healthcare equipment and generally weaker national health systems, and there is no doubt that the continent is facing one of its gravest healthcare challenges.

Businesses with an African presence will need to understand how governments are responding in the jurisdictions in which they operate and the implication of those responses on their people. Accordingly, DLA Piper produced the COVID-19 Governmental Response guide to assist businesses to navigate the commercial threats posed by COVID-19. 

The guide provides updates and insights in respect of how 16 of Africa’s biggest economies have responded to the crisis across a range of topics, including Financial Support, Business Protection, Employment, Business Operations, Corporate Law, Insolvency Law and Access to Justice. The Guide forms part of a broader DLA Piper Global Guide, which covers over 40 jurisdictions across Europe, the UK, the Middle East, Africa and Asia Pacific.

Our analysis showed that individual countries are on their own journeys in the response to COVID-19 and that measures being adopted by governments to assist businesses and employees vary depending on a range of factors. These include(among other things):

  • State capacity to provide financial support;
  • Stage of community spread of COVID-19 infection;
  • Practical effectiveness of lockdown measures compared to potential long term damage to fragile economies;
  • Sectors considered most adversely affected and/or in need of financial support;
  • Constraints in accessing international capital markets; and
  • Political, social and economic imperatives.

The guide showed that African countries favoured indirect support measures that promote liquidity and provide support for businesses and employees. These frequently took the form of government grants to financial institutions and commercial banks, with regulatory measures to strengthen the capacity of those institutions to provide financial support to the intended recipients. A number of countries implemented tax relief measures through tax rebates, reductions and payment holidays. Also, a significant number of governments were appealing to the private sector and international bodies for assistance – which in some instances received the support. 

While direct liquidity measures and support for business and employees are being implemented in a number of African countries, these are clearly more challenging given the impact on most countries finances. General lockdowns affecting businesses are being implemented at different levels in a majority of the countries considered. However, in a significant minority of cases, government adopted either partial lockdowns or curfews to try limit the obvious negative economic and social effects. 

In Angola, for as long as the emergency measures remained in force, appeals and enforcement of consumer credit contracts, and in the case of mortgages, evictions, are prohibited. Banks are required to grant clients a moratorium of 60 days on the amortisation of capital and interest contained in credit facilities.

The Egyptian government introduced an alternative voting mechanism which allows shareholders to authorise a delegate (also referred to as an authorised custodian) to vote on their behalf. Authorised custodians are those authorised to practice the activities of the registered owners of shares in  accordance with the provisions of the Central Depository and Registry Law of Securities. The process is a form of voting which identifies the topics presented on the agenda of any given general assembly meeting and notifies the shareholder before each agenda topic is presented on. Each respective shareholder is then afforded the opportunity to agree to the resolution, reject it, or abstain from

voting altogether.

The National Bank of Ethiopia, the financial regulator, has made ETB15 billion (Ethiopian Birr) available to private banks to assist them in providing debt relief and loans to borrowers who may be in financial distress.

The Ghanaian government announced the establishment of the CAP which was to focus, among other things, on providing protection against job losses, protecting livelihoods and supporting small businesses. Details of the CAP including the total amount, sources of funding, the range of activities to be undertaken and disbursement methods. The government announced that it would establish an insurance package with an assured sum of GHS350,000 for all frontline health personnel and allied professionals. It has also announced an additional allowance to cover 50% of the basic monthly salaries for all frontline health workers. This allowance would be paid to frontline health care providers in the public sector involved in the treatment in respect of the pandemic, in addition to their monthly payments. It is unclear if frontline healthcare workers in the private sector benefited from the allowance. 

Kenya established a COVID-19 Emergency Response Fund (Fund) to mobilise resources for emergency response towards containing the spread, effect and impact of COVID-19. The Fund was to be financed by

monies from the exchequer appropriated by the National Assembly and any other source approved by the Cabinet Secretary for the National Treasury. 

President Kenyatta advised that an additional KES10 billion would be set aside for payment to the elderly, orphans and other vulnerable members of society through cash transfers by the Ministry of Labour and Social Protection. The funds are disbursed through Social Protection Schemes funded from government revenues and both local and international partners. Under the various schemes, eligible households will receive certain monthly payments.

At the time of compiling the report the Nigerian government was yet to implement any financial support

policy or directive regarding employment. The federal government had, however, indicated that it would provide life insurance to health workers on the frontline of the fight against the pandemic. Many employees of businesses that were unable to operate in some states that were/are on lockdown  continued to receive salaries from their employers even if they could not work remotely.

Many African governments do not have the same access to global debt markets and simply lack the financial strength to be able to respond in the same way. As a result, many African governments have reached out to the World Bank and the IMF for assistance and significant appeals are being made to the private sector to help finance the response to COVID-19.

Access the full report here

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