Africa’s biggest challenge is viability – Experts
Doing business in Africa is associated with a measure of risk and challenges. Yet, with a robust deposit of natural resources and a large population, Nigeria is generally considered a viable location for doing business.
That notwithstanding, experts in business, finance and law across the continent have said that going forward, Nigeria and other African countries must demonstrate a political will to grow their economies and attract investments into the Africa, as the continent is currently running short of bankable projects.
Speaking at the 25th Annual General meeting and one-day seminar of LEX Africa in Lagos, Nigeria, Richard Todd from UK law firm and LEX Africa Partner, Slaughter and May, announced that though inbound investment into Africa was up 20% in 2016, several international investors where having a hard time finding viable projects on the continent. He sighted South Africa as one of such countries with its challenges in IPP projects.
In his remarks, the chairman of LEX Africa and Director at South African law firm, Werksmans Attorneys, said that if governments in Africa do not get their regulatory framework right, there will be no incentive for investors to bring in businesses.
These sentiments, were echoed by the Senior Partner of the host law firm, Osayaba Giwa-Osagie, who expressed concern at Nigeria’s failure to execute Public Private Partnership (PPP) projects successfully; and the effect this has had on both foreign and domestic investments.
“We do not have good precedents for executing PPP projects,” he said. “In a country where we there are grave challenges with infrastructure, as we continue to search for viable investments that do not directly involve government, this is the time to pause and do some deep thinking about the way forward; in order to be better prepared to deal with the infrastructure deficit in the country and to grow the economy,” Osayaba said.
Speaking from a Kenyan perspective, the country’s representative, at the seminar, Nazima Malik announced that while Foreign Direct Investment continues to grow in Kenya, intra-Africa trade still relatively slow.
She said, “There is however an increasing interest in the country’s renewable energy sector, with our biggest investors coming from the UK. Nigeria does invest in the financial sector, while South Africa remains our biggest investors in all areas of the Kenyan economy. That notwithstanding, intra-Africa trade and investment is still quite low.
“We have seen a slow move in the area of oil and gas, but companies are not shutting down completely. They have only scaled down operations as they wait for oil prices to stabilize,” Nazima said.
Also speaking on the panel for ‘Recent Developments in African Trade, Investments and Business,” BusinessDay publisher, Frank Aigbogun said that lately Nigerians were beginning to hear the right things from government, but noted that there was need to also see the right actions.
“In the recent past, Nigeria has been quite insular in its focus on oil and gas, as successive governments continue to think they can do it all alone. However, with the fall in oil price and significant reduction in production, it is hoped that the country will run with its current economic plan to attract the right investments,” Frank said.
“There are opportunities in the country’s health sector,” he continued. “We see significant Indian activity in the sector at the moment and once the guidelines and rules are clearly defined for businesses, others would join the market. There’s absolutely no question in my mind that this is one area where the outlook is bright.
“There are also great opportunities at this time for Public Private Partnerships (PPPs). Thankfully, Nigeria now has an economic plan, and while it may not be perfect plan we had hoped for, we’re glad to have one to start with, and we expect some action to begin to take place around this plan.
Speaking further on the issue of intra-African trade, Frank agreed with the Kenyan representative, Nazima, that the current level of infra-African trade was indeed low.
Roobesh Ramanjooloo from Mauritius, however spoke of an investment fund by the Mauritian government, which takes 10% of seed capital invested by Mauritians investors to reinvest into projects around Africa.
“So far’” he announced, “the government has committed over MUR500 million into the Mauritius Africa Fund. Some initiatives of this fund are currently ongoing in Senegal with another starting out in Ghana shortly,” Roobesh said.
Richard Todd who had earlier referred to Nigeria’s newly developed Economic Recovery & Growth Plan said,
“Having a plan is a good thing but having the right collaborations to see it through is an entirely different process that must be given full consideration. Nigeria and indeed Africa’s biggest challenge is viability.”
Richard however believes that there’s still massive opportunity for investments across Africa and hopes that Nigeria and other African countries will make the right move to attract investments into the continent starting with its local content laws. He cited Morocco as a good example of African country diversifying and moving away from it natural resources and commodities. He noted also that the moment there was significant investment coming in from Africa to the United Kingdom, “particularly the health sector”, he added.
In an exclusive chat with Businessday Law Editor, Osayaba Giwa-Osagie spoke about the need for Africa to be strategic in its growth plan.
“With the current recession in Nigeria, the depression in South Africa and the drop in oil prices, it is important to consider ways in which our economies can be revamped. We must however be strategic in our efforts to rebuild our economies and attract investments.”
LEX Africa is an alliance of leading law firms across Africa and effectively covers the entire African continent and provides a valuable resource for businessmen and investors in Africa. Only African law firms join the Alliance subject to strict performance and selection criteria to ensure world-class standards of legal practice. A lawyer exchange program and specialist LEX Africa practice and industry sector groups have been established.
Speaking about the quality of legal services and how it impacts the economy, Osayaba Giwa-Osagie explained the benefits of an ongoing exchange programme between LEX Africa law firms and its partners across the continent and the globe at large. He disclosed that the exchange ensures that members operate at an optimum, whilst meeting the demands of cross-border transactions.
“The primary goal of the alliance, is to cultivate a global culture in the way members do business and to move the level of practice and legal services to a global and world class standard. We strive to see that our lawyers have the highest ethical standards in doing business,” he said.
Other speakers at this event were, Bismark Rewane, the Managing Director/ Chief Executive officer, Financial Derivatives Company, Prof. Yinka Omorogbe, Gbite Adeniji, Adedoyin Rhodes-Vivour, Wole Obayomi, Roger Wakefield, from south Africa, Evans Moyo from Zimbabwe amongst several others.
Currently, LEX Africa produces an annual Business Guide and specialist guides including, Mining in Africa and Insolvency and Restructuring.
The Alliance’s management office is situated at the offices of the South African member, Werksmans Attorneys.
THEODORA KIO-LAWSON