Infrastucture Africa And COVID-19: Managing The Risks Of Coronavirus Impacts

On 28 February 2020, the Nigerian Federal Government reported the first confirmed case of COVID-19 or the new "coronavirus" in sub-Saharan Africa.

This announcement came at the end of one of the worst weeks for financial markets since the global financial crisis in 2008, which has been largely attributed to the ongoing outbreak. On 5 March 2020, the South African government reported its first case. This article provides an overview of the key contractual issues parties involved in construction projects in sub-Saharan Africa should consider in order to protect their commercial positions as a result of the risks caused by the COVID-19 outbreak.

The spread of COVID-19 is an increasing cause for concern for businesses, governments and development banks involved in infrastructure projects in sub-Saharan Africa. Although we hope for the best, similar pressures may in future affect Tanzania and the broader East Africa region.

Parties involved in infrastructure projects may be unable to fulfil their contractual obligations as a result of the outbreak due to the increasing likelihood of labour and material shortages. These pressures will be particularly acute for Chinese contractors who have a very strong presence on the continent.

The article is generally applicable to legal concepts across the continent however where necessary we have qualified our remarks in order to emphasise an East African context. Although 'Infrastructure' can be defined broadly, we focus on its application in the construction sector and the contracts which underpin that sector.

Extensions of Time / Additional Costs

Construction contracts generally strike a careful balance in the allocation of responsibility for delays between the employer and the contractor. The determination of whether the employer or the contractor is responsible for a long delay to completion can be the difference between whether a project is profit or loss making for a party.

In the event that an employer is responsible for a delay, a contractor will be awarded an extension of time to complete the project, and in some cases be entitled to recover any additional costs from the employer. In the event that a contractor is responsible for a delay, an employer is generally entitled to recover liquidated damages from the contractor as a result of the delay.

Contractors concerned that they could face delays or increased costs as a result of the COVID-19 outbreak should consider whether they have any express...