Up until December of 2019 when the first case of COVID-19 was reported in Wuhan China, business was as usual, travel and investment was happening as scheduled. This however changed abruptly when more cases continued to be recorded and the virus seemed to spread like wild fire across the globe.
By end of March 2020, over 100 countries globally had instituted either a full or partial lockdown affecting billions of people. Air traffic dropped from the world’s biggest airports as the tough measures took effect. International Air Transportation Association estimating that Africa’s aviation industry lost $2 billion in the same year.
Several African countries brought in initial restrictions on flights from China and even required visitors who were at risk to stay in quarantine on arrival which did not happen for long since they had to lock down as well. This version of lockdown entailed restriction on business operations, mobility, movement within and across international borders, as well as public gatherings.
To mitigate the crisis African governments adopted measures to support companies and compensate loss of income of its population due to lockdown. Temporary measures mainly consisted in reducing tariffs on key services such as water and electricity, accelerating the payment of invoices or clearance of arrears to provide hard-pressed firms with needed liquidity and deferring the payment of taxes or social security contributions.
“The South African government for instance put in place a number of packages that were designed to offer some cushion to small businesses,” says Founder and Managing Partner of Talanta, Dumi Jere
The pandemic caused the deepest economic disruption since World War II disrupting both supply and demand of products globally. In spite of the pressures and high levels of uncertainty as businesses looked for ways to navigate through the new life brought about by COVID-19, many firms embraced digitization and technology. Firms became more efficient and remote working became a norm. Businesses and people went online for the first time. A shift to online channels, automated production tasks and more innovation in business operating models.
“Digital and technology transformation that was estimated to take 10 years to implement and grow, literally took overnight because lots of countries were shut down yet institutions needed to continue operating,” says Dumi Jere.
Africa boasts of a $3tr market opportunity through the African Continental Free Trade Area (AfCFTA) agreements which offers greater manufacturing potential as low cost manufacturing opportunities continue to move to Africa thanks to the growth of technology. This large market consists of a very talented youthful population that can take Africa to greater heights economically.
“The fourth industrial revolution we are currently experiencing is being led by technology and therein lies a lot of investment opportunities. From smart factories to smart agriculture that were previously not possible earlier in the African context,” says Dumi Jere
Overall Foreign Direct investment inflows into Sub Saharan Africa decreased by a huge percentage as compared to years preceding the pandemic, mainly due to heightened uncertainty in the investment climate. However this is changing, African investment space is now opening up and private equity investors in Africa are looking beyond the pandemic to diversify their investment targets in search of businesses that will be more resilient to the post COVID-19 economy. Progress in agriculture, transport and delivery logistics businesses as well as health infrastructure is being witnessed across Africa.
A lesson governments and key stakeholders learnt just after the establishment of lockdowns was that of ‘self-reliance’. Africa’s overreliance on imports was tested during this time, with supply chains being disrupted and so was the movement of goods leaving Africa sore and in dire need of certain commodities
“We need to improve our local economies, so that even if there’s a lockdown in another country, we still are able to sufficiently supply our own local chains. African governments need to learn that they need to constantly improve the supply chain systems and make themselves more self-reliant.”
“So if a country is able to sustain itself, then it is able to supply its own chains and definitely in a better position than most,” indicates Jere