Eversheds SHINE - Doing business in Africa webinar
 

Eversheds SHINE - Doing business in Africa webinar

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Economic growth in Africa remains strong with growth of 5% in 2013. At least a third of countries in the region are growing at 6% and more, and African countries are now routinely among the ...

Economic growth in Africa remains strong with growth of 5% in 2013. At least a third of countries in the region are growing at 6% and more, and African countries are now routinely among the fastest-growing countries in the world. Yet for businesses seeking to expand into or operate on the Continent and their legal advisers, there remain serious challenges to success. So how can we all make the most of this continent of opportunity and challenges?

Focussing particularly on recent developments, legal harmonization, opportunities and day to day issues in the legal world in Africa, the session will provide an insight into the potential challenges that lawyers may find when working with clients or on transactions or litigations in Africa and suggest some ways to mitigate the risks. Covering a range of topics such political risk, corruption, the importance of trust and relationship-building and the different pace of working, the webinar will provide a unique insight into working in Africa and present our unique offering on the continent.

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    Eversheds SHINE - Doing business in Africa webinar Eversheds SHINE - Doing business in Africa webinar Presentation Transcript

    • Eversheds SHINE WEBINAR Doing Business in Africa Strategies for Success Boris Martor Partner, Head of Africa Group Eversheds LLP borismartor@eversheds.com
    • 1. Presentation of Eversheds in Africa 2. Doing business in Africa : opportunities 3. Doing business in Africa : challenges Contents
    • • Eversheds LLP advising in Africa for over 25 years • 2007: Formal creation of Eversheds Africa Group • 7 Offices in Africa – South Africa, Mauritius, Morocco and Tunisia • Have advised in ALL 54 African countries • Specialized team with 33 EALI firms across the continent • Publication of several best selling books on Business Law in Africa • A unique client mix of Banks/Governments/Corporations 1. Eversheds in Africa
    • • Hubs (Paris, London, North Africa, South Africa) • Full service with international transactions-investments and Contentious- arbitration support teams • High quality, proactive, consistent “day-to-day” advice coupled with global project management • Multilingual services across countries & sectors • Many financial institutions, governments and multinationals use us on a daily basis in Africa • Unique African Network of Eversheds and EALI firms 1. Our approach to working in Africa
    • Eversheds Africa Law Institute – 33 firms Angola AG Advogados Benin Cabinet Djogbenou Cabinet HK Cameroon SCP Ngassam Njike & Associés Cape Verde Eva Marques Legal Chad Cabinet Thomas Dingamgoto Comoros Avocat Comores Ghana JLDMB Guinea Cabinet Sylla & Associés Ivory Coast Cabinet Bilé-Aka, Brisoua-Bi & Associés Liberia Liberian Legal Service Intl. Libya Al-Kilani & Gheblawi Law Firm Mozambique AG Advogados/ F Castelo Branco & Associados (FCB&A) Niger Souleymane Yankori Nigeria Perchstone & Graeys Rwanda K-Solutions & Partners Senegal Cabinet 2S Ba & Tandian Seychelles Pardiwalla Twomey Lablache Sierra Leone Basma & Macaulay Sudan El Hussein Ahmed Salih Law Firm Togo SCP Akakpo Zimbabe Dube, Maikai & Hwacha Legal Practitioners +7 EVERSHEDS Offices Mauritius, Morocco, South Africa & Tunisia Malawi Mbendera & Nkhono Associates Mauritania Cabinet El Yezid Namibia KOEP & Partners
    • An African network based on knowledge Africa E-Briefings • Provides monthly updates on legal reform efforts in African countries • Practical information for specific Regions and Industries EALI • Publication of annual reports aimed at exploring up and coming issues and challenges facing the legal profession • Annual summits aimed sharing and formulating Best Practices for members and clients • Secondments and trainings • Focus on Corporate Social Responsibility (CSR) and Diversity • A Student Prize on Infrastructure case studies
    • Our approach to working in Africa Eversheds offices Africa Business Group EALI firm EALI firm Core team Project managementInstructions Opportunities & outputs Reports & local inputs Single point of contact ensuring scope of work Centralized budget and billing Cost predictability Reactivity and quality advice EALI firm EALI firm CLIENTS
    • 2. Doing Business in Africa: opportunities • Growing Economy: 6% average continent growth per year on the continent over the last 5 years • Increase of investments & GDP • An attractive challenge for operators and bankers • A crucial need of infrastructure and investments • Securing of investments through legal frameworks • A growing middle class
    • 2. Doing business in Africa: opportunities “Economic growth in Africa remains strong with growth of 5% in 2013. At least a third of countries in the region are growing at 6% and more, and African countries are now routinely among the fastest-growing countries “
    • • Population growth in particular in cities • Macroeconomic stability even if reliant on raw materials and natural resources • Diversification of trade partners (new foreign direct investments : China, India, Brazil, Malaysia) • New sectors emerge : pharmaceutical and information technology products; agribusiness, telecommunication; mobile banking and credit products • Opportunity to bridge infrastructure gap 2. Doing business in Africa: opportunities
    • 3. Opportunities and/or Challenges? Africa is full of opportunities but in order to succeed, investors must have to manage several pitfalls : • policy clarity • policy stability • policy consistency
    • Trends of improvement at different levels: • National • Regional • International Reconciliation of pitfalls and Improvements Pitfalls common to all countries: • Multiple legal systems • Corruption or “Transparency” • Protection of investments • Identification of laws • Protection of IP rights • Dispute resolution issues • Tax burden 3. Challenges in Africa
    • 3. Challenges in Africa 3.1. Multiple Legal Systems
    • 3. Doing business in Africa: challenges 3.2. Number of economic and legal harmonisations
    • 3. Doing business in Africa: challenges 3.3. Mastering harmonized systems such as OHADA • Synergies with Economic Unions • OHADA main objective – Improving legal security and predictability in order to foster investment and trade – Promote economic growth in Africa • OHADA challenges – Regional integration through legal harmonisation – Common integration within world commerce thanks to African unity establishing trust towards economies and creating development dynamics in Africa
    • 3. OHADA innovative legal framework: 3.3 Benefits of the harmonisation • Modernize business laws and Provide identifiable uniform modern rules on: – commercial law – corporate law – securities – simplified recovery procedures and insolvency proceedings – arbitration – accounting law – transportation law • Create a more stable legal and judicial environment for companies wishing to invest in the OHADA 17 countries • Other attempts like EAC etc Dedicated Regional courts: CCJA • Consultative attributions • Both a judicial court and an arbitration institution : – Supreme court attribution • matter which involve uniform acts • decision without appeal – Arbitration attributions • International arbitration institution • Arbitration rule: 11 March 1999 • Grants exequatur to CCJA arbitral awards
    • •Need to examine and take into account Harmonized regional rules and not only national regulations for the activities •Harmonized regulations can be of benefit to identify rules & standardize project or investment documentation/structure •Need to establish how overall transactions will be governed and which risks might arise from local regulations remaining in place vs regional ones •Need to arbitrate between countries to determine advantageous and disadvantageous existing legal frameworks and investments incentives 3.5 What harmonization means practically for lawyers in Africa?
    • 3.6 Transparency: still a main challenge The high-level of corruption: – Bribery of foreign public officials – Lack of control, supervising – Inappropriate tax audits 0 : highly corrupt 100 : clean Anti-corruption legal frameworks Initiatives: • Regional – ECOWAS, Protocol on the fight against Corruption, 21 December 2001 – Directive n°04/2005/CM/WAEMU of December, 2005 on awarding, executing and regulating public procurement in WAEMU • International – UN Convention against Corruption, dated 14 December 2005 – OECD Anti-Bribery Convention in 2009 : establishes legally binding standards that criminalize the bribery of foreign public officials in international business transactions • Local : states have their own regulation – i.e: Congo : law n°5-2009 dated 22 September 2009 concerning corruption, misappropriation of public funds, fraud and related infringements in the Republic of Congo
    • 3.6 Transparency: What to do in practice? Clients in Africa can greatly benefit from the following: • Develop, implement and train on adequate internal controls • Create Compliance programs and promote awareness of existing rules • Develop due diligence : – on counterparts and business partners – in case of acquisitions or investments • Conduct an annual review of effectiveness of policies/procedures • Avoid cash payments and limit the use of cash in African operations • Obtain receipts for all expenses, and check published rates/tariffs • Making sure records and data is safe
    • 3.7 Challenges of Protection of investments for lawyers : a few examples Limits encountered (Political) • Expropriation or nationalization of the investments without preliminary and appropriate compensation • Risks of Treatment less favorable than domestic investors (“Most Favored Nation Status”) • Difficulty concerning repatriation of income from investments (recent event in Mauritania) • Transitional laws (OHADA in DRC) Specific ownership rules/ a few examples •Libya: concerning the need to associate local management and have local shareholdings •Algeria: the rules 51 /49 generalized to all sectors – 51% of the company’s share capital shall be owned by a national resident or entity – Need to structure and apply for repatriation of funds
    • 3.7 Protection of investments: What to do ? • Determine existing host state investment legislation • Take benefit of regional investment protection mechanisms such as UEMOA or CEMAC or other regional investment treaties • Examine possibility to negotiate investment convention to be ratified by the State • Structure investments taking into account existing bilateral investment treaties (BITs) ≈ 400 in Africa or Multilateral investments treaties between the government of more than two states • Choose adequate arbitration settlements • Identify one stop shop entities to facilitate registrations (CI/Rwanda for instance)
    • 3.8 Protection of IP and data privacy rights As a lawyer, you must ensure that you and your client does the following: • Have knowledge of regional rules • Register IP rights locally • Protect the use of IP • Protect sensitive information • Ensure non-disclosure and confidentiality when engaging and working with third-parties
    • 3.8 Challenges with IP: Regional organizations • African Intellectual Property Organization (AIPO) – 16 member States – Mission: ensuring the protection and the publication of patent rights titles; making the legal framework attractive to private investment; encouraging creativity and transfer of technology. • African Regional Intellectual Property Organization (ARIPO) – 17 member states/13 candidates states – Mission: promote the harmonisation and development of the intellectual property laws, and matters related thereto, appropriate to the needs of its members and of the region as a whole AIPO ARIPO ARIPO
    • 3.9 Challenges with Dispute resolution • Avoid Litigation: Weak/variable national interpretations – Nigeria : rules governing civil proceedings are not uniform across Nigeria – Algeria: limited access to Judicial decisions – Partiality of Judges (number issues day to day) • Prefer Arbitration: – Commercial confidential settlement – Development of arbitration is a trend – Choice of appropriate clauses – Check how to ensure enforcement in practice
    • 3.9 Dispute resolution : what to do? • Check if Local courts are supervised by Regional Court; ex: CCJA (OHADA) • UNCITRAL Model Law on Commercial Arbitration influence (Burkina Faso etc) • Arbitration possibilities – International level: ICSID; ICC etc – Regional level: ex: OHADA : Common Court of Justice and arbitration – National level (i.e: Benin: Centre d’arbitrage et de médiation et de conciliation of the Chamber of Commerce and Industry; Ivory Coast; etc.) • Recognition of : – Foreign judgments (under specific conditions – DRC, Egypt, etc) – Foreign arbitral awards: » generally, appeal of foreign arbitral awards expressly prohibited by some countries » check ratification of New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
    • 3.10 African tax burden: rates (2013) Area State Taxes/ benefits Dividends Interests charges/ services Central Africa Gabon 30% 15% 10% 10% Congo 33% 20% 20% 20% DRC 35% 20% 20% 20% Cameroon 38,5% 16,5% 16,5% 15% Southern Africa and East Africa South Africa 28% 15% 10% 12% Kenya 30% 10% 15% 20% North Africa Morocco 8,75%/10% / 17,5%/30% 10% 20% 10% Algeria 25% 15% 10% 24% West Africa Ghana 25% 8% 8% ≈ 10% Ivory Coast 25% 12% 18% 20% Senegal 30% 10% 16% 20%
    • 3.10 African Tax Burden: How to avoid it? • Relatively high rates and unpredictable implementation • Think about financial flows upfront – global tax structure • Need to check existing tax treaties when structuring investments – ex: France : 30 tax treaties with African States. – Mauritius is n°1 • Regional regulations from various regions or States limit double taxation
    • 3.11 Other day to day challenges • Real Estate and Property Rights – Community and Land rights – Land Reform Efforts • Requirements for legalization – local bank accounts account set up – depositing legal instruments with the notary for number of legal docs – approval from local government ministries/licensing – recognition of agency agreements and requirements for agency licenses • Regulations Governing Bankruptcy and Insolvency – OHADA procedures and creditors’ rights – Restrictions on recovery and transfer of debts • Human resources: – Difficulty to find and manage resources locally or employ locally – Development of Local Contents legislations / interpretations – Limitations on the employment of foreigners
    • 3.12 Other Considerations for Lawyers: Local Content Policies “Local Content” • the share of materials, parts, etc. for the production of a given product that has been produced locally • Promote domestic economies by increasing manufacturing, commerce, services and trade • Policies needed govern business activities, particularly in mining and drilling, and attract investment so smaller, local enterprises can grow • Poses a challenge between stimulating local economy and generating more revenue from exporting through established external channels and facilities.
    • • Contextual Dynamics – Historical/situational awareness of country – Pace of Working – Power and Cultural Dynamics • Relationship-Building – Balance between being both a Practitioner and Advisor – Find the best way to become a trusted resource – Foster the development of legal and non-legal activities – Create an enabling environment for communication – Build and leverage contracts of a local network 3.12 Other considerations for lawyers
    • QUESTIONS?