Tag: investment

A new era of antitrust in Zimbabwe: National Competition Policy moves ahead

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Having recently hosted a national sensitisation workshop on COMESA competition policy in Harare, as we reported here, Zimbabwe is expected to enact a revised competition law.  The country’s Cabinet has reportedly approved the National Competition Policy.  One element of the NCP is to reduce the time it takes the Zimbabwean Competition and Tariff Commission (CTC) to review mergers and acquisitions from 90 to 60 days, thereby encouraging “brownfield” investments, according to a minister.

Zimbabwean Industry and Commerce Minister Dr. Mike Bimha spoke at the mentioned workshop, emphasising the need for “a level playing field”: “We are now working to ensure that we have a new Competition Law in place which will assist the CTC in dealing more effectively with matters related to abuse of dominant positions and cartels,” he said.

The NCP is part of a larger project to encourage investment and is closely linked with the country’s industrial and trade policies, known as Zimbabwe Agenda for Sustainable Socio-Economic Transformation (a.k.a. “Zim-ASSET”).

The Zimbabwean NCP is not merely domestically focussed, however.  Andreas Stargard, a competition-law practitioner, highlights the more international aspects that also form part of the revised competition bill awaiting enactment by the President:

Not only does the NCP contain the usual  focus of levelling the playing field among domestic competitors under its so-called Zim-ASSET programme.  It also undergirds the so-called ‘domestication’ of the broader regional COMESA competition rules, as well as the Ministry’s bilateral agreements.  For example, Zimbabwe recently entered into a Memorandum of Understanding with the Chinese government, designed to enhance cooperation on competition and consumer protection issues between Zimbabwe’s CTC and the PRC’s MOFCOM.

Cameroon: Opportunities & Challenges

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This past Saturday, 11 March 2017, the Cameroonian Embassy in Paris, France, hosted a conference entitled “Cameroun, Destination d’Opportunités: Potentiel et défis” in conjunction with the Association of Cameroonian Attorneys in France.  The full programme is made available to AAT readers here.

1425573796In its afternoon panel on investment in Cameroons, Primerio Ltd. legal counsel, Dr. Patricia Kipiani spoke at length about the country’s high-growth sectors.  Her co-panellists included the Paris bar’s Lynda Amadagana as moderator, and William Nkontchou (ECP Director) and Hilaire Dongmo (Investment Principal at Actis).

Financial Times: Africa “most exciting”; FT hosts inaugural investment summit

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First-ever FT African Investment Summit to be held in London

In October, the Financial Times will be hosting a timely “FT-Live” London symposium on investment in Africa.  The Oct. 6th FT Africa Summit (agenda) is expected to draw a global audience from various industry sectors, limited to 150 attendees.

Whether or not the conference will spark a wave of M&A activity (and hence antitrust scrutiny) on the continent remains to be seen.  For now, the paper’s event PR proclaims optimistically:

The continent’s economic growth is the second fastest in the world, underpinned by a virtuous cycle of improved governance, Chinese-led investments in infrastructure, high commodities prices, and the growth of a nascent, even if fragile, middle class. Yet, risks abound, from rising inequality to the potential of setbacks in governance.

The inaugural FT Africa Summit will provide a global platform to hear and discuss the views of finance ministers, investors and businesses leaders from around the region. Altogether the first Summit and the special report will be a unique opportunity to gain insights into one of the world’s most exciting markets.

Today’s edition also reports, fittingly, that large-scale investors (such as Atlas Mara’s head and  former Barclays CEO Bob Diamond) are looking increasingly to the African continent for high-growth financial investment opportunities.  Diamond is reported to have raised $1/3 billion for his “African war chest” of Atlas Mara to invest in African bank acquisitions, and is said to plan another $400m round of fund-raising later this year.

Bob Diamond

As the FT points out, the growth potential for financial services in sub-Saharan Africa is theoretically immense, as the majority of the region’s 1-billion-plus population does not yet have bank accounts.  However — and the FT omits this crucial fact — as we reported elsewhere, the dearth of access to brick-and-mortar banks in Africa has led to the pioneering use of GSM mobile technology, such as M-Pesa, for retail financial transactions at a record-setting adoption rate in Africa; see our M-Pesa reporting and other stories.

Positive outlook for Ghana M&A activity

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ghana
Future of Ghanaian M&A deals promising, according to bankers

The Benso Oil Palm Plantation and FanMilk International deals (both involving foreign investment in the country) over the past year are merely an indication of an upward mergers & acquisitions trend, according to a GhanaWeb report.

Usually, with increased merger activity comes heightened competition scrutiny, of course — not so in Ghana, however, as the West-African country still lacks an antitrust and merger-review law.  AAT noted in December:

[Ret. Ghanaian Supreme Court] Justice Date-Bah, who has held visiting academic positions at Oxford and Yale Law School, deplored the legislature’s previously failed attempts of enacting a comprehensive competition law, calling for the country to do so to ensure proper market dynamics.

The most recent economic report quotes Randolph Rodrigues, sr. investment banker at Stanbic Bank Ghana, as predicting “a rise in M&A activity in the country given the increasing emphasis on local content across sectors in the country.”

“The renewed quest for the institution of local content requirements across industries is expected to drive a wave of M&A activity, with larger foreign-owned enterprises seeking partnership opportunities with indigenous operations to continue to grow within the legal framework of their respective industries. Banks are well placed to lead the way in advisory services.”

In AAT’s view, four factors may contribute to the anticipated deal volume and influx of foreign investment, of which one is competition-law based: (1) the absence of antitrust hurdles, as noted above, (2) the relatively open Ghanaian economy, (3) stable political climate (unlike its distant neighbor at the moment, Nigeria), and (4) high intrinsic growth rate of Ghana’s GDP:

ghana gdp growth
Ghana’s GDP growth (blue line) compared to Kenya and Cameroon

Investment in Africa: Changing landscape, new hurdles

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Questioning African antitrust growth prospects: Slowdown in economic investment (both organic and outside investment) may affect functioning of competition law on the continent

Recent developments in Africa have many scratching their heads and wondering whether the formerly wondrous economic-growth engine of the vastly resource-rich and otherwise economically still undervalued continent will soon experience a slowdown, if not come to a halt altogether.

For one, in April 2014, Nigeria surpassed South Africa as the continent’s largest economy (see Economist Apr. 12, 2014: “Africa’s New Number One“).  This is a significant milestone for the former, and a setback for the latter — an economy that was 8 times the size of the Nigerian economy only 20 years ago, yet is now suffering from stagnating GDP, reeling from corruption allegations amongst its current leadership, undergoing a closely-watched presidential election process, and whose ruling ANC party is facing a heretofore unprecedented backlash and torrent of criticism.

Source: The Economist

Not only South Africa has weakened, politically and economically, however.  Events such as the Northern Nigerian wave of violence – with sectarian Boko Haram forcefully displaying the impotence of the central Nigerian government of a weakened president Goodluck Jonathan – fuel the fire of outside investors’ mistrust of African stability and their concomitant reluctance to make good on prior investment promises.  As The Economist notes in the article quoted above: “it is not a place for the faint-hearted” to invest, even though it highlights the successful Nigerian business ventures of outsiders such as Shoprite, SABMiller, and Nestlé.  Bloomberg BusinessWeek quotes Thabo Dloti, chief executive officer of South Africa’s fourth-largest insurer Liberty Holdings Ltd. (LBH), as saying: “It does slow down the plans that we have, it does put out the projections that we have by a year or two.”

http://www.stanlib.com/EconomicFocus/Pages/InterestingChart112SouthAfricaneconomyvsNigerianeconomy.aspx
Nigerian vs. RSA GDP
Source: http://www.stanlib.com

Likewise, multi-national organisations such as COMESA and its competition enforcement body, are undergoing significant changes (such as, currently, an opaque process of raising the heretofore insufficient merger-filing thresholds), shockingly successful web attacks on their data, and a resulting dearth of transactions being notified.  Elsewhere in developing economies, recent political turmoil has likewise led observes to comment on the negative spillover effect from political & social spheres into the economy (e.g., Financial Times, May 8, 2014: “Political crisis further dents prospects for Thai economy“).

Impact on antitrust practice

The upshot for competition-law practitioners and enforcers alike is rather straightforward, AAT predicts: more hesitation around African deals being done means fewer notifications, less enforcement, and overall lower billings for firms.

The flip side of the coin – as is usually the case in the economic sine curve of growth and slowdowns – is the commonly-observed inverse relationship of M&A and criminal antitrust: while we may see fewer transactions in the short term, the incidence of cartel behaviour and commercial bribery & government-contract fraud cases will likely increase.