Pandemic recovery in Africa: A case for strengthening insolvency laws for rescuing small and medium enterprises
Authors: Williams C. Iheme and Sanford U. Mba
Affiliations: LLB, LLM, SJD. Associate Professor of Law, Jindal Global Law School; Visiting Professor, Strathmore Law School; LLB, LLM, SJD. Senior Associate in the law firm Dentons ACAS
Source: Journal of Comparative Law in Africa, Volume 8 Issue 2, p. 74 – 103
Small and Medium Enterprises (SMEs) play a significant role in the economy of developing countries. Although SMEs contribute to economic growth, they still struggle with access to finance and cash flow constraints. The coronavirus (COVID-19) pandemic worsened this situation, making it necessary for countries to develop rescue regimes suitable for financially distressed SMEs. Focusing on Nigeria and Kenya – which represent the largest economies in West Africa and East Africa respectively – this paper critically sheds light on the socio-legal challenges posed by extant insolvency law regimes in both countries and their unsuitability for driving SME rescue. As a conversation starter in the African context, the authors identify transplanted concepts and structures which make SME rescue a futility, in the light of local circumstances, while proposing solutions tailored to the social milieu of both countries.