The necessity of strong regional regulatory oversight on infrastructure projects in Africa

Africa-infrastructure

The necessity of strong regional regulatory oversight on infrastructure projects in Africa

RogerBy Roger Tafotie

Dr. Tafotie is a Pr1merio advisor with a legal & business focus on both African and European markets. A member of the Luxembourg Bar, he is also a lecturer in law at the University of Luxembourg. His focus areas include project finance/public private partnerships, banking & finance, and corporate law.

In his latest paper on essential infrastructure development on the African continent, Roger not only embarks on a mission to clarify the valuable role of public-private partnerships (“PPPs”) — he also reminds us that, beyond “well-drafted projects contracts,” there must also be an “effective and efficient African regional regulatory oversight system, with clear roles and lines of command, that is able to protect against ills such as self-dealings and anti-competitive alliances or monopolies,” including “the monitoring of the tendering process against corruption.”

Enhanced competition and an effective oversight system to weed out corruption in the bidding (and execution) process not only protects the local, national or regional governmental issuer of the infrastructure PPP. In order to keep all stakeholders, including global financing institutions or other private lenders, in a position of “acceptable risk,” a well-supervised competitive process is essential to tender selection and project execution.

You can find the full paper here, exclusively on AAF and on AAT.

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Corruption & instability scare away foreign direct investment in South Africa

south_africa

Corruption & instability scare away foreign direct investment in South Africa

Former ANC Treasurer and Mpumalanga premier Mathews Phosa has identified corruption, inconsistent government policies, and other factors as root causes of investors’ growing reluctance to invest in South Africa.

The Mail & Guardian’s Adam Wakefield reports that Mr. Phosa, who speaks nine languages and has had a successful but not always undisputed past history within the ANC organisation, spoke at an investment conference sponsored by the Austrian Business Chamber in Johannesburg, at which the former ANC official admitted that the current government’s tackling of corruption and other conduct had led to diminished investor confidence in the political leadership’s adherence to promoting the rule of law and in the country’s forward-looking stability.

In order to create and maintain an “investment-friendly culture where every investor feels protected and free to do business,” the ZA government should implement “actions and activities to grow the economic cake,” rather than dividing it.  Emphasising that South Africa must send a clear signal about its dedication to the fight against corruption, Mr. Phosa said that whistle blowers should enjoy greater protections, the office of the Public Protector should be strengthened, and perpetrators of graft and other corrupt activities must be removed.

Mathews Phosa (Felix Dlangamandla, Gallo Images).

Mathews Posa with Mr. Zuma

Other factors he identified as leading to foreign investors’ reluctance to expand into South Africa include inconsistent BEE policies, mining policies that have led to a diversion of mining-related investments away from RSA and into  Zambia, Mozambique and Angola; lacking eduational policy; and failed agricultural development and land reform.

Mr. Phosa’s comments coincide with a new report released by the Centre for Corporate Governance in Africa at the University of Stellenbosch Business School, which concludes that corruption remains one of the major obstacles to Africa’s economic rise.  In the Centre’s “Ethics and Compliance Risk Survey 2014,” the authors claim that, among the Southern African Development Community (SADC), South Africa suffers particularly from the perception of a high prevalence of bribery and corruption in the granting of South African government contracts and procurement tenders, whilst the top countries in terms of ethical business environments and regulatory efficiency are Mauritius, Botswana, Namibia and Lesotho.

south africa ethics report table excerpt

Perceived Corruption Hampers Asian Investment in Kenya

 

Chinese Investors See East African Corruption As Hurdle to further Investments

Welcome to 2015, AAF readers.  Our editors and staff are looking forward to a great New Year of providing you with news and insights into anti-corruption and fraud-prevention on the African continent.

Our first story of the year hails from East Africa, when CNBCafrica‘s Elayne Wangalwa reports on the dampening effect of Asian investment into the Kenyan economy due to the high degree of perceived corruption in the state.

In her article, Wangalwa writes that the primary alleged culprits are the Nairobi City Council and the Kenya Revenue Authority.  These figures are based on statistics resulting from a Business Perceptions Index (BPI) survey requested by the Sino-Africa Centre of Excellence Foundation.  The study surveyed approximately 400 Chinese state and privately-owned firms active in East Africa (75 in Kenya).

Interestingly, the foreign investors were partially at fault when the bribery-allegation triggers occurred: “Most of [the Asian companies] were asked for bribery when the officials found misconduct in their business practices, like the absence of some business certificate display,” according to the survey, resulting in the BPI suggestion that “Chinese companies learn more about Kenyan laws and regulations.”

According to CNBCafrica, the Chinese presence has been augmented significantly since the last visit of Chinese Premier Li Keqiang to the country in 2014, with the number of Chinese expatriates in Kenya more than doubling.