Africa Forum Report 2016 Contents

The dawn of a new Africa? 4

Transforming African economies 11

Power on and power up: 16 solving Africa’s energy crisis

Solving the infrastructure conundrum 20

The changing face of nance in Africa 24

African ntechs chart their own course 29

New horizons: future trends for 34 international arbitration in Africa

Managing bribery and corruption 37 in Africa: it’s not as easy as ABC

In summary… 41 3

Opening remarks Andrew Skipper, Partner and Head of Africa

Over the last few months, a lot has been said about Africa’s future. The Africa Rising narrative has been challenged, with some pundits claiming this led to an overinflated bubble that has now burst. Or is the disruption from recent months’ activity the catalyst to drive change and innovation that will take Africa to its next industrial revolution? Who is right – and if you are looking to invest in Africa for the first time, what should you believe?

At the 2016 Hogan Lovells Africa and it needs an open and business- We’d like to say a huge thank you to Forum, we wanted to take an friendly environment to attract all our guest speakers and we look honest look at what is happening investment, without which none of forward to seeing you at our London on the ground, hearing from those the above can be fulfilled. and Johannesburg Africa Forums who are at the heart of business in 2017. Overall the outlook is positive. There on the continent. What they had is no surprise in acknowledging that Best regards to say was both enlightening and Africa is a mid-long term play, but Andrew Skipper reassuring. Many governments are from this forum it is true to say that trying to shift the focus away from some industries are being thrust traditional exports such as oil and into the limelight creating more commodities, angling for more immediate, short-term opportunities investment into the manufacturing for those who can respond and and agribusiness, whilst technology adapt quickly. The answer may not is continually changing the economic be whether Africa is rising, but like landscape creating a budding army most emerging markets it’s about of entrepreneurs, and the regulators realising where the opportunities are are struggling to keep up. But, and positioning yourself at the right ultimately, even with all the change time. Regardless of where you may happening, Africa still needs a stable be in your business strategy on the power supply; it needs roads to get continent, one thing is sure, Africa products and produce from A to B; has something for everybody. 4 Hogan Lovells

The dawn of a new Africa? Donald Kaberuka, 7th President, African Development Bank (2005-2015)

Firstly, I regret I was not able Ever since the apparent end of the More than just minerals to deliver this presentation in commodity super-cycle, a narrative While the strong export growth person at the Hogan Lovells about Africa has become fashionable of the last decade has contributed which has been reduced to the Africa Forum in June 2016. significantly to sustained economic macroeconomic implications of the growth, the reality is that such Secondly, as this is a topic lower oil or mineral prices, and the I am particularly passionate growth in resource-rich countries, impact on the real sector as a whole. though strong, has often been about, I wanted to use this As the story goes, this would mark the very volatile. report to share my views, end of the ‘seven years of plenty’ and from the perspective of the so-called ‘Africa Rising’, or does it? In contrast, growth in non-resource ex-President of the African rich countries, which is the large It is, of course, true that the majority, has been steady, exceeded Development Bank, an headwinds in the global economy, population increase and is generally economist and a proud hardening of borrowing terms and more sustained. Indeed, some of African, of how disruption is other shocks, both internal and the fastest growing economies, creating a pathway for much external, are negatively affecting Ethiopia, Côte d’Ivoire, and Rwanda needed innovation and resource-rich countries. are not endowed with oil, gas or reform across the continent. But a close observation of the facts minerals. In this second category would rather point to another of countries, the role of both public direction, beyond the short term and private investment, greater macroeconomic issues that consumer demand and increase require dwweft management; the in regional trade, have been key. longer term prospects for African economies remain robust provided the countervailing policy stances are right and a number of longer-term structural issues are continuously addressed. Africa is, of course, a mosaic of 54 countries, with many similarities but also large differences. Africa Forum Report 2016

Securing the gains During the first 15 years of the new millennium, not only did Africa turn a corner but it turned out to be much more resilient than expected. Many economies were able to recover quickly from global shocks whilst the rest of the world struggled. Now, however, the continent must deploy all the solutions in the toolbox not only to safeguard the gains of years of reforms, but also to deal with both old and emerging problems.

So, first things first; securing the gains. 6 Hogan Lovells

Effective policy Investing now in the youth The first thing to do is to anchor The second element of safeguarding policy predictability and sound achievements of recent years is to Beyond the short term countercyclical macroeconomic address issues around inclusion, macroeconomic issues policies. The continent’s inequalities and jobs, especially for that require dwweft policymakers have a lot of the young. experience, having navigated over management; the This is not to underestimate the two decades of economic reforms longer term prospects policy challenges that this entails, and structural adjustment in the neither to ignore the global nature of for African economies 1980s and 1990s. The necessary the problem. It is only to emphasize remain robust. fiscal and monetary policies that the fact that all policy approaches assure stability with flexibility are from education, agriculture, small well known. Overvalued currencies businesses, gender and access to do not benefit the poor; on the financial services must be viewed contrary, they create opportunities through this lens. That takes time for rent-seekers. How to craft but clear plans are imperative. fiscally friendly and socially effective safety nets and targeted subsidies is technically not too difficult. It is the politics of vested interests that must be challenged. In this spirit, it is absolutely vital that the independence of institutions such as Central Banks is respected both in law and in fact. In the same breath, it is vital to rebuild macroeconomic buffers by limiting deficits, borrowing wisely and avoiding all things that undermine the revenue base.

It is important to emphasise this basic fact because, in recent months, the policy responses to global shocks and declining commodity prices have sometimes gone in the opposite direction to these cardinal principles. Africa Forum Report 2016 7

Security and stability While the proximate cause of these These are familiar challenges This is indirectly related to the conflicts is not social discontent per to the people of Africa and her third challenge: peace, security se, there are groups which feed on leaders, which are difficult but not and stability. The 1990s were years pockets of deprivation, exclusion, insurmountable. Going forward, the of mayhem in large parts of the marginalisation, unemployment truly disruptive force that is at once Continent. The advent of the new and lack of opportunities. It is an opportunity or risk is around the millennium ushered in a period imperative, therefore, that in order demographic dynamics. when those conflicts began to to secure lasting stability and peace, wane, both in number of countries economic and social policies that involved and numbers of people drive towards cohesive inclusive affected. Of late however, without societies are not only fundamental even mentioning the failed state but they must be frontloaded. that is Somalia, we see, from South Sudan to the Central African Republic, signs of reversals. 8 Hogan Lovells

Crystal ball 2. Urbanisation: over the next 3. Digitisation is already beginning In the next few decades Africa’s decade alone, an additional to provide businesses with 200 million Africans will move population will comprise four features, new opportunities such as to the cities and other urban online shopping, even drone all of which will fundamentally shape conglomerations, adding to the delivered medical products in the continent’s fortunes: 400 million who are already remote areas. We see today the 1. By 2034, Africa’s labour force urban dwellers. This will not only impact of greater digitisation will surpass that of both China affect consumption and demand in the leapfrogging in the and India. That work force will for all types of infrastructure and service delivery. This moves be younger, urban, digitally services, but also the economics beyond mobile money to connected and highly mobile. of agglomeration will in all health, education and public probabilities lead to a doubling service delivery. of productivity. 4. The high mobility of this emerging labour force will, if cross country obstacles in movements are relaxed, lead to a larger more diversified labour market across the continent. Africa Forum Report 2016 9

This is Africa (TIA) Although this presents new opportunities, we cannot ignore By 2034, Africa’s labour force will surpass that that this is Africa, with its own of both China and India. That work force will idiosyncrasies and rules, so it is be younger, urban, digitally connected and worth taking note that: highly mobile. 1. Nothing is pre-ordained; the demographic dividend is a window that opens and 2. At this time when the global 3. In all this, one issue is critical; closes rather quickly. Hence economy is said to be ‘secularly far too often governments know the importance of the policy stagnant’ and managing the what to do. They have the right space and actions taken today; downside of globalisation is policies, but limited capacity to from quality education and now a priority everywhere, deliver. We have come a long infrastructure development Africa cannot ‘decouple’. way in the realm of public/ to further lowering of barriers Upgrading of policies from private sector partnerships. This on trade and the movement regulations and institutions that is not a panacea, but with such a of people across Africa. The anchor rule of law, stability and frontloaded, overloaded agenda recent decision to introduce the inclusion are primordial. That that is needed in the new global African passport is a step in the must go hand-in-hand with landscape, the relationship right direction. leveraging the millennials and between the market players the digital economy. and the state will be crucial, from providing education, healthcare and helping to close the infrastructure gap. Only in this way can Africa tackle her ambitious agenda of transformation, by ensuring a continent at peace, integrated and able to provide jobs and opportunities for its young people.

The disruptive forces Africa – and indeed the World – face are also full of opportunity and promise. It is those choices that we make today, some of them difficult, that will determine the outcome.

Africa Forum Report 2016 11

Transforming African economies

As we know, falling commodity Nicholas Cheffings, Chair of Hogan infrastructure investor, working in prices have hindered economic Lovells, expertly navigated a panel partnership with governments is activity in sub-Saharan Africa, of key industry players including central to everything we do,” says but they have also prompted Franck Behiblo, Head of Corporate Lawson. It is a developing story governments in the region to Development at Quantum Global; and there are encouraging signs of reassess and reposition their Olusola Lawson, Investment progress. An Economist Intelligence economies. While there is still a Director for West Africa at Unit survey of the top 15 economies long way to go, the investment African Infrastructure Investment in Africa showed that the top 10 all landscape in Africa is improving. Managers (AIIM), a subsidiary of have public-private partnership Old Mutual and Andrew Skipper, [PPP] enabling legislation. Among Head of Africa at Hogan Lovells. the others, laws are going through parliaments and only two do not “Africa is not what it used to be yet have a clear framework for PPP. a few years ago,” says Franck. “During the past six years,” he adds, “Working with governments “there has been a significant remains a complex matter as each push by governments across sub- country is very specific and success Saharan Africa to set up enabling requires in-depth assimilation of environments for investors. The these local markets; but compared creation of an enabling environment with 10-15 years ago there has been is very important for private equity much improvement across Africa, investors; much more so than with confidence and trust being incentives,” Lawson adds. built up.” Franck adds that building trust The government sector plays is particularly important in an important part in creating doing business in Africa as we confidence – by building the speak of long-term projects and right framework and providing potential to be realized through support, governments can create the development of Africa- an environment that is attractive specific solutions as opposed to to investors not only within Africa the application of an investment but also from outside. “As an framework that worked elsewhere. 12 Hogan Lovells

Such are the opportunities in the Lawson says infrastructure has the region that Quantum Global remains potential to play a significant role very positive on the market despite in boosting GDP in Africa. “Power the drop in commodities prices; it represents around 40% of the strongly believes there are gaps and cost of most businesses in Africa. inefficiencies that can be addressed. Greater efficiencies in the power “There are many sectors we believe supply chain will drive GDP growth. we can help to support, including Nigeria, with 180 million people and infrastructure and agriculture. With one of the largest countries in the the right environment and working world, generates less electricity than in partnership with governments, the city of Bradford. It generates 4 we know we can bring in the right gigawatts of power; imagine what partners to Africa to support the country could do if it generated development in these sectors; 30 gigawatts,” he says. co-investors and businesses that Franck agrees on the importance of previously have been reluctant to power generation to sub-Saharan enter the market.” Africa. “Without power, goods can’t Growth markets be transported, labs can’t be built Infrastructure and agriculture are – progress can’t be made. Power considered the two areas of greatest must be the number one priority promise for investors in the region for every African country,” he says. and, with oil prices remaining low, The international entities are there investors are attracted to alternative to invest in power infrastructure sectors such as these. But in order to funds, provided that favourable, get the most out of their investment, enabling regulation and business a number of issues must first be environments exist,” he adds. “If addressed. Andrew Skipper, Head an investor can’t get money out of of Africa at Hogan Lovells, says a country, it will think twice about investors need three things: certainty, going into it. Power infrastructure corruption to be dealt with and projects are long-term and investors currency to be stabilised. While Nigeria need certainty of the tax scenario, has stabilised its currency, there are political regime and business laws. still issues in repatriating funds, he Many African countries rely on says. There are also challenges in some short-term funding, which is more countries around the certainty of who expensive than long-term capital. owns land and how crop yields can be Many investors, particularly from exported. “Often, breaking of contracts Asia, want to enter the African make it challenging for external power market but the conditions investment in Africa”, he says. are not always encouraging.” Africa Forum Report 2016 13 14 Hogan Lovells

Lawson says AIIM has invested PPPs require government Disruption and innovation more than $1bn in African energy underwriting and the acceptance of in African investment projects, with one of the largest responsibility. Skipper notes that One of the areas that could prove being the renewables sector in some African governments viewed to be transformative for Africa is South Africa. “There are risks PPPs as a way of putting all of the that of power generation. While to be mitigated in Africa, but risk of a project on to the private investors may be focused on our approach is not to sit on the sector. “Governments need to traditional, long-term infrastructure side lines and hope for change. understand risk allocation between projects for power generation, We actively figure out how currency the public and private sector and there are interesting off-grid and other risks can be mitigated – underpin that on a long-term basis,” developments occurring in Africa. there are various ways this can be he says. done. For example, power purchase “In Africa people need power, but Lawson agrees, pointing out that agreements (PPAs) can be linked to there is a complex web of the value PPP programmes that have been the USD or to a basket of currencies. chain to navigate. Increasingly, successful have involved input from “The power market in Africa has people are trying to bypass that web high-quality sell side advisors on never been hotter and returns in and get power delivered directly, the government side. “Deals that certain market segments (such as via rooftop solar, for example,” are not well-structured will not gain renewables) are being pushed to says Lawson. international investment and are dangerously low levels. There is a likely to fail,” he adds. Franck agrees this is a “very strong demand from investors, but exciting” area. “Whatever sector comparatively few well-structured “PPP deals are fairly complex and you choose, it needs power. In projects and when one emerges, it require a certain degree of expertise Africa, around 30% of post-harvest the competition to get into it is very at country level to discuss what the production is lost because there high,” says Lawson. ideal investment structure should isn’t the right storage capacity. Investment vehicles be in light of the country’s planned If that 30% could be recouped, a economic development in the long community could fund a school The main investment vehicles run” says Frank. “But I would ask are or a small hospital. Having power in the region are PPPs or joint they practical for Africa? Locking a delivered where people need it is ventures. Skipper says most clients country into a deal for 20-30 years very important and much of the with whom he works prefer joint would assume such agreements investment here is focused on young ventures, sometimes because local stretch across various governments entrepreneurs. The opportunities content investment rules in some that should honor the commitments in agriculture will continue to grow countries require such an approach. sealed by previous governments. Are as the world’s population grows”, Again, the key to a joint venture is we ready for that? PPPs are a good he adds. certainty and clear arrangements concept, but they have to be fair and that are acceptable to all parties. equal for all sides.” “Coming from outside a country a joint venture makes sense because you really need to know local people,” he says. Africa Forum Report 2016

Encouraging pension funds in African countries to invest in infrastructure is also an area that has great potential, although in some cases it would require sensible changes in legislation with regards to pensions investment policies. At present, significant sums are locked in pension funds and are not put to use. While there is a risk of investing in projects, Franck points out that there is a bigger risk in doing nothing with the money. 16

Power on and Power up: Solving Africa’s Energy Crisis

This panel included Matthias According to a survey of attendees The first obstacle the energy sector Schweinfest (General Manager at the Africa Forum 2016, the lack faces is securing funding to build for Projects, GE Steam Power of reliable energy is the single the generation and distribution Systems), Fabio Borba most severe barrier to economic infrastructure the continent so (Managing Director, Abraaj growth in Africa. Looking at the desperately needs. More than Group), David Edwards statistics, it is easy to see why. US$800 billion of additional (Managing Director for North Across sub-Saharan Africa, 600 investment will be needed by 2040 Africa, Aggreko) and Meagan million people – two thirds of the just to keep pace with demand, Fallone (CEO, Barefoot College) population – do not have access which is set to quadruple over the who shared their bright ideas to electricity. That number is same period. Yet there is no lack of on tackling Africa’s energy crisis. private capital; rather, the difficulty Scot Anderson, Hogan Lovells expected to rise by 45 million by Global Head of Energy & 2030 as electrification struggles to for funders is to turn infrastructure Natural Resources, chaired keep pace with population growth. projects into bankable investments. the discussion. Energy consumption per head in Last year only 23 projects in Africa sub-Saharan Africa is a fraction of reached financial close, of which that in other developing economies, all but seven were in South Africa. and this so-called “energy gap” Lead times are long, averaging 7-10 is growing. years from inception to financial close, after which investors may The effect on economic growth and wait decades to see a return on their investment in the region should investment. Naturally, this requires not be underestimated. Local long-term funding solutions. businesses – “the lifeblood” of regional economies, in the words of According to Fabio Borba, project our panel – suffer on average 56 days development is key to reduce the of blackout each year. It is estimated electricity supply gap in Africa. that power shortages cost between Investors such as the Abraaj 2% and 4% of GDP annually. Group have an opportunity to get involved in development and create Already, these funders are looking of Africa’s energy mix for years to bankable projects sooner. When towards the next generation come. Matthias Schweinfest from developing projects, not just the of projects across Africa. At GE Steam Power Systems told us project’s technical feasibility and present, coal is the single largest that GE is currently adding 9.6 GW financial model are important, energy source, though the share of steam power capacity in South but also whether the grid can of production through gas, Africa. In doing so, it will take support the new capacity; whether hydropower and renewables advantage of the latest technology. the Government can provide the is growing. McKinsey predicts Its new build of coal-fired power necessary guarantees; and the that 40% of power will be gas- stations is designed to be smarter impact on the local community and generated by 2040. In the long and more efficient, achieving environment. Development finance term, the potential for renewables 50% efficiency in generation institutions (DFIs) have a key role is even greater: potential solar compared with the current to play, both in providing financing capacity in sub-Saharan Africa global average of 30%. It follows and in driving regulatory reform: is conservatively estimated at 11 that for every unit generated, they are the ‘bridge’ between the TW, enough to meet over half of tomorrow’s power stations will public and private sectors. the entire world’s current energy have lower fuel costs and a smaller needs. Nevertheless, coal will environmental impact. continue to play a significant part 18 Hogan Lovells

Innovation is not confined to using a traditional build. Further half a million people in the world, large-scale generation, however. opportunities exist in the regional a significant proportion of whom Traditional power stations can integration of power infrastructure, are in Africa. This is also an area take decades to design and such as the Aggreko-EDM joint where the public and private sectors build, whereas businesses and venture trading power between have joined forces with NGOs: communities already suffer load Mozambique, Namibia, Zambia Barefoot College has partnered with shedding, if not a total lack of access and South Africa. Apple to develop and sell solar- to energy. What the continent needs powered projectors and tablets to Indeed, one of the greatest are pragmatic, innovative solutions schools. Through education and challenges is bringing power to off- in the short and medium term to reliable energy, it aims to narrow grid, rural areas where generation bridge the gap. the gulf between urban and rural and transmission infrastructure is communities and foster greater Enter companies like Aggreko, severely lacking. As Meagan Fallone gender equity. which provide temporary interim said, “There can be no country-wide power solutions. Aggreko can development without addressing Rising to the challenge of powering provide a 200 MW facility from development in rural areas.” Africa will require a concerted greenfield site to commissioning in Regional disparities are huge; effort between governments, DFIs, less than four months, compared 90% of households in Nairobi are investors, contractors and NGOs. to 10 or more years for traditional connected to the grid, but only 10% The scale of the crisis is daunting, power stations. These interim in the rural north-west of Kenya. but the potential rewards – both for plants are vital, not only to relieve Businesses in these regions must industry and society at large – are the pressure on many countries’ rely on expensive diesel generators, immeasurable. As the panel agreed, struggling power infrastructure, whereas consumers must manage access to energy drives social but can also connect industries and with kerosene lamps or batteries. change as well as economic growth: communities that are currently These are markets historically “Energy is crucial to the survival of off the grid. “It’s a practical way overlooked by traditional utilities communities and economies, let to keep the lights on now, while companies, and innovative start- alone their development.” giving governments and industry ups and the voluntary sector are time to think for the long term,” stepping up to meet this untapped explained David Edwards. In demand. One such NGO is Barefoot one case, a medium-sized power College, which provides solar station was constructed to power panels to rural villages and trains a remote gold mine, fuelled by illiterate and semi-literate women stranded natural gas, which it would as engineers to maintain them; so have been uneconomic to exploit far, it has brought power to over

20 Hogan Lovells

Solving the infrastructure conundrum

It comes as no surprise that there is Brittenden, partner and lead North The local story a substantial infrastructure deficit specialist, and he encouraged the For Ethan Chorin, a fundamental in Africa. Conservative estimates panel to be as honest as possible, no ingredient to success in Africa is suggest that sub-Saharan Africa matter how contentious their views understanding where the political will require US$100 billion to be might be. and financial centre of gravity sits. invested annually over the next 10 ‘Disruption’ can cover anything from Democracy as a disrupter years in projects simply to keep war, to a change in the commercial pace with current growth. This ‘Democracy itself is a disrupter environment, or a global or pending imperative need for infrastructure in Africa’ was the key message global catastrophe. In Africa in investment has been recognised from David Ofosu-Dorte. Such a particular, although disruptive and and the means to secure sustainable message is not as controversial as even catastrophic, ‘chaos brings infrastructure delivery are available, it might initially seem – he stressed opportunity’ because it can offer a yet the infrastructure gap still that this does not, and should not, country the chance to redefine itself remains – why? advocate a return to dictatorships. and redevelop its infrastructure at the Rather, infrastructure projects Against this backdrop, the panel of same time. This is tied to the individual are constrained by the four-year David Ofosu-Dorte, Senior Partner country’s local story, and how it sees political cycle in many African at AB & David, Ethan Chorin, itself as a player in its own sphere. countries. Large infrastructure CEO at Perim Associates, Fredrik Chorin highlighted that one successful projects fundamentally take time Galtung, President and Co-Founder solution for delivering projects is for to plan and deliver, but four years of Integrity Action, and Gregory countries to work together (including is only 48 months and projects Ness Executive Director, Project via trading blocs) to fund and develop cannot be completed in one electoral & Export Finance at Standard projects that are mutually beneficial cycle. This uncertainty is stalling Chartered Bank, were asked to share and complement what each country the momentum for future projects. their views on the key stumbling can bring to the table. For Africa, chaos Ofosu-Dorte stressed that the blocks for infrastructure in Africa. can be both the stumbling block and market needs to understand the On a more positive note, the panel the solution. project pipeline and plan effectively offered insight into the constructive for the government cycle and role that disrupters can play and beyond in order to pave the way their potential solutions for solving for more sustained infrastructure this infrastructure conundrum. development. The panel was chaired by Jeremy Africa Forum Report 2016 Hogan Lovells Africa Forum Report 2016 23

Integrity action: “helping including pumps being stolen by the in Africa, whether practically, communities fix water companies. Integrity Action politically or economically. Teams development projects” trained up community monitors must be appropriately staffed and One of the most pressing challenges to monitor the project and now, require a dynamic combination for investing in infrastructure in three years later, the water projects of experience and resilience. Africa is the failure to maintain are still all working and local Getting the basics of planning and integrity and trust in a project, both monitoring is still in place. structure right from the start is key to ensuring the long-term success in the planning stages and once it is Galtung acknowledged that whilst of projects. up and running. It is precisely this the app has worked for smaller issue that Fredrik Galtung is trying projects, the approach may not Solutions for the future to address with his social enterprise, necessarily work for monitoring The answer to the infrastructure Integrity Action. Their mission is billion dollar projects, such as ports conundrum is not an easy one. to ‘empower citizens to act with, or airports. However, surrounding Africa is at risk of being trapped in and demand, integrity’. Integrity large projects there are always other a vicious circle – the lack of reliable Action works as a ‘Trip advisor’ smaller infrastructure projects infrastructure is holding back for projects; they have created a required, whether these are roads, economic growth, but the continent ‘development check’ app in several water or sanitation projects, and needs future prosperity, security languages, covering 19 different these would be perfect for the and economic investment to fund sectors, 11 different countries and Integrity Action review system. 398 completed projects, with a its infrastructure. further 600 in the pipeline. It covers Understanding the Ultimately, it would seem from project elements such as budget, African market our panel that developers and completion, timescales, monitoring As the closing panellist, Gregory stakeholders should factor in the and, most importantly, project Ness focused on delivering projects political backdrop from the early effectiveness. This practical and from the developer standpoint. planning stages. It is important to accessible autonomous feedback From his point of view, ‘the real recognise each country’s visions, offers full transparency, and the block for Africa will sit with the ambitions and influence, as this is positive feedback loop leads to project developers’. It is a mistake a key disruptive driver for change trust. The key with the app is that for developers to move in and and, on a practical level, to balance it delivers real results – Integrity treat Africa like Europe – it is its these ambitions alongside what Action has helped to fix faulty own market and requires its own is actually deliverable in both the projects and to reward the best nuanced approach. The reality is short and long term. contractors. Galtung gave the that, in order to create solutions, example of a failed water project in developers must first do their Kenya. To begin with, the project homework and to understand the was plagued with numerous issues, complexities of doing business 24 Hogan Lovells

The changing face of finance in Africa

Denys Denya, Executive Vice mitigate the volatility experienced There is also the question of President of Afreximbank, Jean by many different regions across whether alternative forms of finance Craven, Director and Joint Chief Africa, such volatility arising as a will start to establish themselves as Investment Officer of Barak Fund result of political turbulence, lack of a viable alternative to commercial Management, Saad Rahman, infrastructure and/or the geography bank debt and if so how their role Managing Partner of Amani of a particular region. will intertwine with that of the DFIs. Partners and Eric Guchard, CEO The panel discussed alternatives Commercial bank lending is the of Homestrings, discussed the such as crowdfunding, financing primary source of funding, but with various sources of funding currently from debt funds and alternative headwinds faced by commercial available in Africa and how the funding products such as Islamic banks on a global scale, it was noted landscape may change in the near finance and mezzanine finance. that the continent as a whole is future. Hogan Lovells partner facing a funding gap of circa US$150 Shalini Bhuchar chaired. billion. Questions naturally arise, The current landscape therefore, as to how much further It was emphasised that DFIs the reliance on DFIs can be pushed continue to play a vital enabling and whether this reliance will extend role in African finance, particularly to include other (international) in the context of infrastructural DFIs. Chinese development banks, development projects. Afreximbank in particular, are expected to provide is perhaps one of the most notable cover for funding shortages in examples of this. DFIs respond to power, roads, aircraft financing and market developments and plug gaps other infrastructure projects. China and/or entice investors as required is significantly reliant on African when traditional funding sources commodities, so it seems logical that dry up. Denys discussed the fact it would seek to establish its presence that such entities are particularly in various infrastructural capacities important in Africa because they across the continent. Africa Forum Report 2016 25

Other funding sources markets in its member countries and products with the aim that they can become Islamic finance is an important self-sufficient in terms of liquidity. financing product and Saad noted that the liquidity offered developments in regulatory and by Islamic finance is likely to play legal frameworks have already a complementary role where other commenced to allow more Islamic funding sources fall short. He cited finance into the region; for example, pension fund liquidity (once opened the Islamic Development Bank, up on the continent) as an example an AAA-rated DFI, is very active of such a funding source. in its role alongside DFIs such as Afreximbank. While its focus is on infrastructure projects, it also provides trade finance for member countries. Through its private sector arm it helps develop capital 26 Hogan Lovells

Mezzanine finance enjoys a degree unlikely to establish itself as a Is commercial bank debt still the of popularity (particularly in funding source in Africa without backbone of finance in Africa? the context of short-term trade proper resources, policy support All panel members agreed that finance). Barak Fund, for example, and promotion of opportunities commercial bank debt will continue has been particularly active in sub- being put in place. Along this line of to be the backbone of financing in Saharan Africa across a number thinking, tax incentives for middle Africa for the foreseeable future, of industries. Whilst mezzanine class investors (such as exist in the for a variety of reasons. Africa’s finance can be used as a sole source UK) may be the place to start. dependence on the commodity of funding with characteristically Capital markets cycle (which in turn creates huge high yields promised for investors, reliance on commercial banks to fill the volatility that accompanies The panel discussed the fact that the void) was cited as a key reason these high yields tends to make it the African debt capital markets for this, as is the current lack of a unsustainable as a single source have matured over the last decade, proper regulatory framework for the of capital for most businesses. As with average ticket sizes for capital and financial markets. Jean pointed out, it is therefore sovereigns and large corporates of US$450 million per issuance. We often used in conjunction with other While alternative finance is are currently seeing a shift towards forms of financing – and indeed expected to grow, not much is local and smaller corporates commercial banks and DFIs partner expected to change in the short accessing these debt capital markets well with debt funds providing a term. Further, a key catalyst in this and the industry is forecasted to see mezzanine tranche. growth is the development of intra- that type of participation rise with continental trade, where levels lag Crowdfunding has also recently local currency issuances increasing. far behind those in the Americas, emerged as a possible source of Europe and Asia. This can only be funding. A recent global study Many African countries face developed internally and is itself has indicated that crowdfunding challenges in terms of developing reliant on appropriate government resides mainly in the USA, the their capital markets, with the initiatives being put in place. UK and mainland Europe, where two key problems being a lack of prevalent middle classes tend to regulatory framework and lack of enjoy large disposable incomes. liquidity. However, this is forecast For Africa, the closest equivalent to change such that there is a appears to be funding provided degree of consistency in access to by diaspora (who currently send debt capital markets across the around US$60 billion annually continent. Development banks into the continent, US$15 billion are again expected to play a big of which is being spent looking for role in developing and supporting investment opportunities). Eric this change. explained that, notwithstanding the potentially high funds flow that can be generated though crowdfunding, as a product crowdfunding is Africa Forum Report 2016 27

Looking ahead It is anticipated that China’s role (at There was little debate that both a government-to-government development banks are and will In terms of debt funding, level and a private level) and India’s continue to be, indispensable to commercial bank debt is expected to role (at a private level) will continue the African economy. remain the primary source of long- to increase. term funding in Africa; it is expected that this might change over time It is expected that equity funding once insurance funds and pension into the continent will only funds (both of which are currently increase once price discovery (that subject to archaic and restrictive is, clarity as to the value of an regulations) are unlocked. It should investment) is more established. also be noted that the banking This is in turn expected to be systems in countries like South driven by larger organisations, as Africa and Kenya are currently far with their greater scale and scope more developed than certain other they are best equipped to excite African countries, so continental the equity markets. consistency in this regard would need to be established before a general leaning away from commercial bank debt could begin.

Africa Forum Report 2016 29

African fintechs chart their own course

Financial technology (Fintech) is Fintech is not a new concept in and the Kenyan Government were one of the most significant – and Africa. Suzanne says: “Innovation is involved in M-Pesa from the start disruptive – developments in part of the DNA of Africa.” Mobile and the Central Bank is committed to financial services for decades. Digital payments technology was embraced its success. The model they adopted, technologies, often developed by by African consumers well before it with M-Pesa sitting as a separate innovative start-up companies, gained traction in more developed entity between Safaricom and the are transforming banks’ operating economies, for example. banks, has enabled the launch of models and the way they deliver mobile lending and savings services One of the most high-profile services to customers. This is not (such as M-Shwari), whereas in other examples of Fintech disruption a trend restricted to developed African countries direct partnerships in the region is M-Pesa, a mobile economies, as mobile money and between banks and mobile network money transfer service developed payment solutions contribute to operators have not worked well. by Vodafone for mobile network a seismic change in the personal operators Safaricom in Kenya and wealth and lifestyles of many Vodacom in Tanzania. It has since Africans, facilitating financial expanded to Afghanistan, South inclusion across the continent. Africa, India, Romania and Albania. Innovation is part of the This high-paced panel was chaired M-Pesa allows users to deposit, DNA of Africa. by Rachel Kent, Global Head of withdraw and transfer money and pay Suzanne Prosser Financial Institutions at Hogan for goods and services with a mobile Group General Counsel at Lovells and included Suzanne device. For many Africans, their only MicroEnsure Prosser, Group General Counsel experience of financial services is via at MicroEnsure, a developer of mobile phones. Originally designed emerging markets insurance to address financial inclusion, at products; Edward George, Head least 40% of Kenya’s GDP now of Group Research at pan-African flows through the M-Pesa system, bank Ecobank and Viola Llewellyn, says Edward. M-Pesa hasn’t yet co-founder and president of repeated in other countries its stellar Ovamba Solutions, a Fintech-driven performance in Kenya. The secret platform for small and medium sized of its success there, says Edward, enterprises (SMEs) in Africa. is the backing it received from the authorities. The financial regulator 30 Hogan Lovells

In many aspects of financial Viola says financial institutions have There are “endless start-ups” services, African countries can not been very innovative in the region investigating the application of leapfrog developed nations and during the past 40 years. “There are technology to address unbanked move to more innovative products no credit departments in Africa and it people in the region, says Edward. and services. Financial institutions is very difficult to find data to build a Companies that are using disruptive in developed countries are often risk profile that would enable access to technologies such as blockchain are burdened with legacy technology credit,” she says. There are, however, forging ahead in financial services and business models that prove alternatives to banks that can provide in Africa and “unless banks get their costly to adapt to changing SMEs and individuals with access heads around this” they could lose customer demands. to capital. Ovamba, for example, around one-third of their business in develops mobile applications and the region during the next five years. online platforms that provide alternatives to bank capital. Africa Forum Report 2016 31

Challenges for African fintechs Perhaps the most challenging aspect The role of regulation for financial services in Africa is the There is significant promise for Financial regulators have a lack of credit history and collateral Fintech businesses in Africa, but role to play in setting the right that many citizens experience. there are also challenges, including environment for Fintechs to Money transfer systems, such as distribution, mistrust of financial continue to flourish in Africa. It is M-Pesa, address this by enabling institutions, under-developed worth bearing in mind that Africa users to build up credit histories. infrastructure and a varied customer is very regionalised and one answer Another solution, First Access, base. A pragmatic approach to will not be applicable across all combines financial and mobile providing financial services in the countries. Francophone countries, data to reliably predict credit risk region is often required. for example, are characterised by a for borrowers in informal markets. lack of government engagement and “Old-fashioned” distribution Users are given a credit score that immaturity of regulation related to models are not always appropriate they can then take to a bank. M-Pesa financial services and technology. for all consumers. In targeting is still a text-based payments system, In countries such as the UK, which low-income consumers, products despite the growing use of smart has a strong Fintech industry, the should be simple and reliable,” phones, while many of Africa’s financial regulators are engaged in says Suzanne. “They also should be e-commerce start-ups operate pay- dialogue with Fintech companies scalable and grow with customers as on-delivery services in cash rather and financial institutions. The they become more comfortable with than using e-payments. Financial Conduct Authority has financial products.” Fintech has the power to disrupt established a ‘regulatory sandbox’ A long-standing characteristic of consumer expectations and that enables Fintechs and banks Africa, says Edward, is the ambition behaviour around financial services. to experiment with products and of many governments in the region The ineffective approach of financial services in a controlled, risk-free to develop “perfect” solutions from institutions towards credit, says environment. end-to-end. In the case of financial Viola, means that Fintechs are In many countries in Africa, services, disruptive solutions do not emerging that act as a bridge, or however, there is a question as to have to be holistic. a gateway, to the independent whether incumbent financial services and alternative delivery of credit. providers lobby governments to put “Ovamba uses Fintech solutions to up barriers to new entrants such as assess the collateral of customers Fintechs. In many ways, however, based on goods that are in transit. Africa is better placed to harness Via electronic commerce we can Fintech as there is not a significant buy these goods on behalf of the legacy of existing regulations that customer and sell them back using must be reviewed. Sharia finance principles,” she says. This enables people to access capital in the absence of collateral. 32

The future of African fintech

International investors have recognised the opportunities that exist in African Fintech but businesses in Africa in general face serious difficulties in raising capital. Viola describes intellectual property in Africa as “chronically under- valued” versus the rest of the world.

But investors see an opportunity in Fintech to deliver a very positive social impact. Fintech can help people to access financial services and improve their lives. On a macro level, it will enable financial institutions in the region to move toxic assets off their books and blockchain will help to speed up the movement of capital, surpassing the generally non- functioning bourses in the region.

34 Hogan Lovells

New horizons: Future trends for international arbitration in Africa

A distinguished panel shared Growth of African arbitration –– A similar trend is being seen their views on the current of in ICC arbitrations with more A key theme that emerged was that state of arbitration in Africa parties choosing African there is already a well-established and what the future may hold. seats and African arbitrators, track record of using arbitration The panel comprised Babatunde providing evidence of a slow for African-related disputes. Fagbohunlu SAN, partner at but clear shift towards more Such disputes have been resolved Aluko & Oyebode (Nigeria), arbitrations happening in Africa through arbitration for decades. Dr Jacomijn van Haersolte-van with African arbitrators. Recent statistics from some of the Hof, Director-General of the LCIA; leading arbitration centres show –– KIAC now has 39 registered Tunde Ogenseitan, counsel at that arbitration continues to remain cases. Of these, a third relate the ICC; Thomas Kendra, counsel a popular forum for resolving to construction disputes, a at Hogan Lovells and Board African disputes: quarter involve non-Rwandan Member at Kigali International parties and two-thirds involve Arbitration Centre (KIAC), and –– 12-15% of the LCIA’s caseload Rwandan government entities. was chaired by Nathan Searle, relates to African arbitrations This shows that the centre counsel at Hogan Lovells. with Nigerian, South African is gaining momentum and and Kenyan parties the highest explains why it was identified as users. The LCIA has seen a an arbitration centre to watch number of arbitrations choosing in the next 5-10 years in the seats in Africa and governing recent IBA Arb 40 report on law of African jurisdictions. the Current State and Future Interestingly, the statistics of International Arbitration. indicate that there is no strong correlation between the location of the parties and their choice of seat/governing law in relation to African-related arbitrations. Africa Forum Report 2016

In addition to Kigali, the IBA Arb 40 report identified Johannesburg and Lagos as seats to watch. Hogan Lovells

Development of arbitral centres facilitate the growth of arbitration. One of the best ways to instil in aAfrica Examples of such reforms can be confidence in arbitration users In addition to Kigali, the IBA Arb seen by the recent recognition about the local courts’ support of 40 report identified Johannesburg of arbitration in the constitution arbitration is for the courts to be and Lagos as seats to watch and of Kenya and similar moves in transparent in their decisions about identified Mauritius as already Mozambique. There is a growing their desire to be supportive of being established as an ‘upcoming appreciation that having a law that arbitration and for such decisions alternative’ to traditional is supportive of arbitration will aid to be widely disseminated within arbitration seats. in attracting investment. the arbitration community. It is also important for users of arbitration Opportunities and challenges The panel discussed the key factors and those within the arbitration that led to these or other locations Although plenty of experience and community to promote diversity by becoming an established and expertise exists within the African seeking out the relevant expertise popular seat of arbitration in the region, there is still a perception and experience in Africa because Africa region. that parties are less comfortable when the arbitration panel and with arbitrating in Africa than in In considering this issue it is process reflects the diversity of the traditional arbitration seats (such important to distinguish between region, it will be more credible, as London, Paris or Geneva). There seats and centres. For the former, successful and efficient. is also a perception among some it is necessary to have a strong, of the judiciary in some African The future looks bright for stable legal system, while the latter jurisdictions that arbitration arbitration in Africa with legal is more reliant on the stability of the represents a competitive threat to reform in many jurisdictions seeking country as well as more practical the courts or a sub-standard dispute to support arbitration and the matters such as the ease of access, resolution mechanism requiring emergence of regional arbitration the facilities at the centre and the courts to intervene extensively centres. It will be important to support services available locally. when asked to review or enforce facilitate such growth that the local A key driver for the success of a awards. Both these challenges can courts clearly show their support centre rests with the law of the be addressed by greater education for arbitration in the efficient and relevant country and its support for both of the judges and arbitration effective enforcement of awards. arbitration. The need to support users. Another solution proposed It is also critical that the depth of arbitration as a form of dispute was to seek to create an alternative arbitration experience and expertise resolution is being recognised by support mechanism for arbitration that exists in the region is harnessed African governments. Many African that did not involve the local courts. to promote arbitration in Africa and countries have either recently This could potentially provide a beyond. With increased investment reformed their arbitration laws, are quicker, more effective solution to flows into Africa, arbitration is set in the process of doing so, or plan to the problems caused by interference to remain the method of choice for do so in the near future, to ensure by local courts. resolving international commercial that they are fit for purpose and disputes in the region. Africa Forum Report 2016 37

Managing bribery and corruption in Africa It’s not as easy as ABC

Issues of bribery and corruption in Africa represent one of the continent’s most pressing challenges. Six out of the bottom 10 countries in Transparency International’s Corruption Perception Index from 2015 were African nations; President Zuma of South Africa has been engulfed by constitutional and corruption charges concerning his personal activities; and in Nigeria, despite the Government having recovered US$9.1 billion in stolen money and assets, much more still remains missing.

But businesses, professionals, Chaired by Crispin Rapinet, two female FA presidents in the governments and citizens can all partner and Head of our Global world) and Bérengère Parmly, point to encouraging developments. Investigations, White Collar and a French-American lawyer and Presidents Buhari, Condé and Fraud practice, our panellists Ethics and Compliance Officer at Magufuli of Nigeria, Guinea and engaged in a lively conversation, major international engineering and Tanzania respectively, have all which covered their insights into construction outfit, Bechtel Limited. been democratically elected to the unique continental, regional Crispin kicked off the session with the Presidency of their countries and local risks of doing business in a question to Bérengère Parmly on anti-corruption tickets. There Africa; practical tips for managing on her experience and advice for has been increased enforcement those risks; and their experience conducting compliance programmes activity with the FCPA fining multi- of enforcement trends across across Africa. nationals Hitachi (US$19 million) the continent. and Goodyear (US$16 million) within “Operate within written, local law” The panel comprised Judith the last 18 months. The SFO, only was Bérengère’s key message; Poultney, an experienced Business last year, negotiated the first deferred alongside stressing the importance Intelligence Manager at EY; Pedro prosecution agreement under the UK of training; and developing and Guimarães, a Partner at FCB Bribery Act 2010 with Standard Bank; enacting compliance programmes Advogados in Lisbon whose work and in Guinea, Nigeria, Tunisia and with support from CEOs and the specialises in Lusophone African Morocco, legislation and regulations board, Bérengère suggested that countries, specifically Angola and have been pushed through to businesses would benefit from Mozambique; Isha Johansen, tackle corruption. building relationships with local the President of the Sierra Leone counsel who understood and were Football Association (one of only 38 Hogan Lovells

well-versed in the operation of local multinationals, the key concern issue. Isha stated that football is a law. She pointed to the invaluable was the potential exposure that second religion in Sierra Leone and knowledge local counsel would arose under the FCPA and UKBA “to understand corruption within have in identifying the scope of each when working with local suppliers the sport assists identification of government organisation’s authority or third-parties. Businesses should corruption within the nation”. and jurisdiction; knowing where, mitigate these risks by undertaking Representations of sport by (local) and at what level fees, taxes and due diligence to assess the journalists can reinforce perceptions other payments should be made; reputational and regulatory risks of how corruption is being tackled at and defending cases in court when in all cases and, if necessary, they a grass-roots level. Isha commented the opposing party and/or the should go further by conducting that the issues of corruption and judge is suspected of foul play. By interviews on the ground and governance faced by sport are the incorporating local law, companies undertaking much more detailed same as those faced by business, and can make their compliance investigations into financial they should therefore be addressed programs a “living, breathing thing”. relationships and the sourcing of on the same platform. Indeed, Bérengère stressed that references about suppliers/third Lusophone countries in employees would be more engaged parties. Judith stressed that strong Africa, particularly Angola and with compliance programmes anti-bribery policies articulated in a Mozambique, have significantly that acknowledge their own local multinational’s headquarters must different attitudes to other African legislation, as well as international be understood on the ground and countries according to Pedro best practices. tailored to the local jurisdiction. Guimarães. The difficulty of Judith Poultney highlighted the Isha Johansen recounted her transacting in Angola is exhibited by key trends across the continent, journey from a football-fanatic ten different laws and two different such as the SFO and DOJ family to the head of the Sierra government agencies that concern becoming increasingly engaged Leone Football Association. Using enforcement. “And that’s only how with prosecuting businesses, football as a framework, Isha it is on paper,” added Pedro. The referencing recent cases against has used her path to, and role as, reality is that rules and laws can international banks in Tanzania, President of the Sierra Leone FA to often mean little on the ground and and cases against multinationals investigate match-fixing and sexism as poetic as they may be in print, in Kenya and Mauritania, amongst within sport. This has led to her in practice, corrupt practices still other initiatives such as the G20 recently launching the first match- occur, depressing investment and and the World Bank’s work on fixing enquiry in Sierra Leone, development. In Luanda, ’paying beneficial ownership of businesses. something which she commented for soda’ (one phrase utilised when Judith highlighted that, for most is an endemic, but rarely discussed, paying a bribe) can be commonplace, Africa Forum Report 2016 39

but Pedro stressed that, following the issues of corruption in the region. recent oil price crisis, governments A smaller majority thought that have indeed made efforts to diversify anti-bribery and corruption remains The reality is that rules and laws their economies and provide a a taboo subject in Africa, but the can often mean little on the business environment that is more majority of our audience voted that ground and as poetic as they seductive to foreign investment. high bribery and corruption risk may be in print, in practice, corrupt practices still occur would not put them off transacting Our real-time polling data was in Africa. It would seem, from our almost as revealing as the discussion panel, heightened government itself: 93% of our attendees felt activity in this area, alongside anti-bribery and compliance efforts greater appreciation of local would be aided by an International sensitivities, can give businesses Code of Best Practice, with 76% optimism for African anti-bribery adding they have encountered and corruption efforts.

Africa Forum Report 2016 41

In summary… Dr Alex Vines OBE, Head of the Africa Programme at Chatham House

Africa has tremendous potential and The changes that are occurring on in a number of countries. Indeed, whilst there are headwinds (FDI and the continent are, in part, influenced it is not a coincidence that last year aid have declined in the last year, by the fall in commodity prices, the President of Angola attempted by 35% and 5% respectively, and which is encouraging recalibration to renegotiate the terms of its remittances have also decreased), and a reappraisal of relationships. repayment obligations to China, opportunities remain. In this sense, politics is highly governed by an oil-for-infrastructure interconnected with business in deal. Alex Vines believes that Prior to the Forum, the Zimbabwe Africa and cannot be ignored. growth and development in Africa Herald contained an article Angola, by way of example, is will depend on jobs and training that stated that Britain was showing a greater commitment to opportunities for Africans (the “decolonising” and this was solving issues of corruption within visa figures for Angola reveal that reminiscent, in Alex Vines’ view, of a the country, and the president, José 267,490 Chinese people were time when Robert Mugabe declared Eduardo dos Santos, has indicated working in Angola in 2013). that Zimbabwe had “turned East that he would like Angola to establish where the sun rises and given [its] China is also beginning to question better relations with the USA as well backs to the West where the sun the profitability of a number of as other nations. sets”. However, Alex Vines believes its investments in Africa. Last that, contrary to this sentiment, China imports almost 60% of the March, China required auditors there is a serious re-engagement world’s iron ore and 30% of the from its National Audit Office to process occurring between key world’s copper. However, in recent screen financial statements of state African institutions and the West, years there has been a reduction in oil companies in Angola, having with the international community Chinese demand for these materials. found a net loss of over one billion. continuing to play an important This change in demand has had an Such high levels of scrutiny are role in foreign development and the adverse effect on countries such as also adding pressure on African contributing towards stability of Zambia, which is very dependent countries to find solutions to countries like Zimbabwe. on the export of iron ore, and South internal issues, such as corruption. Africa. The result of this has been growing liquidity and rising inflation Hogan Lovells

Some British ministers, who are Policy: many of the EU member Currency volatility: African focused on Africa, such as James states, with the exception of currencies are particularly Duddridge, argue that, in future, France, have not shown as great vulnerable to global events and the UK is likely to trade more with a commitment to African affairs Alex Vines believes that Ghana, Africa. However, Alex Vines states as the UK. Africa may, therefore, Zimbabwe, Zambia, Mozambique, that the evidence does not support diminish as a policy focus within Angola and South Africa will be hit, this. The number of projects into Europe. By way of example, Britain in particular, by the impact of Brexit which the UK invested in Africa made Somalia a key part of its in the short term. since 2014 has declined. Similarly, foreign policy towards sub-Saharan Regionalism: Brexit may also although the amount of UK-invested Africa, directed by William Hague seed doubt about a continental trade doubled between 2005 and and David Cameron. This is likely to free trade agreement and there will 2014, it remains very small and be much reduced in years to come, be questions about what the UK’s global FDI, which appeared to peak given that other Ministers have failed withdrawal from the EU means, in 2014, has reduced significantly. to show the same level of enthusiasm if anything, for regionalism. towards such issues. Alex Vines then turned his attention The importance of London to Brexit and cited the following as Aid: the UK has been a substantial for innovation: he headwinds key concerns: contributor towards European of Brexit as well as other political aid offered to Africa, contributing Trade: Britain must bilaterally re- crises such as those occurring in the approximately two billion Euros. negotiate trade with several African Democratic Republic of Congo may Alex Vines stated that we are likely countries. Britain’s voice on trade distract financiers and policymakers to see a narrower geographic focus will also be missed in the EU as it from realising the opportunities from the UK, focusing on countries had adopted a consistent and reliable that exist within Africa. The such as Nigeria, Kenya and South anti-protectionist voice within EU general feeling of risk will also be Africa. Further, the Government trade negotiations. In particular, heightened and, consequently, committed to using 0.7% of its gross the UK has been a strong voice on lending to Africa will be under national income for aid in Africa. agricultural reform, to promote greater scrutiny, which will produce Whilst the UK is unlikely to retract better opportunities for those outside barriers for FDI flows into and this commitment, the decline of the of the EU. There is a danger that project finance within the continent. British economy may mean that European trade policy will become it has less money to offer towards Alex Vines concluded that the sun is less favourable to African nations international development. not setting in the West as quickly as following the UK’s withdrawal from Robert Mugabe suggested. African the EU. governments are recognising the need to diversify partnerships to navigate a changing world order and to manage risk.

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