Worldwide: Africa Bulletin

Last Updated: July 3 2013
Article by Edwin Borrini, Vica Irani, Wesley R Johnson Jr, Marcello Hallake, Boris Dolgonos and Michael Arruda
Most Read Contributor in United States, September 2019

This Africa Bulletin outlines in brief a few of the recent legislative, constitutional and commercial developments in Africa during the first half of 2013.

With the increased and increasing investor appetite for Africa (driven by and reflected in the forecasted growth for the region—the World Bank's latest estimates are that growth should reach five percent by 2015), there is a continual evolution of the legislative position of African nations that, when overlapped with the ever-changing political landscape, produces a hugely exciting commercial environment, albeit one in which an investor needs to constantly have his or her fingers on the pulse.

New Merger Control Filing Regime in African COMESA

The competition law regime for the Common Market for Eastern and Southern Africa ("COMESA") went live on 14 January 2013 with the creation of a new supra-national African competition law authority, the COMESA Competition Commission ("CCC").

The CCC will review any merger or acquisition where:

  • There is a change of control on a lasting basis; and
  • At least one party "operates" in two or more COMESA states, regardless of the parties' local revenues and assets or the size of the transaction.

The CCC has indicated that it interprets the concept of "control" by reference to the EU merger control regulation, which in turn defines control widely as the possibility of exercising "decisive influence" over a business through the acquisition of shares or assets, on a contractual basis or by other means (such as economic dependence). In practice, this interpretation of the meaning of control could potentially make a wide range of deals subject to the CCC jurisdiction.

A transaction falling under the CCC's jurisdiction needs to be filed only with the CCC and not individual COMESA states. However, akin to EU merger control regulations, the regime provides for a number of referrals to individual COMESA states for them to review a deal instead of the CCC.

With regard to filings:

A filing must be made within 30 days of the parties' decision to merge.

Parties may complete their deal prior to a decision being granted by the CCC. However, the CCC has cautioned that if a merger is implemented after the parties notify the CCC and the CCC prohibits the merger, they run the risk of having to undo the merger after the CCC's decision is made.

Sanctions for failing to notify the CCC or implementing a transaction that has subsequently been prohibited by the CCC may include the transaction being deemed to not be legally enforceable in COMESA and the parties being fined up to 10 percent of the aggregate local turnover.

Each party must pay a filing fee of the higher of: (i) US$500,000 or (ii) the lesser of 0.5 percent of the parties' combined turnover or 0.5 percent of their combined assets in the COMESA region.

The CCC will normally complete their review of notified mergers within 120 working days from the date of filing. The CCC has the power to ask for an extension of the review period.

The substantive test for review of mergers is three-pronged:

  • Whether the merger is likely to "substantially lessen competition". Under the test, the CCC considers the levels of concentration and of rivalry between the merging companies and their competitors over time, ease of entry, history of collusion and other factors.
  • A balancing test to determine whether the merger's benefits will outweigh its anti-competitive effects.
  • Whether the merger can be justified on public interest grounds.

Nigerian Petroleum Industry Bill

The Nigerian Petroleum Industry Bill ("PIB"), first presented to the Nigerian National Assembly in 2008, purports to enact far-reaching reforms on the Nigerian oil industry, the single most significant contributor to the national economy. In the five years since its first presentation, the PIB has gone through numerous variations (some of which are expected to be prejudicial to indigenous oil firms), and the salient features of which were referred to in our July 2012 Commentary, "Africa Resources Update".

On 7 March 2013, the PIB passed its crucial second reading on the floor of the Senate. Public hearings across the country will take place, during which many domestic and foreign interests will table their views before the final reading is held in the lower house. Repeated challenges to the PIB have led to its delayed promulgation, and contentious areas remain, including:

  • Foreign oil companies see the PIB as an unwelcome intrusion into their traditional monopoly over the industry and an assault on their stranglehold over production and profits;
  • There are concerns that the Host Community Fund, to which oil companies will have to contribute 10 percent of their net profits, may be abused by local governments; and
  • The PIB's suggested increased tax terms have been argued by the International Oil Companies to materially decrease competitiveness.

Nigerian Oil Industry

Beset by problems in its upstream and downstream operations and hampered by subsidy scams, regulatory issues (including the PIB outlined above) and short-sighted policies, investor confidence is waning in Nigeria's energy sector.

In a brief summary of the downstream issues the Nigerian oil industry has been facing recently:

  • At the end of 2012, the Nigerian state oil firm, the Nigerian National Petroleum Corporation ("NNPC"), secured a syndicated loan in an attempt to raise medium-term financing; however, there have been a number of issues with drawing that loan and, at this time, it remains questionable whether it will be able to be drawn.
  • NNPC also has a number of exposures to major commodities houses which, if NNPC defaults on them, could have adverse credit implications for NNPC and for the Nigerian economy.
  • There have been accusations that NNPC, amongst others, has been violating Nigeria's fuel subsidy programme.

The dilemmas of Nigeria's energy sector are not limited to its downstream operations, however, with the upstream side facing severe uncertainty from a regulatory perspective. The PIB is still delayed, prompting increasing anxiety and impatience from industry insiders and further delaying potential investments.

Until the legislation is made law, international firms will be less eager to develop any of the offshore or onshore assets, and the bill's postponement is seen as responsible for holding up numerous oil and gas projects in the country. For example:

  • The trans-Sahara gas pipeline project, which plans to transport natural gas from Nigeria to Europe through Algeria, has experienced major delays.
  • It is believed that approximately US$28 billion worth of investment has been lost or deferred since 2010 as a result of the non-passage on the PIB.
  • Oil giant ConocoPhillips announced its plans to exit the country and sell both its onshore and offshore operations in Nigeria to Oando, while in January Exxon Mobil bypassed Nigeria in its investment decisions when it chose to develop a US$14 billion underwater oil field in Canada.
  • More recently, Chevron announced that it is selling its 40 percent stake in two offshore licences which are currently operated under a joint venture arrangement with the NNPC.

Insiders are concerned that the longer the government's decision is delayed, the more questions will be asked and that international investors will grow increasingly wary of conducting business in the country. Compounding this is the country's local content law, designed to increase the level of Nigerian participation in the oil and gas industry (at which it has had success—anecdotal evidence suggests the level of Nigerian participation in that sector's contracts has increased to 87 percent). The law has had some adverse impact both on the appeal of Nigeria to international investors and, when combined with the increased instability in the north of the country, to international companies looking to place expats in employment in Nigeria.

Uganda Joins the FTA

Uganda has become the 15th member of the Free Trade Area ("FTA") established by COMESA.

Under the membership, the tariff on Ugandan goods will be reduced to 0 percent when exported to other signees, compared to the two percent levy on goods to and from non-member states.

The COMESA FTA began in 2000, and its other member states are Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Zambia and Zimbabwe. Uganda was a founding member of COMESA in 1994 but until now was excluded from the FTA. As the Democratic Republic of Congo and South Sudan are Uganda's biggest trading partners, there is speculation that they will be the next two states to be granted membership.

Sub-Saharan Africa, which includes many of the FTA's member states, has one of the strongest growth rates in the world, and its regional growth is expected to exceed five percent this year. The opportunity for infrastructural development will continue to grow in line with this, creating a wealth of investment opportunities for banks and lenders. Analysts have identified a particular need for infrastructure in energy and oil and gas-related sectors, as well as transport.

Egypt and the IMF

Following the revolution that overturned Hosni Mubarak after 30 years in power, Egypt recently elected (despite only 33 percent of the population voting) Mohamed Morsi as Egyptian President.

Morsi is faced with two immediate challenges: a US$4.8 billion IMF loan that is yet to be advanced and a lack of genuine political consensus. Further, the country's official foreign reserves are down from £36 billion (before the revolution) to around £13 billion, and people feel that the country could miss its budget deficit target of 10.9 percent of gross domestic product if spending cuts are not enacted promptly. Over a quarter of the population is now under the official poverty line.

In order to combat the challenges Egypt is facing, it is believed that Morsi would be reluctant to implement any austerity measures which would risk losing what remains of his government's popular support. Further, without that political support, there is a suspicion that the IMF may be equally reluctant to provide Egypt with the money it desperately needs.

Kenya's Bright Future? A Balance of Caution and Optimism

On 9 April, Uhuru Kenyatta, the son of Kenya's founding father Jomo Kenyatta, was officially sworn in as the new president of the East African country.

Mr Kenyatta's tight victory in the 4 March first round election (gaining 50.07 percent of the vote; a runoff was avoided by barely 4,000 votes) ran against Raila Odinga, the son of the country's first Vice President Oginga Odinga. Mr Odinga lodged a petition with the Kenyan Supreme Court claiming corruption due to technical difficulties and a relatively high proportion of invalid votes. His petition was rejected, although an investigation into the technical failings is being carried out by Kenya's Independent Electoral and Boundaries Commission after recommendations by the court.

Kenyatta's arrival in office follows a calm election, especially when compared with 2007 and 2008, where post-election violence claimed the lives of more than 1,000 people. The decrease in political uncertainty following the election may help to calm international fears of civil unrest in the country and encourage wider investment in key infrastructure.

However, there are still big obstacles for Kenya. First, there is unequal distribution of wealth and land due to corruption. Mr Kenyatta is one of the largest landowners in the country, and many fear that he will continue to encourage social and financial division as his father did. Secondly, Mr Kenyatta and his election running mate Mr William Ruto are due to go on trial at the ICC this year for their part in the 2007/2008 post-election violence. Such proceedings potentially undermine Mr Kenyatta's position as the new head of state and may also create tension with western governments, which may have been hoping for another winner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions