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1. Introduction
The COVID-19 pandemic is becoming one of the most serious
threats to global markets and international trade seen in recent
times. Border closures and travel restrictions instituted by
different countries to restrain the spread of the virus, have
adversely affected transportation and other supply side businesses
and service providers.1 Uncertainty about the disease
has plagued stocks, bonds and futures markets with negative
implications. Financial markets have suffered losses and global
economic forecasts are being reassessed and downgraded to account
for the loss in trade and income to businesses and governments
resulting from the pandemic.2 Asian, American and
European governments and policy makers have pursued policies of
social distancing, quarantines and business closures to curb the
spread of the virus,3 along with stimulus packages to
support businesses and individuals during the intervening period
when work in many business sectors will be restricted.4
Across the world, in addition to the effects of the pandemic,
markets are simultaneously suffering the effects of an oil price
war between Russia and Saudi Arabia, which has seen oil prices
falling as low as $21 for WTI Crude and $25 for Brent crude (per
barrel), with analysts predicting a $20/ barrel oil
market.5
Africa is currently experiencing an increase in cases of
COVID-196 and African governments and policy makers are
pursuing similar policy strategies7 as their Asian,
American and European counterparts. These restrictions along with
the concerning state of the markets discussed above, have
implications for African businesses, in their dealings with their
employees, investments and trade dealings and in their dealings
with the government and regulatory agencies. Some of these
considerations will be considered below.
2. African Businesses and Employees
African countries such as Ghana, Kenya, Nigeria and South Africa
have instituted travel restrictions, social distancing and/ or
quarantine policies.8 These policies are bound to affect
businesses as they are generally obligated to comply with
government policies especially during a public health crisis. This
will inevitably result in businesses changing their work
environment policies to protect the health and safety of their
workplaces and employees while prioritizing business continuity and
the maintenance of the quality of services provided. This may, in
some cases, lead to the institution of remote work policies for
employees, especially those with the capacity to work from
home.
Measures for Workplace Environments
Businesses are encouraged to institute workplace health and
safety preventive measures and guidelines in line with the World
Health Organization guidelines, 9 including ensuring
workplace environments are clean and healthy and promoting good
personal and respiratory hygiene for employees, clients and other
visitors to the workplace. Restriction of business travel may be
necessary, especially in light of the travel restrictions and
border closures instituted by various countries. Companies may also
need to institute new sick and annual leave rules to account for
illnesses and symptoms peculiar to COVID-19 and to cater to
employees that may prefer to self-quarantine where symptoms are not
evident or the certainty of such persons’ contacts with
infected persons is not clear.
Businesses in essential services are encouraged to consider and
mitigate the risk of employee lawsuits relating to occupational
safety and health standards in the workplace. African businesses in
the agricultural sector, an essential industry for food security
during the pandemic, will have to consider how they manage their
workplace environment and worker interactions during COVID-19,as
they may not be subject to the outright restrictions of other
manufacturing and production industries, yet they are responsible
for ensuring healthy and hygienic workplaces, especially during the
pandemic.
Considerations for Remote Work Policies
African businesses must also consider and plan for the
implications of remote working policies, especially those
considerations that are peculiar to businesses in Africa. For
example, the availability of stable power supply and internet
access for employees working out of the formal office space may be
a significant business continuity concern for African businesses
instituting remote working policies. Other general issues such as
the effect of working from home on work and employee productivity
should also be carefully considered and planned for. Some helpful
measures that businesses may undertake in this regard include
providing employees with alternate power and internet for remote
work and ensuring employees log and account for their hours.
However, businesses must make the necessary cost-benefit analyses
in deciding on suitable options.
For African businesses in sectors such as manufacturing, mining
of natural resources and agriculture, which usually employ day
labourers and involve higher levels of close contacts between
workers, social distancing and other shelter-in-place policies may
amount to layoffs for workers within those industries. Some of the
government policies discussed in paragraph 4 below (African
Businesses and Government/ Regulatory Agencies) might be
relevant to these businesses and employees.
Considerations for Business Reorganizations
The effect of reduced trade and business, especially from a
depressed international trade market, will affect company budgets
and income and may in turn result in business reorganizations,
reduction in employee work hours and potential layoffs of
employees. These business reorganizations are generally expected
and may even be allowed, subject to certain considerations
including the provisions of relevant labour laws and
anti-discrimination laws.
Labour and Anti-Discrimination Laws
Each African country will have its own labour and
anti-discrimination laws that the African businesses within its
jurisdiction will be subject to. Businesses are expected to comply
with the provisions of these laws when considering reorganization
due to the COVID-19 pandemic. From an international perspective,
African businesses may also consider the provisions or principles
of the Discrimination (Employment and Occupation) Convention, 1958
and the Right to Organize and Collective Bargaining Convention,
1949, which are international labour guidelines ratified by all
African countries.10
African businesses operating in sectors with employees that have
collective bargaining powers11 may be required to
prepare more detailed business reorganization plans than those
without such considerations. Employers considering layoffs are
bound to comply with anti-discrimination laws and policies. The
implication of this is that businesses may not simply terminate
sick employees, employees exhibiting symptoms, employees with high
risk of illness from COVID-19, or employees in contact with
potentially ill persons, neither may they be seen to do so without
legally adequate justifications. Recommending quarantine, sick and/
or other paid leave for employees should be in accordance with the
provisions of business handbooks and rules rigorously prepared to
account for COVID-19 situations.
Instructing employees who are sick or potentially exposed to
COVID-19 to undergo sick leave or other remote work measures, may
not inevitably lead to termination. In order to protect themselves
in the event of some of the inevitable post-COVID-19 unlawful
termination or workplace discrimination lawsuits, African
businesses are encouraged to develop adequate strategies and
policies to govern any restructuring of work place policies to
ensure a healthy working environment, as well as any business
reorganizations.
Employees’ Data Privacy
Employers may also be naturally inclined to source the health
information of employees as part of their workplace COVID-19
prevention and control strategies. Under such circumstances,
employers are also bound by the privacy and data protection and
anti-discrimination laws and policies of their respective
jurisdictions Compliance requirements such as the processing of
personal data subject to a justifiable legal basis has to be
complied with despite the prevalence of the COVID-19 pandemic. For
instance, in a bid to curtail the COVID-19 epidemic, employers may
need to ask employees to inform them if they have recently visited
COVID-19 high risk countries so as to recommend remote working to
such employees where appropriate. In such a case, Nigerian
employers (for example), will specifically be bound to comply with
the legal basis requirement of the Nigerian Data Protection
Regulation (NDPR) as well as the requirement to
demonstrate the compliance of their actions with provisions of the
NDPR.12
Furthermore, employee health data may not be used or seen to be
used by employers in a discriminatory manner to terminate or
otherwise prejudice employees.
Some Recommended Considerations/ Actions
Institution of preventive workplace health and safety measures
and guidelines.
For employees with remote working capabilities, provision of
alternate power (considering that many African countries experience
intermittent power supply) and internet for work and ensuring
employees log and account for their hours.
Provision of adequate group insurance covers for employees
especially those involved in the provision of essential
services.
Preparation and update of rules for sick and other paid leave
that adequately consider COVID-19 situations.
preparation and update of employee handbooks and rules in
compliance with labour and anti-discrimination laws in COVID-19
situations.
Compliance with national data protection and privacy
rules.
3. African Businesses, Investments, Trade and Markets
While the long-term effects of COVID-19 remain uncertain, the
pandemic poses serious short-term downside business risks to
African businesses and the continental economy.
Financial Markets and Investments
African financial markets are already experiencing
COVID-19’s similar negative impacts on equities and other
securities trading as the rest of the global markets.13
Foreign equity and debt investments in African businesses will also
be adversely affected by COVID-19 as governments and businesses in
China and Europe, which represent the major African investment
partners, respond to their own COVID-19 concerns. Potential foreign
investors may be reluctant to invest in African businesses given
the bearish outlook of the global financial markets.
African businesses should consider the implications of
COVID-19-based restrictions on investments and other business
dealings. Travel restrictions may require that meetings be held
over teleconference or other electronic means. Transactions that
require regulatory searches, filings and disclosures may be stalled
or otherwise delayed if regulatory offices are closed, restricted
or otherwise restrained from undertaking full business functions.
For ongoing business investments such as mergers or acquisitions,
company valuations and other price negotiations may be affected
even after the pandemic status is lifted.
Trade and Supply Chains
African businesses are also being affected by supply chain
disruptions in China, Europe and Central Asia as these markets
become less easily accessible. These disruptions are affecting
African import and export businesses as the export of African raw
materials and importation of machinery and manufactured goods from
European, Chinese and Indian markets into the continent have
decreased.14 This decrease may amount to a default under
already existing contracts and affected businesses should be
concerned about the legal implications of such default.
Force Majeure
The Chinese government has sought to support its business owners
by issuing force majeure certificates to companies defaulting on
their trading obligations. These certificates are intended to
protect the holders from breach of contract claims by
counterparties.
Most supply contracts will include a force majeure clause which
may be triggered by COVID-19 related defaults and will most
definitely be relied on by the party defaulting on their sale,
purchase or supply obligations under these contracts. We can expect
to see a high number of default claims in the coming months with
force majeure implications. African businesses may be on the
claiming or defending side of any such default suit and must
therefore consider the implications of their contract terms and
their obligations under contract on the success of their
position.
Considerations for a Successful Force Majeure
Claim
Force majeure may be invoked to relieve the claiming party of
performing its obligations under contract, where events beyond its
control have occurred to hinder performance. The specifically
allowable force majeure events are usually listed in the force
majeure clause along with a catch-all phrase to cover events not
explicitly provided for. Events such as act of god, epidemics and
change of law are usually explicitly provided for in force majeure
clauses. We can expect that in future contracts, force majeure
clauses will include provisions on pandemics such as COVID-19.
Beyond the explicit classification of an event as a force
majeure event, a successful force majeure claim generally requires
the satisfaction of the following criteria:
that the claimed event is beyond the reasonable control of the
affected party;
that the affected party’s ability to perform its
obligations under contract was prevented or hindered by the claimed
event; and
the affected party took all reasonable steps to seek to avoid
the event or its consequences.
The question of force majeure in each case will generally depend
on whether COVID-19 or any of the resulting government actions, if
determined as force majeure events, has made it impossible for a
party to perform its obligations under contract and to mitigate the
non- performance. African businesses are also encouraged to
consider mitigation strategies for their supply contracts to reduce
the impact of the pandemic on their businesses.
Intra-African Trade as a Mitigation Strategy
African businesses may find new trading partners with businesses
from neighbouring countries across the continent, as they grapple
with strategies to mitigate the supply chain disruptions resulting
from COVID-19.15 African countries will benefit from the
sale and free movement of essential goods and services such as food
and health items and services across the continent, especially
during the COVID-19 pandemic, in an effort to reduce issues of food
and health security which may arise from disrupted supply
chains.
A framework has already been established to facilitate
intra-African trading relationships in the African Continental Free
Trade Area (AfCFTA) Agreement signed by African
member states in 2019, under which trading is to begin on 1 July
2020. The Secretary-General of the AfCFTA has assured all
stakeholders that COVID-19 is unlikely to affect the
agreement’s trading start date.16 However, African
border and trade restrictions17 as well as persisting
protectionist policies18 may hamper successful
intra-African trade. African governments therefore play an
important role in ensuring that intra-African trade amounts to a
successful mitigation strategy. This role is discussed in paragraph
4 below.
Loans and African Businesses
African businesses which have undertaken debt facilities to
sponsor corporate or project matters will be affected by the
disruptions resulting from the COVID-19 pandemic. African
businesses, either as debt providers or beneficiaries are
encouraged to consider the implications of COVID-19 on their debt
portfolio. Disruption in supply chains will affect source of income
that forms the repayment basis for company loans. Employees who may
have taken payday loans or other quick loans may have their
repayment schedule adversely affected if they are laid off or their
hours are cut due to COVID-19 related restrictions.
African businesses are further encouraged to restructure their
loan portfolios to take into consideration the effect of COVID-19
on the markets in general and on their businesses in particular. We
expect to see a wave of debt restructurings post-COVID-19,
including for issues like extension of moratoriums and tenors,
revision of interest payments, re-evaluation of assets or funds
from which repayment is to be made. For example, we expect loan
restructuring for African oil and gas companies with oil-based
financing as the terms upon which those facilities were concluded
has changed, i.e. the drop in the barrel price of crude oil.
African businesses who provide short-term loans to individuals are
encouraged to reach out to their clients and customers and propose
debt renegotiations where possible to mitigate against mass
defaults and a flood of small claims.
Some Recommended Considerations/ Actions
Preparation of a COVID-19 risk analysis matrix for investments
and trade contracts.
Teleconferencing for meetings related to cross border
investments.
Re-assessment of supply contracts for force majeure
provisions.
Consideration of new trading partners as part of mitigation
strategies.
Restructure of loan portfolio and debt facility
agreements.
Consideration of the effect of COVID-19 on company stock
valuations.
4. African Businesses and Government/ Regulatory Agencies
African businesses must also consider their policy environment
and the changes to government economic policy in reaction to
COVID-19.19
Proposed Stimulus Packages to Support Business
The governments of Nigeria and South Africa have proposed
economic stimulus packages to mitigate COVID-19’s impact. While
details of the South African stimulus package are still being
finalized, the nation’s president noted that the package will
contain fiscal and other measures concluded with business, labour
and other relevant institutions.20
Nigeria’s stimulus package includes funds to increase
efforts to boost local manufacturing and import
substitution.21 The Central Bank of Nigeria
(CBN) also released its policy measures in
response to COVID-19.22 These measures include an
extension of moratorium on CBN intervention facilities, a reduction
of interest rates, targeted credit facilities for households and
small and medium enterprises affected by COVID-19, intervention
facilities to develop the nation’s healthcare industry and
regulatory forbearance to allow banks restructure the tenor and
terms of loans to businesses and households most affected by COVID,
especially in oil and gas, agriculture, and manufacturing. This
stimulus package not only cushions the adverse effects of COVID-19
but creates business opportunities for investment especially in the
nation’s health care industry.
African businesses whose governments, such as Nigeria, have
proposed and/or put economic stimulus packages in place are
encouraged to consider how these stimulus packages could support
their business portfolio. They are also encouraged follow updates
on the stimulus packages from their national governments in order
to cushion the effect of the pandemic on their businesses.
Ratification of the AfCFTA
As discussed in paragraph 3 above (African Businesses,
investments, Trade and Markets), successful intra-African
trade through the implementation of AfCFTA is an important policy
item which is beneficial for African businesses as they navigate
new markets and trading partners as part of their mitigation
strategies during COVID-19. However, AfCFTA agreement requires that
African nations provide a structure for trade concessions and other
import waivers to facilitate the free movement of goods and
services across the continent. The supply chain disruption caused
by COVID-19 makes this ratification by all African countries who
are signatories to the agreement, a more urgent economic policy
decision. African businesses will benefit from easy access to new
markets with their geographical neighbours. The implementation of
AfCFTA will translate to a larger inter-continental market,
availability and access to more skilled labour, which further
implies more job opportunities and construction of new supply
chains to replace or support those affected by COVID-19
disruptions.23 The European Commission is already
working to utilize the intercontinental European market to push for
cross border trade in order to support businesses generally and the
public health services sector in particular during the COVID-19
pandemic.24 If AfCFTA is ratified and implemented,
Africa stands to enjoy similar benefits throughout its
intercontinental market.
African businesses located in countries that have already
ratified the AfCFTA should consider new trading partners with
businesses located in other countries who have similarly ratified
the agreement. We expect that the combination of supply chain
disruptions from COVID-19 and the trading start date of the AfCFTA
agreement will result in the negotiation of new supply agreements
across the continent after the pandemic is lifted.
Regulatory Disclosures and Filings
African businesses with regulatory filings may be affected by
COVID-19 restrictions especially social distancing policies may
result in delayed filings. Businesses may be required to consider
the effect of COVID-19 on their budgets and income for any
financial disclosures that may be made. We encourage regulators to
issue extensions on any deadlines for regulatory filings in
consideration of COVID-19.
Some Recommended Considerations/ Actions
Follow policy decisions made by African municipal and national
governments to support businesses.
Consider new trading partners with African companies under the
AfCFTA agreement.
Engage legal counsel for advice on dealing with regulatory
entities.
5. Conclusion
We encourage African businesses affected by coronavirus to
consider and institute some of the measures recommended in this
material and engage legal counsel to ensure legally compliant
strategies. Businesses should keep up to date with all news and
insights during COVID-19 and order their engagements accordingly as
we all assess the scale and impact of this outbreak on African
businesses and global markets.
Footnotes
1. Rosamond Hutt, The Economic Effects of COVID-19
Around the World (World Economic Forum, 17 February 2020),
available at https://www.weforum.org/agenda/2020/02/coronavirus-economic-effects-global-economy-trade-travel/,
accessed on 19 March 2020.
2. Yen Nee Lee, 6 Charts Show the Coronavirus Impact
on the Global Economy and Markets so far, (CNBC Markets, 11
March 2020), available at https://www.cnbc.com/2020/03/12/coronavirus-impact-on-global-economy-financial-markets-in-6-charts.html,
accessed on 19 March 2020.
3. Alana Semuels, As COVID-19 Crashes the Economy,
Workers and Business Owners Wonder if Anything Can Save Them From
Financial Ruin, (Time, 18 March 2020), available at https://time.com/5805526/coronavirus-economy-layoffs/,
accessed on 19 March 2020.
4. Gabe Alpert, Government Stimulus Efforts to Fight
COVID-19 Crisis, (Investopedia, 18 Macy 2020), available at https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723,
accessed on 19 March 2020.
5. Pippa Stevens, Oil Falls 24% in 3rd
Worst Day on Record, Sinks to More Than 18-year Low, (CNBC
Markets, 18 March 2020), available at https://www.cnbc.com/2020/03/18/oil-plummets-to-near-18-year-low-on-pace-for-worst-month-ever.html,
accessed on 19 March 2020.
6. World Health Organization, More Than 600 Confirmed
Cases of COVID-19 in Africa, 19 March 2020, available at https://www.afro.who.int/news/more-600-confirmed-cases-covid-19-africa,
accessed on 21 March 2020.
7. African nations have begun to institute border and
travel restrictions to curb the spread of COVID-19 within their
territories. Bukola Adebayo, African Countries Shut Doors
Against Europe, America to Combat Coronavirus, (CNN World, 17
March 2020), available at https://edition.cnn.com/2020/03/16/africa/africa-coronavirus-travel-restrictions-foreigners/index.html,
accessed on 19 March 2020. Nations such as South Africa and Nigeria
have proposed economic stimulus packages for individuals and
businesses to cushion the effect of COVID-19. Please see Thando
Maeko, Ramaphosa Pledges COVID-19 Economic Stimulus
Package, (Business National, 15 March 2020), available at https://mg.co.za/article/2020-03-15-ramaphosa-pledges-covid-19-economic-stimulus-package/,
and Alonso Soto, Nigeria Central Bank COVID-19 Stimulus to
Reach $2.7 billion (Bloomberg, 18 March 2020), available at https://www.bloomberg.com/news/articles/2020-03-18/nigeria-central-bank-covid-19-stimulus-to-reach-2-7-billion,
accessed on 19 March 2020.
8. Id.
9. World Health Organization, Getting Your Workplace
Ready for COVID-19, 27 February 2020, available at https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-covid-19.pdf,
accessed on 21 March 2020.
10. International Labour Organization, Labour
Standards in Africa, available at https://www.ilo.org/africa/areas-of-work/labour-standards/lang–en/index.htm,
accessed on 19 March 2020.
11. Sectors such as oil and gas and mining in countries
with strong natural resource markets, usually have labour unions to
ensure collective bargaining and protect their interests. For
example, in Nigeria, the Nigeria Union of Petroleum and Natural Gas
Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff
Association (PENGASSAN) represent oil and gas workers in the
country. In South Africa, the principal union for miners is the
National Union of Mineworkers (NUM).
12. Section 2.1 of the NDPR
13. The Johannesburg and Nigerian Stock Exchanges have
suffered losses due to uncertainties related to COVID-19. Please
see Larry Classen, COVID-19 Crash: R2.3trn Wiped Out,
(Moneyweb, 16 March 2020), available at https://www.moneyweb.co.za/news/markets/another-covid-19-crash/,
and Peter Egwuatu & Nkiruka Nnorom, COVID-19: Stock Index
Crashes 15.3% YtD, (Vanguard, 16 March 22020), available at https://www.vanguardngr.com/2020/03/covid-19-stock-index-crashes-15-3-ytd/,
accessed on 19 March 2020.
14. Baker McKenzie, The Impact of COVID-19 on Key
African Sectors, 10 March 2020, available at https://www.bakermckenzie.com/en/insight/publications/2020/03/the-impact-of-covid19-on-key-african-sectors,
accessed on 19 March 2020.
15. The United Nations Economic Commission for Africa has
encouraged African nations to seize the opportunity presented by
COVID-19 disruptions to deepen continental trade. Femi Adekoya,
Intra-African Trade Could Help Mitigate the Impact of COVID-19
on Nigeria, Others; (The Guardian, 18 March 2020), available
at https://guardian.ng/business-services/intra-african-trade-could-help-mitigate-impact-of-covid-19-on-nigeria-others/,
accessed on 19 March 2020.
16. Leanne de Bassompierre, African Free-Trade Deal on
Track Despite Coronavirus Disruption, (Fin24, 12 March 2020),
available at https://www.fin24.com/Economy/Africa/african-free-trade-deal-on-track-despite-coronavirus-disruption-20200312,
accessed on 19 March 2020.
17. Many African countries have closed their borders or
issued travel restrictions as part of COVID containment strategies.
Bukola Adebayo, African Countries Shut Doors Against Europe,
America to Combat Coronavirus, supra at note 7.
18. For example, Nigeria’s restriction of rice
importation through its land borders resulted in retaliatory
restrictions of its exports to neighbouring countries. Fakoyejo
Olalekan, Border Closure Retaliation: Ghanaian Traders Union Shuts
Nigerian Shops. To Clamp Down on More (Nairametrics, 1 November
2019), available at https://nairametrics.com/2019/11/01/border-closure-retaliation-ghanaian-traders-union-shuts-nigerian-shops-to-clamp-down-on-more/,
accessed 19 March 2020.
19. For example, the Nigerian Federal Government recently
announced cuts to its 2020 budget in order to account for the
effect of COVID-19 and the oil price war on its budgetary
estimates. Oladeinde Olawoyin, Coronavirus: Nigeria Cuts Oil
Benchmark to $30, Slashes Capital Budget By 20%, (Premium
Times, 18 March 2020), available at https://www.premiumtimesng.com/news/headlines/382605-coronavirus-nigeria-cuts-oil-benchmark-to-30-slashes-capital-budget-by-20.html,
accessed on 19 March 2020.
20. Thando Maeko, Ramaphosa Pledges COVID-19 Economic
Stimulus Package, supra at note 7.
21. Alonso Soto, Nigeria Central Bank COVID-19
Stimulus to Reach $2.7 billion, supra at note 7.
22. CBN Circular to Deposit Money Banks and the General
Public on: CBN Policy Measures in Response to COVID-19 Outbreak and
Spillovers, March 16 2020, available at https://www.cbn.gov.ng/Out/2020/FPRD/CBN%20POLICY%20MEASURES%20IN%20RESPONSE%20TO%20COVID-19%20OUTBREAK%20AND%20SPILLOVERS.pdf,
accessed on 19 March 2020.
23. Adetayo Adetuyi & Nnanke Williams, Considerations
for the Implementation of the African Continental Free Trade Area
Agreement, 27 February 2020, available at https://brooksandknights.com/2020/02/27/considerations-for-the-implementation-of-the-african-continental-free-trade-area-afcta-agreement/,
accessed at 21 March 2020.
24. European Commission, Message by Ursula von der
Leyen, President of the European Commission, on the Latest Measures
to Address the Coronavirus, available at https://europa.eu/!Dq37YP, accessed on 23 March
2020.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
