Addleshaw Goddard's Africa Business Group are delighted to publish our October newsletter, which this month has a Middle East focus and which coincides with Addleshaw Goddard sponsoring the Africa Business Forum's investment forum being held in Dubai's World Trade Centre on 17 October 2015 (see article under Events below).

The UAE is increasingly emerging as a platform from which to invest in Africa with the country's transport links, logistics hub, global banking institutions, sovereign funds and double taxation treaties each playing a part in attracting investors to Dubai to invest in Africa.

We hope you enjoy reading a selection of some of the most interesting business news and articles from around the continent. For a regular stream of business and legal news in Africa, please download our innovative and award-winning "Doing Business in Africa" App, available for free for ipad users on <iTunes> when inside the App Store or accessible from your browser here which is compatible with Chrome, Safari or Internet Explorer 10.

Addleshaw Goddard's Africa Business Group operates in Africa across each of its offices in the UK, Asia and the Middle East, including from its office in Dubai, and is recognised as one of the leading law firms advising in Africa.

For further information please contact:

Darren Harris – Managing Associate, Dubai - +971 4 350 6429

Sara Carmody – Legal Director, Dubai - + 971 4 350 6438

Judicial corruption exposed in Ghana – but how will it be dealt with?

Korieh Duodu, a lawyer with Addleshaw Goddard LLP based in Ghana, considers the ramifications on doing business in Ghana of an undercover investigation into judicial corruption that is currently scandalising the Ghanaian courts.

Mazher Mahmood and Roger Cook (of the famed Cook Report) are well known proponents of undercover journalism in England, secretly filming with tiny briefcase cameras the corrupt and dishonest in extraordinary set-up operations which made for captivating newspaper and television stories. However, until recently, such journalistic techniques were relatively unknown in West Africa. That is, until Anas Aremeyaw Anas, a celebrated Ghanaian undercover journalist, blew the lid with his latest exposé, which has made international news.

See attached article by Korieh Duodu

korieh.duodu@addleshawgoddard.com 

kduodu@belonline.org 

Bilateral Investment Treaties

Bilateral investment treaties (BITs) fall within the scope of international investment agreements (IIAs), which as a wider category includes other IIAs.

A BIT is an agreement established through trade pacts between two countries in relation to the promotion and protection of investments made by investors from respective countries in each other’s territory. In particular, BITs set forth the terms and conditions for private investment by nationals and companies of one state in another state. It is worth noting that influential capital exporting states usually negotiate BITs on the basis of their own model texts (such as the US or UK model BIT). In particular, the United Kingdom has two BIT models dated 1991 (the UK BIT Model 1991) and 2008 (the UK BIT Model 2008).

See attached article by Alessandra Pirozzolo, Associate – Addleshaw Goddard 

alessandra.pirozzolo@addleshawgoddard.com

Bilateral treaties have for many years played an important role in providing protections to those investing in Africa. Typically, these treaties protect against expropriation and nationalisation of foreign assets but ultimately vary according to their negotiated terms. Investors seeking protection under international treaties has come under the microscope in recent years but there are important protections available if investors qualify for protection. This article focuses on the Netherlands and its bilateral treaties. Addleshaw Goddard's Doing Business in Africa App contains a useful list of bilateral treaties (continuing the Netherlands theme, the App details bilateral treaties between the Netherlands and each of the following African countries: Burkina Faso, Ethiopia, Gambia, Ivory Coast, Kenya, Malawi, Namibia, Morocco, Nigeria, Mozambique, Uganda, Tanzania and Zimbabwe). Instructions below on how bilateral treaty information can be obtained from Addleshaw Goddard's Doing Business in Africa App:

Clicking on this link (compatible with Chrome, Safari or Internet Explorer 10) will take you to the Addleshaw Goddard cover page, "Doing Business in Africa". To gain access to your content, click on theAfrica outline icon on the top right of the page. This will bring up the alphabet that appears on the bottom of the page. Click your country's key and the page will show every country under that letter. Click on the white shaded space to bring up your own page. To enter the main content portal, click on the top of the circle that appears at the bottom of the page. The circle will rise and you can gain access to the bilateral investment treaty information by clicking on the Foreign Investment icon. As you view content through a particular icon, the circle will drop down again. When moving to the next icon, click on the top of the circle and it will rise again.

INVESTMENT

Dubai is Africa’s emerging trade and financing hub

Dubai is fast emerging as the global banking, logistics and trade hub for African business, taking market share from historic hubs such as London, Paris and even Johannesburg. The emirate facilitates trade between Asia and East African states, where an offshore oil and gas exploration and production boom has boosted economic growth. It is no coincidence that major Chinese banks have all opened branches and subsidiaries at the Dubai International Financial Centre and Chinese trading companies use Dubaias their African regional head office. Read more…

UAE People & Politics: Policy in Africa is all about stability and cooperation

The UAE conducts a “nodal” foreign policy in parts of the Mena region and Africa, meaning it groups countries for political, economic and security purposes. This modus operandi has been evident in the past week as Sheikh Abdullah bin Zayed, Foreign Minister, visited Somalia, Kenya and Uganda. That these countries are looked upon as areas of interest is significant. Kenya and Somalia have been plagued by attacks from Al Shabab terrorists, but both hold economic potential. Uganda, a landlocked central African country, is an ideal starting point for Emirati investment to grow eastwards towards Kenyaand Somalia, helping Kampala reach the Indian Ocean and new trade opportunities. Read more…

Africa Attracts Arab Investors

Many Arab investors are keen to invest in African countries that provide attractive returns of investments...

An economic boom in the Middle East countries has resulted in Arab investors spreading their investments to north and sub-Saharan Africa in search of the high returns that are becoming harder to find in saturated western markets. With banks and financial institutions in the Arabian Gulf overflowing with liquidity, Middle investors are keen to expand their investments into new markets. Consequently, there have been many joint ventures, mergers, acquisitions and reverse takeovers in Africa that are backed by capital surpluses and local and international loans secured by land holdings in the Gulf. Read more… 

Gulf states investing in series of projects to power Africa growth

CAPE TOWN // Chinese investment into Africa gets much of the press, but the Arabian Gulf states are quietly making inroads in strategic sectors.

In September one of Abu Dhabi’s largest companies, Trojan General Contracting, signed a US$16 billion package of infrastructure projects in West Africa. Trojan is part of the Royal Group owned by Sheikh Tahnoon bin Zayed Al Nahyan, and will build roads, bridges and other much-needed infrastructure in the region. The pledge was made at the inaugural West Africa Investment Forum, during which a total of $21.5bn was set aside for African projects by three UAE and Omani parties. Read more…

Middle East and North Africa to invest $755 billion in energy

Middle Eastern and North African states are expected to invest $755 billion in energy projects over the next five years despite the plunge in world oil prices, a key lender says. The Arab Petroleum Investments Corporation (APICORP) said its projection for the 2015-19 period was only slightly down on the $760 billion that it forecast for 2014-18, although estimates for the coming period have been slightly inflated by an increase in project costs. Oil is expected to account for 31 percent of the investment spend and gas for 27 percent, the lender said in its February report. Read more...

Centaur Holdings Announces Funding Package for 'Nungu Colliery' Coal Project in South Africa

Centaur Holdings Ltd ("Centaur"), a global investment holding company with interests and investments ranging from asset management, wealth management, private equity, venture capital, mining and natural resources and agricultural investments is pleased to announce that it has completed a funding package through a wholly owned subsidiary (the "Company") for IPC Coal (Pty) Ltd and IPC Mining (Pty) Ltd (collectively "IPC"). Read more…

In to Africa: Dubai bids to become continent’s staging post

At the Chilly Willy factory in Dubai, the lorries roll in with giant drums of raw tomato paste from China and roll out with tiny sachets of the processed product bound for Africa. “It’s a 24-hour operation,” says director Iain Cusick as workers pack boxes destined for shops and restaurants from Mozambique toSomalia. Business is booming.

The rise of the African consumer is encouraging companies across the UAE to look west, from the factories and warehouses of Jebel Ali Port and Dragon Mart to the banks and fund managers of Dubai’s financial heartland. The race is on to become Africa’s staging post. Read more…

Zimbabwe and the UAE build up bilateral ties

Zimbabwe made news last Thursday with its decision to formally withdraw the Zimbabwean dollar from circulation. The central bank will offer US$5 for every 175 quadrillion Zimbabwean dollars held in bank accounts. As the African country leaves behind its era of hyperinflation and moves towards economic growth, it is looking increasingly eastward to countries including the UAE. Zimbabwe defines its relationship with the UAE well within the context of its Look East Policy, which was inaugurated in 2003 to expand bilateral and trade relations. Read more…

Africa offers UAE investors outsize returns

UAE companies and sovereign wealth funds including DP World and Investment Corporation of Dubai (ICD) are keener than ever to invest in Africa, betting that the high risks associated with the continent will pay off with outsize returns. Read more…

GCC investors pile in to North African energy

UAE and GCC investors are gearing up to funnel buckets of cash into various African energy projects.

There are different types of financiers coming into the continent, spanning sovereign wealth funds to high-risk, high-return developers, according to Cornelius Matthes, the managing director of the Mena region for the Italian firm Building Energy. Mr Matthes said North Africa was the obvious choice for many investors based on common culture and language. And players such as Abu Dhabi-based Masdar are looking to expand in their existing North African branches. Read more…

UAE workers and companies build bridges to Africa

Gary Robinson is flushed with success. In his recent business trip to Nairobi, he oversaw his company’s first foray into bridging the markets of China and Africa, using the UAE as its base. Read more…

South Africa: Constitution protects foreign investors’ rights

Business Council for Africa

The Department of Trade and Industry defended its Promotion and Protection Investment Bill on Wednesday despite a slew of submissions claiming the bill was investor unfriendly.

A host of organisations, including the European Union Chamber of Commerce in SA, the American Chamber of Commerce in SA as well as Anglo American and the Banking Association of SA, have told public hearings by Parliament's trade and industry committee the bill does not sufficiently protect foreign investments in SA.

They have predicted capital flight, saying some companies are already looking to other African countries as possible bases for regional operations. The committee was also told that projects had been put on hold as a result of the bill.

The bill seeks to replace SA's bilateral investment treaties with a single piece of legislation.

In his response to the submissions, Department of Trade and Industry director-general Lionel October said SA had an ambitious development agenda, which required new policies and regulations while ensuring it remained open to foreign investment.

"SA is the favourite destination for foreign direct investment in Africa by a long way and we want to put to rest the notion that there is less protection under the bill," Mr. October said.

SA had one of the highest levels of investor protection most of which was contained in the Constitution, according to Mr. October. He stressed that once established in SA, foreign investors benefited from the legal protection of property rights by the Constitution.

"While the bill applies generally to investment, other policies will address the more specific issues contained in the bill … which policies are inclusive of the Expropriation Bill, the Property Valuation Act and the Infrastructure Development Act," Mr. October said.

The possible expropriation of a foreign investment and the compensation paid is a key issue with the bill, particularly because the Expropriation Bill is still being processed by Parliament. Mr. October said section 25 of the Constitution effectively meant that compensation would be at market value.

The department's deputy director-general, Xolelwa Mlumbi-Peter, told the committee that one of the dangers of bilateral investment treaties was that they allowed huge claims to be made against the state by offended companies. The core principles in the bill were affirmed by the United Nations Conference on Trade and Development, she said.

Democratic Alliance MP Geordin Hill-Lewis said every investor making submissions had said the bill would deter investment and "that is cause for serious concern, particularly when the DTI (Department of Trade and Industry) says the opposite". He said the bill should be rewritten by the committee or sent back to the department for redrafting.

Mr Hill-Lewis also expressed concern about compensation, saying the bill contradicted the Southern African Development Community's foreign investment protocol and should be delayed until the proposed changes to the protocol had been made. (BD 17-09-2015)

Kellogg's inks Nigeria deal in Africa expansion

Business Council for Africa

US-based cereal maker Kellogg's announced this week it is acquiring half of Nigerian food distributor Multipro for $45m as part of its drive to expand on the continent.

This follows its acquisition in January of a majority stake in Egyptian biscuit manufacturer Bisco Misr for $125m.

"We have the potential to double the size of our emerging-market business by 2020," said Kellogg's CEO John Bryant.

The growing middle class in sub-Saharan Africa, Latin America and Asia give multinationals such as Kellogg's the potential avenues for growth as developed markets stagnate.

"We are very aggressive in the emerging markets and our growth plans, and we believe now is the right time to make those investments," Mr Bryant said.

Kellogg's, the second-largest cereal brand in SA behind Pioneer Foods, manufactures its products in 17 countries outside SA and distributes them to 180 countries worldwide.

Its cereal brands include Corn Flakes, Special K, Coco Pops and All-Bran.

Kellogg's said the growth potential for cereal was especially strong in sub-Saharan Africa. "As a region that is experiencing explosive growth – with a population of almost 1 billion people and an economy that is expected to more than double over the next 10 years – sub-Saharan Africa provides tremendous opportunity for our company," said Mr Bryant.

The Frontier Strategy Group's practice leader for sub-Saharan Africa, Anna Rosenberg, said many multinational companies had decided to include African countries in their portfolios.

"Many executives hope to compensate for sluggish growth in the eurozone by making quick returns inAfrica" she said.

"While Africa's economy is on track to be worth $3 trillion by 2025, benefiting from sub-Saharan African growth is a long-term game. The region's development will likely span several decades."

(BD 11-09-2015)

OIL & GAS

East Africa being sought after by Gulf Petrochem

UAE-based trader Gulf Petrochem is focusing on East Africa for increasing its storage capacity and enhancing growth

Gulf Petrochem will set up storage facilities in Kenya and Tanzania. The company plans to ramp up storage capacity in Dar es Salaam and Mombasa, stated executive director S Thangapandian to Reuters. Read more…

Ghana aims to be port of call for west Africa’s offshore oil industry

CAPE TOWN // The Atlantic waters off the west African coast teem with oil rigs and support vessels, most a very long way from home. Ghana, a new entrant to the energy game, wants to provide them with a closer port of call. Like many resource dependent countries, Ghana wants to grow its economy beyond raw material exports – and hopes a new port and rig repair depot will help it to do just that. Read more…

Egypt’s new gas discovery: Opportunities and challenges

After a tough year, the Egyptian government recently received some good news. Italy’s ENI announced that it has discovered the “largest ever” offshore natural gas field in the Mediterranean off the Egyptian coast. Dubbed a “supergiant” field, ENI suggested that the Zohr project would be able to meet Egypt’s own natural gas demands for decades to come. Read more…

EVENT

AfricaBusinessForum.com – New Africa | New Opportunities | New Frontiers

This event is sponsored by the Dubai office of Addleshaw Goddard (Middle East)

See attached article – Africa Business Forum

COUNTRY REPORT

Economic Rankings

Sub-Saharan Africa now ranks as the second greatest investment destination in the world, after North America. Five countries on the continent demonstrate the greatest appeal and total FDI rose to $60 billion, some five times greater than in 2000. EAA

Ethiopia - Despite various constraints to doing business in the country, Ethiopia is the fifth fastest growing economy of the IMF's 188 members, with impressive 8-10% GDP growth recorded annually over the past decade. This compares with an average of just over 5% p.a. throughout sub-Saharan Africa. EAA

Mauritius, South Africa and Rwanda have been ranked by the World Economic Forum as the most productive and prosperous African countries in its 2015 – 2016 Global Competitiveness report. BCA

General

Senegal - According to the IMF, Senegal is on track to achieve its growth targets for 2016. GDP will rise by 6% in 2016 thanks to the first results of Senegal Emergent Plan (PES), the increase in trade with Maliand weak oil prices. BCA

Kenya and Uganda have finally agreed in principle on a route for a 1500km pipeline to pump oil from Uganda to the Indian Ocean, a project that officials hope will transform East Africa into a major oil producing region. The pipeline is part of the broader regional LAPSSET project, bringing together Kenya, South Sudan and Ethiopia. The agreed proposal is for a pipeline of crude and refined petroleum products, as well as the development of a refinery in Uganda, which will serve the region. EAA

Ethiopia – The construction of the new railway line connecting Addis Ababa to Djibouti which began in early 2012, being built by two Chinese companies is nearing completion, within the 42 month time frame. Trials are expected to being in October of this year. EAA

Ethiopia – The Ethiopian Government and the US Icelandic firm Reykjavik signed a construction agreement to begin the first 500MW phase of a major 1000MW geothermal electricity plant. The US $4 billion plant will generate and sell power to the country's citizens via the government and has been touted as Africa's largest geothermal energy initiative. The whole project is expected to take 8-10 years to complete. EAA

Gabon - A.T. Kearney's 48 country Africa Retail Development Index names Gabon as the most promising market for retail growth on the continent. The country's strong economic growth and burgeoning middle class are factors which have contributed to the retail sector's growth so far, although fresh supply chains and modern shopping space construction are yet to be developed. BCA

Our Africa Business Group works closely with both the Business Council for Africa (BCA) and the East Africa Association (EAA) who provide us with useful information and analysis from across the continent and also support and networking opportunities.

Established almost 60 years ago, The Business Council for Africa network supports over 400 companies and entrepreneurs operating across the continent. The Business Council for Africa works closely with its members to promote business opportunities and facilitate sustainable investment across the continent. They organise over 30 African business related meetings in London each year and have 33 In-Country Directors in West and Southern Africa and thus provide a very useful platform for networking for both new investors and those already operating on the continent. The EAA was established in 1964 on the initiative of a number of prominent, mainly British based companies with business interest in East Africaand it now has over 400 member companies from more than 25 different countries. The EAA aims to facilitate successful participation in the economic development of Eastern Africa by member companies. The EAA exists to support the business activities of its members in the countries covered by providing channels of communication and lobbying on common issues, either through the various diplomatic missions, the international financial institutions or directly with the respective national government.

Some of the stories above have been shared with us by the BCA and EAA. If you would like any further information about membership of either the BCA or EAA please contact  Karen Taylor or John Small.