Recent forecasts suggest that Africa will be one of the world’s fastest growing regions by 2030. Among the contributing factors is its youthful population which will result in one of the largest labour pools by 2050.
This presents an opportunity for investors – foreign, intra-African and local – as does the continent’s significant infrastructure gap compared to global benchmarks. Closing this gap is the first step in supporting the forecasted growth.
Current data suggests that foreign direct investment in Africa is still small relative to other developing regions in Asia and Latin America. However, against the backdrop of growth forecasts, it is likely foreign direct investment will increase in the medium to long term.
These investments will need to be made with careful consideration of local ownership and empowerment requirements, which differ from country to country having been informed by differing political histories and socio-economic environments.
Many of these requirements seek to regulate sectors of strategic national importance, such as aviation, financial services, logistics, mining/ oil and gas, private security and telecommunications. Others are aimed at redressing historic economic imbalances among certain local population groups, or protecting indigenous populations and increasing their participation in economies. Some are designed to ensure diversification while providing support for agriculture and food security, or to improve transport infrastructure, or to drive industrialisation by focusing on small local business.
Click here to access the full guide (PDF).
In a few of the countries covered in this guide, such as Namibia, South Africa and Zambia, local ownership and empowerment regulations apply to both private companies and state institutions and across all sectors of the economy.
In some jurisdictions, there are significant penalties for non-compliance or misrepresentation regarding empowerment status (otherwise known as ‘fronting practices’). These jurisdictions include among others Ghana, Namibia, South Africa, Zambia and Zimbabwe. In most other jurisdictions, non-compliance may result in the withdrawal of an investment licence.
We have prepared this guide to support our clients who are considering investing in the region. It deals with frequently asked questions relating to local ownership, local management and local content requirements, empowerment of indigenous populations and foreign land ownership. It provides a snapshot of the relevant regulations in 14 countries and has been prepared in collaboration with our alliance firms in Ethiopia and Nigeria and our relationship firms in Botswana, Namibia, Ghana, Rwanda and Zimbabwe.
Click here to access the full guide (PDF).
Excerpt reprinted with permission; written by Ashleigh Hale, Co-head of Corporate / M&A, and Lerato Thahane, Partner Mergers and Acquisitions, Bowmans.