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African countries becoming more investor friendly

10th July 2015

By: Dylan Stewart

Creamer Media Reporter

  

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Senior lawyers from Zimbabwe and Uganda are confident that African countries, including Uganda and Zimbabwe, are becoming more investor friendly through the implementation of more liberal economic policies, says law firm Norton Rose Fulbright.

The law firm made this statement after business leaders from various sectors attended a panel discussion focusing on growth sectors and opportunities in East Africa and Zimbabwe, hosted by Norton Rose Fulbright, in Johannesburg, in May.

The global legal practice announced strategic alliances in February 2015 with the law firms Gill, Godlonton & Gerrans, in Harare, Zimbabwe, and Shonubi, Musoke & Co Advocates, in Kampala, Uganda. Representatives of both firms attended the discussion.

Norton Rose Fulbright further states that “panellists made it clear that Africa is open for business and that investors who do their homework will not be disappointed”.

Changes in Zimbabwe
Although economic and political hurdles remain, Zimbabwe offers a multiplicity of investment opportunities in mining, agriculture, infrastructure, tourism, manufacturing and retail, states Norton Rose Fulbright.

Mining opportunities are rich and varied, with substantial unmined resources; however, perceived political uncertainty and lack of clarity around the country’s indigenisation legislation cause investor anxiety, Gill, Godlonton & Gerrans partner Peter Lloyd tells Mining Weekly.

Gold must be sold through a subdivision of Zimbabwe’s Reserve Bank and most other minerals must be sold through Zimbabwe sales parastatal the Minerals Marketing Corporation. Although they act as barriers to trade, these arrangements appear to be working satisfactorily, states Lloyd.

Although there has been talk for some time about amending or replacing Zimbabwe’s Mines and Minerals Act, it remains unclear if and when this will happen, he says.

“While some might think Zimbabwe is a hard sell, there are opportunities for strategic investment, banking on a brighter future.”

There is also a sense that Zimbabwe is reaching a turning point regarding its investor attractiveness and a conscious effort is being made to create a somewhat more investor-friendly environment, says Lloyd.

Meanwhile, Gill, Godlonton & Gerrans partner Mordecai Mahlangu says that politicians are acknowledging the need for reform in all areas of life in Zimbabwe, adding that underpriced assets in the country also represent opportunity for investors.

Mahlangu and Lloyd say that, although laws that investors perceive as a disincentive remain in place in Zimbabwe, they are being implemented in a way that indicates a softening on the part of the authorities.

He suggests that government seems to have recognised that a more pragmatic and achievable approach is needed, citing as an example government’s apparent realisation that strict adherence to the law requiring all mining companies to be 51% locally owned is not practically achievable.

“The authorities recognise that mining is a cash earner and that further disruption to the sector will be undesirable.”

The Golden Ganda
Norton Rose Fulbright says Uganda is benefiting from its foreign-investor-friendly policies and its wealth of resources. The country is attracting significant investment in oil and gas, infrastructure, banking, insurance and real estate.

Investor interest is intense in Uganda, particularly among investors from China, Russia, Europe and African countries, including South Africa.

The country’s fast-growing oil and gas sector expected about 30 international companies to express interest in bidding for exploration blocks that government planned to auction off, said Shonubi, Musoke & Co lawyer Innocent Kihika at the discussion held in May.

He highlighted government’s auctions of exploration blocks that had been clearly marked, thereby reducing the likelihood of territorial disputes.

Russian investors are playing a prominent role in oil and gas in Uganda, with Russia’s State-owned subsidiary RT Global Resources awarded the contract to build a refinery in western Uganda. During the infrastructure development stage of the project, 150 000 artisans must be trained, housed and fed, which will stimulate other sectors, Kihika said.

Electricity generation is another priority for Uganda’s development. “A few years ago, Uganda had almost 24 hours of uniterrupted load-shedding, and government spent money on providing emergency power using diesel generators,” Kihika said.

However, owing to Uganda’s liberal economy, there are currently many independent power producers harnessing various forms of renewable energy.

Further, the country’s foreign investors could bring in and repatriate their money, said Shonubi, Musoke & Co partner Noah Mwesigwa at the discussion, adding that investment incentives were available in the country.

Uganda’s court system is reliable, with a fast and efficient commercial court specifically created to deal with commercial disputes.

There were also arbitration and mediation programmes, and it was compulsory to mediate a dispute to resolve it before there was a court hearing, stated Mwesigwa.

Edited by Leandi Kolver
Creamer Media Deputy Editor

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