AFRICA’S GOVERNANCE RESPONSE TO COVID-19 | PRELIMINARY REPORT 2020
the pandemic has affected significantly, while
Botswana has established a relief fund and seeks
to stabilize businesses and ensure the availability of
strategic supplies. Lesotho has set up a Contributory
Fund and is using it to pay a subsidy to affected
textiles workers, pay business rentals in May 2020
and defer certain taxes until September 2020 as
well as improve credit facilities for SMEs. Zambia
has established an emergency fund to strengthen
its preparedness and enhance public security
during the pandemic. Ethiopia is planning to
support enterprises and job creation in urban areas
and industrial parks. It is also working to expand its
Urban Productive Net Program in collaboration
with the World Bank. Cote d’Ivoire has established
a USD 490 million fund to support communities
and corporations. Ghana has established a USD 1.5
million National Trust Fund.
of supervised financial institutions guarantee the
safety of customers and staff, instituting measures
to minimize the likelihood of sound businesses
going into insolvency due to lack of credit, and
waiving limitations on restructuring of credit
facilities at financial institutions that may be at risk
of going into distress.
Countries are also bolstering their financial
and banking sectors. In this vein,various central
banks have sought to ease liquidity conditions
by reducing reserve requirements for banks and
easing payment system transactions. Angola’s
central bank, for example, has reduced the rate
on its seven-day permanent liquidity absorption
facility by 3 percent, and provided about 0.5
percent of its GDP as liquidity support to banks
and created a liquidity line equivalent to USD 186
million for the purchase of government securities
from non-financial corporations. Zimbabwe has
reverted to a multicurrency system, reducing the
bank policy rate from 35 percent to 25 percent,
reducing the statutory reserve ratio from 5 percent
to 4.5 percent, and increasing private sector
lending facility from ZW$1 billion to ZW$2.5 billion.
Its central bank has also moved from a managed
floating exchange rate system to a fixed exchange
rate management system. The Bank of Uganda
is providing exceptional liquidity assistance for a
period of up to one year to financial institutions
that need it, ensuring that the contingency plans
To minimize the use of bank notes, the
governments of various AU member states such
as Cote d’Ivoire, Kenya, Mozambique, Uganda and
Zambia have persuaded mobile money operators
to either reduce or remove user fees and charges
for periods of about three months. These countries
have also lowered fees and charges for other
digital financial transactions.
Yet another significant set of measures relates
to taxation. In this respect, governments have
imposed various tax relief measures. Kenya’s
measures include full income tax relief for persons
earning below the equivalent of $225 per month,
and reductions of the top pay-as you earn rate
from 30 to 25 percent, the base corporate income
tax rate from 30 to 25 percent, the turnover tax rate
on small businesses from 3 to 1 percent, and the
standard VAT rate from 16 to 14 percent.
2.5 Innovative Responses
Besides the four responses discussed above
(categories 1 to 4), there are cases of innovation
happening across the African continent that
should be recognised. Among these is, for
example, the Senegalese Ministry of Health, that, in
collaboration with the Virology Laboratory of the
l’Institut Pasteur de Dakar, created the $1 COVID 19
diagnostic testing kit. This innovation has enabled
the government to rapidly detect infections in ten
minutes without exorbitant costs 6.
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