Jim O’neil the erstwhile chairman of Goldman Sachs coined the acronym BRICS and MINT wherein two Africa countries were identified as one of the emerging economies in the world. These two countries are South- Africa and Nigeria who are the biggest economies in Africa.  Their inclusion is a strong signal suggestive that the Africa continent should be viewed from a different level of optimism. There is no doubt that as developing nations there are complex challenges in transacting in this market. This article will attempt to put in context the some of the indices, challenges, legal and regulatory framework in Africa as well as some simulations that has influenced investors interest in the continent.


Late MYLES MUNROE once described Africa as the last world or last frontier. In his description he opined that there are three worlds on earth: the first world made up of the Old Roman and Greek empire which is finished, the second world made of the developed nations namely the United States, Europe, Canada and Australia which is finishing and the third world which is the last world are the developing nations with Africa as a focal point. He went on by saying Our Lord Jesus Christ was not mistaken when he said“ the first shall be the last”. TheAfrican Economic outlook from 2012 to 2015 has constantly poised the continent as the investment destination of the 21st century.  The Economic figures speak for themselves as the GDP growth rates in 2015 is projected at 4.4 percent. More so since 2008 the GDP has not fallen below USD 1.6 trillion. Today amidst all the uncertainty the rate of return on foreign direct investment (FDI) is higher than in any other developing region in the world. This was also confirmed at the recent discussions we had at the IBA BRICS to MINT and beyond conference in London, February 2015 with Jim O’ Neil as the Keynote speaker.

By 2020, the continent’s GDP is projected to reach USD 2.6trillion and with fast-emerging middle-class, consumer spending is projected to reach USD 1.4trillion. Overall, the combined GDP of the continent’s 54 nations makes it the fifth-largest economy in the world, after the United States, China, Japan and India.

Additionally, the continent includes seven of the world’s ten fastest-growing economies and average growth outpaces that the United States and Europe.  From this outlook one can safely say, it is time for the last world; more than ever, for global investment to strive in the region given the rate at which its economic pulse has quickened.


Beyond the obvious economic drivers stated above which has enhanced the attractiveness to the continent and indeed contribute to a more positive outlook generally, there are other vital factors such as the political climate and relative stability. The slow pace of development in Africa has been attributed to factors such as corruption, long experience of military dictatorship, but more importantly political instability.  However, with the recent turnout of events (Still fresh on the Agenda) wherein; successful organization of presidential and National Assembly (the supreme Lawmaking organ of government in Nigeria) Elections in Nigeria, without recording any visible act of violence (not discounting the post-elections litigation that may ensue in the next couple of weeks), likewise in Egypt, Senegal and Ghana within the last few years has alternated to a testament of improved political climate in the continent. More commendable is the new mentality of the crop of African leaders today, that politics is not a do or die affair. This feature was highly exemplified by the incumbent President Jonathan of the Federal Republic of Nigeria in his legendary show of statesmanship in handling the outcome of the election. This political transition from autocracy to a road leading to greater democracy, transparency and rule of law, will vastly improve the global perceptions about Africa and Nigeria in particular.

The Key Factor in my considered opinion that is behind the growth surge in Nigeria includes the government initiative to end the militancy in the oil rich Niger – Delta region of Nigeria, thereby creating a relatively peaceful and enabling environment for improved macroeconomic conditions, and undertaking microeconomic reforms to create a more attractive business climate.  Several Africa countries followed suit by halting their deadly hostilities and creating the political stability necessary to restart economic growth.  With similar initiatives and more qualified personnel on board, Africa’s economies grew healthier as governments reduced the average inflation rate 22 % in the 1990s to 8percent after the year 2000. They further trimmed their foreign debt by one quarter and shrunk their budget deficits by two thirds.  Little wonder we are witnessed to a rush by foreign investors to bid for opportunities in the most lucrative industries in Africa. The scramble by global private equity investors and hedge funds for Africa is on.


The transformation agenda of the continent has led to boundless opportunities for foreign investors in diversified sectors of economy such as the mining sector, banking, oil and gas, power, infrastructure, telecoms, agricultural sector including consumer and retail transactions. The entities that are participating in the investment boom in Africa are naturally those that are interested in these sectors. They include global players like Shell, Total, Chevron, ExxonMobil and Conocophillips in the Oil and Gas Sector.

In the banking sector global players like Goldman Sachs, Citigroup, Standard Chartered, Carlyle and Helios in the private equity industry.  In the infrastructure sector the Chinese investors such as CCECC, Sinogy China Etc whose overall interest in Africa is well documented and driven primarily, but not exclusively by strategic need for resources, backed with huge finances from the Chinese National corporations such as the China Nexim bank amongst others that as so determined.

There is also an increase in the number of high end luxury brands steadily broadening their Africa presence. Virtually all high end luxury brand from Rolex, PatexPhillippe, Louis Vuiton, Hermes, Carlo Pagnetelli, etc have established branches in either Johannesburg, Cape-town and Durban. Porsche also in 2013 set up a branch in Lagos and Global eateries like Nandos, KFC and Starbuck now have visible presence in a number of African countries.  One category of investors that is often overlooked in most of this discuss is Africans making investments in Africa. The Dangote group which is gradually becoming a Pan African Conglomerate with investment in the cement operation in Ghana, Benin, Senegal, South Africa and Zambia. While the South – African Telecom giant MTN now has broad continental presence owing to its investments in many African countries. Talerveras and Seplat expanding their frontiers with the later’s last years duo listing in London and Nigeria stock market.

In the overall it has been reported by the Wall street Journal that investment between African countries has almost doubled in the past five years, to 13 per cent of new projects started on the continent and that African investors are playing a larger role in the projects on the continent.  This realities were made possibly by visionary leaders,  but could be better.


There are several factors which pose challenges to foreign investors doing business in Africa. Transaction lawyers must be aware of these risk factors, and better still get the services of local counsel ( which most do) as the African legal market is not so open to foreign attorneys.

These factors include the lack or perceived lack of independence of the Judiciary. More so, most general counsel’s perception is that African judges lack the requisite technical expertise required to effectively analyze complex corporate legal issues as they relate to transactions in order to properly determine the rights and remedies of the parties. Therefore recourse is made to international arbitration as the most viable option.

Others include the culture of corruption and the role of FCPA, The lack of capacity, governing laws, financing, lack of unified legal system in Africa unlike the EU, Local content laws which result in un-envisaged marriages, goalpost shifting and so on.

One of the biggest fears of foreign investors in Africa is the regime change. This change in regime often inevitably comes along with significant policy and regulatory changes in various sectors, for example, oil and gas in Nigeria. These changes are most times linked with perceived imbalance in the contractual arrangements between foreign investors and the host government.

Such perceptions could arise from the fact that the host feels it is not receiving its fair share of the revenues from the monetization of the resources that are the subject of a concession that, as in some cases, certain individuals and not the state or government have benefited from such arrangements and so they need to be revisited.  Host governments typically address this either by new legislation or modification of the existing contractual arrangements. The Bi-Courtney concession for the MM2 Airport suffered similar fate in Nigeria which led to series of litigation proceedings, Moreno construction (an Italian Firm) also suffered the same challenge under slightly different circumstances.

All of this creates an atmosphere of uncertainty and unpredictability about the law and the contractual arrangements and therefore an unstable investment environment.  From a foreign investor’s perspective, it is not uncommon to require that the concession agreement or the mineral development agreement be approved and ratified at the highest level of government including senate approval in order to provide the investor with comfort that the transaction was properly discussed and all interested parties do approve the investment…..


To be continued!