Coronavirus and more....

Weekly updates and information

Coronavirus pandemic

Movers & Shakers

Mauritius declared wary victory over Covid-19, saying on May 12 it had “zero” active patients and had not documented a single new case in 17 days. The Indian Ocean island nation is the first African country to announce such a feat, though the island remains wary of new infections.

Kenya’s biggest bank by assets, KCB Group, posted 8% profit after tax in the first quarter to March at $59m. However, the lender has had to restructure more than $1bn in loans and the CEO is hesitant to predict how earnings will be impacted this year. 

Jumia, a major e-commerce platform in Africa, has reported an almost 7% fall in first quarter revenue due to supply chain disruptions, particularly in China. It also reported signs that lockdowns were hastening a shift towards online shopping in Africa.  

Kenya and Zambia have closed their borders with Tanzania, following growing fears that the government has failed to get a handle on Covid-19. The government has not announced any updates since April 29, leading to a warning from the US Embassy that the pandemic has grown exponentially in Dar es Salaam. 

The eastern-based Libya National Army (LNA) has suffered a series of military setbacks since Turkey sided with the Triopli-based UN-backed government in January. The Government of National Accord (GNA) captured the LNA’s only airbase near Tripoli, as Libya’s ongoing civil war draws in more foreign powers. 

 
 

A rare glimpse of hope from Djibouti and Egypt

While the world faces an unprecedented health crisis, the International Monetary Fund has published its regional economic outlook for the Middle East and Central Asia.

As COVID-19 has precipitated an economic crisis, concerns about a recession are growing and governments will need to take decisive measures with the support of the international community to limit the negative impact.

According to the IMF, the region is likely to contract by an average of 3.1% in 2020, as it has been hit by two reinforcing shocks, COVID-19 and the plunge in oil prices.

Despite this, Djibouti and Egypt are among the few economies in the region expected to avoid a contraction. According to the IMF latest regional economic outlook, Djibouti is expected to grow 1% in 2020 and 8.5% in 2021.

Moreover, IMF forecasts Egypt will grow by 2% and 2.1% respectively in 2020 and 2021. Djibouti faces significant challenges due to the COVID-19 pandemic. However, the IMF forecast shows that the country has built resilience and is well-placed for continued economic progress in the long-term.

Egypt embarked on a structural reform programme back in 2017, which has helped strengthen growth, reduce unemployment, increase foreign exchange reserves, and put public debt on a downward path.

Egypt and Djibouti are the only countries in the region to maintain growth during this crisis.

Read our Djibouti report from our sister magazine New African here: https://newafricanmagazine.com/22689/

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South Africa is the second African country to ease a lockdown

South Africa will begin easing a nationwide lockdown from May 1 in a bid to revive the country’s ailing economy.

In the planned phase-out of restrictions, South Africa will move from the maximum disease-alert level 5 to a national level 4, president Cyril Ramaphose said yesterday in a televised address.

International and domestic travel remains banned as well as large gatherings, while restrictions on outdoor exercise, public transport and the sale of cigarettes and alcohol will be lifted.

A maximum of one-third of workers will be able to return to work.

“While a nationwide lockdown is probably the most effective way to contain the spread of the virus, it cannot be sustained indefinitely,” Ramaphosa said. “Our people need to eat and they need to earn a living.”

South Africa, which currently has the most cases in Africa, follows Ghana to tentatively lift its lockdown in two key cities on Monday.

South Africa’s disease-alert levels are as follows:

Level 5 means that drastic measures are required to contain the spread of the virus to save lives.

Level 4 means that some activity can be allowed to resume subject to extreme precautions required to limit community transmission and outbreaks.

Level 3 involves the easing of some restrictions, including on work and social activities, to address a high risk of transmission.

Level 2 involves the further easing of restrictions, but the maintenance of physical distancing and restrictions on some leisure and social activities to prevent a resurgence of the virus.

Level 1 means that most normal activity can resume, with precautions and health guidelines followed at all times.

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‘COVID-19 single biggest catalyst for a digital transformation in Africa’, says Cellulant co-CEO

In the wake of the current crisis, digitizing has moved from being a posterity agenda debated in boardrooms to a survival game with many casualties, writes Ken Njoroge, co-CEO of Cellulant, in an exclusive op-ed for African Business.

As governments continue to implement curfews and lockdowns in order to enforce social distancing, consumers are now engaging with businesses through online channels, he says.

Large consumer segments especially the older generation to whom this whole digital world held little appeal are now becoming active users.

Within just weeks, the world has been flung into “digitization unusual mode”  as businesses find ways to survive and ensure continuity and the COVID-19 crisis has become the single biggest catalyst for a digital transformation and has moved digitization from a niche market into mass adoption.

The level of digitization in Africa has generally been quite slow.

For all the hype that has been surrounding digital transformation in the past, most industries across Africa have generally been very conservative. This is likely to change and very quickly.

“There is an immense opportunity for business to re-invent their business models to enable the delivery of their goods and services online,” he says.

“For us in the payments business, we have to prepare for the inevitable change in consumer behaviour which is likely to spur a lot more digitization for a whole range of services to ensure that the payment platforms and the customer journey are able to cater for different sectors in the new context.”

Read the entire post here: https://liveblog.africanbusinessmagazine.com/digitization-as-unusual-how-african-businesses-can-thrive-in-a-world-beyond-covid-19/

WHO urges countries not to let COVID-19 eclipse other health issues

Public health systems in Africa are coming under severe strain as the unprecedented COVID-19 pandemic persists. But as countries battle to bring the outbreak under control, efforts must also be maintained on other health emergencies and progress made against diseases such as malaria or polio preserved, the World Health Organization (WHO) urged today.

Prior to the arrival of the novel coronavirus in Africa, WHO was stressing the need for countries to ensure the continuity of routine essential health services. An overburdened health system not only undermines the effectiveness of the response to COVID-19 but may also undermine the response to a whole host of preventable threats to human health. Even brief interruptions of vaccination make outbreaks more likely to occur, putting children and other vulnerable groups more at risk of life-threatening diseases.

“I urge all countries to not lose focus on their gains made in health as they adapt to tackle this new threat,” said Dr Matshidiso Moeti, WHO Regional Director for Africa. “We saw with the Ebola Virus Disease outbreak in West Africa that we lost more people to malaria, for instance than, we lost to the Ebola outbreak. Let us not repeat that with COVID-19.”

Confirmed COVID-19 cases in Africa continue to rise, now exceeding 25 000. WHO is supporting countries in all aspects of the COVID-19 response and has recently published guidelines for ensuring the continuation of critical health services, including immunization and anti-malaria campaigns. The guidelines stress the need for countries to take a dynamic approach that mitigates any unavoidable pause in vaccination campaigns.

The consequences of disrupting efforts to control malaria in Africa could be particularly grave. Current estimates suggest that sub-Saharan Africa accounted for approximately 93% of all malaria cases and 94% of deaths, mainly among children under five. A new analysis by WHO and partners suggests that in a worst case scenario if malaria prevention and treatment services were severely disrupted as a result of COVID-19, the number of malaria deaths in 2020 in sub-Saharan Africa could rise to double the number in 2018.

“Africa has made significant progress over the past 20 years in stopping malaria from claiming lives. While COVID-19 is a major health threat, it’s critical to maintain malaria prevention and treatment programmes. The new modelling shows deaths could exceed 700 000 this year alone. We haven’t seen mortality levels like that in 20 years. We must not turn back the clock,” said Dr Moeti.

There are countries like Benin, the Democratic Republic of the Congo, Sierra Leone, Chad, Central African Republic, Uganda and Tanzania which are continuing with their insecticide treated bed net campaigns and other important malaria prevention activities. Countries are adapting their malaria strategies to the current complex situation.

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Miracle cure from Madagascar

The President of Madagascar created headlines recently when he announced on his facebook page and on national tv that he had uncovered a potential cure to COVID-19.

President Rajoelina had been referring to a cocktail of medicinal plants, primarily artemisia and ranvensara. Madagascar is said to have the world’s largest supply of artemisia, a medicinal plant with antimalarial properties.

It should be noted that he’s not the first President to be promoting the use of medicines as therapy to treat COVID-19. President Trump in his daily press briefings was extolling the virtues of hydroxychloroquine and chloroquine, following some encouraging signs from a clinic in Marseille, France.

Chloroquine has been used as an anti-malarial for years and Dr Raoult, a distinguished French professor who spent part of his childhood in Senegal, noted interesting correlations between patients who had managed to overcome COVID-19 and the use of chloroquine.

However no proper clinical trials have yet been conducted to validate this claim. And on Tuesday, a study conducted in a veteran’s clinic in the US showed that the death ratio of patients who had been given chloroquine was actually higher than those who had not been administered the drug.

In Brazil, doctors stopped a study after heart rhythm problems developed in one-quarter of people given the higher of two doses being tested

In an article by Jeune Afrique, it is said that a French-based humanitarian organisation, La Maison de l’Artemisia, had written to a number of African presidents highlighting the potential benefits of artemisia in helping treat Covid19. This letter somehow made it to the President and caught his attention.

It is too early to say whether the Rajoeilina’s hunch is right. Clinical trials and scientific studies in Africa and around the world are currently being conducted to verify the effectiveness of this treatment.

Whether it works or not, Rajoelina has started to ease lockdown measures. The country has reported less than 100 cases and no deaths to date

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De Beers downgrades diamond production forecast

It’s not only oil that has seen its markets come to a grinding halt. The diamond industry appears to be another casualty of global lockdowns and the impact of Covid19. Anglo American, owner of the world’s second-largest diamond miner, De Beers, announced on Thursday that it will mine significantly less diamonds this year than previously planned.

De Beers had already cut supply last year by 13% for what had been a disappointing year for the group with its earnings before interest, tax and other items, fell 55% to $558m. Its production fell from 35m carats to 31m.

The lockdown will not only impact demand for diamonds, but it has also effectively shut down the trade in diamonds: India, which handles most of the world’s diamond cutting, is under strict lockdown. Botswana, where De Beers sells its stones, has closed its borders.

As a result production forecast for this year is set to fall by another 20% to between 25m and 27m carats. Anglo American had bought a 40% share of De Beers from the Oppenheimer family in 2012 for $5.2bn.

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IMF provides support to Africa’s island nations

Over the past week, the IMF has provided economic stimulus packages to three of Africa’s tiny island nations.

The global lender today approved a disbursement of $32m to Cabo Verde in the Atlantic Ocean and $12m Comoros in the Indian Ocean.

The pandemic is severely affecting Cabo Verde’s economy, which is heavily dependent on tourism.

Comoros along with Lesotho is one of the only two African countries yet to report any cases of the deadly virus.

Nonetheless, the shock comes less than a year after Cyclone Kenneth and is affecting Comoros severely.

Remittances receipts have slowed and visitor arrivals have stopped, weighing on activity in the services sector.

On Wednesday, the IMF approved the disbursement of $12m to São Tomé and Príncipe in the Atlantic Ocean which has also seen its tourism sector disrupted.

Africa’s biggest island nation Madagascar had received a $165.99m loan much earlier on May 5.

The large island is facing a dramatic decline in tourism, as well as disruptions to mining and manufacturing.

Seychelles and Mauritius, the remaining island nations, are yet to agree on funding with the lender.

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Airlines start to feel more serious COVID-19 consequences

Air Mauritius today announced its intention to enter voluntary administration after the disruptions caused by COVID-19 will make it impossible to meet its financial obligations.

This follows the announcement earlier this week from South African Airways that it had been refused further government financing to help it shore up its balance sheet, leaving the airline’s survival hanging on a thread.

With borders closed and half the world in lockdown, airlines have taken a massive hit to their business. The aviation sector is known for its low margins and analysts are predicting many will not be able to withstand this crisis where their fleet is effectively grounded.

There are today over 200 airlines in Africa, many of them propped up by governments or barely profitable. The continent’s biggest success story is Ethiopian Airlines. It made profits of $260m last year on revenues of $4.2bn.

The start of the year looked promising with Qatar Airways’ announcement to take a 40% stake in RwandAir, following a decision last year to take a 60% stake in the $1.3bn new airport being built in the east of the capital.

But the market environment for airlines has always been challenging. SAA had accumulated $1.7bn in losses since 2008. In February, the government set aside $860 million to repay the airline’s guaranteed debt over the medium term and since January the airline has relied on $180m in emergency funding issued by the state development bank.

Kenya Airways is in the process of being nationalised after the government announced last year its intention to buy back the stake that it had sold to KLM-Air France. The current crisis will be the final nail in the coffin.

But it is not all doom and gloom. In a webinar hosted by Invest Africa this afternoon, a number of current and former chief executives agreed that these were challenging times but it actually presented a unique opportunity for airline CEOs and key stakeholders to get together and reboot the African airline industry.

Airline and pilot unions will have to work with airlines on restructuring the sector; many of these operations have become far too bloated and staff/aircraft ratios are also well above industry average.

Regulators need to see how they can also  support airlines and review landing fees and other taxes. Regulatory and airport costs are some of the highest in the world.

The future will be difficult: it will take a while for passenger numbers to get back to what they were and costs in the short term will increase. Airlines will have to disinfect aircrafts and take necessary measures to enforce some kind of social distancing, reducing available seats. So consolidation, they agreed, is inevitable especially as there will be reduced demand and excess capacity.

Consolidation will also force airlines to reduce overhead costs. The challenge for African airlines has always been their cost base according to James Hogan, former CEO of Etihad. As consolidation takes place, governments will have to be imaginative such as looking at creating separate companies, separating the ‘good assets’ and ‘bad assets’ to enable the new structures to properly take off.

To win the support of financiers and investors, the airlines industry will have to work smarter, together with airlines providing a clear roadmap, showing they are leaner, more efficient, with clear revenue streams.

In her conclusion, Yvonne Makolo, the recently appointed MD and CEO of Rwandair, said that this was an opportunity to rethink our networks, rethink our fleets and rethink our business model.

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South Africa announces $26bn economic package to fight COVID-19

During a televised address on Tuesday night, President Ramaphosa announced $26bn economic package to deal with the health and economic consequences from the COVID-19 pandemic.

The package is roughly 10% of the country’s GDP. It is the biggest package yet to be announced on the continent. South Africa, despite its recent downgrade, has a longstanding history of accessing international and local capital markets to issue debt.

In a tweet last night Tito Mboweni, the country’s finance minister and former central bank governor also said that South Africa is entitled to as much as $4.2bn in emergency funding from the IMF should it request financial support to fight the coronavirus pandemic. Reports say this would be at a rate of 1%.

The country is also in discussions to launch a $5.3bn social impact bond to support their COVID-19 response, making it the biggest such bond, following the issuance of a $3bn social bond last month by the African Development Bank.

The country, as part of a larger group from Africa and other emerging markets, should also see some of its debt repayments due this year postponed to 2021 or even later. In his address the president said the details of the package would be tabled by Mboweni in an adjustment budget.

Even by international standards, the size of the package is large. According to the IMF Fiscal Monitor it is on a par with Spain, Canada, Korea and Brazil. It will incorporate funding to support the country’s health system, funding to a wider disbursement of for social grants, distribution of food parcels and vouchers, bank loan guarantees for companies needing bridging finance, wage support schemes like has been seen in Europe for companies that have had to put their staff on furlough schemes.

The package included a special $1bn COVID-19 health budget, wide-ranging support for the most vulnerable through $2.5bn in expanded social grants, the distribution of food parcels and vouchers and a $10bn loan guarantee scheme for firms that need additional resources to bridge them through the crisis. The economy is forecast to contract between 6-10% using worst-outcome scenarios.

As of Tuesday, the country’s total confirmed cases of COVID-19 stood at 3,465, with 58 deaths. It has one of the most extensive testing schemes in Africa. An announcement on the phased lifting of the lockdown will be made on Thursday.

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IMF approves $12m disbursement to São Tomé and Príncipe

The IMF yesterday approved a $12m disbursement to São Tomé and Príncipe under the Rapid Credit Facility (RCF).

The financing provided under the will help address São Tomé and Príncipe’s urgent external and fiscal financing needs as a result of the outbreak of the COVID-19 pandemic.

The COVID-19 pandemic is taking a heavy toll on Sao Tome and Principe, with tourism and externally financed projects halted and international supply chains disrupted.

The challenging circumstances are further affected by the fragility of the economy and a weak health care system.

The IMF’s deputy managing director and acting chair, issued the following statement:

“The authorities of São Tomé and Príncipe have moved swiftly to develop a plan to address the major challenges posed by the COVID-19 pandemic. In addition to posing a major health risk, the pandemic exerts strong fiscal and balance of payments pressures.

“Emergency support under the Rapid Credit Facility will help prevent a much more severe and prolonged economic contraction and provide space for critical health and social spending. It is also expected to help catalyze donor support, which is vital for closing the remaining financing gap.”

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