COVID-19
The governmental response
Global overview and supporting business guide
As governments across the globe take drastic action to help businesses weather the storm from COVID-19, we have produced a global guide which provides an insight into the issues likely to impact businesses and the key measures taken by governments across more than 50 countries, from financial support and business protection, through to employment and access to justice.
Ethiopia
Last updated: May 15 2020
What form of direct liquidity support has the government made available?
The Ethiopian government has made ETB21 billion (Ethiopian Birr) available to private banks to assist them in providing debt relief and loans to borrowers who may be in financial distress.
What form of private sector and/or international support initiatives or requests have been launched by the government?
The IMF has approved USD411 million in emergency assistance for Ethiopia to be provided under the Rapid Financing Instrument. The country will also benefit from IMF debt service relief under the Catastrophe Containment and Relief Trust.
Financial institutions and businesses in the private sector have contributed both in cash and in-kind to the Corona Virus Mitigation Trust Fund. Further, the Ethiopian Diaspora Trust Fund has received donations of personal protective equipment with a value of over USD1 million.
What form of additional financial support is there for employment?
None.
What national and local tax reliefs / payment holidays have been introduced?
The government has introduced certain tax relief measures:
- for those with tax liabilities for financial years prior to 2014, tax payers are exempted from the requirement to pay these unpaid taxes and any respective penalties and interest; and
- for those with tax liabilities for financial years between 2014 and 2018, tax payers may either (i) pay 25% of unsettled tax liability upfront and pay the outstanding balance within 1 year or (ii) pay any outstanding tax in full and receive a 10% discount on the amount due.
In both cases all penalties and interest on the outstanding tax liability will be waived. In order to benefit from the relief measures, pending disputes in respect of outstanding taxes must be terminated.
Additional tax relief measures include:
- waiving rental income tax for building owners;
- deferring the requirement for payment by employees of employment income tax;
- extending filing periods for Value Added Tax and Turn Over Tax;
- making charitable donations tax deductible;
- allowing employees of private businesses to postpone pension contributions for up to 3 months; and
- extending the period allowed for a loss carry forward from 2 to 3 years for a company that has exhausted the 2 years previously set by law.
Ethiopia
Last updated: May 15 2020
What changes to rights of utility companies and property owners have been introduced?
Property Owners
The House of Peoples Representatives declared a state of emergency on 8 April 2020, for an initial period of 5 months, by proclamation 3/2012 (State of Emergency). The Council of Ministers issued a regulation detailing measures to be taken under the State of Emergency, including the following:
- any owner of a hotel, house, apartment, gathering hall or vehicle may be required to surrender the use of said property in relation to the State of Emergency; and
- landlords that rent out their property either for private or commercial use are not permitted to terminate the lease, other than by way of mutual agreement, during the State of Emergency.
Utility companies
Any manufacturer or service provider may be required to provide services; expand their services; manufacture items; increase supply of items it manufactures; manufacture new products and sell the manufactured products (at a price recommended by the government) to the government, consumers or cooperatives.
Companies providing essential services including telecommunication, electricity, water supply, supply or distribution of food items, cleaning, fire and safety measures, banking, security, and waste disposal are not permitted to stop operations.
Has the government given guidance or introduced laws to treat COVID-19 as a force majeure event?
No.
Ethiopia
Last updated: May 15 2020
What changes to employment law have been introduced (including social security entitlements and health and safety requirements)?
On 27 March 2020, The Ministry of Labour and Social Affairs issued a protocol in response to the pandemic (Protocol).
The Protocol lists precautionary measures which must be taken by employers including, but not limited to, providing employees with protective materials such as face masks and gloves, training employees on how to use protective materials, creating a work space that allows employees to practice social distancing while working, and reducing crowding on employee transportation services.
The Protocol also lists recommended measures which should only be adopted after consultation between employers and employees:
- employees to take paid annual leave. In the case of employees who do not have unused annual leave, employers should allow them to take at least half of the following year’s leave;
- ongoing negotiations towards new collective agreements to be suspended for the next 12 months;
- unimplemented salary raise plans to be suspended for the next 12 months;
- payment of benefits and allowances (such as hardship allowance, transportation allowance, house allowance, commission, bonus and other benefits which are not considered salary) to be deferred until the end of the State of Emergency;
- based on consultations of employers’ and workers’ unions, revising existing salary scales in a bid to maintain business continuity; and
- for employees assigned to non-essential positions who temporarily lose their jobs, provision of loans and written assurance that they will be reinstated once the situation stabilises.
In addition, pursuant to the regulation issued to implement the state of emergency proclamation 3/2020, termination or reduction of employees during the effective period of the State of Emergency is prohibited, except for cases to be determined by the Ministry of Labour and Social Affairs. The regulation also states that employers must provide a suitable working environment for its employees.
Other Relevant Measures taken by the government
None.
Ethiopia
Last updated: May 15 2020
When do businesses have to close their properties?
Certain businesses such as pubs, night clubs, cinemas and theatres are not permitted to operate during the State of Emergency.
Ethiopia
Last updated: May 15 2020
Have there been any changes to financial market regulations (e.g. in relation to short selling)?
No.
What additional requirements have been placed on financial institutions?
None.
What mortgage and consumer credit changes and protections have been introduced?
Some banks have introduced measures to assist their clients, including rescheduling of loan and interest repayments, removal/reduction of penalties for early settlement of loans, rescheduling mortgage repayments for government owned housing, and sector specific loan rescheduling for business sectors (such as horticulture) that have been particularly affected by the pandemic.
Ethiopian law permits banks to foreclosure on property held in mortgage without needing to have a court judgment where the borrower has defaulted on payment. Due to the pandemic and the financial distress businesses may be in at this time, banks have suspended any such foreclosure.
Have mandatory deferrals of repayments for financial institutions been imposed? If so, please explain: a) whether these obligations have been placed on national or international lenders; and b) whether these deferrals are of payments of interest or principal, or both.
None.
Ethiopia
Last updated: May 15 2020
Have changes been made to annual reports filing formats and deadlines and AGMs for companies generally?
No.
Have there been changes to laws and regulations about holding board meetings?
No.
Have there been any changes to foreign investments laws?
No.
Regarding listed companies, are there any new requirements on annual and interim financial reporting obligations?
No.
Regarding listed companies, are there any new requirements on the holding of shareholder meetings?
No.
Ethiopia
Last updated: May 15 2020
What changes to the law have been introduced to protect against claims by creditors?
None.
Ethiopia
Last updated: May 15 2020
Have litigation procedures been adjourned / postponed nationwide?
All courts have suspended hearing any new or pending cases with the exception of cases that would otherwise be time barred and cases requiring urgent court decisions, such as those involving bail and breach of the State of Emergency law.
What exceptions to postponement exist?
None.
Have procedural time limits been suspended or extended?
No.
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