19 July 2016

Made in Africa - July 2016

Welcome to Issue 15 of our market leading publication Made in Africa. In this issue we continue to focus on the latest legal and market developments, with our partners across Africa, that are of interest to investors and businesses operating on the continent. 

From an international perspective, we look enviously at the key markets in Africa and see relative stability, positive deregulation, investment promotion and growth. Whereas in the UK, due to Brexit, we have been beset by political leadership battles, fluctuating currencies and stock markets, and short-to-medium term macro-economic uncertainty as well as legal and regulatory uncertainty. 

As we report on in this issue, there have been positive developments in Nigeria with the Central Bank (CBN) finally announcing the deregulation of the Nigerian foreign exchange regulations. This has been touted as the most significant re-ordering of the market since the repeal in the 1990s of its historical exchange controls. Although some details are outstanding, this step should give investors more certainty on their ability to invest in the country, which will hopefully boost new investment. There have also been real efforts made by the CBN to promote local exports. 

In terms of new investment in the region, we report on significant relations between China and Nigeria, with steps being taken to utilise Chinese will and finance to develop sizeable energy and infrastructure opportunities in Nigeria. More generally in Africa, the energy and infrastructure sector is in need of long term capital and is being boosted by existing and new entrants, such as Themis Energy, a new energy development company, with big ambitions. 

A healthy source of capital for Africa continues to be private equity funds and their investors. Together with SAVCA, we report on the numbers, showing that funds raised by managers have reached new highs, a good example being Investec Asset Management’s second pan-African fund with its successful final close reported in this issue. The common question remains as to how these managers deploy the capital raised. This is increasingly being achieved through innovative strategies and structures such as “buy-and-build”, investment platforms and follow-on growth investing, rather than typical buy-outs. 

We also look at the trends in the mining sector, which has seen a period of subdued activity but sizeable divestments have occurred and opportunities remain for savvy investors. We see new regulations in the resources space, in countries such as Mozambique and Angola, to adapt to the prevailing market conditions. 

In other jurisdictions such as Kenya, change has been a long time coming. With the launch of the new Companies Act, the country has brought its legislation substantially in line with the modern UK Companies Act, which will further comfort investors targeting this region. 

In South Africa, further scrutiny of compliance with the black economic empowerment laws is expected and in Zimbabwe there has been some clarification of the changeable indigenisation laws.

In this issue we also focus on managing and mitigating risk and consider the importance of international arbitration in resolving disputes between parties on the continent. 

This year is also the 10th year of ilfa which our firm founded to support legal capacity building in Africa. We celebrate this milestone with an interview with the Executive Director of ilfa, Anna Gardner. 

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