Angola

3. Legal Regime

Transparency of the Regulatory System

Angola’s regulatory system is complex, vague, and inconsistently enforced. In many sectors, no effective regulatory system exists due to a lack of institutional and human capacity. The banking system is slowly adhering to International Financial Reporting Standards (IFRS). Public sector companies (SOEs) are still far from practicing IFRS. The public does not participate in draft bills or regulations formulation, nor does a public online location exist where the public can access this information for comment or hold government representatives accountable for their actions. The Angolan Communications Institute (INACOM) sets prices for telecommunications services and is the regulatory authority for the telecommunications sector. Revised energy-sector licensing regulations have permitted some purchase power agreements (PPA) participation.

Overall, Angola’s national regulatory system does not correlate to other international regulatory systems. However, Angola is a member of the WB, ADB AfDB, OPEC (January 2007), the United Nations (UN) and most of its specialized agencies – International Conference on Reconstruction and Development (IBRD), UNCTAD, the IMF, the World Health Organization (WHO), the WTO, and has a partnership agreement with the EU. At the regional level, the GRA is part of the Common Market for Eastern and Southern Africa (COMESA), the Community of Portuguese Speaking Countries (CPLP), and the SADC, among other organizations. Angola has yet to join the SADC Free Trade Zone of Africa as a full member. On March 21, 2018 together with 44 African countries, Angola joined the African Continental Free Trade Area (AfCFTA), an agreement aimed at paving the way for a liberalized market for goods and services across Africa. Angola is also a member of the Port Management Association of Eastern and Southern Africa (PMAESA), which seeks to maintain relations with other port authorities or associations, regional and international organizations and governments of the region to hold discussions on matters of common interest.

Angola became a member of the WTO on November 23,1996. However, it is not party to the Plurilateral Agreements on Government Procurement, the Trade in Civil Aircraft Agreement and has not yet notified the WTO of its state-trading enterprises within the meaning of Article XVII of the GATT. A government procurement management framework introduced in late 2010 stipulates a preference for goods produced in Angola and/or services provided by Angolan or Angola-based suppliers. TBT regimes are not coordinated. There have been no investment policy reviews for Angola from either the OECD or UNCTAD in the last four years. Angola conducts several bilateral negotiations with Portuguese Speaking countries (PALOPS), Cuba and Russia and extends trade preferences to China due to credit facilitation terms, while attempting to encourage and protect local content.

Regulation reviews are based on scientific or data driven assessments or baseline surveys. Evaluation is based on data. However, evaluation is not made available for public comment.

The National Assembly is Angola’s main legislative body with the power to approve laws on all matters (except those reserved by the constitution to the government) by simple majority (except if otherwise provided in the constitution). Each legislature comprises four legislative sessions of twelve months starting on October 15 annually. National Assembly members, parliamentary groups, and the government hold the power to put forward all draft-legislation. However, no single entity can present draft laws that involve an increase in the expenditure or decrease in the State revenue established in the annual budget.

The president promulgates laws approved by the assembly and signs government decrees for enforcement. The state reserves the right to have the final say in all regulatory matters and relies on sectorial regulatory bodies for supervision of institutional regulatory matters concerning investment. The Economic Commission of the Council of Ministers oversees investment regulations that affect the country’s economy including the ministries in charge. Other major regulatory bodies responsible for getting deals through include:

  • The National Gas and Biofuels Agency (ANPG): The government regulatory and oversight body responsible for regulating oil exploration and production activities. On February 6, 2019, the parastatal oil company Sonangol launched the National Gas and Biofuels Agency (ANPG) through the Presidential decree 49/19 of February 6. The ANPG is the new national concessionaire of hydrocarbons in Angola, authorized to conduct, execute and ensure oil, gas and biofuel operations run smoothly, a role previously held by Sonangol. The ANPG must also ensure adherence to international standards and establish relationships with other international agencies and sector relevant organizations.
  • The Regulatory Institute of Electricity and Water Services (IRSEA): The regulatory authority for renewable energies and enforcing powers of the electricity regulatory authority.
  • The Angolan Communications Institute (INACOM): The institute sets prices for telecommunications services and is the regulatory authority for the telecommunications sector. Revised energy-sector licensing regulations have improved legal protection for investors to attract more private investment in electrical infrastructure, such as dams and hydro distribution stations.
  • As of October 1, 2019, a 14 percent VAT regime came into force, replacing the existing 10 percent Consumption Tax. The General Tax Administration (AGT) is the office that oversees tax operations and ensures taxpayer compliance. The new VAT tax regime aims to boost domestic production and consumption, and reduce the incidence of compound tax created for businesses unable to recover consumption tax incurred. VAT may be reclaimed on purchases and imports made by taxpayers, making it neutral for business.

Angola acceded to the New York Arbitration Convention on August 24, 2016 paving the way for effective recognition and enforcement in Angola of awards rendered outside of Angola and subject to reciprocity. Angola participates in the New Partnership for Africa’s Development (NEPAD), which includes a peer review mechanism on good governance and transparency. Enforcement and protection of investors is under development in terms of regulatory, supervisory, and sanctioning powers. Investor protector mechanisms are weak or almost non-existent.

There are no informal regulatory processes managed by nongovernmental organizations or private sector associations, and the government does not allow the public to engage in the formulation of legislation or to comment on draft bills. Procurement laws and regulations are unclear, little publicized, and not consistently enforced. Oversight mechanisms are weak, and no audits are required or performed to ensure internal controls are in place or administrative procedures are followed. Inefficient bureaucracy and possible corruption frequently lead to payment delays for goods delivered, resulting in an increase in the price the government must pay.

No regulatory reform enforcement mechanisms have been implemented since the last ICS report, in particular those relevant to foreign investors. The Diário da República (the Federal Register equivalent), is a legal document where key regulatory actions are officially published.

International Regulatory Considerations

Angola’s overall national regulatory system does not correlate to other international regulatory systems and is overseen by its constitution. Angola is not a full member of the International Standards Organization (ISO), but has been a corresponding member since 2002. The Angolan Institute for Standardization and Quality (IANORQ) within the Ministry of Industry & Commerce coordinates the country’s establishment and implementation of standards. Angola is an affiliate country of the International Electro-technical Commission that publishes consensus-based International Standards and manages conformity assessment systems for electric and electronic products, systems and services.

A government procurement management framework introduced in late 2010 stipulates a preference for goods produced in Angola and/or services provided by Angolan or Angola-based suppliers. Technical Barriers to Trade (TBT) regimes are not coordinated. Angola acceded to the Kyoto Convention on February 23, 2017.

Legal System and Judicial Independence

Angola’s formal legal system is primarily based on the Portuguese legal system and can be considered civil law based, with legislation as the primary source of law. Courts base their judgments on legislation and there is no binding precedent as understood in common law systems. The constitution proclaims the constitution as the supreme law of Angola (article 6(1) and all laws and conduct are valid only if they conform to the constitution (article 6(3).

The Angolan justice system is slow, arduous, and often partial. Legal fees are high, and most businesses avoid taking commercial disputes to court in the country. The World Bank’s Doing Business 2020 survey ranks Angola 186 out of 190 countries on contract enforcement, and estimates that commercial contract enforcement, measured by time elapsed between filing a complaint and receiving restitution, takes an average of 1,296 days, at an average cost of 44.4 percent of the claim.

Angola has commercial legislation that governs all commercial activities but no specialized court. In 2008, the Angolan attorney general ruled that Angola’s specialized tax courts were unconstitutional. The ruling effectively left businesses with no legal recourse to dispute taxes levied by the Ministry of Finance, as the general courts consistently rule that they have no authority to hear tax dispute cases, and refer all cases back to the Ministry of Finance for resolution. Angola’s Law 22/14, of December 5, 2014, which approved the Tax Procedure Code (TPC), sets forth in its Article 5 that the courts with tax and customs jurisdiction are the Tax and Customs Sections of the Provincial Courts and the Civil, Administrative, Tax and Customs Chamber of the Supreme Court. Article 5.3 of the law specifically states that tax cases pending with other courts must be sent to the Tax and Customs Section of the relevant court, except if the discovery phase (i.e., the production of proof) has already begun.

The judicial system is administered by the Ministry of Justice at trial level for provincial and municipal courts and the supreme court nominates provincial court judges. In 1991, the constitution was amended to guarantee judicial independence. However, as per the 2010 constitution, the president appoints supreme court judges for life upon recommendation of an association of magistrates and appoints the attorney general. Confirmation by the General Assembly is not required. The system lacks resources and independence to play an effective role and the legal framework is obsolete, with much of the criminal and commercial code reflecting colonial era codes with some Marxist era modifications. Courts remain wholly dependent on political power.

There is a general right of appeal to the court of first instance against decisions from the primary courts. To enforce judgments/orders, a party must commence further proceedings called executive proceedings with the civil court. The main methods of enforcing judgments are:

  • Execution orders (to pay a sum of money by selling the debtor’s assets);
  • Delivery up of assets; and,
  • Provision of information on the whereabouts of assets.

The Civil Procedure Code also provides ordinary and extraordinary appeals. Ordinary appeals consist of first appeals, review appeals, interlocutory appeals, and full court appeals, while extraordinary appeals consist of further appeals and third-party interventions. Generally, an appeal does not operate as a stay of the decision of the lower court unless expressly provided for as much in the Civil Procedure Code.

Laws and Regulations on Foreign Direct Investment

AIPEX is the investment and export promotion center tasked with promoting Angola’s export potential, legal framework, environment, and investment opportunities in the country and abroad. Housed within the Ministry of Industry & Commerce, AIPEX is also responsible for ensuring the application of the 2018 NPIL on foreign direct investments, entered into force on June 26, 2018.

Competition and Anti-Trust Laws

On May 17, 2018 Angola’s National Assembly approved the nation’s first anti-trust law. The law set up the creation of the Competition Regulatory Authority, which prevents and cracks down on actions of economic agents that fail to comply with the rules and principles of competition. The Competition Regulatory Authority of Angola (Autoridade Reguladora da Concorrência – ARC) was created by Presidential Decree no. 313/18, of December 21, 2018, and it succeeds the now defunct Instituto da Concorrência e Preços. It has administrative, financial, patrimonial and regulatory autonomy, and is endowed with broad supervisory and sanctioning powers, including the power to summon and question persons, request documents, carry out searches and seizures, and seal business premises.

The ARC is responsible, in particular, for the enforcement of the new Competition Act of Angola, approved by Law no. 5/18, of May 10, 2018 and subsequently implemented by Presidential Decree no. 240/18, of October 12. The Act has a wide scope of application, pertaining to both private and state-owned undertakings, and covers all economic activities with a nexus to Angola. The Competition Act prohibits agreements and anti-competitive practices, both between competitors (“horizontal” practices, the most serious example of which are cartels), as well as between companies and its suppliers or customers, within the context of “vertical” relations.

Equally prohibited is abusive conduct practiced by companies in a dominant position, such as the refusal to provide access to essential infrastructures, the unjustified rupture of commercial relations and the practice of predatory prices, as well as the abusive exploitation, by one or more companies, of economically-dependent suppliers or clients. Prohibited practices are punishable by heavy fines that range from one-ten percent of the annual turnover of the companies involved. Offending companies that collaborate with the ARC, by revealing conduct until then unknown or producing evidence on a voluntary basis, may benefit from significant fine reductions, under a leniency program yet to be developed and implemented by the ARC. Considering the ample powers and potentially heavy sanctions at the disposal of the ARC, companies present in (or planning to enter) Angola are well advised to consider carefully the impact of the new law on their activities, in order to mitigate any risk that its market conduct may be found contrary to the Competition Act.

Expropriation and Compensation

Under the Land Tenure Act of November 9, 2004 and the General Regulation on the Concession of Land (Decree no 58/07 of July 13, 2007), all land belongs to the state and the state reserves the right to expropriate land from any settlers. The state is only allowed to transfer ownership of urban real estate to Angolan nationals, and may not grant ownership over rural land to any private entity (regardless of nationality), corporate entities or foreign entities. The state may allow for land usage through a 60-year lease to either Angolan or foreign persons (individuals or corporate), after which the state reserves legal right to take over ownership.

Expropriation without compensation remains a common practice. Land tenure became a more significant issue following independence from Portugal when over 50 percent of the population moved to urban centers during the civil war. The state offered some areas for development within a specific timeframe. After this timeframe, areas that remained underdeveloped reverted to the state with no compensation to any claimants. In most cases, claimants allege unfair treatment and little or no compensation.

Dispute Settlement

ICSID Convention and New York Convention

Angola is not a member state to the International Centre for Settlement of Investment Disputes (ICSID Convention), but has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Its ratification was endorsed domestically via resolution No. 38/2016, published in the Official Gazette of Angola on August 12, 2016.

Investor-State Dispute Settlement

The Angolan Arbitration Law (Law 16/2003 of July 25) (Voluntary Arbitration Law — VAL) provides for domestic and international arbitration. Substantially inspired by Portuguese 1986 arbitration law, it cannot be said to strictly follow the UN Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. In contrast, the VAL contains no provisions on definitions, rules on interpretation, adopts the disposable rights criterion in regards to arbitration, does not address preliminary decisions, nor distinguish between different types of awards, and permits appeal on the merits in domestic arbitrations, unless the parties have otherwise agreed.

Angola is also a member of the Multilateral Investment Guarantee Agency (MIGA), which can provide dispute settlement assistance as part of its political risk insurance products and eligibility for preferential trade benefits under the African Growth Opportunity Act. The United States and Angola have signed a TIFA, which seeks to promote greater trade and investment between the two nations. The U.S. Embassy is aware of one ongoing formal investment dispute involving an American company.

International Commercial Arbitration and Foreign Courts

Although not widely implemented, the Government of Angola and public sector companies recognize the use of arbitration to settle disputes with foreign arbitration awards issued in foreign courts. In 2016, Angola took a major step in international arbitration by signing the New York Convention on recognition of foreign arbitration awards. On March 6, 2017, the Government of Angola deposited its instrument of accession to the Convention with the UN Secretary General. The Convention entered into force on June 4, 2017.

Bankruptcy Regulations

Angola is ranks 168 out of 190 on the World Bank’s Doing Business 2020 report on resolving insolvency. Banks are bound to comply with prudential rules aimed at ensuring that they maintain a minimum amount of funds not less than the minimal stock capital at all times to ensure adequate levels of liquidity and solvability. Insolvency is regulated by the Law on Financial Institutions No. 12/2015 of June 17, 2015. Based on this law, the BNA increased the social capital requirement for banks operating in the country by 200 percent (BNA notice 2/2015) to guard against possible damages to clients and the financial system. All monetary deposits up to 12.5 million Kwanzas (USD 27,000 equivalent) are also to be deposited into the BNA’s Deposit Guarantee Funds account (Presidential Decree 195/18 of 2018) so that clients (both local and foreign) are guaranteed a refund in case of bankruptcy by their respective bank. Article 69 of the law expressly states that it is the responsibility of the president of the Republic to create the fund, but it is silent on the rules governing its operation or the amounts guaranteed by the fund.

In 2018, based on Notice 2/2018 on the “Adequacy of Minimum Capital Stock and Regulatory Own Funds of Financial Banking Institutions,” commercial banks were required to increase their operating capital from 2.5 billion to 7.5 billion kwanzas (USD 35 million) by the end of the year. In late 2019, following results from an Asset Quality Review, the government announced plan to recapitalize the largest state-owned bank, Banco de Poupanco e Credito (BPC). The injection of capital will constitute the third capital injection into BPC by the state since 2015, which has previously received close to USD2 billion of state funds to help restructure the bank.  In early 2019, the BNA revoked the operating licenses of two private banks, Banco Mais and Banco Postal, due to their inability to recapitalize to meet new mandatory operating capital requirements. A third bank, Banco Angolano e Comércio de Negócios (BANC), was also put under administration due to its poor governance and a failure to also raise the mandatory operating capital to meet new minimum requirements.

In 2015, following the 2014 collapse of Banco Espirito Santo Angola (BESA), the subsidiary of Portugal’s Banco Espírito Santo, the State intervened and restructured BESA which now operates as Banco Economico. In August 2019, the BNA ordered Banco Economico’s shareholders to increase the bank’s capital to comply with the new BNA-imposed capital requirements no later than June 2020. While Angola’s arbitration law (Arbitration Law No. 16/03) for insolvency adopted in 2013 introduced the concept of domestic and international arbitration, the practice of arbitration law is still not widely implemented.

The law criminalizes bankruptcy under the following classification: condemnation in Angola or abroad for crimes of fraudulent bankruptcy, i.e. involvement of shareholders or managers in fraudulent activities that result in the bankruptcy, negligence bankruptcy, forgery, robbery, or involvement in other crimes of an economic nature. The Ministry of Finance, the BNA and the Capital Markets Commission (CMC) oversee credit monitoring and regulation.

5. Protection of Property Rights

Real Property

Transparency and land property rights are critical for Angolan economic development, given that two thirds of Angolans work in agriculture and are directly dependent on land property rights. However, the Land Act (Lei de Terras de Angola) has not been revised since its approval in December 2004. While the land act is a crucial step toward addressing issues of land tenure, normalization of land ownership in Angola persists with problems such as difficulties in completing land claims, land grabbing, lack of reliable government records, and unresolved status of traditional land tenure. Among other provisions, the law included a formal mechanism for transforming traditional land property rights into legal land property rights (clean titles). During the civil war, a transparent system of land property rights did not exist, so it was crucial to re-establish one shortly after the end of hostilities in 2002.

According to the “Land Act,” the State may transfer or constitute, for the benefit of Angolan natural or legal persons, a multiplicity of land rights on land forming part of its private domain. Although, it is possible to transfer ownership over some categories of land, the transfer of State land almost never implies the transfer of its ownership, but only the formation of minor land rights with leasehold being the most common form in Angola. The recipient of private property rights from the State can only transfer those rights with consent of the local authority and after a period of five years of effective use of the land (GRA 2004 law). Weak land tenure legislation and lack of secure legal guarantees (clean titles), are the reasons given by most commercial banks for their greater than 80 percent refusal rate for loans since land is used as collateral. Foreign real-estate developers therefore seek out public-private partnership (PPP) arrangements with State actors who can provide protection against land disputes and financial risks involved in projects that require significant cash outlays to get started.

Registering parcels of land over 10,000 hectares must be approved by the Council of Ministers. Registering property takes 190 days on average, ranking 167 out of 173 according to the World Bank’s Doing Business 2020 survey, with fees averaging three percent of property value. Owners must also wait five years after purchasing before reselling land. There are no written regulations setting out guidelines defining different forms of land occupation, including commercial use, traditional communal use, leasing, and private use. Over the years, the government has given out large parcels of land to individuals in order to support the development of commercial agriculture. However, this process has largely been unsystematic and does not follow any formal rule change on land tenure by the State.

Before obtaining proof of title nationwide, an Angolan citizen or an Angolan legal entity must also obtain the Real or Leasing Rights (“Usufruct”) of the Land from the Instituto de Planeamento e Gestão Urbana de Luanda, an often a time-consuming procedure that can take up to a year or more. However, in the case that a company already owns the land, it must secure a land property title deed from the Real Estate Registry in Luanda. An updated property certificate (“certidão predial”) is obtained from the relevant Real Estate Registry, with the complete description of the property including owner(s) information and any charges, liens, and/or encumbrances pending on the property. The complex administration of property laws and regulations that govern land ownership and transfer of real property as well as its tedious registration process may reduce investor appetite for real estate investments in Angola. Despacho no. 174/11 of March 11, 2011 mandates the total fees for the “certidão predial” include stamp duty (calculated according to the Law on Stamp Duty); justice fees (calculated according to the Law on Justice Fees); fees to justice officers (according to the set contributions for the Justice budget); and, notary and other fees. The total fee is also dependent on the current value of the fiscal unit (UCF).

Intellectual Property Rights

Angolan law recognizes the protection of intellectual property rights (IPR). Angola’s National Assembly adopted the Paris Convention for the Protection of Industrial Intellectual Property in August 2005, incorporating the 1979 text, and the Patent Cooperation Treaty concluded in 1970 and later amended in 1979 and 1984. The Ministry of Industry administers IPR for trademarks, patents, and designs under Industrial Property Law 3/92. The Ministry of Culture regulates authorship, literary, and artistic rights under Copyright Law 4/90. Angola is a member of the World Intellectual Property Organization (WIPO) and follows international patent classifications of patents, products, and services to identify and codify requests for patents and trademark registration.

IAPI (Instituto Angolano de Propriedade Intelectual) is the governmental body within the Ministry of Industry & Commerce charged with implementing patent and trademark law. The Ministry of Culture, Tourism & Environment oversees copyright law. IP infringement is widespread, most notably in the production and distribution of pirated CDs, DVDs, and other media, largely for personal consumption. Counterfeit pharmaceuticals are another major area of concern.

There are currently no statistics available regarding counterfeit goods seized by the Angolan government. INADEC (Instituto Nacional de Defesa dos Consumidores), under the umbrella of the Ministry of Industry & Commerce, tracks and monitors the Angolan government’s seizures of counterfeit goods. They do not currently have a website, nor do they regularly publish statistics. They publish information on seizures of counterfeit products on an ad-hoc basis, primarily in the government-owned daily, Jornal de Angola.

Angola is not included in the United States Trade Representative’s (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ . The U.S. Embassy point of contact for IPR related issues is Mballe Nkembe (NkembeMM@state.gov). For legal counsel, refer to Angola’s Country Commercial Guide Local Professional Services List (http://export.gov/ccg/angola090710.asp )

7. State-Owned Enterprises

In Angola, certain state-owned enterprises (SOEs) exercise delegated governmental powers, especially in the mining sector where the government is the sole concessionaire. Foreign investors may sometimes find demands made by SOEs excessive, and under such conditions, SOEs have easier access to credit and government contracts. There is no law mandating preferential treatment to SOEs, but in practice they have access to inside information and credit. Currently, SOEs are not subject to budgetary constraints and quite often exceed their capital limits.

SOEs, often benefitting from a government mandate, operate mostly in the extractive, transportation, commerce, banking, and construction sectors. All SOEs in Angola are required to have boards of directors, and most board members are affiliated with the government. SOEs are not explicitly required to consult with government officials before making decisions. By law, SOEs must publish annual financial reports for the previous year in the national daily newspaper Jornal de Angola by April 1. Such reports are not always subject to publicly released external audits (though the audit of state oil firm Sonangol is publicly released). The standards used are often questioned. Not all SOEs fulfill their legal obligations, and few are sanctioned.

Angola’s supreme audit institution, Tribunal de Contas, is responsible for auditing SOEs. However, the Tribunal de Contas does not make its reports publicly available. Angola’s fiscal transparency would be improved by ensuring its supreme audit institution audits SOEs, as well as the government’s annual financial accounts, and makes public its findings within a reasonable period. Publicly available audit reports would also improve the transparency of contracts between private companies and SOEs.

In November 2016, the Angolan Government revised Law 1/14 “Regime Juridico de Emissão e Gestão da Divida Publica Directa e Indirecta,” which now differentiates between ‘direct’ and ‘indirect’ public debt. The GRA considers SOE debt as indirect public debt, and only accounts in its state budget for direct government debt, thus effectively not reflecting some substantial obligations in fact owed by the government. President Lourenço has launched various reforms to improve financial sector transparency, enhance efficiency in the country’s SOEs as part of the National Development plan 2018-2022 and Macroeconomic Stability Plan. The strategy included the prospective privatization of 74 SOEs that are deemed not profitable to the state. The privatization will possibly include the restructuring of the national air carrier TAAG, as well as Sonangol and its subsidiaries. The latter intends to sell off its non-core businesses as part of its restructuring strategy to make the parastatal more efficient.

Angola is not a party to the WTO’s Government Procurement Agreement (GPA). Angola does not adhere to the OECD guidelines on corporate governance for SOEs.

Privatization Program

The government has a plan to privatize 74 of 90 public companies by 2022 through the Angola Debt and Securities Exchange market (BODIVA) and under the supervision of the Institute of Management of Assets and State Participations (IGAPE). The privatization plan is in line with the provisions of the Government’s Interim Macroeconomic Stabilization Program (PEM), which aims to rid the government of unprofitable public institutions. The terms of reference for the privatization program are not yet public, except for seven factories located in the Special Economic Zone (ZEE). The seven industrial units with full terms of reference are:

UNIVITRO – glassworks industry; JUNTEX – plaster industry; CARTON – carton and packaging industry; ABSOR – absorbent products industry; INDUGIDET – sanitation and detergents industry; COBERLEN – blankets and linens industry; and, SACIANGO – cement bags industry. By April 2020, the Government had reportedly sold an estimated seven entities under its privatization initiative, mostly farms, and did not include the seven industrial units with full terms of reference.

The government plans to privatize part of state-owned Angola Telecommunications Company, companies in the oil and energy sector, as well as several textile industries. The government has stated that the privatization process will be open to interested foreign investors and has guaranteed a transparent bidding process. Proposals from investors for seven industrial units at the ZEE will be given special attention to those who decide to retain local workers in these units. The government created a privatization commission on February 27, 2018 and a website https://igape.minfin.gov.ao/PortalIGAPE/#!/sala-de-imprensa/noticias/5413/anuncio-de-concurso-tender-announcement  for submission of tenders. Full tender documents can be obtained by visiting the below link: http://www.ucm.minfin.gov.ao/cs/groups/public/documents/document/zmlu/mdu4/~edisp/minfin058842.zip 

Alternatively, contact igape@minfin.gov.ao. The tenders are open to local and foreign investors.

9. Corruption

Corruption remains a strong impediment to doing business in Angola and has had a corrosive impact on international market investment opportunities and on the broader business climate. Transparency International’s 2019 Corruption Perceptions Index ranks Angola 165 out of 175 countries in its corruption level survey, improving two places from the previous year’s ranking due to ongoing efforts to reduce corruption.

Since coming into office on an anti-corruption platform, President Lourenco has led a concerted effort to restore investor confidence by prioritizing anti-corruption and the fight against nepotism. In December, the government froze the assets and accounts of Isabel dos Santos, the former first daughter, and subsequently indicted her on fraud-related charges for mismanaging and embezzling funds during her 18-month stint as chair of the state’s oil firm, Sonangol. Several other government officials were also sacked from office, detained and tried on corruption charges. On September 19, the Supreme Court ordered that Norberto Garcia, the former spokesman of the ruling MPLA party and former director of the defunct Technical Unit for Private Investment, a state institution, charged with fraud, money laundering and document falsification, be placed under house arrest in Luanda. The case dates back to November 2017 when Garcia and six foreigners allegedly tried to set up a state project in a USD 50 billion scam.

In another high-profile anti-corruption case, the trial of the former head of Angola’s sovereign wealth fund, José “Zénu” Filomeno dos Santos and his co-conspirator, former Central Bank Governor Valter Felipe, began on December 9. The former stands accused of embezzling USD 1.5billion of public money during his tenure at the Sovereign wealth fund (2013-2017), and both stand accused of fraud and embezzlement related to the illegal transfer of USD 500 million from the BNA coffers to a Credit Suisse account in London. Meanwhile, in August, a court sentenced former Transport Minister Augusto da Silva Tomás to 14 years in prison on fraud charges, but later reduced his sentence to eight years.

Angola has a comprehensive anti-corruption legal framework but implementation remains a severe challenge. In January, the government issued a general conduct guide mostly for the National Public Procurement Service, the regulatory and supervisory body of public procurement in Angola, outlining whistleblowing responsibilities for corruption and related offences in public procurement. Following approval in October, a new law on anti-money laundering, combating the Financing of Terrorism, and the proliferation of weapons of mass destruction came into force in January 2020, superseding Law No. 34/11, of 12 December 2011. The new law incorporates several IMF and the Financial Action Task Force (FATF) recommendations. Importantly, it finally recognizes and includes politically exposed persons to be any national or foreign person that holds or has held a public office in Angola, or in any other country or jurisdiction, or in any international organization, and subjects them to greater scrutiny by the financial sector. Other significant improvements in the new law include:

  • The definition of “ultimate beneficial owner” was expanded to encompass, notably, all persons that hold, directly or indirectly, a controlling interest in a company, including the control of the share capital, voting rights or a significant influence in the company. There is no longer a minimum threshold to determine the existence of control;
  • Identification and diligence duties are now applicable to occasional transactions executed via wire transfers in an amount of more than USD 1,000, in national or foreign currency;
  • The scope of the duty to communicate suspicious transactions in cash or wire transfers has been amended and is now applicable to transactions between USD 5,000 and USD 15,000, depending on the underlying operation;
  • Payment-service providers that control the ordering and reception of a wire transfer must consider the information received from the sender and the beneficiary to determine whether there is a communication duty;
  • The Tax Authorities now have a duty to report suspicious cross-border payments.

The president approved a set of amendments to the Public Contracts Law on November 16, 2018, which imposed further requirements for the declaration of assets and income, interests, impartiality, confidentiality, and independence in the formation and execution of public contracts.  In December 2018, the Government of Angola rolled out of a national anti-corruption strategy (NACS) billed under the motto, “Corruption – A fight for All and By All.” The five-year strategy, developed in concert with the UNDP, is designed to improve government transparency, accountability, and responsiveness to citizen needs.  The NACS focuses on three pillars in the fight against corruption – prevention, prosecution, and institutional capacity building.

Crimes linked to corruption are enforced through the Public Probity Law of 2010. President Lourenco’s mandate for senior government officials requires all public officials to disclose their assets and income once every two years, and it prohibits public servants from receiving money or gifts from private business deals. The Penal Code makes it a criminal offense for private enterprises to engage in business transactions with public officials.

Angola has incorporated regional anti-corruption guidelines and into their domestic legislation, including: the SADC “Protocol Against Corruption,” the African Union’s “Convention on Preventing and Combating Corruption,” and the United Nation’s “Convention against Corruption.” Angola does not have an independent body to investigate and prosecute corruption cases, and generally, enforcement of existing laws is weak or non-existent. However, the Attorney General’s office has a department for Investigation of Corruption crimes and Recovery of Assets. Three institutions – the Audit Court, the Inspector General of Finance, and the Office of the Attorney General – perform many of the anti-corruption duties in Angola. http://www.business-anti-corruption.com/country-profiles/sub-saharan-africa/angola/initiatives/public-anti-corruption-initiatives.aspx 

The government also passed the Law on the Repatriation of Financial Resources in June 2018, which established the terms and conditions for the repatriation of financial resources held abroad by resident individuals and legal entities with registered offices in Angola. The law exempted individuals and legal entities, who voluntarily repatriated their financial resources within a period of 180 days following the date of entry into force of the Law, by transferring the funds to an Angolan bank account, from any obligation or liability of tax, foreign exchange and criminal nature. Upon expiry of the grace period for repatriation, the Law allowed for the possibility of coercive repatriation by the government. The government estimates that USD 30 billion of Angolan assets are sheltered overseas. In early 2019, the government established the National Asset Recovery Service (SNRA), an institution linked to the Attorney General’s Office (PGR), in charge of ensuring compliance with the repatriation law.

Private sector companies have individual internal controls for ethics, compliance and tracking fraudulent activities. However, they do not have a mechanism to detect and report irregularities related to dealings with public officials. It is important for U.S. companies, regardless of their size, to assess the business climate in the sector in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in Angola, should take the time to become familiar with the relevant anticorruption laws of both Angola and the United States in order to properly comply with them, and where appropriate, they should seek legal counsel.

Angola is not a member state to the UN Anticorruption Convention or the OECD Convention on Combatting Bribery. On March 26, 2018 it ratified and published in the national gazette the African Union Convention on the Prevention and Fight against Corruption and now takes legislative measures against illicit enrichment (Article 8), confiscation and seizure of proceeds and means of corruption (Article 16), and international cooperation in matters of corruption and money laundering (Article 20).

Resources to Report Corruption

Hélder Pitta Grós
Procurador Geral da Republica (Attorney General of the Republic)
Procurador Geral da Republica (Attorney General’s Office)
Travessa Antonio Marques Monteiro 22, Maianga
Telephone: 244-222-333172

10. Political and Security Environment

Angola maintains a politically stable environment under the motto “Together, we are stronger” politically motivated violence is not a high risk, and incidents are rare. President Joao Lourenco’s government seeks reform of the state and national cohesion. Local elections – “Autarquias” are scheduled to take place in 2020 with objectives to reduce asymmetries, dissemination of governance powers and equitable distribution of financial resources essential for economic and social development. However, the elections may be postponed due to the COVID-10 pandemic.

The last significant incident of political violence happened in 2010 during an attack against the Togolese national soccer team by FLEC-PM (Front for the Liberation of the Enclave of Cabinda—Military Position) in the northern province of Cabinda. FLEC threatened Chinese workers in Cabinda in 2015 and claimed in 2016 that they would return to active armed struggle against the Angolan government forces. No attacks have since ensued and the FLEC has remained relatively inactive. President Lourenco has pledged to govern for all Angolans, and combat two of the country’s major problems: corruption and mismanagement of public funds.

Russia remains Angola’s premier security cooperation partner. However, a May 2017 U.S.–Angola Defense Cooperation MOU has enabled more open mil-to-mil coordination. Our security cooperation aims to build the U.S.-Angolan military relationship, address Angolan defense priorities, and develop sustainable proficiency in areas of common interest, such as maritime safety and security, civil-military operations, humanitarian assistance, medical readiness, and English language programs.

In September 2019 UN Secretary-General António Guterres held a meeting with Lourenço during the Forum on China-Africa Cooperation (FOCAC) in Beijing. During the meeting, Guterres highlighted the role of Angola in the effort to maintain peace and stability in Southern Africa and the Great Lakes region.

In October 2019, UN High Commissioner for Human Rights Michelle Bachelet condemned the mass deportation of Congolese nationals, who were illegally working and residing in Angola. Angola deported thousands of Congolese nationals for allegedly exploiting diamonds and other forms of illegal trade in the northern and southern Lundas provinces.

Activist groups continuously face repression by police for online and offline activities and for using online spaces to criticize and organize protests. Social media has been a mobilizing tool for demonstrations and there are no instances of damage to property or vandalism by protestors who decry continued economic hardships, high unemployment and poverty, highlighting President Joao Lourenco’s election pledge to create jobs.

Angola engages multilaterally, through the AU, SADC, and the International Conference on the Great Lakes Region, to address its security and economic equities with the DRC. Angola continues to struggle with its legacy of land mines and is far from reaching its goal of becoming mine impact free by 2025. Since 1995, the United States (Angola’s largest demining donor) has invested more than USD 134 million in Angola to clear and dispose of landmines and unexploded ordnance. The United States donated USD 3.1 million in demining assistance in 2019. The Angolan government also pledged in 2019 an unprecedented USD 60 million of its own money for humanitarian demining over the next five years, largely focused on a potential corridor for tourism and sustainable development in the southeast, linked to the Okavango Delta.

Burundi

3. Legal Regime

Transparency of the Regulatory System

Although parts of the government are working to create more transparent policies for fostering competition, Burundi lacks clear rules of the game. Many policies for foreign investment are not transparent, and laws or regulations on the books are often ineffective or unenforced. Burundi’s regulatory and accounting systems are generally transparent and consistent with international norms on paper, but a lack of capacity or training for the staff and political constraints sometimes limit the regularity and transparency of their implementation.

Rule-making and regulatory authority is exercised exclusively at the national level. Relevant ministries and the Council of Ministers exercise regulatory and rule-making authority, based on laws passed by the Senate and National Assembly. In practice, government officials sometimes exercise influence over the application and interpretation of rules and regulations outside of formal structures. The government sometimes discusses proposed legislation and rule-making with private sector interlocutors and civil society, but does not have a formal public comment process. There are no informal regulatory processes managed by non-governmental organizations (NGOs) or private sector associations.

Accounting, legal, and regulatory procedures are generally transparent or consistent with international norms on paper but are unevenly implemented in practice.

Draft bills or regulations are not subject to a public consultation process. There are no conferences that involve citizens in a consultation process to give them an opportunity to make their comments or contributions, especially at the time of project development, and, even if this were the case, the public does not have access to the detailed information needed to participate in this process.

Burundi does not have a centralized online location where key regulatory actions are published; however, regulatory actions are sometimes posted on the websites of GoB institutions (typically that of the Office of the President or ministries).

Burundi has sectoral regulatory agencies covering taxes and revenues, mining and energy, water, and agriculture. Regulatory actions are reviewable by courts. There have been no recent reforms to the regulatory enforcement system.

The government generally issues terms of reference and recruits private consultants who prepare a study on the draft legislation for review and comment by the private sector. The government analyzes these comments and takes them into consideration when drafting new regulations. New regulations can be issued by a presidential decree or Parliament can make them into a law. This mechanism applies to laws and regulations on investment.

Information on public finances and debt obligations (including explicit and contingent liabilities) is published in the Burundi Central Bank’s Reports and on its website: https://www.brb.bi/ ; however, some publications are not up to date.

International Regulatory Considerations

Burundi is a part of the East African Community (EAC), a regional economic bloc composed by six member states, the republics of Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. The EAC Integration process is anchored on four pillars: Customs Union, Common Market, Monetary Union, and Political Federation. Each member state must harmonize its national regulatory system with that of the EAC. At the moment, several milestones have been realized under the EAC Pillars; some countries are ahead of others, but the process of harmonization of regulatory systems (national and regional) continues to progress, as does regional integration (progress of the East African Customs Union, the creation of the Common Market and the implementation of the Monetary Union Protocol, etc.).

Burundian law and regulations reference a number of standards, including the East African Standards, Codex Alimentarius Standards, the International Organization for Standardization (ISO), and its own standards. ISO remains the main reference.

The country joined the WTO on July 23, 1995. According to the Ministry of Commerce, Industry, and Tourism, Burundi has not notified the WTO Committee on TBT of all draft technical regulations.

Legal System and Judicial Independence

The country’s legal system is civil (Roman), based on German and French civil codes. For local civil matters, customary law also applies. Burundi’s legal system contains standard provisions guaranteeing the right to private property and the enforcement of contracts. The country has a written commercial law and a commercial court. The investment code offers plaintiffs recourse in the national court system and to international arbitration.

The judicial system is not effectively independent of the executive branch. A lack of capacity hinders judicial effectiveness, and judicial procedures are not rigorously observed.

The investment code offers plaintiffs recourse in the national court system and to international arbitration when necessary.

Laws and Regulations on Foreign Direct Investment

There were no major laws, regulations, or judicial decisions pertaining to foreign investment in the past year. In 2009, the GoB created an Investment Promotion Authority (API) in charge of promoting investment and facilitating market entry for investors in Burundi. API offers a range of services to potential investors, including assistance in acquiring the licenses, certificates, approvals, authorizations, and permits required by law to set up and operate a business enterprise in Burundi. In 2014, API created a follow-up mechanism to make sure that investors are implementing projects for which they received tax exemptions and other advantages provided in the investment code.

In 2018, the Council of Ministers reviewed draft legislation updating the investment code and then referred it to a technical committee for review and improvement; it remains a work in progress. Among other changes, the draft contains new measures to ensure the protection of the property of foreign investors and penalties for malfeasance by foreign investors.

Competition and Anti-Trust Laws

There is no Burundian agency in charge of reviewing transactions for competition-related concerns.

Expropriation and Compensation

Burundian law allows the GoB to expropriate property for exceptional and state-approved reasons, but the GoB is then committed to provide a legal prior fair compensation allowance based on the fair market value.

There are no recent cases involving expropriation of foreign investments nor do any foreign firms have active pending complaints regarding compensation in Burundian courts.

Dispute Settlement

ICSID Convention and New York Convention

Burundi is a full member of ICSID Convention since 1969 and became the 150th country to sign the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Burundi’s commercial law allows enforcement of judgments in foreign courts by local courts.

Investor-State Dispute Settlement

Burundi is a signatory of International Centre for Settlement of Investment Disputes (ICSID) and Multilateral Investment Guarantee Agency (MIGA) in which international arbitration of investment disputes is recognized. Burundi has no bilateral investment treaty with the United States.

There have been limited instances of foreign investors seeking restitution from the GoB over allegations of breach of contract and corruption.

In cases involving international elements, the GoB accepts international arbitration and recognizes and enforces foreign arbitral awards. There is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

In rare cases involving international elements, the GoB accepts international arbitration and recognizes and enforces foreign arbitral awards. In commercial disputes between private parties, international arbitration is accepted as a means of settlement provided one of the parties is an extra-national. In 2007, the GoB created a Center for Arbitration and Mediation (CEBAC) to handle such disputes, but it is not very active.

There is no operational commercial arbitration body in the country besides CEBAC. Foreign arbitral awards are recognized, but local courts are not legally equipped to enforce them. No Burundian private entity has been involved in a foreign arbitration. In the past, one registered case involved the GoB and a private gold refining company. The ICSID ruling was enforced by GoB, which lost the case.

Although there are complaints about the discriminatory and opaque nature of Burundian court processes in general, there are no known cases involving State-Owned Enterprises (SOEs) in investment disputes.

Bankruptcy Regulations

Burundi has two laws governing or pertaining to bankruptcy: Law N°1/07 of March 15, 2006, on bankruptcy and Law N°1/08 of March 15, 2006, on legal settlement of insolvent companies. Under Burundian law, creditors have the right to file for liquidation and the right to request personal or financial information about the debtors from the legal bankruptcy agent. The bankruptcy framework does not require that creditors approve the selection of the bankruptcy agent and does not provide creditors the right to object to decisions accepting or rejecting creditors’ claims.

5. Protection of Property Rights

Real Property

Secured interests in both real and movable property are nominally recognized under Burundian law (2011 land code). The Burundi land code, adopted in 2011, recognizes the right to property and protection for Burundians and for foreigners. Foreigners enjoy the same rights and protection as nationals, subject to the principle of reciprocity (which means that the foreign country must in return recognize the same rights for Burundians). The state can give property to foreigners for industrial, commercial, cultural use, can rent them out, but full ownership is reserved for Burundians. The legal system and the investment code are designed to protect and facilitate the acquisition and disposition of all property rights.

The Land Titles Service registers real estate and security instruments, such as mortgages. Property titles are accepted as a guarantee (mortgages) by commercial banks, but documents for properties located outside the capital city of Bujumbura are less easily accepted because of multiple conflicts and crimes related to the land in rural areas (more than 80 percent of the litigations in the courts and tribunals are conflicts over land).

Land titling in Burundi has historically been a lengthy, opaque and centralized process although the Burundian Land Code appears simple, transparent and inexpensive. As a result, some applicants (those with limited financial resources or contacts) fail to title their land while others (wealthy ones or those with good contacts) bribe land titling agents to speed up the procedure. To address these issues, in December 2019, GoB implemented several initiatives aimed at: (1) informing the population on the procedure for registering land and obtaining title deeds; (2) establishing in all provinces of the country one-stop windows where persons interested in titling land have access to all necessary government offices to carry out the titling; (3) combating, in accordance with the law, all forms of corruption related to the properties registration process. The GoB has been slow to decentralize land titling for financial reasons and it is likely that the government will still need financial resources to make its initiatives a reality.

The legal system and the investment code do not differentiate local and foreign investors regarding land acquisition or lease. However, land acquisition is based on reciprocity between Burundi and the investor’s home country, obliging a foreign country to recognize the same rights for Burundians in the foreign country as the foreigners of their country enjoy in Burundi.

Properties in urban and rural areas must be registered. However, according to estimates, more than 90 percent of houses and land in rural areas are not registered and around 80 percent of the litigations in the Burundian courts and tribunals are conflicts over land. When a property has been legally purchased, it cannot be legally confiscated by the state except when it is the subject of an expropriation procedure in accordance with legal and regulatory procedures.

Intellectual Property Rights

Burundi has adopted the 1995 World Trade Organization (WTO) Agreement on Trade-Related Aspects of International Property Rights (TRIPS), which introduced global minimum standards for the protection and enforcement of virtually all intellectual property rights (IPR). The legal system and the investment code aim to protect and facilitate the acquisition and disposition of all property rights, including intellectual property rights IPR. The law also guarantees protection for patents, copyrights, and trademarks. However, there is no record of enforcement action on intellectual property IPR infringement violations. No IPR-related law has been enacted during the past year and no bills are pending.

Agents of Burundian institutions in charge of the fight against piracy and counterfeiting (Burundian Revenue Office and the Ministries of Trade and Public Health) have already benefited from various sources of support in terms of capacity building on industrial property rights and the fight against piracy and counterfeiting on the part of multilateral partners, but these institutions lack the tools needed for detecting counterfeits. Although these institutions have already committed themselves to operate reforms in this sector (a multisectoral committee responsible for promoting procedures to combat counterfeiting and piracy and monitoring has been set up), they still need to set up a database of recognized trademarks, in which all the information on trademarks registered at customs is compiled and to require this procedure for all companies or representatives of multinationals to be effective.For now, the Burundi Bureau of Standardization (BBN) is the state authority responsible the monitoring of the quality of consumer products on the market; however, this Bureau lacks the necessary expertise and resources to be effective.  Counterfeiters who are apprehended are fined and their products are seized. There are no statistics available on seizures of counterfeit goods. Burundi is not listed in the United States Trade Representative (USTR) Special 301 Report or the Notorious Market List.

7. State-Owned Enterprises

There are five SOEs in Burundi with 100 percent government ownership: REGIDESO (public utility company), ONATEL (telecom), SOSUMO (sugar), OTB (tea), and COGERCO (cotton). No statistics on assets are available for these companies as their reports are not available to the public. Board members for SOEs are appointed by the GoB and report to its ministries. The GoB has a minority (40 percent) share in Brarudi, a branch of the Heineken Group, and in three banking companies.

There is no published list of SOEs.

SOEs have no market-based advantages and compete with other investors under the same terms and conditions; however, Burundi does not adhere to the OECD guidelines on corporate governance for SOEs.

Privatization Program

In 2002, Burundi entered an active phase of political stabilization, national reconciliation and economic reform. In 2004, it received an emergency post-conflict program from the IMF and the World Bank, paving the way for the development of the Strategic Framework for Growth and Poverty Alleviation (PRSP). After the 2005 elections, the GoB made the decision to convert several state-owned enterprises different sectors of the economy to private investment, including foreign investment. The Burundian government, considering coffee a strategic sector of its economy, decided to opt for the privatization of the coffee sector first in an effort to modernize it. However, following the crisis of 2015, the GoB decided to suspend immediately the privatization program. At that time, it had not yet privatized other sectors such as tea or sugar. In late 2019, the GoB retook control of the coffee sector, citing as its rationale perceived mismanagement on the part of the privatized company during the 2015-2019. It is unclear if or when the privatization program will continue.

The privatization program was open to all potential buyers, including foreigners, and there was no explicit discrimination against foreign investors at any stage of the investment process. Public bidding was mandatory. The process is transparent and non-discriminatory. When the government intends to sell a business or shares in a business, offers are published in local newspapers.

9. Corruption

The government has an anti-corruption law and an enforcement organization, the Anti-Corruption Brigade, responsible for enforcing this legislation. Cabinet members, parliamentarians, and officials appointed by presidential decree have immunity from prosecution on corruption charges, insulating them from accountability. Laws designed to combat corruption do not extend to family members of officials or to political parties.

Article 60 of the April 2016 law “Bearing Measures for the Prevention and Punishment of Corruption and Related Offenses” regulates conflicts of interest, including in awarding government procurement. Burundian legislation criminalizes bribery of public officials, but there is no specific requirement for private companies to establish internal codes of conduct.

Burundi is a signatory to the UN Anti-Corruption Convention and the OECD Convention on Combating Bribery. Burundi has also been a member of the East African Anti-Corruption Authority since joining the EAC in 2007. The country does not provide protections to NGOs involved in investigating corruption.

A number of U.S. firms have specifically noted corruption as an obstacle to direct investment in Burundi. Corruption is most pervasive in the award of licenses and concessions, which takes place in a non-transparent environment with frequent allegations of bribery and cronyism. Customs officials are also reportedly corrupt, regularly extorting bribes from exporters and importers.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Name: Roger Ndikumana
Title: Commissaire Général
Organization: Anti-Corruption Brigade
Address: PO Box 890 Bujumbura
Telephone Number: (+257) 22 25 62 37
Email Address: brigadeanticorruption@yahoo.fr

Contact at a “watchdog” organization (international, regional, local, or nongovernmental organization operating in the country/economy that monitors corruption, such as Transparency International):

Name: Gabriel Rufyiri
Title: President
Organization: OLUCOME
Address: 47, Chaussée Prince Louis Rwagasore, n°47, 1st Floor
Telephone Number: (+257) 22 25 20 20 /22 25 89 00
Email Address: rufyirig@gmail.com / olucome2003@gmail.com

10. Political and Security Environment

Burundi has experienced cycles of ethnic and political violence since its independence in 1962. Periods before and after national elections have often been marked by political violence and civil disturbance. During the reporting period, the political turmoil associated with the 2015 elections and failed coup has ceased, but tensions and uncertainties related to the upcoming 2020 elections remain.

Cameroon

3. Legal Regime

Transparency of the Regulatory System

Cameroon has good laws, most of which are consistent with international business and legal norms.  Weak implementation and investigating capacity, a lack of understanding of international business practices, and corruption in the judiciary limit the effectiveness of the rule of law.  In many circumstances, judicial loopholes persist, leading to arbitrary interpretations of the texts.

Some government ministries, though not all, consult with the general public and private sector organizations through targeted outreach to stakeholders, such as business associations or other groups.  There is no formal process for such consultations.  Ministries do not report the results of consultations, but it is not believed that such processes disadvantage U.S. or other foreign investors.

Cameroon’s National Assembly and Senate pass laws.  The President proposes bills and then executes laws.  Though there is technically a separation of powers, the Presidency is the supreme rule-making and regulatory authority.  Regions and municipalities have little additional regulatory authority beyond that of the central government.  Cameroon is a member of CEMAC and is thus subject to its regulations, though implementation is a weak point.  CEMAC’s central bank, BEAC, controls monetary policy and is the de facto finance regulator, in coordination with the Ministry of Finance.

Cameroon does not meet the minimum standards of fiscal transparency.  Many of the state-owned enterprises do not have public accounts.  There are only three publicly listed companies on the Douala Stock Exchange.  All three use the Organization for the Harmonization of Business Law in Africa (OHADA) accounting system, which does not conform with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) standards.

Draft bills and regulations are not made available for public comment.  The website for the Office of the Prime Minister (www.spm.gov.cm ) contains PDF versions of most new regulatory actions published in the Cameroon Tribune, the country’s newspaper of record.

Cameroon has administrative courts that specialize in the application and enforcement of public laws.  From a strictly legal perspective, the Supreme Court has oversight on enforcement mechanisms, but a lack of separation of powers prevents the judiciary from carrying out its responsibilities. There have been no new regulatory or enforcement reforms announced since the last Investment Climate Statement.

Ministries and regulatory agencies do not develop forward regulatory plans, i.e., a public list of anticipated regulatory changes or proposals intended to be adopted/implemented within a specified period.  Ministries do not have a legal obligation to publish the text of proposed regulations before their enactment.  There is no period of time set by law for the text of the proposed regulations to be publicly available.  There is no specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.

The National Institute of Statistics (INS) conducts surveys and produces statistics, which are meant to inform policy decisions.  Some of these statistics are cited in government documents when ministries are drafting legislative proposals or during parliamentary debates. Quantitative analysis conducted by the INS have often been used by multilateral lenders such as the IMF, the World Bank, and the African Development Bank.  However, scientific or data-driven assessments of new regulations are limited; public comments are not the main drivers of regulations.

Cameroon does not meet the minimum standards of fiscal transparency due in large part to the opacity of state-owned companies.  A public national budget is produced each year, but there is little adherence to the document.  Thanks to the IMF’s Extended Credit Facility conditionality, information on public debt is fairly reliable and available.

International Regulatory Considerations

Cameroon is a member of the Central African Economic and Monetary Community (CEMAC). In theory, CEMAC regulations supersede those of individual members, though recent reforms by CEMAC’s central bank, BEAC, have met stiff resistance from individual member states, including Cameroon.

The government requires use of the Organization for the Harmonization of Business Law in Africa (OHADA) accounting system.  No other norms or standards are referenced in the country’s regulatory system.

Cameroon joined the World Trade Organization (WTO) on December 13, 1995 and was previously a member of the General Agreement on Taxes and Tariffs.  On March 11, 2019, Cameroon was suspended from the WTO for failure to meet its designated 180 million Central African Franc (USD 308,000) contribution to the organization.  The government of Cameroon is expected to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

The Cameroonian legal system is a legacy of French, German (Codified Laws), and English (Common law) colonization.  There is also the traditional ethnological legal system, which varies for each ethnic group.  The government wants to harmonize these different legal traditions to equip Cameroon with laws that are applicable across the country and to reduce the need to navigate different legal systems.  This project, however, is being met with stiff resistance from English-speaking lawyers, who claim that the initiative will undermine their heritage.

In terms of standards, Cameroon’s commercial legal system follows the OHADA rules, which are supposed to be aligned with International Financial Reporting Standards (IFRS).  Enforcement is weak partly because of lack of capacity.  Cameroon does not train enough specialized judges in the commercial and economic fields.  Consequently, poor enforcement of laws and accounting standards tends to create confusion for foreign investors.  Despite efforts to align OHADA standards to international norms, government accounting regulations remain obsolete in the context of rapid developments in international finance and capital markets.

To circumvent the problem, U.S. enterprises and investors often maintain two sets of accounting records, one in accordance with U.S. GAAP or suitable international standards, and another set to address the OHADA standards and government reporting requirements.

The judicial system is not independent of the executive branch.  The executive regularly interferes in judiciary matters.  The current judicial process is not procedurally competent, fair, or reliable.  Endemic corruption, lack of funding, and political considerations makes the courts unable to function as independent arbiters of disputes.

Arbitration is becoming the solution of choice to solve business disputes in Cameroon.  Arbitration is in the OHADA corporate law.  Since OHADA is a supra national law, Cameroon is bound by its decisions.

Regulations and enforcement actions are appealable, and they are adjudicated in the national court system.  Due to the court’s lack of objectivity, few businesses attempt to appeal unfavorable rulings.

Laws and Regulations on Foreign Direct Investment

Foreign direct investments are governed by Law No. 2013/004 of 18 April 2013, which defines incentives for private investment in Cameroon, while proposing generic and special incentives and affirming the government’s responsibilities with regard to private investors.  The law remains valid for domestic and foreign investors.  Additional laws and regulations that refer to specific economic sectors are available on the website of the Ministry of Finance (http://www.minfi.gov.cm/index.php/en/documents ).

The 2020 finance law, passed in December 2019, is the main new legal instruments to have been published  in the past year.  It contains new taxes and two exonerations notably on the Value Added Taxes.  Full implementation is expected over 2020, and many of the results are not fully understood.  The text of the law can be found here .

The Cameroon Investment Promotion Agency is the primary or “one-stop-shop” website for investment that provides relevant laws, rules, procedures, and reporting requirements for investors (https://investincameroon.net/en/ ).

Competition and Anti-Trust Laws

The National Competition Commission handles anti-competition and anti-trust disputes.  In some cases, the regulator of a specific economic sector can play the anti-trust role.  State-owned companies are often granted monopoly or monopsony status in their markets.

Expropriation and Compensation

Decree N°.85-9 of 4 July 1985 and the subsequent implementation of Decree N°.87-1872 of December 16, 1987, lay down the procedure governing expropriation for public purposes and conditions for compensation.  Some of the provisions of these legal texts were repealed by Instruction n°005/I/Y.25/MINDAF/D220 of December 29, 2005.  Essentially, for the general public interest, the State may expropriate privately owned land.  The laws also lay down the formalities to be observed within the context of the procedure, both at the central and local levels.

In recent years, the government of Cameroon has expropriated property in the context of the construction of large infrastructure projects such as roads and hydroelectric dams.  The government has a compensation process in place to meet the losses of those affected by such decisions.

Despite weakness in the actual implementation and execution of laws on the ground, compensation after expropriation generally follows a due process.  There are no cases of indirect expropriation, confiscatory tax regimes, or regulatory actions that deprive investors of substantial economic benefits from their investments.  However, serious allegations of corruption have plagued compensation procedures over the last decade.  These incidents, often carried out by civil servants, have undermined trust in the process.

Dispute Settlement

ICSID Convention and New York Convention

Cameroon ratified the “International Centre for Settlement of Investment Disputes” (ICSID) Convention on January 3, 1967 and the New York Convention on February 19, 1988.  There is no specific domestic legislation providing for enforcement under the 1958 New York Convention and for the enforcement of awards under the ICSID Convention.

Investor-State Dispute Settlement

The OHADA-signatory nations adopted a uniform act on arbitration (the Uniform Act) on March 11, 1999.  The Uniform Act sets out the basic rules applicable to any arbitration, where the seat of arbitration is located in an OHADA member state.  The Uniform Act is based on the United Nations Commission on International Trade Law (UNCITRAL) model law.  It supersedes the national laws on arbitration of the OHADA states.  Cameroon’s arbitration law is contained in its code of civil and commercial procedure in the third volume, Articles 576 to 601.

Cameroon has a Bilateral Investment Treaty (BIT) with the United States.  There have been no claims against the BIT since it came into force in 1989.  While there have been disputes between Cameroonian partners and U.S. companies, few have risen to the level of requiring arbitration.  Misunderstandings between partners have led to conflicts, but such cases have been infrequent over the past 10 years.

Local courts may recognize foreign arbitral awards issued against the government, but they are not well equipped to enforce such decisions.  Post is aware of several such awards against state-owned companies that have not been enforced.  In general, foreign investors complain more about administrative harassment or bottlenecks, and less about extrajudicial actions.

International Commercial Arbitration and Foreign Courts

The OHADA system serves both as domestic and primary reference legislation for alternative dispute resolution but is rarely used.  GICAM, the country’s largest business lobby group, has an arbitration center based in Douala.  In principle, local courts have the power to recognize and enforce foreign arbitral awards issued against the government if found at fault.

As a treaty, the OHADA prevails over domestic laws.  An international arbitration award can prevail especially if operating through the OHADA framework.  The Common Court of Justice and Arbitration (CCJA) enforced under OHADA are both an arbitration institution and a judicial court, with a remit covering all the OHADA states.

Judicial processes are bureaucratic, expensive, time-intensive, and lengthy.  This is true even for domestic and state-owned companies, which like their foreign competitors, also suffer from the weaknesses of the legal system and are not guaranteed any better treatment in case of dispute.

In a prominent November 2019 case, the general manager of a state-owned hydrocarbon distribution company complained that debts owed by the state-owned electricity company, in combination with frequent power cuts, had caused millions of dollars in financial losses.  Instead of addressing the issue or seeking arbitration, the company fired the manager.

Bankruptcy Regulations

Cameroon has bankruptcy laws which recognize the right of creditors, the equity of shareholders and other types of liabilities.  Bankruptcy is not criminalized unless it can be proven that it is a deliberate collusion to avoid tax or mislead investors.  In 2020, Cameroon stands at 129 in the World Bank’s ranking of 190 economies on the ease of resolving insolvency.  According to data collected by Doing Business 2019, resolving insolvency takes 2.8 years on average and costs 33.5 percent of the debtor’s estate, with the most likely outcome being that the company will be sold piecemeal.  The average recovery rate is 15.8 cents on the dollar.

5. Protection of Property Rights

Real Property

Property rights are recognized by law, but Cameroon’s weak judiciary makes enforcement sporadic.  For mortgage transactions between two private parties, a proper contract is required for the agreement to be binding and enforceable in the courts.  Liens have to be recorded in the contract.  A registry of land title exists in Cameroon.  The land rights of indigenous peoples, tribes, and farmers are recognized in the Constitution.  Existing legislation does not discriminate against foreign landowners.

Records from the Ministry of State Property and Land Tenure (French acronym “MINDAF”) indicate that land registration rates have not significantly increased since colonial times.  Between 1884 and 2005, only 125,000 title deeds were issued.  On average, this represents approximately 1,000 titles per year, covering less than 2 percent of the land in Cameroon.  In 2009, a study by the African Development Bank (AfDB) identified other distinctive patterns in land ownership.  For example, formal land registration is more common in urban (60 percent) than in rural areas.

Land disputes are common between Cameroonian citizens.  The disputes are generally caused by non-respect of commercial sales contracts or by informal sales of land.  Illegal occupations of lands are also common.  Globally, Cameroon stands at 177 in the ranking of 190 economies on the ease of registering property in the World Bank’s Doing Business Report 2020.

Intellectual Property Rights

The legal structure for Intellectual Property Rights (IPR) and corresponding enforcement mechanisms are weak.  IPR infringement  is especially common in the media, pharmaceuticals, software, and print industries.  Theft is common. To secure a trademark registration right, a Cameroon attorney must prepare and file a trademark application  with the African Organization for Intellectual Property Rights (OAPI). The courts are responsible for enforcement.

There were no new IPR-related laws or regulations enacted during the previous year.  The government seizes and publicly burns counterfeit goods. These actions are not documented systematically, and no cumulative data exists on the seizures.  Cameroon is not listed in the United States Trade Representative (USTR)  Special 301 Report or the Notorious Markets List.  For additional information about national laws and points of contact at local IP offices, see WIPO’s country profiles at http://www.wipo.int/directory/en/.

7. State-Owned Enterprises

Cameroon has at least 200 SOEs.  Roughly 70 percent of SOEs are profit-oriented, though most are a net negative on government finances.  Some provide public services.  Many SOEs are so dominant in their markets that they act as de facto regulators, specifically in telecommunications and media.  The Government of Cameroon has over 130 state-owned companies in which it has majority ownership, and which operate in key sectors of the economy including agribusiness, energy, and mining.  SOEs are also present in real estate, transportation, services, information & communication, finance, and travel.

In 2017, the National Assembly voted into law a new regulation to govern SOEs.  The stated objective is to improve the services offered and the competitiveness of public companies, in line with the development objectives of the country.  Some of the innovations of this law include the diversification of the investment universe of SOEs, modern control through reporting requirements, and compliance with modern governance principles.  As of 2020, it does not appear that any of these objectives have been completed.

SOEs competing in the domestic market receive non-market based advantages from the Cameroonian government.  They receive taxpayer subsidies, and in many markets, serve as de facto regulators.  They also have a history of accumulating unpaid tax arrears while at the same time benefitting from preferential access to land and to public funds through State interventions.

The Supreme Audit Chamber of Cameroon indicates in its yearly reports that SOEs are not financially transparent.  Only about 22 percent of these structures publish financial accounts.  Other reports have highlighted corruption cases involving managers of SOEs and unveiled inefficiencies, severe dysfunctions, and opacity of the management of SOEs.  These problems are exacerbated by the fact that over the past years, the government has not imposed any performance targets, productivity requirements, and quality of service standards nor any significant budget constraints on SOEs.  The governing boards and senior executive teams are political appointees and connected individuals.  The SOEs have means to avoid tax burdens levied on private enterprises, receive specialized consideration for subsidies, and enhanced operating budgets, and obtain generally preferential treatment from the government (including courts).

Privatization Program

Cameroon enacted major privatization policies in the 1990s and early 2000s with the encouragement of international donors such as the International Monetary Fund and the World Bank.  The process has been stalled for over a decade, but market pressures continue to mount for additional privatization efforts.  We estimate that 30 companies have undergone some form of privatization since 2004.  The government has openly discussed privatization of the national airline, telecommunications company, the oil sector, and agribusinesses, but little has occurred.

In general privatization appears to be on hold.  The government favors Public Private Partnerships or some variations of outsourcing of/contractual management, with the State retaining some ownership of assets or of the business, rather than outright privatization.  In some cases, the State also prefers to take participation in ventures, such as mining companies, rather than creating a state-owned company.  Yet, in at least one case, the government has appeared to be reversing privatization.  This is the case for the country’s water provider, CAMWATER.  Until 2019, the government had outsourced distribution to a private operator. In April 2019, the State regained control of infrastructure management, distribution and commercialization of potable water throughout the country, and there are no indications that this situation will change in 2020.

Foreign investors can and do participate in the privatization programs.  According to some analysts, of the 30 State-owned companies were privatized before 2004, foreign bidders won the majority (22).  For example, British private equity firm owns the controlling share in ENEO, the country’s electricity monopoly.

The public bidding on tender offers is transparent.  They are advertised in the media, but the actual process of awarding contracts may still be tainted by corruption, particularly on large projects.  The listing of public tenders in the Cameroon Tribune newspaper and publication of which firms received the contract do not guarantee a fully transparent process of awards.

9. Corruption

Corruption is punishable under sections 134 and 134 (a) of the Pena1 Code of Cameroon.   Despite these rules, corruption remains endemic in the country.  In 2019, Cameroon ranked 153 (of 180 countries) in Transparency International’s Corruption Perception Index.  Arrests of high-ranking officials for corruption are widely viewed as political.

Anti-corruption laws are applicable to all citizens and institutions throughout the national territory. If Cameroon has laws or regulations to counter conflict-of-interest in awarding contracts or government procurement, Post is unaware of them.  U.S. firms indicate that corruption is most pervasive in government procurement, award of licenses or concessions, transfers, performance requirements, dispute settlement, regulatory system, customs, and taxation.

The National Anti-corruption Commission (CONAC) recently began encouraging private companies to establish internal codes of conduct and ethics committees to review practices.  Post is unaware of how many companies have instituted either program.  Bribery of government officials remains common.  While some companies use internal controls to detect and prevent such bribery, Post is unaware of how widespread these internal controls are.

Cameroon is signatory to the United Nations and the African Union anti-corruption initiatives, but the international initiatives have practical limited effects on the enforcement of laws in the country.  Post is unaware of any NGO’s involvement in investigating corruption.  The government prefers the state-controlled anti-corruption commission, CONAC, to investigate potential cases. U.S. firms indicate that corruption is most pervasive in government procurement, award of licenses or concessions, transfers, performance requirements, dispute settlement, regulatory system, customs, and taxation.

Resources to Report Corruption

NAME:  Rev. Dieudonné MASSI GAMS
TITLE:  Chairman
ORGANIZATION:  National Anti-Corruption Commission
ADDRESS:  B.P. 33200 Yaoundé Cameroon
TELEPHONE NUMBER:  (+237) 22 20 37 32
EMAIL ADDRESS: www.conac-cameroun.net
infos@conac-cameroun.net

NAME:  Barrister Charles NGUINI
TITLE:  Country Representative
ORGANIZATION:  Transparency International Cameroon
ADDRESS:  Nouvelle route Bastos, rue 1.839,  BP : 4562 Yaoundé
TELEPHONE NUMBER:  (+237) 33 15 63 78
EMAIL ADDRESS: transparency@ti-cameroon.org

10. Political and Security Environment

Cameroon faces several security challenges.  An armed secessionist uprising is entering its fourth year in the English speaking Southwest and Northwest Regions.  Boko Haram and ISIS-West Africa are resurgent in the Far North Region.  In the Adamoua and East Regions, a wave of kidnappings and the presence of refugees from the Central African Republic has led to increased military presence.  Terrorists and secessionist alike have targeted economic assets in order to affect political change.  The country is growing increasingly more politicized and insecure.

In the Anglophone regions, secessionists leaders have claimed responsibility on social media, for the arsons that destroyed hospitals, schools, bridges and roads. Secessionists have also posted videos of executions and beheading on the internet while also claiming several kidnappings for ransom. Human rights organizations have accused soldiers for burning down houses in many villages. In the Far North of Cameroon, Boko Haram fighters have looted villages and cattle and also kidnapped and abused women.  Consequently, several infrastructures projects have grounded to a halt.

Cameroon is growing increasingly insecure.  While the government has made platitudes toward resolving the Anglophone crisis, little of note has actually been done.  Security forces are stretched thin, allowing Boko Haram and ISIS-West Africa to maintain a footprint in the country’s Far North Region.  Political dissent is immediately stamped out.

Chad

3. Legal Regime

Transparency of the Regulatory System

Chad implements laws to foster competition and establish clear rules based on Uniform Acts produced by the Organization for the Harmonization of Business Law in Africa (OHADA, Organisation pour l’Harmonisation en Afrique du Droit des Affaires, www.ohada.com ). However, certain Chadian and foreign companies may encounter difficulties from well-established companies with a corner on the market that discourages competition.

Regulations and financial policies generally do not impede competition in the financial sector. Legal, regulatory, and accounting systems pertaining to banking are transparent and consistent with international norms. Chad began using OHADA’s accounting system in 2002, bringing its national standards into harmony with accounting systems throughout the region. Several international accounting firms have offices in Chad. However, while accounting, legal, and regulatory procedures are consistent with international norms, some local firms do not use generally accepted standards and procedures in their business practices.

Chad develops forward regulatory plans to encourage foreign investment and budget support. Government ministries draft regulations, subject to approval by the Secretary General of the Government, Council of Ministers, National Assembly, and President. National regulations are most relevant to foreign investors. There are no informal regulatory processes managed by nongovernmental organizations or private sector associations. The GOC occasionally provides opportunities for local associations, such as the National Council of Employers (CNPT, Conseil National du Patronat Tchadien) or the CCIAMA to comment on proposed laws and regulations pertaining to investment. All contracts and practices are subject to legal review, which can be weak.

The Government publishes all budget information, including on the Ministry of Finance and Budget website. Other proposed laws and regulations are not published in draft form for public comment. The Observatory on Public Finance is an online framework for the dissemination of public finance data and the operationalization of the Code of Transparency and Good Governance. This code is an implementation of one of the six CEMAC Directives on the new harmonized framework for public financial management.

The Presidential Council to Improve the Business Climate was announced in 2018 and inaugurated in late 2019. This effort to reform Chad’s investment climate and improve Chad’s performance in World Bank assessments is still in its embryonic stage. The global spread of COVID-19 in early 2020 drew the GOC’s attention to pandemic response.

Chad is not listed on www.businessfacilitation.org .

International Regulatory Considerations

Chad has been a member of the WTO since October 19, 1996 and a member of GATT since July 12, 1963. Chad is a member of OHADA and the Central African Economic and Monetary Community (CEMAC, Communaute Economique et Financiere de l’Afrique Centrale, www.cemac.int ). Since 2017, Chad is gradually implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts. Chad’s banking sector is regulated by COBAC (Commission Bancaire de l’Afrique Centrale), a regional agency.

Legal System and Judicial Independence

Chad’s legal system and commercial law are based on the French Civil Code. The constitution recognizes customary and traditional law if it does not interfere with public order or constitutional rights. Chad’s judicial system rules on commercial disputes in a limited technical capacity. The Chadian President appoints judges without National Assembly confirmation, and thus the judiciary may be subject to executive influence. Courts normally award monetary judgments in local currency, although it may designate awards in foreign currencies based on the circumstances of the disputed transaction.

Chad’s commercial laws are based on standards promulgated by CEMAC, OHADA, and the Economic Community of Central African States (CEEAC, Communaute Economique des Etats de l’Afrique Centrale, http://www.ceeac-eccas.org ). The Government and National Assembly are in the process of adopting legislation to comply fully with all these provisions.

Specialized commercial tribunal courts were authorized in 1998 and operationalized in 2004. These tribunals exist in five major cities but lack adequate technical capacity to perform their duties. Firms not satisfied with judgments in these tribunals may appeal to OHADA’s regional court in Abidjan, Ivory Coast, that ensures uniformity and consistent legal interpretations across its member countries. Several Chadian companies have done so. OHADA also allows foreign companies to utilize tribunals outside of Chad, generally in Paris, France, to adjudicate business disputes. Finally, CEMAC established a regional court in N’Djamena in 2001 to hear business disputes, but this body is not widely used.

Contracts and investment agreements can stipulate arbitration procedures and jurisdictions for settlement of disputes. If both parties agree and settlements do not violate Chadian law, Chadian courts will respect the decisions of courts in the nations where particular agreements were signed, including the United States. This principle also applies to disputes between foreign companies and the Chadian Government. Such disputes can be arbitrated by the International Chamber of Commerce (ICC). Foreign companies frequently choose to include clauses in their contract to mandate ICC arbitration.

Bilateral judicial cooperation is in effect between Chad and certain nations. Chad signed the Antananarivo Convention in 1970, covering the discharge of judicial decisions and serving of legal documents, with eleven other former French colonies (Benin, Burkina Faso, Cameroon, CAR, Congo-Brazzaville, Gabon, Cote d’Ivoire, Madagascar, Mauritania, Niger, and Senegal). Chad has similar arrangements in place with France, Nigeria, and Sudan.

Laws and Regulations on Foreign Direct Investment

The National Investment Charter encourages foreign direct investment. Chad is a member of the Central African Economic and Monetary Community (CEMAC, Communaute Economique et Financiere de l’Afrique Centrale, www.cemac.int ) and the Organization for the Harmonization of Business Law in Africa (OHADA, Organisation pour l’Harmonisation en Afrique du Droit des Affaires, www.ohada.com ). Since 2017, Chad is gradually implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts.

Foreign investors using the court system are not generally subject to executive interference. In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes. Companies may also access the OHADA’s court located in Abidjan, Côte d’Ivoire.

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers a one-stop shop for filing the legal forms needed to start a business. The process officially takes 72 hours and is the most important legal requirement for investment. ANIE’s website (www.anie-tchad.com ) provides additional information.

Competition and Anti-Trust Laws

Regulation of competition is covered by the OHADA Uniform Acts that form the basis for Chadian business and economic laws and regulations. The Office of Competition in Chad’s Ministry of Industrial and Commercial Development & Private Sector Promotion reviews transactions for competition-related concerns.

Expropriation and Compensation

Chadian law protects businesses from nationalization and expropriation, except in cases where expropriation is in the public interest. There were no government expropriations of foreign-owned property in 2019. There are no indications that the GOC intends to expropriate foreign property in the near future.

Chad’s Fourth Republic Constitution adopted in May 2018 prohibits seizure of private property except in cases of urgent public need, of which there are no known cases. A 1967 Land Law prohibits deprivation of ownership without due process, stipulating that the state may not take possession of expropriated properties until 15 days after the payment of compensation. The government continues to work on reform of the 1967 law.

Dispute Settlement

ICSID Convention and New York Convention

Chad has been a signatory and contracting state of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) since 1966.

Chad is not a contracting state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Arbitration Convention”).

Investor-State Dispute Settlement

Chad is signatory to an investment agreement among the member states of CEMAC, CEAC, and OHADA. The OHADA Investment Arrangement, with provisions for securities, arbitration, dispute settlement, bankruptcy, recovery, and other aspects of commercial regulation, has defined the commercial rights of several economic stakeholders, e.g., the Chadian Treasury, and provides for the enforcement of foreign arbitral awards. Chad has no Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter with the United States.

There is no formal record of the government’s handling of investment disputes. Some U.S. and other foreign investors have been involved in disputes with the GOC, particularly over issues regarding taxes and duties, though there are no official statistics. Investment disputes involving foreign investors are frequently arbitrated by an independent body.

International Commercial Arbitration and Foreign Courts

In addition to independent courts, such as the ICC, Chad’s constitution recognizes customary and traditional law as long as it does not interfere with public order or constitutional rights. As most businesses operate in the informal sector, customary and traditional law function as alternative dispute resolution (ADR) mechanisms when parties are from the same tribe or clan and express their desire to settle outside of the formal court.

Specialized commercial tribunal courts were authorized in 1998 and became operational in 2004. These tribunals exist in five major cities but lack adequate capacity to perform their duties. The N’Djamena Commercial Tribunal has heard disputes involving foreign companies.

Foreign investors using the court system are not generally subject to executive interference. In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes. Companies may also access OHADA’s court located in Abidjan, Côte d’Ivoire.

Bankruptcy Regulations

Chad’s bankruptcy laws are based on OHADA Uniform Acts. According to Section 3, Articles 234 – 239 of OHADA’s Uniform Insolvency Act, creditors and equity shareholders may designate trustees to lodge complaints or claims to the commercial court collectively or individually. These laws criminalize bankruptcy and the OHADA provisions grant Chad the discretion to apply its own sentences.

The World Bank’s 2020 Doing Business Report ranks Chad’s ease of resolving insolvency  at 155 of 190. This is a decrease of five positions from 2018. https://www.doingbusiness.org/en/data/exploreeconomies/chad/#resolving-insolvency

5. Protection of Property Rights

Real Property

The Chadian Civil Code protects property rights. Since 2013, landowners may register land titles with the One-Stop Land Titling Office (Guichet Unique pour les Affaires Foncieres). However, enforcement of these rights is difficult because a majority of landowners do not have a title or a deed for their property.

The office of Domain and Registration (Direction de Domaine et Enregistrement) in the Ministry of Finance and Budget is responsible for recording property deeds and mortgages. In practice, this office asserts authority only in urban areas; rural property titles are managed by traditional leaders who apply customary law. Chadian courts frequently deal with cases of multiple or conflicting titles to the same property. In cases of multiple titles, the earliest title issued usually has precedence. Fraud is common in property transactions. By law, all land for which no title exists is owned by the government and can only be given to a separate entity by Presidential decree. There have been incidents in which the government has reclaimed land for which individuals held titles, which government officials granted to other individuals without the backing of Presidential decrees.

The GOC does not provide clear definitions and protections of traditional use rights of indigenous peoples, tribes, or farmers.

The World Bank’s 2020 Doing Business Report ranks Chad 131 of 190 in ease of registering property. The report cites the high cost of property valuation plus other associated costs for registering property as the major impediment. Time required and number of procedures are on par with the rest of Sub-Saharan Africa.

Intellectual Property Rights

Chad is a member of the African Intellectual Property Organization (OAPI) and the World Intellectual Property Organization (WIPO). Chad ratified the revised Bangui Agreement (1999) in 2000 and the Berne Convention in 1971. The GOC adheres to OAPI rules within the constraints of its administrative capacity.

Within the Ministry responsible for trade, the Department of Industrial Property and Technology addresses intellectual property rights (IPR) issues. This department is the National Liaison Unit (SNL) within the OAPI and is the designated point of contact under Article 69 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Counterfeit pharmaceuticals and artistic works, including music and videos, are common in Chad. Counterfeit watches, sports clothing, footwear, jeans, cosmetics, perfumes, and other goods are also readily available on the Chadian market. These products are not produced locally and are generally imported through informal channels. Despite limited resources, Chadian customs officials make occasional efforts to enforce copyright laws, normally by seizing and burning counterfeit medicines, CDs, and mobile phones.

Chad does not regularly track and report on seizures of counterfeit goods. Chadian authorities will occasionally announce such a seizure in the local press. Customs officers have the authority to seize and destroy counterfeit goods ex officio. The Government pays for storage and destruction of such goods.

Chad is not listed on the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

All Chadian SOEs operate under the umbrella of government ministries. SOE senior management reports to the minister responsible for the relevant sector, as well as a board of directors and an executive board. The President of the Republic appoints SOE boards of directors, executive boards, and CEOs. The boards of directors give general directives over the year, while the executive boards manage general guidelines set by the boards of directors. Some executive directors consult with their respective ministries before making business decisions.

The GOC operates SOEs in a number of sectors, including Energy and Mining; Agriculture, Construction, Building and Heavy Equipment, Information and Communication, in water supply and cement production. The percentage SOEs allocate to research and development (R&D) is unknown.

There were no reports of discriminatory action taken by SOEs against the interests of foreign investors in 2019, and some foreign companies operated in direct competition with SOEs. Chad’s Public Tender Code (PTC) provides preferential treatment for domestic competitors, including SOEs.

SOEs are not subject to the same tax burden and tax rebate policies as their private sector competitors and are often afforded material advantages such as preferential access to land and raw materials. SOEs receive government subsidies under the national budget; however, in practice they do not respect the budget. State and company funds are often commingled.

Chad is not a party to the Agreement on Government Procurement within the framework of the WTO. Chadian practices are not consistent with the OECD Guidelines on Corporate Governance for SOEs.

Privatization Program

Foreign investors are permitted and encouraged to participate in the privatization process. There is a public, non-discriminatory bidding process. Having a local contact in Chad to assist with the bidding process is important. To combat corruption, the GOC has recently hired private international companies to oversee the bidding process for government tenders. Despite the GOC’s willingness to privatize loss-making SOEs, there remain several obstacles to privatization.

The Chamber of Commerce submitted a ‘white paper’ (livre blanc) in 2018 with recommendations for the GOC to facilitate and simplify private sector operations, including establishing a Business Observatory and a Presidential Council, which would implement the over 70 recommendations to improve the investment climate in Chad. The Presidential Council was inaugurated in late 2019.

Chad is considering privatization in the following sectors:

  • Information & Communication (SOTEL Tchad)
  • Food Processing & Packaging (the Société Tchadienne de Jus de Fruit (STJF), which produces fruit juice in Doba; and the Société Moderne de Abattoires (SMA), a slaughterhouse and meat packaging company in Farcha)

9. Corruption

Foreign investors should also be aware that corruption remains common in Chad. Corruption in Chad remains a significant deterrent to U.S. investment. Corruption is most pervasive in government procurement, award of licenses or concessions, dispute settlement, regulation enforcement, customs, and taxation.

Chad is not a signatory country of the UN Convention Against Corruption (UNCAC). Chad is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“the OECD Anti-Bribery Convention”).

There is an independent Court of Auditors (Cour des Comptes), equivalent to a supreme audit institution (SAI), to enhance independent oversight of government decisions, although its members are nominated by presidential decree. Concurrently, the GOC created a General Inspectorate for State Control within the Presidency to oversee government accountability. No reports have been published, however. In addition to these bodies, the National Assembly’s Finance Committee carries out verifications of the GOC’s annual financial statement. No audits have been made publicly available during the reporting period.

A February 2000 anti-corruption law stipulates penalties for corrupt practices. The law does not single out family members and political parties. As in other developing countries, low salaries for most civil servants, judicial employees and law enforcement officials, coupled with a weak state system and a culture of rent seeking, have contributed to corruption.

The Ministry of Finance and Budget set up a toll-free number (700) to fight corruption and embezzlement. According to the Minister of Finance and Budget, the toll-free number 700 allows each economic operator or any other individual to alert the Inspectorate General of Finance to denounce any unscrupulous agent who seeks to be corrupted in the context of the issue of administrative paper or the payment of a tax. There are no specific laws to counter conflict of interest. The GOC does not require private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.

A prominent local NGO, the Center for Studies and Research on Governance, Extractive Industries and Sustainable Development (CERGIED), formerly GRAMP-TC (Groupe Alternatif de Recherche et de Monitoring de Petrole – Tchad), tracks government expenditures of oil revenue. There are no indications that anti-corruption laws are enforced differently on foreign investors than on Chadian citizens. There is no specific protection for NGOs involved in investigating corruption.

Corruption is an obstacle to FDI. It is most pervasive in government procurement, award of licenses or concessions, transfers, performance requirements, dispute settlement, regulatory system and customs or taxation.

Resources to Report Corruption

Government agency contact responsible for combating corruption:

Inspection Generale d’Etat
Ministry of Finance and Budget toll free number 700 (inside Chad)
Presidence de la Republique
Ndjamena, Chad
+235 22 51 51 39 / 22 51 44 37

Contact at watchdog organizations:

Gilbert Maoundonodji
Coordinator
CERGIED (formerly GRAMP –TC)
BP 4021, N’Djamena, Chad
+235 6058 2016 / 9317 7678
infos@cergied.org / secretariat@cergied.org / https://cergied.org/ 

10. Political and Security Environment

Chad has enjoyed political stability since 2008. There have been no reported incidents in recent years involving politically motivated damage to projects and/or installations, including during the 2008 disturbances. President Deby is completing his fifth elected presidential term and is eligible to participate in the next presidential elections, scheduled for April 2021. Socio-economic conditions occasionally spark demonstrations and protests against the Government. In many cases, the Government either denied permits for demonstrations or suppressed them using tear gas, arresting participants and organizers. Extended periods of reduced oil revenues add to socioeconomic stress. The spread of the COVID-19 pandemic strains Chad’s limited medical infrastructure and disrupts trade routes with neighboring countries and international air travel.

Regional violent extremist organizations threaten Chadian and Western interests. Boko Haram’s violence has choked off vital trade routes with Nigeria and the road between N’Djamena and Douala, Cameroon, the principal port serving Chad. This has increased costs for imports and decreased exports due to border closures. Violent extremist organizations may threaten foreign investments along the Lake Chad Basin.

For up-to-date information on political and security conditions in Chad, please refer to the Consular Affairs Bureau’s Travel Warning and Country Specific Information at http://www.travel.state.gov. The Embassy encourages all U.S. Citizens visiting Chad to register with the Embassy upon arrival or online via the STEP program.

U.S. businesses and organizations in Chad are welcome to inquire at the Embassy about joining the Overseas Security Advisory Committee (OSAC).

France and Monaco

3. Legal Regime

Transparency of the Regulatory System

The French government has made considerable progress in the last decade on the transparency and accessibility of its regulatory system.  The government generally engages in industry and public consultation before drafting legislation or rulemaking through a regular but variable process directed by the relevant ministry.  However, the text of draft legislation is not always publicly available before parliamentary approval.  U.S. firms may also find it useful to become members of industry associations, which can play an influential role in developing government policies.  Even “observer” status can offer insight into new investment opportunities and greater access to government-sponsored projects.

To increase transparency in the legislative process, all ministries are required to attach an impact assessment to their draft bills.  The Prime Minister’s Secretariat General (SGG for Secretariat General du Gouvernement) is responsible for ensuring that impact studies are undertaken in the early stages of the drafting process.  The State Council (Conseil d’Etat), which must be consulted on all draft laws and regulations, may reject a draft bill if the impact assessment is inadequate.

After experimenting with new online consultations, the Macron Administration is regularly using this means to achieve consensus on its major reform bills.  These consultations are often open to professionals as well as citizens at large.  Another Macron innovation is to impose regular impact assessments after a bill has been implemented to ensure its maximum efficiency, revising, as necessary, provisions that do not work in favor of those that do.  Finally, the Macron Administration aims to make all regulations and laws available online by 2022.

Over past decades, major reforms have extended the investigative and decision-making powers of France’s Competition Authority.  On April 11, 2019, France implemented the European Competition Network (ECN) Directive, which widens the powers of all European national competition authorities to impose larger fines and temporary measures. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position.  It issues specific guidance on competition law compliance, and government ministers, companies, consumer organizations, and trade associations now have the right to petition the authority to investigate anti-competitive practices.  While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

France’s budget documents are comprehensive and cover all expenditures of the central government.  An annex to the budget also provides estimates of cost sharing contributions, though these are not included in the budget estimates.  In its spring report each year, the National Economic Commission outlines the deficits for the two previous years, the current year, and the year ahead, including consolidated figures on taxes, debt, and expenditures.  Since 1999, the budget accounts have also included contingent liabilities from government guarantees and pension liabilities.  The government publishes its debt data promptly on the French Treasury’s website and in other documents.  Data on nonnegotiable debt is available 15 days after the end of the month, and data on negotiable debt is available 35 days after the end of the month.  Annual data on debt guaranteed by the state is published in summary in the CGAF Report and in detail in the Compte de la dette publique.  More information can be found at: https://www.imf.org/external/np/rosc/fra/fiscal.htm 

International Regulatory Considerations

France is a founding member of the European Union, created in 1957.  As such, France incorporates EU laws and regulatory norms into its domestic law.  France has been a World Trade Organization (WTO) member since 1995 and a member of GATT since 1948.  While developing new draft regulations, the French government submits a copy to the WTO for review to ensure the prospective legislation is consistent with its WTO obligations.  France ratified the Trade Facilitation Agreement in October 2015 and has implemented all of its TFA commitments.

Legal System and Judicial Independence

French law is codified into what is sometimes referred to as the Napoleonic Code, but is officially the Code Civil des Francais, or French Civil Code.  Private law governs interactions between individuals (e.g., civil, commercial, and employment law) and public law governs the relationship between the government and the people (e.g., criminal, administrative, and constitutional law).

France has an administrative court system to challenge a decision by local governments and the national government; the State Council (Conseil d’Etat) is the appellate court.  France enforces foreign legal decisions such as judgments, rulings, and arbitral awards through the procedure of exequatur introduced before the Tribunal de Grande Instance (TGI), which is the court of original jurisdiction in the French legal system.

France’s Commercial Tribunal (Tribunal de Commerce or TDC) specializes in commercial litigation.  Magistrates of the commercial tribunals are lay judges, who are well known in the business community and have experience in the sectors they represent.  Decisions by the commercial courts can be appealed before the Court of Appeals. France’s judicial system is procedurally competent, fair, and reliable and is independent of the government.

The judiciary – although its members are state employees – is independent of the executive branch.  The judicial process in France is known to be competent, fair, thorough, and time-consuming.  There is a right of appeal.  The Appellate Court (cour d’appel) re-examines judgments rendered in civil, commercial, employment or criminal law cases.  It re-examines the legal basis of judgments, checking for errors in due process and reexamines case facts.  It may either confirm or set aside the judgment of the lower court, in whole or in part. Decisions of the Appellate Court may be appealed to the Highest Court in France (cour de cassation).

Laws and Regulations on Foreign Direct Investment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all sorts of remunerative activities.  U.S. investment in France is subject to the provisions of the Convention of Establishment between the United States of America and France, which was signed in 1959 and remains in force.  The rights it provides U.S. nationals and companies include:  rights equivalent to those of French nationals in all commercial activities (excluding communications, air transportation, water transportation, banking, the exploitation of natural resources, the production of electricity, and professions of a scientific, literary, artistic, and educational nature, as well as certain regulated professions like doctors and lawyers).  Treatment equivalent to that of French or third-country nationals is provided with respect to transfer of funds between France and the United States.  Property is protected from expropriation except for public purposes; in that case it is accompanied by payment that is just, realizable and prompt.

Potential investors can find relevant investment information and links to laws and investment regulations at http://www.businessfrance.fr/ .

Competition and Anti-Trust Laws

Major reforms have extended the investigative and decision-making powers of France’s Competition Authority.  France implemented the European Competition Network or ECN Directive on April 11, 2019, allowing the French Competition Authority to impose heftier fines (above €3 million / $3.3 million) and temporary measures to prevent an infringement that may cause harm.  The Authority issues decisions and opinions mostly on antitrust issues, but its influence on competition issues is growing.  For example, following a complaint in November 2019 by several French, European, and international associations of press publishers against Google over the use of their content online without compensation, the Authority ordered the U.S. company to start negotiating in good faith with news publishers over the use of their content online.  On December 20, 2019, Google was fined €150 million ($162 million) for abuse of dominant position.  Following an in-depth review of the online ad sector, the Competition Authority found Google Ads to be “opaque and difficult to understand” and applied in “an unfair and random manner.”

The Competition Authority launches regular in-depth investigations into various sectors of the economy, which may lead to formal investigations and fines. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position.  It issues specific guidance on competition law compliance.  Government ministers, companies, consumer organizations and trade associations have the right to petition the authority to investigate anti-competitive practices.  While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

A new law on Economic Growth, Activity and Equal Opportunities (known as the “Macron Law”), adopted in August 2016, vested the Competition Authority with the power to review mergers and alliances between retailers ex-ante (beforehand).  The law provides that all contracts binding a retail business to a distribution network shall expire at the same time.  This enables the retailer to switch to another distribution network more easily.  Furthermore, distributors are prohibited from restricting a retailer’s commercial activity via post-contract terms.  The civil fine incurred for restrictive practices can now amount to up to five percent of the business’s revenue earned in France

Expropriation and Compensation

In accordance with international law, the national or local governments cannot legally expropriate property to build public infrastructure without fair market compensation. There have been no expropriations of note during the reporting period.

Dispute Settlement

ICSID Convention and New York Convention

France is a member of the World Bank-based International Centre for Settlement of Investment Disputes (ICSID) Convention and a signatory to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention) which means local courts are obligated to enforce international arbitral awards under this system. The International Chamber of Commerce’s International Court of Arbitration (ICA) has been based in Paris since 1923.

France was one of the first countries to enact a modern arbitration law in 1980-1981. In 2011, the French Ministry of Justice issued Decree 2011-48, which introduced further international best practices into French arbitration procedural law. As a result, parties are free to agree orally to settle their disputes through arbitration, subject to standards of due process and a newly enacted principle of procedural efficiency and fairness.

Investor-State Dispute Settlement

The President of the Tribunal de Grande Instance (High Civil Court of First Instance) of Paris has the authority to issue orders related to ad-hoc international arbitration. Paris is the seat of the International Chamber of Commerce’s International Court of Arbitration, composed of representatives from 90 countries, that handles investment as well as commercial disputes.

France does not have a bilateral investment treaty with the United States.   The European Commission directly negotiates on behalf of the EU on foreign direct investment since it is part of the EU Common Commercial Policy.  In 2015, the EU agreed to pursue an investment court approach to investor-State dispute settlement.  While this model is included in the Comprehensive Economic and Trade Agreement (CETA) with Canada and the EU-Vietnam FTA, no actual court has yet been established in any form or context; no disputes have been brought under these post-2015 treaties.

International Commercial Arbitration and Foreign Courts

French law provides conditions for the recognition and the enforcement of foreign arbitral awards in relation to the New York Convention.  The provisions of French law are contained in the Code of Civil Procedure and the Code of Civil Enforcement Procedures.  The French Civil Code envisions several mechanisms of alternative dispute resolution (ADR) including out-of-court arbitration and conciliation where a judicial conciliator puts an end to a dispute. France is a member of UNCITRAL.  Local courts recognize and enforce foreign arbitral awards as mentioned above.  The recognition of judgments of foreign courts by French courts is possible, but judgements must be accompanied by the issuance of an exequatur – a legal document issued by a sovereign authority that permits the exercise or enforcement of a foreign judgement.

Bankruptcy Regulations

France has extensive and detailed bankruptcy laws and regulations.  Any creditor, regardless of the amount owed, may file suit in bankruptcy court against a debtor.  Foreign creditors, equity shareholders and foreign contract holders have the same rights as their French counterparts.  Monetary judgments by French courts on firms established in France are generally made in euros.  Not bankruptcy itself, but bankruptcy fraud – the misstatement by a debtor of his financial position in the context of a bankruptcy – is criminalized.  Under France’s bankruptcy code managers and other entities responsible for the bankruptcy of a French company are prevented from escaping liability by shielding their assets (Law 2012-346).  France has adopted a law that enables debtors to implement a restructuring plan with financial creditors only, without affecting trade creditors.  France’s Commercial Code incorporates European Directive 2014/59/EU establishing a framework for the recovery and resolution of claims on insolvent credit institutions and investment firms.  In the World Bank’s 2019 Doing Business Index, France was ranked 28th of 190 on ease of resolving insolvency.

The Bank of France, the country’s only credit monitor, maintains files on persons having written unfunded checks, having declared bankruptcy, or having participated in fraudulent activities. Commercial credit reporting agencies do not exist in France.

5. Protection of Property Rights

Real Property

Real property rights are regulated by the French civil code and are uniformly enforced. The World Bank’s Doing Business Index ranks France 32nd of 190 on registering property. French civil-law notaries (notaires) – highly specialized lawyers in private practice appointed as public officers by the Justice Ministry – handle residential and commercial conveyance and registration, contract drafting, company formation, successions, and estate planning. The official system of land registration (cadastre) is maintained by the French public land registry under the auspices of the French tax authority (Direction Generale des Finances Publiques or DGFiP), available online at http://www.cadastre.gouv.fr . Mortgages are widely available, usually for a 15-year period.

Intellectual Property Rights

France is a strong defender of intellectual property rights (IPR).  Under the French system, patents and trademarks protect industrial property, while copyrights protect literary/artistic property. By virtue of the Paris Convention , U.S. nationals have a priority period following filing of an application for a U.S. patent or trademark in which to file a corresponding application in France:  twelve months for patents and six months for trademarks.

Counterfeiting is a costly problem for French companies, and the government of France maintains strong legal protections and a robust enforcement mechanism to combat trafficking in counterfeit goods — from copies of luxury goods to fake medications — as well as the theft and illegal use of IPR.  The French Intellectual Property Code has been updated repeatedly over the years to address this challenge, most recently in 2019 with the implementation of the so-called Action Plan for Business Growth and Transformation or PACTE Law (“Plan d’Action pour la Croissance et la Transformation des Entreprises”).  This law reinforcing France’s anti-counterfeiting legislation and implements EU Directive 2015/2436 of the Trademark Reform Package.  It increases the Euro amount for damages to companies that are victims of counterfeiting and extends trademark protection to smartcard technology, certain geographic indications, plants, and agricultural seeds.  The new legislation also increases the statute of limitations for civil suits from three to ten years and strengthens the powers of customs officials to seize fake goods sent by mail or express freight.  France also adopted legislation in 2019 to implement EU Directive 2019/790 on Copyright and Related Rights in the Digital Single Market.

The government also reports on seizures of counterfeit goods.  In 2018, French Customs seized 5.4 million counterfeited goods, down from 8.5 million counterfeited goods in 2017.  However, in 2019, seizures increased by 49 percent, according to the French Customs Office. Cigarettes represented 45 percent of all seized goods.  France’s top private sector anti-counterfeiting organization, UNIFAB, called on the government in 2018 to launch a national public awareness campaign.  The government has been working on a plan to improve the coordination between the Customs Office, which investigates fraud cases, and the National Institute of Industrial Property, which oversees patents, trademarks, and industrial design rights.

France has robust laws against online piracy.  A government agency called the High Authority for the Dissemination of Artistic Works and the Protection of Rights on Internet (Haute Autorite pour la Diffusion des Œuvres et la Protection des droits sur Internet – HADOPI) administers a “graduated response” system of warnings and fines.  It has taken enforcement action against several online pirate sites.  HADOPI cooperates closely with the U.S. Patent and Trademark Office (USPTO) including pursuing voluntary arrangements that to single out awareness about intermediaries that facilitate or fund pirate sites. (Note that one of HADOPI’s tasks is to ensure that the technical measures used to protect works do not prevent the right of individuals to make personal copies of television programs for their private use.)  In December 2019, HADOPI released its yearly barometer of online cultural consumption showing that 26 percent of French people acquired and consumed music, films and television series through illegal sites (53 percent via streaming and 45 percent through direct or indirect download).  This figure has remained steady over the past few years.  Offenders risk fines of between €1,500 ($1,650) and €300,000 ($330,000) and/or up to three years imprisonment.

HADOPI was due to merge with France’s audiovisual watchdog CSA as part of a new draft law on audiovisual communication and cultural sovereignty in the digital age, tabled by the Minister of Culture in December 2019.  The reform was due in Parliament in March 2020 but was further delayed by the COVID-19 epidemic.

France does not appear on USTR’s 2020 Special 301 Report.  USTR’s 2019 Notorious Market report continues to list France as host to illicit streaming and copyright infringement websites.  The 2019 report also listed amazon.fr, based in France, noting alleged high levels of counterfeit goods on its platform (Note:  Other Amazon sites were also included in the report: amazon.ca in Canada, amazon.de in Germany, amazon.in in India, and amazon.co.uk in the United Kingdom.)

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

The 11 listed entities in which the French State maintains stakes at the federal level are Aeroports de Paris (50.63 percent), Airbus Group (10.96 percent), Air France-KLM (14.29 percent), EDF (83.58 percent), ENGIE (23.64 percent), Eramet (25.57 percent), La Française des Jeux (FDJ) (21.91 percent), Orange (a direct 13.39 percent stake and a 9.60 percent stake through Bpifrance), Renault (15.01 percent), Safran (11.23 percent), and Thales 25.68 percent).  Unlisted companies owned by the State include SNCF (rail), RATP (public transport), CDC (Caisse des depots et consignations) and La Banque Postale (bank).  In all, the government has majority and minority stakes in 88 firms, in a variety of sectors.

Private enterprises have the same access to financing as SOEs, including from state-owned banks or other state-owned investment vehicles.  SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors.  SOEs may get subsidies and other financial resources from the government.

France, as a member of the European Union, is party to the Agreement on Government Procurement (GPA) within the framework of the World Trade Organization.  Companies owned or controlled by the state behave largely like other companies in France and are subject to the same laws and tax code.  The Boards of SOEs operate according to accepted French corporate governance principles as set out in the (private sector) AFEP-MEDEF Code of Corporate Governance.  SOEs are required by law to publish an annual report, and the French Court of Audit conducts financial audits on all entities in which the state holds a majority interest.  The French government appoints representatives to the Boards of Directors of all companies in which it holds significant numbers of shares, and manages its portfolio through a special unit attached to the Ministry for the Economy and Finance Ministry, the shareholding agency APE (Agence de Participations de l’Etat).  The 2018-2019 APE annual report depicted a “State that invests in the future and protects its sovereignty.”  The State as a shareholder must set an example in terms of respect for the environment, gender equality and social responsibility. The report also highlighted that the State must protect its strategic assets and remain a shareholder in areas where the general interest is at stake.

Privatization Program

The government was due to privatize many large companies in 2019, including ADP and ENGIE in order to create a €10 billion ($11 billion) fund for innovation and research.  However, the program was delayed because of political opposition to the privatization of airport manager ADP, regarded as a strategic asset to be protected from foreign shareholders.  The government succeeded in selling in November 2019 a 52 percent stake in gambling firm FDJ.  The government continues to maintain a strong presence in some sectors, particularly power, public transport, and defense industries.

9. Corruption

In line with President Macron’s campaign promise to clean up French politics, the French parliament adopted in September 2017 the law on “Restoring Confidence in Public Life.” The new law bans elected officials from employing family members, or working as a lobbyist or consultant while in office. It also bans lobbyists from paying parliamentary, ministerial, or presidential staff and requires parliamentarians to submit receipts for expenses.

France’s “Transparency, Anti-corruption, and Economic Modernization Law,” also known as the “Loi Sapin II,” came into effect on June 1, 2017.  It brought France’s legislation in line with European and international standards.  Key aspects of the law include: creating a new anti-corruption agency; establishing “deferred prosecution” for defendants in corruption cases and prosecuting companies (French or foreign) suspected of bribing foreign public officials abroad; requiring lobbyists to register with national institutions; and expanding legal protections for whistleblowers.  The Sapin II law also established a High Authority for Transparency in Public Life (HATVP).  The HATVP promotes transparency in public life by publishing the declarations of assets and interests it is legally authorized to share publicly.  After review, declarations of assets and statements of interests of members of the government are published on the High Authority’s website under open license.  The declarations of interests of members of Parliament and mayors of big cities and towns, but also of regions are also available on the website.  In addition, the declarations of assets of parliamentarians can be accessed in certain governmental buildings, though not published on the internet.

France is a signatory to the OECD Anti-Bribery Convention.  The U.S. embassy in Paris has received no specific complaints from U.S. firms of unfair competition in France in recent years. France ranked 23rd of 180 on Transparency International’s (TI) 2019 corruption perceptions index. See https://www.transparency.org/country/FRA .

Resources to Report Corruption

The Central Office for the Prevention of Corruption (Service Central de Prevention de la Corruption or SCPC) was replaced in 2017 by the new national anti-corruption agency – the Agence Francaise Anticorruption (AFA).  The AFA is charged with preventing corruption by establishing anti-corruption programs, making recommendations, and centralizing and disseminating information to prevent and detect corrupt officials and company executives.  The AFA will also administrative authority to review the anticorruption compliance mechanisms in the private sector, in local authorities and in other government agencies.

Contact information for Agence Française Anti-corruption (AFA):

Director: Charles Duchaine
23 avenue d’Italie
75013 Paris
Tel : (+33) 1 44 87 21 14
Email: charles.duchaine@afa.gouv.fr

Contact information for Transparency International’s French affiliate:

Transparency International France
14, passage Dubail
75010 Paris
Tel: (+33) 1 84 16 95 65;
Email: contact@transparency-france.org

10. Political and Security Environment

France is a politically stable country.  Occasionally, large demonstrations and protests occur (sometimes organized to occur simultaneously in multiple French cities); these normally do not result in violence.  When faced with imminent business closures, on rare occasions French trade unions have resorted to confrontational techniques such as setting plants on fire, planting bombs, or kidnapping executives or managers.

From mid-November 2018 through 2019, Paris and other cities in France faced regular protests and disruptions, including “Gilets Jaunes” (Yellow Vest) demonstrations, initiated by discontent over high cost of living, taxes, and social exclusion.  In the second half of 2019, most demonstrations were in response to President Macron’s proposed unemployment and pension reform.  Authorities permitted peaceful protests.  During some demonstrations, damage to property, including looting and arson, in popular tourist areas occurred with reckless disregard for public safety.  Police response included water cannons, rubber bullets and tear gas.

On February 7, 2020, a survey produced by the American Chamber of Commerce in France and the consulting firm Bain & Company cited a renewed confidence of American companies regarding France’s attractiveness despite an outpouring of social unrest during the first half of 2019 and often violent protests throughout the whole year:  41 percent of the investors positive over the next two to three years (+ 11 points compared with 2018), and 51 percent expected to increase the number of their employees in France.  Furthermore, over 85 percent considered the impact of France’s reforms to be positive for investors.  France’s Yellow Vest movement rekindled class warfare in France and exemplified the existence of two Frances, putting on hold on-going economic and labor reforms such as cuts to unemployment benefits and pensions .

In recent years, more than 230 people have been killed in terrorist attacks in France, including the January 2015 assault on the satirical magazine Charlie Hebdo, the November 2015 Bataclan concert hall and national stadium attacks, and the 2016 Bastille Day truck attack in Nice.  While terrorists continue to target French interests, since July 2016 attacks have been smaller in scale and most often perpetrated by lone actors inspired by, but with little direct connection to, ISIS or other international terrorist organizations.  French security agencies continue to disrupt plots and cells, and their efforts have been aided by recent legislation and executive measures which strengthen search and detention authorities.  Despite the spate of recent small-scale attacks, France remains a strong, stable, democratic country with a vibrant economy and culture.  Americans and investors from all over the world continue to invest heavily in France.

Gabon

3. Legal Regime

Transparency of the Regulatory System

Government policies and laws often do not establish clear rules of the game, and foreign firms can have difficulty navigating the bureaucracy.  Despite reform efforts, hurdles and red tape remain, especially at the lower and mid-levels of the ministries.  Lack of transparency in administrative processes and lengthy bureaucratic delays occasionally raise questions for companies about fair treatment and the sanctity of contracts.

Rule-making and regulatory authority rests at the ministerial level.  There are no nongovernmental organizations or private sector associations that manage informal regulatory processes.  The government of Gabon has not exhibited any recent tendency to discriminate against U.S. investments, companies, or representatives.

The government does not publish proposed laws and regulations in draft form for public comment.  There are no centralized online locations where key regulatory actions, nor are their summaries published.  Key regulatory actions are published in the government’s printed Official Journal.  It is not uncommon for legislative proposals to be provided “off the record” to the press.

In 2015, Gabon implemented a recommendation from CEMAC to program its budget by objectives.  Despite improvements, Gabon still does not have a fully transparent budget. No new regulatory systems have been announced in the last year, and no new reforms have been implemented in the last year.  Regulations are developed by the relevant ministry concerned, and regulatory enforcement is controlled by individual ministries.  There are no instances of regulations being reviewed on the basis of scientific or data-driven assessments.

International Regulatory Considerations

Gabon is a member of CEMAC, along with Cameroon, the Central African Republic, the Republic of Congo, Equatorial Guinea, and Chad.  Gabon is also member of a larger economic community: The Economic Community of Central African States (ECCAS).  Headquartered in Gabon, ECCAS has 11 members: Gabon, Angola, Burundi, Cameroon, Central African Republic, Chad, the Republic of Congo, Democratic Republic of Congo, Equatorial Guinea, Rwanda, and São Tomé and Príncipe.  Both CEMAC and ECCAS work to promote economic cooperation among members.

Legal System and Judicial Independence

Gabon’s legal system is based on French Civil Law.  Regular courts handle commercial disputes in compliance with the Organization for Harmonization of Business Law in Africa (OHADA).  Courts do not apply the law consistently, and delays are frequent in the judicial system.  Lack of transparency in administrative processes and lengthy bureaucratic delays call into question the country’s commitment to fair treatment and the sanctity of contracts.  Judicial capacity is weak, and many government contacts underscore the need for specialized training in technical issues such as money laundering and environmental crimes.  Foreign court and international arbitration decisions are accepted, but enforcement may be difficult.

Gabon has a written code of commercial law.  Gabon is affiliated with OHADA and has been a WTO member since January 1, 1995.

The judicial system is not independent from the executive branch.  Gabon’s judicial bodies are subject to political influence, creating uncertainty concerning fair treatment and the sanctity of contracts.  Regulations or enforcement actions are appealable and are adjudicated in the national court system.

Laws and Regulations on Foreign Direct Investment

Gabon’s 1998 investment code, which gives foreign companies operating in Gabon the same rights as domestic firms, allows foreign investors to choose freely from a wide selection of legal business structures, such as a private limited liability company or public limited liability company.  The distinctions arise primarily from the minimum capital requirements and the conditions under which shares may be re-sold.  Foreign investment in Gabon is subject to local law that is in many instances unsettled or unclear, and in certain cases, Gabonese law may require local majority ownership of businesses.  The state reserves the right to invest in the equity capital of ventures established in certain sectors (e.g., petroleum and mining).  There are no known systemic practices by private firms to restrict foreign investment, participation, or control.

ANPI-Gabon’s website contains some information on investing in Gabon: https://www.investingabon.ga

Competition and Anti-Trust Laws

Gabonese Law No. 5/89 of July 6, 1989 on Competition covers all aspects of competition and anti-trust (http://www.wipo.int/wipolex/en/details.jsp?id=8814 ).  The relevant ministry for a given dispute reviews transactions for competition-related concerns.

Expropriation and Compensation

Foreign firms established in Gabon operate on an equal legal basis with national companies. Businesses are protected from expropriation or nationalization without appropriate compensation, as determined by an independent third party.  The Gabonese government has not exhibited a tendency to discriminate against U.S. investments, companies, or representatives, nor have there been any indications or reports of incidences of indirect expropriation, such as through confiscatory tax regimes.

Dispute Settlement

ICSID Convention and New York Convention

Gabon is a member state of the International Centre for the Settlement of Investment Disputes (ICSID) and a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).  The 1965 Code of Civil Procedure provides for various means of enforcement of judgments (both foreign and domestic), depending on the nature of the decree or decision.

Investor-State Dispute Settlement

Gabon does not have a BIT with the United States.  Post is aware of one investment dispute involving a U.S. company.

In 2018, there was one case of a foreign arbitral award issued against the government.  In March 2018, the Société d’Energie et d’Eau du Gabon (SEEG), a subsidiary of the Veolia Group, filed a request for conciliation against Gabon at the International Centre for the Settlement of Investment Disputes (ICSID).  Veolia and the Gabonese government signed an agreement to settle the case in February 2019.  Gabon agreed to buy Veolia’s 51 percent stake in SEEG and Veolia agreed to withdraw its arbitrage case once the agreement is finalized.

International Commercial Arbitration and Foreign Courts

No alternative dispute resolution options exist within Gabon.  Investment disputes are generally negotiated directly with the governmental entity involved.  There is no domestic arbitration body within the country.  Local courts recognize foreign arbitral awards, but enforcement may be difficult.

Post is not aware of any cases of state-owned enterprises (SOEs) being involved in investment disputes in the court system.

Bankruptcy Regulations

Gabon has a bankruptcy law, but it is not well developed.  In the World Bank’s Doing Business Report 2020 (http://documents.worldbank.org/curated/en/134861574860295761/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies-Economy-Profile-of-Gabon.pdf), Gabon ranks 130 out of 190 economies on the ease of resolving insolvency.

Gabon’s bankruptcy law is based on OHADA regulations.  According to Section 3: Art 234-239 of OHADA’s Uniform Insolvency Act, creditors and equity shareholders, collectively or individually, may designate trustees to lodge complaints or claims to the commercial court.  These laws criminalize bankruptcy, and the OHADA regulations grant Gabon the discretion to apply its own remedies.

5. Protection of Property Rights

Real Property

Secured interest in property is recognized, and the recording system is relatively reliable.

There are no specific regulations for foreign and/or non-resident investors regarding land lease or acquisition.  Laws in Gabon for private and commercial property do not provide any restrictions on nationality for the possession and ownership of property in Gabon.

Almost 85 percent of Gabon’s area (and possibly 95 percent or more) is legally owned by the state.  Only 14,000 private land titles appear to have been registered in Gabon according to a 2012 report; most refer to tiny urban parcels.  Urban areas constitute no more than one percent of total land area.  The government created the National Agency for Urban Planning, Surveys and the Land Registry in 2011.

If property legally purchased is unoccupied by the owner, property ownership can revert to others.

Intellectual Property Rights

As a member of CEMAC and ECCAS, Gabon adheres to the laws of the African Intellectual Property Office (OAPI).  Based in Yaoundé, Cameroon, OAPI aims to ensure the publication and protection of patent rights, encourage creativity and transfer of technology, and create favorable conditions for research.  As a member of OAPI, Gabon acceded to a number of international agreements on patents and intellectual property (IP), including the Paris Convention, the Berne Convention and the Convention Establishing the World Intellectual Property Organization (WIPO).  As a member of the WTO, Gabon is also a signatory of the Agreement on Trade-Related Aspects of Intellectual Property Rights.  U.S. companies have not raised IP rights (IPR) concerns with the Embassy.

During the past year, no IP related laws or regulations were enacted concerning IPR protection.  Gabon does not report on seizures of counterfeit goods.  Gabon is not in the United States Trade Representative (USTR) Special 301 Report.  Gabon is not listed in USTR’s Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see the WIPO country profiles at http://www.wipo.int/directory/en/ .

Resources for Rights Holders

John McGuire
Economic Chief
U.S. Mission to Gabon and São Tomé & Príncipe
Tél: (241) 11.45.71.11
Librevilleeconomic@state.gov

For a list of local attorneys visit:  https://ga.usembassy.gov/u-s-citizen-services/attorneys/

7. State-Owned Enterprises

Government-appointed civil servants manage Gabonese state-owned enterprises (SOEs), which work primarily in energy, extractive industries, and public utilities.  SOEs generally follow OECD guidelines on corporate governance.  Corporate governance of SOEs usually consists of a board of directors under the authority of the related ministry.  Each ministry chooses the members of the board.  The ministry does not allocate board seats specifically to government officials and may choose members from the general public.  The SOEs often consult with their ministry before undertaking any important business decisions.  The corresponding ministry in each sector prepares and submits the budget of each SOE each year.  Independent auditors examine the activities of SOEs each year, conducting the audit according to international standards.  Auditors do not publish their reports, but rather, submit them to the relevant ministry. There is no published list of SOEs.

There are no specific laws or rules that offer preferential treatment to SOEs.  However, although private enterprises may compete with public enterprises under open market access conditions, SOEs often have a competitive advantage in the industries in which they operate.

9. Corruption

Gabon has established a legal framework to fight corruption, yet enforcement remains limited and official impunity is a problem.  Corruption is rarely, if ever, prosecuted in Gabon.  Transparency International lists Gabon rank is 123 of 180 countries (2019 Transparency International report).  The Gabonese Penal Code criminalizes abuse of office, embezzlement, passive and active bribery, trading in influence, extortion, offering or accepting gifts, and other undue advantages in the public sector.  Private sector corruption is criminalized whenever a given company is related to a public entity.  Punishments for public officials found guilty of soliciting or accepting bribes include prison sentences ranging from two to 10 years, and a fine of CFA five million (USD 8,572).

The government established the Commission to Combat Illicit Enrichment (CNLCEI) in 2004.  In summer 2018, the CNLCEI’s five-year mandate was not renewed.   The CNLCEI regulations do not extend to family members of civil servants or to political parties.

The Gabonese government launched an anti-corruption campaign in January 2017 called Operation Mamba.  The first conviction occurred in April 2018 but was overturned on appeal in April 2019.  Few details of the investigations have been made public.  In 2019, the anti-corruption campaign Operation Scorpion generated eight arrests of senior Gabonese administration officials, accused of “siphoning off public funds and money laundering” through the end of October 2019. On December 13, 2019, the former presidential Chief of Staff Brice Laccruche was arrested and sent to prison.  Pro-government newspaper L’Union reported in November 2019 that more than 85 billion CFA ($142 million) has “evaporated” over the past two years from the funds of the Gabon Oil Company (GOC). Under Gabonese law, embezzlement of public funds is punishable by up to 20 years’ imprisonment and a fine of up to 100 million CFA ($170,000).

There are no known laws or regulations to counter conflict of interest in awarding contracts or government procurement.  There is no information about action on the part of the government to encourage or require private companies to establish codes of conduct that prohibit bribery of public officials.  Some private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.

Gabon is a signatory to the United Nations Convention against Corruption and is a member of The Task Force on Money Laundering in Central Africa (Groupe d’action contre le blanchiment d’argent en Afrique Centrale, or GABAC).

No international or regional watchdog organizations operate in Gabon.  Local civil society lacks the capacity to play a significant role in highlighting cases of corruption.

Companies contend with a high risk of corruption when dealing with the Gabonese extractive industries.  Gabon has vast oil, manganese, and timber resources; however, contracting and licensing processes lack transparency.

Resources to Report Corruption

National Financial Investigations Agency
Tel: +241 0176 1773
Agence Nationale d’Investigation Financière
Immeuble Arambo, Boulevard Triomphal
BP:189
Libreville, Gabon
contact@anif.ga

10. Political and Security Environment

Violence related to politics is relatively rare in Gabon.  Elections, however, can lead to heightened tensions or erupt in violence.  The 2018 legislative and local elections took place without major incident.  Violence broke out on August 31, 2016, after the National Electoral Commission announced incumbent president Ali Bongo Ondimba defeated opponent Jean Ping in the August 27 presidential election by a margin of less than 2 percent of the vote.  Protestors took to the streets, attempting to burn the National Assembly building.  There were numerous arrests.  Nongovernmental organizations stated the government’s use of excessive force to disperse demonstrators resulted in approximately 20 deaths and over 1000 arrests; the opposition claimed at least 50 persons were killed.

Gabon’s reduced oil production, in addition to political tensions after the 2016 elections, fostered frustration and disappointment within the country.  In 2018, public and private sector strikes continued over unpaid salaries, benefits, and worsening work conditions.  The coalition of oil, mining, and energy sector unions announced a five-day strike across the country from January 23 January 27, 2020 because of the decision of the Gabonese government to review the Gabonese labor code.  The government met with striking unions representatives and was able to negotiate an agreement to end the strike after four days.

Kenya

3. Legal Regime

Transparency of the Regulatory System

Kenya’s regulatory system is relatively transparent and continues to improve. Proposed laws and regulations pertaining to business and investment are published in draft form for public input and stakeholder deliberation before their passage into law (http://www.kenyalaw.org/  and http://www.parliament.go.ke/the-national-assembly/house-business/bills-tracker ). Kenya’s business registration and licensing systems are fully digitized and transparent while computerization of other government processes to increase transparency and close avenues for corrupt behavior is ongoing.

The 2010 Kenyan Constitution requires government to incorporate public participation before officials and agencies make certain decisions. The draft Public Participation Bill (2016) would provide the general framework for such public participation. The Ministry of Devolution has produced a guide for counties on how to carry out public participation; many counties have enacted their own laws on public participation. The Environmental Management and Coordination Act (1999) incorporates the principles of sustainable development, including public participation in environmental management. The Public Finance Management Act mandates public participation in the budget cycle. The Land Act, Water Act, and Fair Administrative Action Act (2015) also include provisions providing for public participation in agency actions.

Kenya has regulations to promote inclusion and fair competition when applying for tenders. Executive Order No. 2 of 2018 emphasizes publication of all procurement information including tender notices, contracts awarded, name of suppliers and their directors. The information is published on the Public Procurement Information Portal enhances transparency and accountability (https://www.tenders.go.ke/website). However, the directive is yet to be fully implemented.

Many GOK laws grant significant discretionary and approval powers to government agency administrators, which can create uncertainty among investors. While some government agencies have amended laws or published clear guidelines for decision-making criteria, others have lagged in making their transactions transparent. Work permit processing remains a problem, with overlapping and sometimes contradictory regulations. American companies have complained about delays and non-issuance of permits that appear compliant with known regulations.

International Regulatory Considerations

Kenya is a member state of the East African Community (EAC), and generally applies EAC policies to trade and investment. Kenya operates under the EAC Custom Union Act (2004) and decisions on the tariffs to levy on imports from countries outside the EAC zone are made at the EAC Secretariat level. The U.S. government engages with Kenya on trade and investment issues bilaterally and through the U.S.-EAC Trade and Investment Partnership. Kenya also is a member of COMESA and the Inter-Governmental Authority on Development (IGAD).

According to the Africa Regional Integration Index Report 2019, Kenya is the second best integrated country in Africa and a leader in regional integration policies within the EAC and COMESA regional blocs, with strong performance on regional infrastructure, productive integration, free movement of people, and financial and macro-economic integration. The GOK maintains a Department of East African Community Integration within the Ministry of East Africa and Regional Development. Kenya generally adheres to international regulatory standards. The country is a member of the WTO and provides notification of draft technical regulations to the Committee on Technical Barriers to Trade (TBT). Kenya maintains a TBT National Enquiry Point at http://notifyke.kebs.org . Additional information on Kenya’s WTO participation can be found at https://www.wto.org/english/thewto_e/countries_e/kenya_e.htm .

Accounting, legal, and regulatory procedures are transparent and consistent with international norms. Publicly listed companies adhere to International Financial Reporting Standards (IFRS) that have been developed and issued in the public interest by the International Accounting Standards Board. The board is an independent, private sector, not-for-profit organization that is the standard-setting body of the IFRS Foundation. Kenya is a member of UNCTAD’s international network of transparent investment procedures.

Legal System and Judicial Independence

The legal system is based on English Common Law, and the 2010 constitution establishes an independent judiciary with a Supreme Court, Court of Appeal, Constitutional Court, and High Court. Subordinate courts include: Magistrates, Khadis (Muslim succession and inheritance), Courts Martial, the Employment and Labor Relations Court (formerly the Industrial Court), and the Milimani Commercial Courts – the latter two of which both have jurisdiction over economic and commercial matters. In 2016, Kenya’s judiciary instituted specialized courts focused on corruption and economic crimes. There is no systematic executive or other interference in the court system that affects foreign investors, however, the courts face allegations of corruption, as well as political manipulation in the form of unjustified budget cuts which significantly impact the ability of the judiciary to deliver on its mandate and delayed confirmation of nominated Judges by the President resulting in an understaffed judiciary and long delays in rendering judgments.

Laws and Regulations on Foreign Direct Investment

The Foreign Judgments (Reciprocal Enforcement) Act (2012) provides for the enforcement of judgments given in other countries that accord reciprocal treatment to judgments given in Kenya. Kenya has entered into reciprocal enforcement agreements with Australia, the United Kingdom, Malawi, Tanzania, Uganda, Zambia, and Seychelles. Outside of such an agreement, a foreign judgment is not enforceable in the Kenyan courts except by filing a suit on the judgment. Foreign advocates may practice as an advocate in Kenya for the purposes of a specified suit or matter if appointed to do so by the Attorney General. However, foreign advocates are not entitled to practice in Kenya unless they have paid to the Registrar of the High Court of Kenya the prescribed admission fee. Additionally, they are not entitled to practice unless a Kenyan advocate instructs and accompanies them to court. The regulations or enforcement actions are appealable and are adjudicated in the national court system.

Competition and Anti-Trust Laws

Kenya does not have a competition or Anti-Trust policy, however the Competition Act (2010) created the Competition Authority of Kenya (CAK) which covers restrictive trade practices, mergers and takeovers, unwarranted concentrations, and price control. All mergers and acquisitions require the CAK’s authorization before they are finalized, and the CAK regulates abuse of dominant position and other competition and consumer-welfare related issues in Kenya. In 2014, CAK imposed a filing fee for mergers and acquisitions set at one million Kenyan shillings (KSH) (approximately USD 10,000) for mergers involving turnover of between one and KSH 50 billion (up to approximately USD 500 million). KSH two million (approximately USD 20,000) will be charged for larger mergers. Company takeovers are possible if the share buy-out is more than 90 percent, although such takeovers are rarely seen in practice.

Expropriation and Compensation

The 2010 constitution guarantees protection from expropriation, except in cases of eminent domain or security concerns, and all cases are subject to the payment of prompt and fair compensation. The Land Acquisition Act (2010) governs due process and compensation in land acquisition, although land rights remain contentious and can cause significant project delays. However, there are cases where government measures could be deemed indirect expropriation that may impact foreign investment. Companies report an emerging trend in land lease renewal where foreign investors face uncertainty in lease renewals by county governments in instances where the county wants to confiscate some or all of the foreign investor’s project property.

Dispute Settlement

ICSID Convention and New York Convention

Kenya is a member of the International Centre for Settlement of Investment Disputes, also known as the ICSID Convention or the Washington Convention, and the 1958 New York Convention on the Enforcement of Foreign Arbitral Awards. International companies may opt to seek international well-established dispute resolution at the ICSID. Regarding the arbitration of property issues, the Foreign Investments Protection Act (2014) cites Article 75 of the Kenyan Constitution, which provides that “[e]very person having an interest or right in or over property which is compulsorily taken possession of or whose interest in or right over any property is compulsorily acquired shall have a right of direct access to the High Court.” Kenya in 2020 prevailed in an ICSID international arbitration case against WalAm Energy Inc, a U.S./Canadian geothermal company in a geothermal exploration license revocation dispute.

Investor-State Dispute Settlement

There have been very few investment disputes involving U.S. and international companies. Commercial disputes, including those involving government tenders, are more common. There are different bodies established to settle investment disputes. The National Land Commission (NLC) settles land related disputes; the Public Procurement Administrative Review Board settles procurement and tender related disputes, and the Tax Appeals Tribunal settles tax disputes. However, the private sector cites weak institutional capacity, inadequate transparency, and inordinate delays in dispute resolution in lower courts. The resources and time involved in settling a dispute through the Kenyan courts often render them ineffective as a form of dispute resolution.

International Commercial Arbitration and Foreign Courts

The government does accept binding international arbitration of investment disputes with foreign investors. The Kenyan Arbitration Act (1995) as amended in 2010 is anchored entirely on the United Nations Commission on International Trade Law (UNCITRAL) Model Law. Legislation introduced in 2013 established the Nairobi Centre for International Arbitration (NCIA), which seeks to serve as an independent, not-for-profit international organization for commercial arbitration, and may offer a quicker alternative to the court system. In 2014, the Kenya Revenue Authority launched an Alternative Dispute Resolution (ADR) mechanism aiming to provide taxpayers with an alternative, fast-track avenue for resolving tax disputes.

Transcription of Court Proceedings in the Commercial and Tax Division

The Kenyan Judiciary reported in its 2018-2019 State of the Judiciary and Administration Report that it had commenced its court recording and transcription project with the installation of recording equipment in six courtrooms in the Commercial and Tax Division in Nairobi. The project will significantly speed up the hearing of cases as judges will no longer be required to record proceedings by hand.

Court Annexed Mediation and Small Claims Courts

The National Council on the Administration of Justice spearheaded legislative reforms to accommodate mediation in the formal court process as well as introduce small claims courts to expedite resolution of commercial cases. The Judiciary reported in its State of the Judiciary Address (2018-2019), that the Mediation Accreditation Committee accredited 645 mediators that were handling a total of 411 commercial matters during the reporting period. Additionally, the Judiciary reported that disputes with a total value of over three billion Kenyan shillings (KSH) (approximately USD 30,000,000) had been resolved through Court Annexed Mediation during the reporting period. Court Annexed Mediation serves as an effective case resolution mechanism that will significantly reduce pressure on the justice system and eventually result in expeditious determination of commercial cases.

Bankruptcy Regulations

The Insolvency Act (2015) modernized the legal framework for bankruptcies. Its provisions generally correspond to those of the United Nations’ Model Law on Cross Border Insolvency. The act promotes fair and efficient administration of cross-border insolvencies to protect the interests of all creditors and other interested persons, including the debtor. The act repeals the Bankruptcy Act (2012) and updates the legal structure relating to insolvency of natural persons and incorporated and unincorporated bodies. Section 720 of the Insolvency Act (2015) grants the force of law to the UNCITRAL Model Law.

Creditors’ rights are comparable to those in other common law countries, and monetary judgments typically are made in Kenyan shillings. The Insolvency Act (2015) increased the rights of borrowers and prioritizes the revival of distressed firms. The law states that a debtor will automatically be discharged from debt after three years. Bankruptcy is not criminalized in Kenya. Kenya moved up 6 ranks in the World Bank Group’s Doing Business 2020 report, moving to 50 of 190 countries in the “resolving insolvency” category.

5. Protection of Property Rights

Real Property

The 2010 Constitution prohibits foreigners or foreign owned firms from owning freehold interest in land in Kenya. However, unless classified as agricultural, there are no restrictions on foreign-owned companies leasing land or real estate. The cumbersome and opaque process to acquire land raises concerns about security of title, particularly given past abuses relating to the distribution and redistribution of public land. The Land (Extension and Renewal of Leases) Rules (2017) stopped the automatic renewal of leases and tied renewals to the economic output of the land that must be beneficial to the economy. If property legally purchased remains unoccupied, the property ownership can revert to other occupiers, including squatters. Privately-owned land comprised six percent of the total land area in 1990; government land was about 20 percent of the total and included national parks, forest land and alienated and un-alienated land. Trust land is the most extensive type of tenure, comprising 64 percent of the total land area in 1990.

The 2010 Constitution and subsequent land legislation created the National Land Commission, an independent government body mandated to review historical land injustices and provide oversight of government land policy and management. This had the unintended side effect of introducing coordination and jurisdictional confusion between the commission and the Ministry of Lands mainly fueled by land interests by the political class. In 2015, President Kenyatta commissioned the new National Titling Center with a promise to increase the 5.6 million title deeds issued since independence to 9 million. From 2013 to 2018, an additional 4.5 million title deeds have been issued, however 70 percent of land in Kenya remained untitled. Land grabbing resulting from double registration of titles remains prevalent. Property legally purchased but unoccupied can revert ownership to other parties.

Mortgages and liens exist in Kenya, but the recording system is not reliable – Kenya has only some 24,000 recorded mortgages in a country of 47.6 million people – and there are often complaints of property rights and interests not being enforced. The legal infrastructure around land ownership and registration has changed in recent years, and land issues have delayed several major infrastructure projects. Kenya’s 2010 Constitution required all land leases to convert from 999 years to 99 years, giving the state the power to review leasehold land at the expiry of the 99 years, deny lease renewal, and confiscate the land if it determines the land has not been used productively. The constitution also converted foreign-owned freehold interests into 99-year leases at a nominal “peppercorn rate” sufficient to satisfy the requirements for the creation of a legal contract. The GOK has not yet effectively implemented this provision. In July 2020, the Ministry of Lands and Physical planning released draft electronic land registration regulations (2020) to guide the e-transaction of land. The Ministry together with the National Land Commission agreed to commence the e-transaction on land matters pending resolution of outstanding issues.

Intellectual Property Rights

The major intellectual property enforcement issues in Kenya related to counterfeit products are corruption, lack of penalty enforcement, failure to impound imports of counterfeit goods at the ports of entry, and reluctance of brand owners to file a complaint with the Anti-Counterfeit Agency (ACA). The prevalence of “gray market” products – genuine products that enter the country illegally without paying import duties – also presents a challenge, especially in the mobile phone and computer sectors. Copyright piracy and the use of unlicensed software are also emerging challenges.

The Presidential Task Force on Parastatal Reforms (2013) proposed that the three intellectual property agencies, namely: the Kenya Industrial Property Institute (KIPI), the Kenya Copyright Board (KECOBO) and the Anti-Counterfeit Authority (ACA) be merged into one Government Owned Entity (GOE). A task force on the merger comprising staff from KIPI, ACA, KECOBO, the Ministry of Industrialization, Trade and Enterprise Development is drafting the instruments of the merger which has led to a draft GOE named Intellectual Property Office of Kenya (IPOK) and has also drafted Intellectual Property Office Bill, 2020 for establishing IPOK. In an attempt to combat the import of counterfeits, the Ministry of Industrialization and the Kenya Bureau of Standards (KEBS) decreed in 2009 that all locally-manufactured goods must have a KEBS standardization mark. Several categories of imported goods, specifically food products, electronics, and medicines, must have an import standardization mark (ISM). Under this program, U.S. consumer-ready products may enter the Kenyan market without altering the U.S. label but must also carry an ISM. Once the product qualifies for a Confirmation of Conformity, KEBS will issue the ISM free of charge. From time to time KEBS and the Anti-Counterfeit Agency conduct random seizures of counterfeit imports but there is no clear database of seizures kept.

Kenya is not included on the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see the World Intellectual Property Organization’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

In 2013, the Presidential Task Force on Parastatal Reforms (PTFPR) published a list of all state-owned enterprises (SOEs) and recommended proposals to reduce the number of State Corporations from 262 to 187 to eliminate redundant functions between parastatals; close or dispose of non-performing organizations; consolidate functions wherever possible; and reduce the workforce — however, progress is slow. The taskforce’s report can be found at (https://drive.google.com/file/d/0BytnSZLruS3GQmxHc1VtZkhVVW8/edit ) SOEs’ boards are independently appointed and published in the Kenya Gazette notices by respective Cabinet Secretary. The State Corporations Advisory Committee is mandated by the State Corporations Act 2015 to advise on matters of SOEs. Financial operations of most SOEs are not readily available due to their opaque operating procedures despite being public entities, only those that are listed in the Nairobi Securities Exchange publish their financial positions as guided by the Capital Markets Authority guidelines. Corporate governance in SOEs is guided by the 2010 Constitution chapter 6 on integrity, Leadership and Integrity Act 2012 and the Public Officer Ethics Act 2003 which provide integrity and ethical requirements governing the conduct of State and public officers.

In general, competitive equality is the standard applied to private enterprises in competition with public enterprises. Certain parastatals, however, have enjoyed preferential access to markets. Examples include Kenya Reinsurance, which enjoys a guaranteed market share; Kenya Seed Company, which has fewer marketing barriers than its foreign competitors; and the National Oil Corporation of Kenya (NOCK), which benefits from retail market outlets developed with government funds. Some state corporations have also benefited from easier access to government guarantees, subsidies, or credit at favorable interest rates. In addition, “partial listings” on the Nairobi Securities Exchange offer parastatals the benefit of financing through equity and GOK loans (or guarantees) without being completely privatized.

In August 2020, the executive reorganized the management of SOEs in the cargo transportation sector and mandated the Industrial and Commercial Development Corporation (ICDC) to oversee rail, pipeline and port operations through a holding company called Kenya Transport and Logistics Network (KTLN). ICDC assumes a coordinating role over the Kenya Ports Authority (KPA), Kenya Railways Corporation (KRC) and Kenya Pipeline Company (KPC). KTLN is aimed at lowering the cost of doing business in the country, which will be achieved through the provision of port, rail, and pipeline infrastructure in a cost effective and efficient manner.

SOE procurement from the private sector is guided by the Public Procurement and Asset Disposal Act 2015 and the published Public Procurement and Asset Disposal Regulations 2020 which introduced exemptions from the Act for procurement on bilateral/multilateral basis commonly referred to government to government procurement; introduced E-procurement procedures; and preferences and reservations which gives preferences to the “Buy Kenya Build Kenya” strategy (http://kenyalaw.org/kl/fileadmin/pdfdownloads/LegalNotices/2020/LN69_2020.pdf ). The amendment reserves 30 percent government supply contracts for youth, women, and small and medium enterprises. Kenya is neither party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO) nor an Observer Government.

Privatization Program

The Privatization Act 2003 establishes the Privatization Commission (PC) which is mandated to formulate, manage, and implement Kenya’s Privatization Program. GOK has been committed to implementing a comprehensive public enterprises reform program to increase private sector participation in the economy. The privatization commission ( https://www.pc.go.ke/  ) is fully constituted with a board which is responsible for the privatization program. The PC has 26 approved privatization programs (https://www.pc.go.ke/sites/default/files/2019-06/APPROVED%20PRIVATIZATION%20PROGRAMME.pdf  ). In 2020, GOK is implementing a sugar taskforce report that proposed privatization of some state-owned sugar firms to increase their efficiency and productivity. The process of privatization involves open bids by interested investors including foreign investors.

9. Corruption

Many businesses deem corruption to be pervasive and entrenched in Kenya. Transparency International’s (TI) 2019 Global Corruption Perception Index ranks Kenya 137 out of 198 countries, six places lower than in 2018 and Kenya’s score of 28 remains below the sub-Saharan Africa average of 32. Historical lack of political will, limited progress in prosecuting past corruption cases, and the slow pace of reform in key sectors were reasons cited for Kenya’s chronic low ranking. Corruption has been reported to be an impediment to FDI, with local media reporting allegations of high-level corruption related to health, energy, ICT, and infrastructure contracts. There are many reports that corruption often influences the outcomes of government tenders, and U.S. firms have had limited success bidding on public procurements. In 2018, President Kenyatta began a public campaign against corruption. The Anti-Corruption agencies mandated to fight corruption have been inconsistent in coordinating activities, especially in bringing cases against senior officials. However, there were cabinet level arrests in 2019 that signaled a commitment by the GOK to fight corruption. Despite these efforts, much still remains to be done in convicting high profile suspects.

In 2020, a high-level conviction was secured for a Member of Parliament setting a precedent for top officials’ convictions. Relevant legislation and regulations include the Anti-Corruption and Economic Crimes Act (2003), the Public Officers Ethics Act (2003), the Code of Ethics Act for Public Servants (2004), the Public Procurement and Disposal Act (2010), the Leadership and Integrity Act (2012), and the Bribery Act (2016). The Access to Information Act (2016) also provides mechanisms through which private citizens can obtain information on government activities; implementation of this act is ongoing. The Ethics and Anti-Corruption Commission (EACC) monitors and enforces compliance with the above legislation.

The Leadership and Integrity Act (2012) requires public officers to register potential conflicts of interest with the relevant commissions. The law identifies interests that public officials must register, including directorships in public or private companies, remunerated employment, securities holdings, and contracts for supply of goods or services, among others. The law requires candidates seeking appointment to non-elective public offices to declare their wealth, political affiliations, and relationships with other senior public officers. This requirement is in addition to background screening on education, tax compliance, leadership, and integrity.

The law requires that all public officers declare their income, assets, and liabilities every two years. Public officers must also include the income, assets, and liabilities of their spouses and dependent children under the age of 18. Information contained in these declarations is not publicly available, and requests to obtain and publish this information must be approved by the relevant commission. Any person who publishes or makes public information contained in public officer declarations without permission may be subject to fine or imprisonment.

On August 31, 2016, the president signed into law the Access to Information Act (2016) although the government has not yet issued regulations required to fully operationalize the act. The law allows citizens to request government information and requires government entities and private entities doing business with the government proactively to disclose certain information, such as government contracts. The act also provides a mechanism to request a review of the government’s failure to disclose requested information, along with penalties for failures to disclose. The act exempts certain information from disclosure on grounds of national security.

The private sector-supported Bribery Act (2016) stiffened penalties for corruption in public tendering and requires private firms participating in such tenders to sign a code of ethics and develop measures to prevent bribery. Both the Bill of Rights of the 2010 Constitution and the Access to Information Act (2016) provide protections to NGOs, investigative journalism, and individuals involved in investigating corruption. The Witness Protection Act (2006) calls for the protection of witnesses in criminal cases and created an independent Witness Protection Agency. A draft Whistleblowers Protection Bill (2016) is currently stalled in Parliament.

Kenya is a signatory to the UN Convention Against Corruption (UNCAC) and in 2016 published the results of a peer review process on UNCAC compliance: (https://www.unodc.org/documents/treaties/UNCAC/CountryVisitFinalReports/2015_09_28_Kenya_Final_Country_Report.pdf ). Kenya is also a signatory to the UN Anticorruption Convention and the OECD Convention on Combatting Bribery, and a member of the Open Government Partnership. Kenya is not a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Kenya is also a signatory to the East African Community’s Protocol on Preventing and Combating Corruption.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

Rev. Eliud Wabukala (Ret.)
Chairperson and Commissioner
Ethics and Anti-Corruption Commission
P.O. Box 61130 00200 Nairobi, Kenya
Phones: +254 (0)20-271-7318, (0)20-310-722, (0)729-888-881/2/3
Report corruption online: https://eacc.go.ke/default/report-corruption/ 

Contact at “watchdog” organization:

Sheila Masinde
Executive Director
Transparency International Kenya
Phone: +254 (0)722-296-589
Report corruption online: https://www.tikenya.org/ 

10. Political and Security Environment

Political tensions over the protracted and contentious 2017 election cycle spilled well into 2018. In March 2018, however, President Kenyatta and opposition National Super Alliance (NASA) leader Raila Odinga publicly shook hands and pledged to work together to heal the political, social, and economic divides revealed by the election. The 2017 electoral period had been marred by violence that claimed the lives of nearly 100 Kenyans, a contentious political atmosphere pitting the ruling Jubilee Party against NASA, and political interference and attacks by both sides on key institutions. In November 2017, the Kenyan Supreme Court unanimously upheld the October 2017 repeat presidential election results and President Uhuru Kenyatta’s win in an election boycotted by NASA leader Raila Odinga. The court’s ruling brought a close to Kenya’s protracted 2017 election cycle, a period that included the Supreme Court’s historic September 2017 annulment of the August 2017 presidential election and the unprecedented repeat election. In November 2019, the Building Bridges Initiative Advisory Taskforce, established by President Kenyatta in May 2018 as part of his pledge to work with Odinga, issued a report recommending reforms to address nine areas: lack of a national ethos, responsibilities and rights of citizenship; ethnic antagonism and competition; divisive elections; inclusivity; shared prosperity; corruption; devolution; and safety and security.

The United States’ Travel Advisory for Kenya advises U.S. citizens to exercise increased caution due to the threat of crime and terrorism, and not to travel to counties bordering Somalia and to certain coastal areas due to terrorism. Instability in Somalia has heightened security concerns and led to increased security measures aimed at businesses and public institutions around the country. Tensions flare occasionally within and between ethnic communities. Regional conflict, most notably in Ethiopia, Somalia, and South Sudan, sometimes have spill-over effects in Kenya. There could be an increase in refugees escaping drought and instability in neighboring countries, adding to the large refugee population already in Kenya from several countries. Security expenditures represent a substantial operating expense for businesses in Kenya.

Kenya and its neighbors are working together to mitigate the threats of terrorism and insecurity through African-led initiatives such as the African Union Mission in Somalia (AMISOM) and the nascent Eastern African Standby Force (EASF). Despite attacks against Kenyan forces in Somalia, the GOK has maintained its commitment to promoting peace and stability in Somalia.

Madagascar

3. Legal Regime

Transparency of the Regulatory System

Bureaucratic delays and inefficiencies plague Madagascar’s legal and regulatory system.  Non-transparent regulatory decisions have affected global investors who alleged unfair competition or lack of transparency.  High-level corruption and alleged collusion between business and political elites have been a recurring issue in Madagascar for decades.  Its auditing and financial information reporting systems are transparent and consistent with international norms, International Standards on Auditing (IAS) and International Financial Reporting Standards (IFRS), respectively.  Although the regulations strive to establish clear rules, a lack of enforcement combined with shortage of resources and capacity hinder their efficacy.  In addition, certain investment policies are not harmonized and, in some areas, can be contradictory.  A policy harmonization process for Special Economic Zones is underway.

Madagascar has municipal, regional, national and international laws; the most relevant for foreign businesses would be national and international laws.

Depending on the circumstances, regulations can be suggested, drafted, or amended by various actors such as government or its institutions, business associations, academics, civil society organizations, and/or individual experts.  Non-governmental organizations, industry associations and private organizations such as the American Chamber of Commerce, can also be influential voices in raising concerns about new legislation or regulations.  For instance, the Chamber of Mines has had an important role in pushing back against the Rajoelina government’s proposed amendments to the mining code which would have discouraged further investment in the sector.

If the GOM decides to move ahead with a bill, it is transmitted to the National Assembly and then the Senate for study and voting.  It may go forth and back between them.  Once the bill passes in both Chambers, it goes to the High Constitutional Court (HCC) for constitutional verification.  Finally, the President has the ultimate right to proclaim or deny a proposed law.  The President also has the right to enact a proposed law by decree if Parliament does not pass the legislation, though it is still subject to constitutionality checks by the HCC.  Laws are published by their insertion in the Official Gazette of the Republic or its broadcast on national radio or TV in case of emergency.

Scientific, data-driven assessments, and quantitative analysis are not yet common practice.  Regulatory reviews usually take place when a non-governmental organization or interest group protests against a new or amended regulation.  Though public comments are welcomed and recorded in a registry before consideration and processing, there is no set mechanism which makes them available to the public.  There is also no formal mechanism in place to make draft bills or regulations available for public comment or public consultation prior to their adoption.  This applies to investment law and regulations as well.  Informally, draft legislation and regulations do circulate and institutional pushback can lead to further changes as was the case with the revision of the mining code, where the circulation of draft bills led to protests from interest groups.  As a result, the government withdrew the drafts for further consultation and review.

There is no centralized location for publication of draft regulatory actions.  Once enacted, the full text of key regulatory actions is published on the Justice Ministry’s website through the link to the National Center of Legal and Legislative Information and Documentation (CNLEGIS). http://www.cnlegis.gov.mg/ page_find_direct_mots/. 

The regulatory enforcement mechanisms are usually defined along with the enactment decree of each regulation.  The enforcement process may be legally reviewed.  Anyone can lodge a complaint with the administrative courts, which are responsible for judging failure to comply with administrative regulations.  The Council of State is at the apex of the administrative order and is responsible for ensuring the legality of the GOM’s actions and oversight of lower courts.  It also handles appeals for annulment of actions by local and regional authorities.  The HCC verifies the conformity of laws with the Constitution of the Republic of Madagascar.

Since the last ICS report, while several regulatory changes including enforcement reforms have been announced, there have been no reforms relating to foreign investors.  One of the changes is the appointment of the Integrity Safeguarding Committee (CSI), which has been tasked with the development of the national integrity system (NIS) to ensure the coordination, monitoring, and evaluation of the anti-corruption system; and elaborating and implementing the national good governance policy.  In general, the reforms carried out improve the economy, governance, land tenure, and the rule of law, although sometimes they make the administration more cumbersome and complex.

Accounting regulations appear transparent. The country has no stock market, and therefore, no publicly listed companies.

Budget proposals, enacted budgets, and audited end-of-year reports are publicly available.  The timing of their release often hampers public debate; for instance, budget proposals are usually published just two weeks before they are voted on.  The enacted budget is often not available until many weeks into the start of the fiscal year.

Income and expenditure are not truly representative of the governments revenues and expenses.  Income calculations exclude fees and royalties from the mining sector, while expenditure does not break out the transfers and subsidies to state-owned enterprises.  The interim audit for the 2018-19 budget noted issues with fiscal transparency where the government changed beneficiaries and/or amounts allocated by the initial appropriation without further parliamentary approval.  Government contracts are not fully transparent as to their funding arrangements.  The 2019-20 budget also had a set-aside under Sovereign Funds, amounting to 1.9 percent of the budget earmarked for discretionary use under special presidential projects.

Debt obligations are not fully transparent.  For example, the rate of return and the subscribers of non-market treasury bills (called “special TB”) are not readily available to the public.

International Regulatory Considerations

Madagascar is a member country of the following economic blocks: Indian Ocean Commission (IOC), Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), and the Continental African Free Trade Area (ZLECA).  The regional regulatory systems prevail over the national system in case of trade disputes amongst members.

As a former French colony, most of the norms and standards in force are French, although other international norms are increasingly in use as the country’s trade relationships become more diversified.

Madagascar is a member of WTO and the GOM has committed to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

French civil law largely inspires Madagascar’s legal code, which contains protections of private property and rights.

The civil court system has its own independent jurisdiction, where civil and commercial cases are heard.  The country’s written commercial law consists mainly of the code of commerce and annexed laws.  Recent reforms of commercial regulations and procedures have halved processing times for commercial cases at the Trade Court.  Major cities and regions do have their own competent courts, although some trials fall under the jurisdiction of the central courts.

Madagascar’s constitution provides for an independent judiciary.  However, there is often flagrant interference by the executive branch in judicial matters, particularly through the appointment of compliant judges.  Bribery and corruption are also factors affecting the fairness of the judicial process.

Regulations or enforcement actions are appealable within the prescribed time and are adjudicated in the national court system established in the capital city Antananarivo.

Laws and Regulations on Foreign Direct Investment

The country’s investment law was promulgated in January 2008 and governs foreign direct investment as well.  In addition to the freedom of investment and equality of treatment for foreign and national investors, Madagascar’s investment law includes articles on the protection of patent rights and protections against expropriation, freedom to transfer funds abroad without prior authorization, and a stability clause guaranteeing investor privileges from future legal or regulatory measures.

Major laws, regulations, and judicial decisions which have come out in the past year are:

  • Law n˚2018-043 dated February 13, 2019 against money laundering and financing of terrorism acts
  • Law n˚2018-042 dated January 17, 2019 authorizing the ratification of the loan agreement to finance the “integrated poles of growth and project (PIC 2.2)” between the government and the International Development Association (IDA)
  • Law n˚2018-039 dated January 7, 2019 authorizing the ratification of the statutes of the “Eastern and Western Africa Bank for Commerce and Development or Trade and Development Bank (TDB)”

EDBM is Madagascar’s one-stop-shop for investment and its website www.edbm.mg  provides summaries of relevant laws, rules, procedures, and reporting requirements for investors as well as links to the relevant laws.  Comprehensive details are found on the Ministry of Justice website at cnlegis.gov.mg

EDBM has links to relevant laws and reporting requirements for investors.

  • Law n˚2007-036 on investment
  • Law n˚2007-037 on export processing zone
  • Laws n˚2001-031 and n˚2005-022 on large mining investment
  • Law n˚1996-108 on petroleum, code
  • Law n˚2003-036 on commercial company

The following laws enacted in the last five years, also relate to foreign investment.

  • Law n˚2015-039 on Public and Private Partnership (PPP)
  • Law n˚2017-047 on Madagascar’s Industrial Development which is reflecting the Industrial Policy (LDI)
  • Law n˚2017-023 on Madagascar’s Special Economic Zone (SEZ)
  • Law n˚2017-020 on Madagascar’s Electricity Law
  • The e-commerce and digital activity law has been adopted but is still awaiting its enforcement decree

Competition and Anti-Trust Laws

The Ministry of Commerce and Industry has the overall responsibility to ensure fair competition between businesses.  The 2018 law on competition and anti-trust issues attempts to give teeth to the independent Competition Council (CC) which rules on unfair competition cases; the CC has the power to assess proportionate penalties for abuses of dominant market position.  However, the CC is largely unfunded.

Expropriation and Compensation

The investment law provides protection to foreign and local investors against nationalization, expropriation, and requisition, with the exception of public interest cases as established by regulations.  For infrastructure projects which require expropriation of private property, the GOM must issue an official proclamation that defines the public interest of the project and the owner of the private property must be paid the fair market value of the concerned property prior to its expropriation.  The government may also legally expropriate property when a judicial ruling permits it in cases where there is proven money laundering, profiting from trafficking, acts of terrorism, or a failure to make tax or debt payments.

Recent expropriations have taken place as described above.  For instance, a well-known businesswoman recently had her new four-star hotel located near Antananarivo international airport expropriated after a court ruling against her for tax evasion.  Court procedures included evidence presented by the Directorate General of Taxes and the Directorate General of Customs.

There were cases where asset owners alleged a lack of due process.  In the case noted above, the businesswoman claimed she was victimized due to political bias.

Dispute Settlement

ICSID Convention and New York Convention

Madagascar is a member state to the International Centre for the Settlement of Investment Disputes (ICSID) and under the Investment Law, disputes between foreign investors and the administration can be resolved through arbitration proceedings administered by the ICSID.

In case a foreign investor initiates the proceeding, he/she can decide to file the dispute at the Madagascar Trade Court, which is the country’s competent jurisdiction in such matters.  However, no specific domestic legislation provides for enforcement of awards under the New York Convention and/or under the ICSID Convention.

Investor-State Dispute Settlement

As a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), Madagascar also accepts international arbitration as means of resolving investment disputes.  Based on the obligation of the New York convention, domestic courts should recognize and be willing to enforce foreign arbitral awards.  International arbitration is accepted as a way of settling commercial disputes between private parties.  Madagascar has also been a member of the Multilateral Investment Guarantee Agency (MIGA) since 1989.

Investment disputes involving foreign investors over the last 10 years include:

1) A Cypriot holding company affiliated with a U.S. energy company is the claimant in a business dispute with its partners, including a Malagasy business.  The claimant has filed for arbitration in New York.  The partnership sells electricity to state-owned energy company JIRAMA and in 2019 was in discussions with the GOM about the terms of its Power Purchase Agreement.  Following the election of President Rajoelina in December 2018, the Energy Ministry has sought to renegotiate all contracts signed by previous governments.  The claimant raised objections to the reopening of its contract, which had been signed by a previous government for a term of 20 years.  JIRAMA also owed the claimant overdue payments, but was reportedly making them in a piecemeal fashion as of early 2020.  Embassy Antananarivo continues to follow developments in this case.

2) In 2019, the Paris Commercial Court ordered Madagascar’s state-owned airline company Air Madagascar to pay $20 million to Air France in connection with the leasing of two A340s in 2011.

3) In 2016, an international power producer (IPP) supplying electricity to Antananarivo, complained of non-payment by the national utility JIRAMA, a state-owned enterprise.  After weeks of negotiations combined with threats to withdraw by the IPP, the government agreed to pay the IPP using a different payment mechanism.

4) In 2012, the government shut down the telecommunication operator “Life,” a Mauritius controlled company, without providing evidence of substantial wrong doing.  The company sought compensation and sued the Malagasy government at ICSID in August 2017 but there has been no resolution.

Madagascar does not have a history of extrajudicial action against foreign investors since the 1970s.  However, enforcement by local courts of foreign arbitral awards against the government is uncommon.  In the case of Air France, the GOM has not yet paid the fines ordered by the Paris Commercial Court.  As far as Post is aware, none of Madagascar’s commercial courts have taken up this verdict.

International Commercial Arbitration and Foreign Courts

Two types of alternative dispute resolution (ADR) mechanisms are available in Madagascar, namely “arbitration” and “mediation.”  Arbitration is a contractual jurisdictional mode of settlement of commercial disputes.  The procedure involves submitting a dispute between two or more parties to the jurisdiction of an arbitral tribunal consisting of a sole arbitrator or three arbitrators.

Mediation is a structured process in which two or more parties to a dispute voluntarily attempt to reach an agreement on the resolution of their dispute with the assistance of a mediator, who is a neutral, impartial, and independent third party.

Both procedures are recognized by law.  Arbitration results in an enforceable title in the form of an arbitral award, whereas mediation results in an agreement between the parties that does not constitute an enforceable title.

A privately managed entity named Center for Arbitration and Mediation of Madagascar (CAMM), created in 2001and then restructured in 2012, promotes and oversees ADR mechanisms to resolve international and domestic commercial disputes and lessen reliance on an overburdened court system.  The CAMM helps companies manage their conflicts, determine the best way to settle them quickly and durably, and helps ensure the security of their investments and the maintenance of business continuity.  As a result, many private contracts now include arbitration provisions that allow the CAMM to mediate eventual disputes.

Since the 8th Economic Forum of the Indian Ocean Islands in 2012, CAMM has initiated a process with its counterparts in Reunion, Mauritius, and Comoros for the setting up of a cross-border dispute resolution platform in which co-mediation will play an important role.  CAMM recognizes and enforces arbitral awards in that sub-region.  However, only the commercial judgements of these foreign courts are recognized and enforceable under the CAMM.

CAMM only applies in disputes amongst private parties and so has no jurisdiction in disputes involving SOEs.  In the latter case, it is tried in civil court.  While the SOE does not always win, the judgement is not always enforced.

Bankruptcy Regulations

In 2019, Madagascar ranked 161 among 190 in the World Bank’s Ease of Doing Business survey and it ranks 135 for the “resolving insolvency” criteria.  The bankruptcy law, which was last updated in 2014, lays out collective debt settlement procedures, which treat all parties equally in bankruptcy proceedings.  Creditors have the right to initiate insolvency proceedings only when seeking liquidation of the debtor, but not when seeking reorganization.  Bankruptcy is no longer a criminal offense, but is punishable by fines and imprisonment depending on whether it is deemed simple, negligent, or fraudulent bankruptcy.  The court system has reduced the associated prison sentences from those stipulated in the previous insolvency framework.

There are three procedures that apply when assessing the fate of a company in difficulty.  The first – preventive settlement – is a reconciliation procedure designed to avoid the suspension of payments or the cessation of activity of a firm in difficulty which has not yet defaulted on payments.  This procedure, which is non-contentious, requires the agreement of all parties and aims to reach an agreement on the settlement of debts and avoid individual lawsuits.

The two other procedures – receivership and liquidation of assets – are intended to remedy payment defaults and correspond to the current judicial settlement and bankruptcy procedures.  Some of the provisions include the appointment of a receiver, who is a representative of the creditors, by the Commercial Court to supervise the debtor who continues to manage the business.  While a compensation agreement is being negotiated, all claims are frozen; the compensation to creditors may be on unequal terms and sale of the business is subject to a transfer plan.

5. Protection of Property Rights

Real Property

Madagascar ranked 164 on the World Bank’s 2019 Doing Business survey in registering property.  Property rights and interests are poorly respected because of alleged widespread corruption in the Domain and Topography Department and a lack of material and technological resources.  Mortgages and liens are used in commerce and business to guarantee commercial loans.  However, the registration system is cumbersome, complicated and unreliable.

Upon independence, Madagascar continued the land tenure policies of the French colonial administration with the presumption of state ownership of all land and the central government being the sole provider of legitimate land titles.  However, due to the length and cost of the procedures for registering land, together with the remoteness of the authorities, customary practices for recognition of property rights prevailed at the local level.  Recognition of property rights at this local level entailed the use of non-uniform, handwritten titles.  The Land Title Office in Antananarivo is the only place to obtain an official title whenever a locally registered business wants to acquire a large parcel of government land.  Registering a land title or transfer remains difficult, costly, and time-consuming for those outside the capital.

When the Land Ownership Act was amended in 2005, more than 90 percent of the occupants did not have a land title.  The situation has not improved significantly despite several efforts financed by traditional donors.  In 2005, with the support of a Millennium Challenge Corporation Compact, the government embarked on a land reform project to simplify the registration process and to reconcile the existing formal and informal land titles.  The reform reversed the presumption of state ownership of land and introduced private ownership, while at the same time decentralizing land registration and recognizing/formalizing the existing local customs for social recognition of property rights.  The 2009 political crisis disrupted this reform process, leaving the country with approximately 10 percent of its existing land plots formally titled.

The majority of land ownership disputes are resolved at the local level without recourse to judicial proceedings.  The small percentage of disputes that go through the court system remain bogged down due to the complexity of the cases and the lack of clear evidence of ownership, and even when determinations are made, they are often not adequately enforced.

The investment law authorizes foreign investors to possess real estate through renewable 99-year leases, so long as the concerned property is used exclusively and continuously to carry out commercial activity.  The regulation specifically prohibits the acquisition of land by investors for resale in its original state, or for sale after its development.  The amendment to the investment law slated for later in 2020 is expected to further clarify access to land for foreigners.

In principle, if a property is legally purchased but unoccupied, property ownership stays with the legal owner even if squatters take over the land.  In practice, due to corruption and lack of oversight, there have reportedly been instances of fraudulent transfer of property rights.  The national land policy (PNF) that the GOM developed in 2016 has done little to correct the situation due to slow enforcement.[i]

Intellectual Property Rights

The “Office Malgache des Propriétés Industrielles (OMAPI),” Madagascar’s intellectual property rights authority was created in December 1992.  OMAPI publishes the titles it grants in the Official Gazette of Industrial Property (GOPI) and provides the public with industrial property documentation such as patent documents, industrial property legislation in various countries, and multilateral treaties on industrial property rights (IPR).  The “Office Malgache des Droits d’Auteurs (OMDA),” is Madagascar’s agency to protect authors’ rights and copyrights.  OMDA’s mission is to ensure the exclusive protection, defense and management of the economic interests of Malagasy and foreign authors, performers, and their successors concerning the use of scientific, literary and artistic works.

Officially, these authorities protect against IPR infringement, but in reality, enforcement capacity is quite limited due to resource constraints including poor digitalization, weakness of the judicial system, and lack of awareness of intellectual property rights among businesses and consumers.  Due to these constraints, international investors have faced difficulties defending their interests.  Madagascar neither tracks nor reports seizures of counterfeit goods, which are easily available in local markets as are unauthorized copies of famous brands, songs, and videos.

New IPR laws have stalled for years due to inaction by Parliament and the Office of the Prime Minister.  The proposed legislation incorporates The Hague (international registration of industrial designs) and Lisbon (protection of origin appellation and international registration) agreements, and other international treaty classifications.  The adoption of these bills would substantially improve  IPR  in Madagascar, provided OMAPI has sufficient funding for enforcement.

Madagascar was not listed included in the United States Trade Representative (USTR) ecial 301 Report or the  Notorious Markets List.

[i] https://slideplayer.fr/slide/1169362/ 

7. State-Owned Enterprises

The government has shares in 53 companies, with a majority stake in 27 enterprises; in 11 cases, the government owns over 95 percent of the entity.  Detailed information about state-owned companies (SOEs) is not easy to come by but they operate in many key sectors such as aviation, public utility (running water and electricity), ports, hotels, insurance, finance, woodworking, mining, maintenance and construction of ships, and real estate.  The government has minority shares in three major banks, the beverage industry, oil distribution, and mining activities.  The two most well-known SOEs are JIRAMA (100 percent state-owned), the water and electricity utility, and Air Madagascar whose equity tie-up with France’s Air Austral is in the process of unraveling.  The GOM has spent substantial amounts subsidizing the operations of both of these entities.  Improvement in the governance and a return to profitability of SOEs is a long-standing condition for future assistance by multilateral donor institutions such as the World Bank and the IMF.

In theory, private enterprises are, on the whole, allowed to compete with SOEs under the same terms and conditions for market access, credit, and other business operations.  The reality is somewhat different.  State-owned enterprises dominate the sectors they operate in and stifle competition.  For instance, in the airline industry, Air Madagascar offers unreliable service and charges high fares but faces little competition domestically or regionally since the GOM has restricted access to flight routes for other airlines.  Any investor seeking to compete with an SOE in Madagascar should consider not only market-entry difficulties but also its ability to compete for scarce resources and permits.

Privatization Program

The 2004 law on privatization prohibits the Government from owning more than 50 percent of a privatized company.  The fledgling privatization program initiated before 2009 has given way to more government control as reflected by the GOM’s recent moves to increase what it calls “the production share of the government” in the mining sector.

In the past, foreign investors participated actively in these privatization programs. Almost all state-owned banks were purchased by foreign investors including foreign state-owned banks.

Currently, the GOM does not have a privatization program on its agenda.

9. Corruption

While giving or accepting a bribe is a criminal act and is subject to trial by court, corruption is an ongoing issue at all levels in Madagascar.  No sector is immune, but it is most pervasive when dealing with the judiciary, police, tax, customs, land, and the mining industry.

Madagascar’s anti-corruption legislation, updated in 2016, mandated the establishment of the Independent Anticorruption Office (BIANCO) and the Committee for Safeguarding Integrity (CSI).  BIANCO enforces the anti-corruption law while CSI monitors the implementation of the national anticorruption strategy.  The anti-corruption courts (PAC) were established in 2018 to hear all corruption-related cases – including economic and financial crimes – after an investigation by BIANCO or the gendarmerie.  There are supposed to be PACs throughout the country, but the only one fully operational is in the capital.  Madagascar also has a Financial Intelligence Unit (SAMIFIN) to carry out research and financial analysis related to money laundering.  Transparency International Initiative Madagascar (TI-IM) has an office in the country working here since 2002.  TI-IM, BIANCO, SAMIFIN, Police and Gendarmerie collaborate closely to bring cases to the courts.

The Rajoelina administration has prioritized the fight against corruption and has begun to prosecute major corruption cases.  Between January and September 2019, 1,111 individuals were investigated, 421 arrested, and 78 were sent to prison for pre-trial detention.

During an investigation, bank accounts of family members (spouse, parents, children) can be investigated, but there is no provision or sanctions for family members of officials convicted of corruption.

There is no requirement for companies to establish internal codes of conduct that prohibit bribery of public officials.  Both the anti-corruption law and the penal code prohibit any individual/enterprise from giving money, presents, or other gifts to public officials to obtain advantages they are not entitled to.  The law also provides that any private enterprise that commits corrupt practices to obtain a permit, license or authorization is excluded from government procurement.  Furthermore, according to the law, any license, authorization, or permit issued illegally through corruption is void.

Both Article 31 of the 2016 anti-corruption law and Article 182 of the penal code require that any conflicts of interest concerning a public official should be declared to the supervising authority.  Failure to do so can lead to between six months to two years of imprisonment, a fine varying from Ar 1,000,000 to Ar 50,000,000 or both.  There is limited information on companies using internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.  However, some foreign companies have begun to orient their internal control, ethics, and compliance programs to prevent bribery, and the Foreign Corrupt Practices Act prohibits U.S. firms from engaging in such behavior.

Madagascar ratified the United Nations Convention against Corruption, as well as the African Union Convention on Preventing and Combating Corruption, in 2004.  Madagascar also joined the Southern African Development Community (SADC) Protocol against corruption in 2007, but has not yet signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transaction.

NGOs and associations are involved in governance and anti-corruption projects.   The law does not have any explicit provisions protecting NGOs and associations.  A Transparency International Initiative report states that although many associations and NGOs exist on paper, their actions are limited in terms of impact, especially in terms of playing a watchdog or advocacy role concerning government institutions.  Environmental activists have been harassed and threatened by various means.  The government, however, does not target them directly.

In general, the private sector identifies corruption as an obstacle to investment.  The IMF country report on Madagascar published in 2017 indicates that corruption affects the business climate in Madagascar.  Forty percent of those surveyed expected to give gifts “to get things done,” or to get an operating license, or to secure a government contract.  Moreover, 30 percent of the surveyed firms expected to give gifts in meeting tax officials and were required to make an informal payment or experienced a bribe payment request.  Similarly, more than 75 percent of Malagasy stated that corruption had increased in Madagascar over the past year, according to the 2019 Afrobarometer Survey, with 44 percent of Malagasy believing that police and gendarmes are involved in corruption and 39 percent believing the same of judges and magistrates.  BIANCO fared better with respect to the public’s trust, with 87 percent believing it is somewhat or very probable that BIANCO would take action if they report an act of corruption.  Nevertheless, of these respondents, 70 percent believe that regular citizens are at risk of retaliation if they report this.  For exporters, many products require documentation linked to regulatory controls and this process can require a significant amount of time, costs, and possibly bribes.  Aside from the routine demands for a quid pro quo, close ties between business and political elites also present barriers to entry for newcomers to the field.

Resources to Report Corruption

Bureau Indépendant Anti-Corruption (BIANCO)

  • Laza Eric Donat ANDRIANIRINA
  • General Manager
  • Independent Bureau Anti-Corruption (BIANCO)
  • Villa “La Piscine”, Ambohibao, Antananarivo, Madagascar, PO Box 399
  • +261 20 22 489 79 / +261 20 22 489 93 / +261 33 02 002 99
  • DG@MOOV.MG; CONTACT@BIANCO-MG.MG; WWW.BIANCO-MG.ORG 

TRANSPARENCY INTERNATIONAL-INITIATIVE MADAGASCAR (TI-IM)

SEHATRA FANARAHA-MASO NY FIAINAM-PIRENENA (SEFAFI) – Observatory of public life

  • Mme Sahondra RABENARIVO
  • Chairperson
  • Sehatra Fanaraha-maso ny Fiainam-pirenena (SEFAFI)
  • Lot IIIM33K, Andrefan’Ambohijanahary, Antananarivo, Madagascar
  • +261 32 59 761 52
  • sefafi@gmail.com

AFROBAROMETER

10. Political and Security Environment

Madagascar’s political history is characterized by cyclical political unrest since its independence.  The two most important events during the past two decades happened in 2002 and 2009.  In 2002, the disputed presidential elections between Didier Ratsiraka and Marc Ravalomanana led to six months of social, political, and economic conflict before Ravalomanana took over as President of the Republic.  In 2009, following violent public protests against widespread poverty and bad governance, Ravalomanana handed over power to a military directorate which installed Andry Rajoelina as President on March 17, 2009.  Both times, the political crises drove Madagascar into an extended period of economic decline, further exacerbating poverty, malnutrition, and socio-economic problems.

In April 2018, the parliament adopted a new electoral law with provisions aimed at preventing both former Presidents Ravalomanana and Rajoelina from participating in the presidential elections.  After weeks of protests by their supporters, the HCC ruled the disputed provisions unconstitutional.  Two rounds of peaceful presidential elections took place in November and December 2018, following which Andry Rajoelina took office as President in January 2019.  The elections of Rajaonarimampianina in 2013 and of Rajoelina in 2018 were the first two consecutive democratic transfers of power in Madagascar’s history.

The 2009 coup was preceded by violent protests which damaged many factories and warehouses, and destroyed radio and TV stations.  Looting and arson destroyed many businesses in downtown Antananarivo and other urban centers.  The political turmoil had a secondary and more lasting impact on Madagascar’s infrastructure.  With foreign aid at a standstill, public investment also diminished leading to significant deterioration of Madagascar’s transportation and energy infrastructure, erosion of environmental diversity, and contributed to an increase in food insecurity and levels of poverty.  Total private investment dropped from 40.96 percent of GDP in 2008 to 23.42 percent of GDP in 2010.

After the peaceful presidential transition in 2018, Madagascar held legislative elections in 2019 which also took place without incident.  Though the opposition alleged fraud in the municipal elections in November 2019, there were no significant protests or acts of violence.  So far, the government has been able to move its legislative agenda without significant opposition.  The economic impact of COVID-19 pandemic bears watching as it is likely to cause significant unemployment, business closures, and strain the government’s budget.

According to a 2019 report published by the commercial bank Société Générale, political instability, institutional weakness, and bad governance constitute obstacles to Madagascar’s economic growth.  Corruption and social instability remain a challenge for the Malagasy economy.  The report points to rising insecurity in the south and risk of political violence in the country.

Mali

3. Legal Regime

Transparency of the Regulatory System

As reflected in agreements with the IMF and World Bank, the Government of Mali has adopted a generally transparent regulatory policy and laws to foster competition.  Mali’s laws related to commerce, labor, and competition are designed to meet the requirements of fair competition, ease bureaucratic procedures, and facilitate the hiring and firing of employees.  In practice, however, many international firms complain of lack of transparency in the regulatory system and challenges in enforcing regulatory requirements to the detriment of business prospects.  There is no public comment period or other opportunity for citizens or businesses to comment upon proposed laws.

Mali is a member of UNCTAD’s international network of transparent investment procedures.  Mali is also a member of the African Organization for the Harmonization of Business Law (OHADA) and implements the Accounting System of West African States (SYSCOA), which harmonizes business practices among several African countries consistent with international norms.  There are no informal regulatory processes managed by nongovernmental organizations or associations.

Mali’s Public Procurement Regulatory Authority (Autorité de régulation des marchés publics or ARMDS) is tasked with ensuring transparency in public procurement projects and may receive complaints from businesses on public procurement-related issues.  ARMDS publishes information about its decisions in disputes as well as key laws relating to public procurement on its website at http://www.armds.ml/ .

The Government of Mali regularly reviews regulations in order to adapt them to the current national context or to international standards or commitments.  A new mining code that will apply to future mining projects was announced in 2019 but has yet to be formally adopted as law.  Reforms to the tax code, the investment code, and petroleum product pricing are ongoing.

Mali makes public finance documents, including the budgets for all government ministries and offices, available on the Ministry of Economy and Finances’ website at https://www.finances.gouv.ml/lois-des-finances .  Mali’s national budget provides details on the expenditures of government entities (including the Presidency and Prime Minister’s office) and the revenues of tax collection authorities, including customs, the public debt directorate, the land administration directorate, and the treasury and public accounting directorate.  The budget also includes information on public debt, as well as government subsidies to petroleum products and to the state-owned utility company (Energie du Mali or EDM).  The Government of Mali also publishes a simplified version of the budget known as the citizen’s budget.

The Government of Mali has multiple audit institutions tasked with monitoring public spending.  The Accounts Section of the Supreme Court is responsible for reviewing and approving the financial statements of all Government of Mali departments.  The Office of the Auditor General (Bureau du Verificateur General or BVG) is authorized to audit the accounts of all government entities as well as private companies or other entities that receive public funds.  Its reports are made public and can be accessed at http://www.bvg-mali.org/ .  The Government of Mali has other auditing institutions, including the Office to Fight against Illicit Enrichment (Office central de Lutte contre l’Enrichissement illicite or OCLEI), the General Comptroller of Public Services (Contrôle Général des Services Publics or CGSP), and the Support Unit for Administrative Auditing Bodies (Cellule d’Appui aux Structures de Contrôle de l’Administration or CASCA).  Despite the existence of multiple audit institutions, management of public funds remains opaque and subject to corrupt practices, particularly in public procurements.  In 2019, the Department of State determined that Mali did not meet the minimum requirements of fiscal transparency.

International Regulatory Considerations

As a member of WAEMU and ECOWAS, Mali applies WAEMU and ECOWAS directives.

Mali is a member of the WTO.  Mali has not notified the WTO of any measures concerning investments related to trade in goods that are inconsistent with the requirements of Trade Related Investment Measures.  Information on other notifications from Mali to the WTO can be found at https://www.wto.org/english/thewto_e/countries_e/mali_e.htm  under the “Notifications from Mali” section.

Legal System and Judicial Independence

Mali’s legal system is based on French civil law.  Mali uses its investment code, mining code, commerce code, labor code, and code on competition and price to govern disputes.  Disputes occasionally arise between the government or state-owned enterprises and foreign companies.  Some investors report that certain cases involve wrongdoing on the part of corrupt government officials.

Although Mali’s judicial system is independent, many companies have noted that it is subject to political influence.  Numerous business complaints are awaiting an outcome in the courts.  The Minister of Justice wields influence over the career paths of judges and prosecutors, which may compromise their independence.  Corruption in the judicial system is common, leading to what foreign investors have characterized as flawed decisions.

An independent commercial court was established in 1991 with the encouragement of the U.S. government to expedite the handling of business litigation.  Commercial courts, located in Bamako, Kayes, and Mopti, can hear intellectual property rights cases.  In areas where there is no commercial court, the local Courts of First Instance have the jurisdiction to hear business disputes.  The Courts of First Instance’s decisions are appealable in the Court of Appeal and/or in the Supreme Court.  Since its inception, the commercial court has handled cases involving foreign companies.  The court is staffed by magistrates and is assisted by elected Malian Chamber of Commerce and Industry representatives.  Teams composed of one magistrate and two Chamber of Commerce and Industry representatives conduct hearings.  The magistrate’s role is to ensure that the court renders decisions in accordance with applicable commercial laws, including internationally recognized bankruptcy laws, and that court decisions are enforced under Malian law.

Laws and Regulations on Foreign Direct Investment

Mali’s investment code gives the same incentives to both domestic and foreign companies for licensing, procurement, tax and customs duty deferrals, export and import policies, and export zone status if the firm exports at least 80 percent of production.  Incentives include exemptions from duties on imported equipment and machinery.  Investors may also receive tax exemptions on the use of local raw materials.  In addition, foreign companies can negotiate specific incentives on a case-by-case basis.  The Government of Mali has reduced or eliminated many export taxes and import duties as part of ongoing economic reforms; however, export taxes remain for gold and cotton, Mali’s two primary exports.  The government applies price controls to petroleum products and cotton, and occasionally to other commodities (such as rice) on a case-by-case basis.

In most cases, foreign investors may own 100 percent of any business they create, except in the mining and media sectors.  Foreign investors may also purchase shares in parastatal companies.  Foreign companies may also start joint-venture operations with Malian enterprises.  The repatriation of capital and profit is guaranteed.

Despite having a generally favorable investment regime on paper, foreign investors have complained of facing challenges in practice, including limited access to financing, high levels of corruption, poor infrastructure (including inconsistent electricity access), a non-transparent judicial system, and the lack of an educated workforce.

The following websites provide additional information relating to investments in Mali:

Investment Promotion Agency:  https://apimali.gov.ml/  and http://mali.eregulations.org/ 
Mali Trade Portal:  https://tradeportal.ml/ 
National Council of Employers:  http://www.cnpmali.org/index.php/lois-et-reglements/codes 
Niger River Authority (Officer du Niger):  https://www.on-mali.org/on/ 
Chamber of Commerce and Industry:  http://www.cci.ml 
Ministry of Economy and Finances:  http://www.finances.gouv.ml 
Public Procurement Regulatory Authority:  http://www.armds.ml/ 

Competition and Anti-Trust Laws

The Ministry of Commerce and Industry is responsible for reviewing free competition in the Malian market place.  Mali’s national competition law (Order 2007, Decree 2008) and the WAEMU 2002 anti-trust rules are the primary judicial documents that govern competition in Mali.  The commercial court (Tribunal of Commerce) and ARMDS are the primary judicial bodies that oversee competition-related concerns.

Mali’s Organization of Industrial Entrepreneurs (Organisation Patronal des Industriels or OPI) has criticized corruption and smuggling as significant hurdles to fair competition.  Contacts report that Mali struggles to limit illegal imports of products such as sodas, juices, tobacco, medicines, and textiles (including fabrics).  The General Directorate of Customs, the National Directorate for Commerce and Competition, and the Agency for the Sanitary Security of Foods occasionally intervene to address the import and commercialization of smuggled goods but have limited capacity to effectively address the problem.

Expropriation and Compensation

Expropriation of private property other than land for public purposes is rare.  The Malian government has not unfairly targeted U.S. firms for expropriation.  By Malian law, the expropriation process should be public and transparent and follow the principles of international law.  Compensation based on market value is awarded by court decision.

The government may exercise eminent domain in various situations, including when undertaking large-scale public projects, in cases of bankrupt companies that had a government guarantee for their financing, or when a company has not complied with the requirements of an investment agreement with the government.

In cases of illegal expropriations, Malian law affords claimants due process in principle.  However, given reported corruption in the land administration sector, impartial adjudication of court cases involving land disputes is rare.

Dispute Settlement

ICSID Convention and New York Convention

Mali is a member of the International Center for the Settlement of Investment Disputes (ICSID).  Malian law (Decree No. 09/P-CMLN promulgating Order No. 77-63/CMLN of November 11, 1977 and Order No. 77-63/CMLN) authorizes implementation of the ICSID Convention.  Mali is also a signatory of the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention).

Investor-State Dispute Settlement

Investors engaged in disputes with the state are supposed to undertake amicable negotiations before engaging Mali’s Public Procurement Regulatory Authority (ARMDS) or the courts.  Failure to reach an out-of-court agreement will lead to the case being transferred to the Court of First Instance, the commercial court, or international arbitration.  The decisions of foreign courts are enforced as long as specified and recognized by Malian law.

Mali’s investment code allows a foreign company that has a signed agreement with the government to refer to international arbitration any case that the local courts are unable to resolve.  Mali’s 2019 mining code (which has yet to be fully adopted as law) specifies that if there is a disagreement between the Malian government and a mining company related to application of the mining code, the disagreement may be referred to Malian courts, regional courts, and international courts.

Investors have reported that the dispute resolution process is often unfair, cumbersome, and time-consuming.  Dispute resolution can take multiple years and is reportedly often fraught with corruption, political influence, and demands for payments to facilitate the legal process.

International Commercial Arbitration and Foreign Courts

Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 treaty creating the Common Court of Justice and Arbitration.  OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali.

Bankruptcy Regulations

Mali’s bankruptcy law is found in its commerce code, which does not criminalize bankruptcy.   According to the World Bank’s 2020 Doing Business Report, resolving insolvency takes 3.6 years on average and costs 18 percent of the debtor’s estate.  Generally, a bankrupt company will be sold piecemeal.  The average recovery rate is 28.3 cents on the dollar.

5. Protection of Property Rights

Real Property

Property rights are protected under Malian law.  Ownership of property is defined by the use, the profitability, and the ability of the owner to sell or donate the property.  According to the World Bank’s 2020 Doing Business Report, registering property in Mali requires five steps, takes 29 days, and costs 11.1 percent of the property value on average.  Mali scored 8 (against 8.8 for other Sub-Saharan African countries and 23 for OECD countries) on the quality of land administration index (with 0 being the worst score and 30 the best).

The Government of Mali established the Malian Center for the Promotion of Industrial Property to implement property rights protection laws, including the WTO TRIPS agreements.  The Malian Center for the Promotion of Industrial Property is a member of the African Property Rights Organization and works with international agencies recognized by the United Nations Industrial Development Organization.  Patents, copyrights, and trademarks are covered under property rights protection laws.  These structures notwithstanding, property rights are not always adequately protected in practice.

Mali’s National Land Agency (Direction Nationale des Domaines et du Cadastre or DNDC) defines three types of land property classifications in Mali:  1. a land title (le titre foncier), which gives full property ownership to an individual; 2. an occupancy permit (permis d’occuper) that can be obtained by paying a fee and does not grant full ownership; and 3. farming rights granted to rural agricultural communities.  All non-registered land belongs to the state.  Various government officials, including prefects, mayors, governors, and officials from the Ministry of Lands, are able to grant land ownership status.

Mali currently lacks a nationwide land registry, and different government structures at the local, regional, and national level are involved in land administration.  As a result, there are often competing claims for land.  In March 2020, as part of efforts to improve land management, the Government of Mali began the process of adopting a new law to create a one-stop shop for land registration, eliminate rural land titles (concession rurale), reinforce traditional land rights (droit coutumier), and enable the Minister of Lands to cancel the attribution or confiscation of public properties.

Intellectual Property Rights

Mali is a member of the World Intellectual Property Organization (WIPO).  Mali has ratified a number of international treaties related to intellectual property rights (IPR).  There are two primary agencies involved with the protection of IPR in Mali:  the Malian Office of the Rights of the Author (Bureau Malien du Droit d’Auteur or BUMDA) and the Malian Center for the Promotion of Intellectual Property (Centre Malien de Promotion de la Propriété Intellectuelle or CEMAPI).  CEMAPI is the primary agency for patents and for industrial property rights violation claims, while BUMDA covers artistic and cultural works.  In addition to registering copyrights, BUMDA conducts random searches during which it seizes and destroys counterfeit products.  Mali’s Agency for the Sanitary Security of Foods, the National Directorate of Agriculture, and the National Directorate for Commerce and Competition are also charged with enforcing laws related to fair trade, fair competition, and IPR.

In general, however, the government has limited capacity to combat IPR violations or to seize counterfeit goods.  There is a significant number of reported IPR violations in the artistic sector as well as in the pharmaceutical sector.  According to the Malian National Pharmaceutical Association, nearly 50 percent of pharmaceuticals sold in Mali are counterfeit.  Many CDs, movies, and books are reported to be pirated.  Several companies have noted that children are often involved in selling counterfeit products such as clothes, CDs, and books.  In the past, counterfeit products were typically imported from foreign cities, including Guangzhou and Dubai.  However, BUMDA has reported that counterfeit products increasingly originate in Mali and Nigeria.

Mali is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

Mali has privatized or reduced government involvement in a number of state-owned enterprises (SOEs).  However, there are still 48 state-owned or partially state-owned companies in Mali, including 12 mining companies, the national electricity company (EDM), a telecommunications entity (SOTELMA), a cotton ginning company (CMDT), a cigarette company (SONATAM), sugar companies (SUKALA and N-SUKALA), and the Bamako-Senou Airport.  The government no longer has shares in two banks, BSIC-Mali and Coris Bank International-Mali, in which it had respectively 25 and 10 percent shares as of December 2017.  The government also reduced its shares in the Malian Development Bank (BDM) and Malian Solidarity Bank (BMS).

More details on SOEs are available at https://www.finances.gouv.ml/documents/situation-des-participations-de-l%C3%A9tat-dans-les-soci%C3%A9t%C3%A9s-%C3%A0-la-date-du-31-d%C3%A9cembre-2019 .

Private and public enterprises compete under the same terms and conditions.  No preferential treatment is given to SOEs, although they can be at a competitive disadvantage due to the limited flexibility they have in their management decision-making process.  Malian law guarantees equal treatment for financing, land access, tax burden, tax rebate, and access to raw materials for private firms and SOEs.

The Government of Mali is active in the agricultural sector.  The parastatal Niger River Authority (Office du Niger) controls much of the irrigated rice fields and vegetable production in the Niger River inland delta, although some private operators have been granted plots of land to develop.  The Office du Niger encourages both national and foreign private investment to develop the farmlands it manages.  Under an MCC-funded irrigation project, Mali granted titles to small private farmers, including women; an adjacent tranche developed with MCC was to have been open to large-scale private investment through a public tender process.  However, all MCC projects were suspended as a result of the coup d’état of March 2012 and discontinued when the projects reached the end of their implementation deadline.  The national cotton production company, CMDT, which is yet to be privatized, provides financing for fertilizers and inputs to cotton farmers, sets cotton prices, purchases cotton from producers, and exports cotton fiber via ports in neighboring countries.

The Government of Mali is still active in the banking sector.  The state owns shares in five of the 14 banks in Mali:  BDM (19.5 percent share), BIM (10.5 percent), BNDA (36.5 percent), BMS (13.8 percent), and BCS (3.3 percent).  While the government no longer has a majority stake in BDM, it has significant influence over its management, including the privilege to appoint the head of the Board of Directors.

Senior government officials from different ministries make up the boards of SOEs.  Major procurement decisions or equity raising decisions are referred to the Council of Ministers.  Government powers remain in the hands of ministries or government agencies reporting to the ministries.  No SOE has delegated powers from the government.

SOEs are required by law to publish an annual report.  They hold a mandatory annual board of directors meeting to discuss financial statements prepared by a certified accountant and certified by an outside auditor in accordance with domestic standards (which are comparable to international financial reporting standards).  Mali’s independent Auditor General conducts an annual review of public spending, which may result in the prosecution of cases of corruption.  Audits of several state-owned mining companies have revealed significant irregularities.

Privatization Program

The government’s privatization program for state enterprises provides investment opportunities through a process of open international bidding.  Foreign companies have responded successfully to calls for bids in several cases.  The government publishes announcements for bids in the government-owned daily newspaper, L’Essor.  The process is non-discriminatory in principle; however, there have been many allegations of corruption in public procurement.

9. Corruption

Many companies claim that corruption is the greatest obstacle for foreign investment and economic development in Mali.  While corruption is a crime punishable under the penal code, bribery is frequently reported in many large contracts and investment projects.  Some investors report that government officials often solicit bribes in order to complete otherwise routine procedures.  The Government of Mali passed a law against illicit enrichment in 2014.  The law, however, does not force members of parliament or the executive to declare their assets.  The government has pledged to update the law.  In 2019, Transparency International’s global corruption ranking for Mali deteriorated to 130th of 180 ranked countries (from 120th of 180 in 2018).  Mali’s perceived public corruption score from Transparency International was 29 out of 100 in 2019 (with 0 being “highly corrupt” and 100 being “very clean”).  Relative to other developing countries, Mali was rated at the 67th percentile for control of corruption on the FY2020 MCC Scorecard (based on World Bank and Brookings Worldwide Governance Indicators reports).

Corruption is reportedly common in government procurement and dispute settlement.  The government has addressed this issue by requiring procurement contracts to be inspected by the Directorate General for Public Procurement, which determines whether the procedure meets fairness, price competitiveness, and quality standards.  However, there are allegations of significant political interference in procurement.  In addition, both foreign and domestic companies complain about harassment and requests for bribes from officials involved in tax collection.  Mali’s international donor community has been working with the government to reduce corruption.

Investors have found the judicial sector to be neither independent nor transparent.  Questionable judgments in commercial cases have occasionally been successfully overturned at the Supreme Court’s Court of Appeal.  However, there is a general perception among the populace that while prosecution of minor economic crimes is routine, official corruption, particularly at the higher levels, goes largely unpunished.

The President of Mali created the Office of the Auditor General (Bureau du Verificateur General or BVG) in 2004 as an independent agency tasked with auditing public spending.  Since its inception, the BVG has uncovered several significant cases of corruption, including in the customs directorate.  However, few findings of corruption have resulted in prosecutions.

Growing pressure from international donors for more transparency in public resource management led to changing the appointment process of the Directors of Finance and Equipment.  As a result, in March 2017, the Minister of Economy and Finances dismissed 15 Directors of Finance and Equipment.  Eighteen others were moved to other ministries.  The Government of Mali opened a new office in 2017, the Office to Combat Illicit Enrichment (Office central de Lutte contre l’Enrichissement illicite or OCLEI), to combat illicit enrichment by government officials.  The OCLEI has the authority to collect asset declarations from public servants, to conduct investigations of government officials suspected of corruption, and to refer cases for prosecution if sufficient evidence is gathered against the defendant.  However, the OCLEI’s operations were temporarily suspended following civil servants’ union protests against asset declaration requirements.  Negotiations between the unions, the Government of Mali, and donors eventually yielded a satisfactory solution that enabled the office to resume operations, and the office has begun registering asset declarations for certain categories of civil servants.  According to its 2017-2018 report, the OCLEI received asset declarations from approximately 1,000 civil servants (nearly 70 percent of all civil servants in Mali) over 2017-2018 and referred three suspected cases of corruption to the justice system.

Following a cabinet reshuffle in 2019, the newly appointed Minister of Justice took measures to address corruption by appointing a new prosecutor in the Economic and Financial Specialized Judicial Office of Bamako, a court in charge of prosecution of corruption.  Since these changes, many high-profile businesspeople and political leaders have been arrested due to corruption allegations.  Mali’s Auditor General also increased the pace of its reporting in 2019 and 2020, releasing 11 financial audits reports, four performance audits reports, four reports of conformity, and seven reports on the level of implementation of recommendations it made in previous audits reports.  The Auditor General refers cases of fraud or other unlawful practices to the Economic and Financial Specialized Judicial Office of Bamako.

Resources to Report Corruption

Mamoudou Kassogue
Head Prosecutor
Economic and Financial Specialized Judicial Office (Pole Economique et Financier de Bamako)
Tel. (+223) 20 29 71 34

Samba Alhamdou Baby
Chief Auditor
Office of the Auditor General (Bureau du Verificateur General)
Tel. (+223) 20 29 70 25

Mama Sininta
Chief Prosecutor
Accounts Chamber of the Supreme Court (Section des Comptes de la Cour Supreme)
Tel. (+223) 20 22 15 02

Konate Salimata Diakite
Comptroller
Comptroller of Public Services (Controleur General des Services Publics)
Tel. (+223) 20 22 58 15

10. Political and Security Environment

The U.S. Department of State’s Fact Sheet on Mali is available at https://www.state.gov/u-s-relations-with-mali/.  The current Travel Advisory for Mali is available at https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/mali-travel-advisory.html.

Throughout nearly three decades of multi-party democracy, Mali has consistently encouraged private enterprise and investment.  However, the destabilizing effects of Mali’s 2012 coup d’état led to a deterioration of the economic situation and uncertainty in the investment climate.  Mali continues to face significant political and security challenges amidst slow implementation of a peace agreement signed in 2015 that aims to resolve the ongoing conflict in northern Mali.  A disparate group of politically-motivated armed groups, militias, bandits, and extremist groups continue to exert influence in wide swathes of Mali’s largely ungoverned northern areas as well as central Mali.  Furthermore, terrorist groups have increased the frequency and range of their attacks—particularly against the base camps of the UN peacekeeping mission (MINUSMA) and the Malian Armed Forces in northern and central Mali—in an effort to destabilize the country.  The situation in central Mali—namely in the Segou and Mopti regions—is increasingly unstable due to intercommunal conflict, localized political violence, and the incursion of extremist groups into the region.

Terrorist groups with varying degrees of allegiance to al-Qaeda and the Islamic State of Iraq and the Levant (ISIS) operate in Mali, and often pursue local agendas complementary to these global extremist movements.  Groups linked with al-Qaeda in the Islamic Maghreb (AQIM), which have merged under the banner of Jama’at Nusrat al-Islam wal-Muslimin (JNIM), continued to conduct terrorist attacks throughout 2019, primarily targeting international and Malian military forces.  These groups have claimed responsibility for recent gun and improvised explosives attacks, kidnappings, and other violent actions in northern and central Mali.

In addition to MINUSMA’s peacekeeping presence, French troops are deployed in the country and conduct offensive counterterrorism operations in collaboration with Malian security forces that target extremist elements.  However, their presence is not sufficient to counter every threat.  Extremist groups have attacked UN peacekeepers’ northern base camps in Timbuktu, Gao, and Kidal.  Attacks by violent extremist groups have moved beyond the traditional conflict zone in the North to central and southern Mali.  The area along the border with Burkina Faso, and some remote parts of southern Mali, are increasingly under threat of attack.

While the Malian government, backed by MINUSMA and French forces, has taken steps to reassert control over most of the major cities, much of the North and Center remain unstable.  AQIM, long entrenched in northeastern Mali, remains a threat.  AQIM has demonstrated a pattern of kidnapping hostages for ransom and launching operations against neighboring Algeria, Mauritania, Burkina Faso, and Niger.  AQIM and its local affiliates have been involved in various terrorist attacks in Mali, including at a restaurant in Bamako in March 2015; at a hotel frequented by foreigners in Sevare in August 2015; against the Radisson Blu Hotel in Bamako in November 2015; and against the Campement de Kangaba hotel in June 2017.

While previous extremist attacks spared foreign companies except hotels and restaurants, some attacks have targeted infrastructure projects involving foreign companies.  In October 2017, extremists attacked a foreign company in charge of the construction of a road in Timbuktu and destroyed several vehicles.  In March 2018, terrorists attacked and destroyed a USD 66 million dam construction project in Djenne.  In addition, in April 2020, extremist groups carried out attacks in the southwestern region of Kayes, Mali’s goldmining region.

U.S. citizens living or traveling in Mali are encouraged to enroll in the Smart Traveler Enrollment Program (STEP) at https://step.state.gov/step to receive security messages and make it easier to be located in an emergency.

Mozambique

3. Legal Regime

Transparency of the Regulatory System

Investors face myriad requirements for permits, approvals, and clearances that take substantial time and effort to obtain. The difficulty of navigating the system provides opportunities for corruption and bribery, a scenario that is aggravated by the prevailing low wages for administrative clerks. Labor, health, safety, and environmental regulations often go unenforced, or are selectively enforced. In addition, civil servants have threatened to enforce antiquated regulations that remain on the books to obtain favors or bribes.

The private sector, through the Confederation of Business Associations (CTA, Confederacao das Associacoes Economicas), Mozambique’s primary business and industry association, maintains an ongoing dialogue with the government, holding quarterly meetings with the Prime Minister and an annual meeting with the President. CTA provides feedback to the GRM on laws and regulations that impact the business environment on behalf of its members and other business associations. However, because of its exclusive role in communicating with the government on behalf of the private sector, some businesses have expressed concern that minority voices are not heard and that CTA, because of its close relationship with the government, is no longer an effective advocate.

Draft bills are usually made available for public comments through the business associations or relevant sectors or in public meetings. Changes to laws and regulations are published in the National Gazette. Public comments are usually limited to input from a few private sector organizations, such as CTA. There have been complaints of short comment periods and that comments are not properly reflected in the National Gazette. The government is considering a law that would make public consultation on future legislation mandatory.

Overall fiscal transparency in Mozambique is improving gradually in the wake of the 2016 hidden debt crisis which saw the government own up to contracting around $2 billion dollars in secret loans in 2013 and 2014. Publicly available budget documents provide an incomplete picture of the government’s planned expenditures and revenue streams, especially with regard to natural resource revenues and allocations to and earnings from state-owned enterprises, which generally did not have publicly available audited financial statements. The government also maintains off-budget accounts not subject to adequate audit or oversight. For portions of the budget that were relatively complete, the provided information is generally reliable.

International Regulatory Considerations

Mozambique is a member of SADC (Southern African Development Community). In June 2016, the SADC EPA Group, which includes Mozambique, Botswana, Lesotho, Namibia, South Africa, and Swaziland, signed an Economic Partnership Agreement (EPA) with the European Union. Mozambique exports aluminum under the EPA agreement.

The GRM ratified the Trade Facilitation Agreement (TFA) in July 2016 and notified the WTO in January 2017. A National Trade Facilitation Committee was established to coordinate the implementation of the TFA.

Legal System and Judicial Independence

Mozambique’s legal system is based on Portuguese civil law and customary law. In December 2005, the Parliament approved major revisions to the Commercial Code which went into effect in 2006. The previous Commercial Code was from the colonial period, with clauses dating back to the 19th century, and it did not provide an effective basis for modern commerce or resolution of commercial disputes. In 2018, the Council of Ministers passed new provisions for the Commercial Code, which were debated and approved in Parliament. In recent years Mozambique’s legal system has shown a degree of greater independence, for example pursuing some politically connected former officials and their family members for their role in the hidden debt scandal.

Laws and Regulations on Foreign Direct Investment

The Code of Fiscal Benefits, Law No. 4/2009, passed in January 2009, and Decree No. 56/2009, approved in October 2009, form the legal basis for foreign direct investment in Mozambique. Operating within these regulations, APIEX (http://invest.apiex.gov.mz/ ) analyzes the fiscal and customs incentives available for a particular investment.  Investors must establish foreign business representation and acquire a commercial representation license. During project development, investors must document their community consultation efforts related to the project. If the investment requires the use of land, the investor will also have to present, among other documents, a topographic plan or an outline of the site where the project will be developed.

If the investment involves an area under 1,000 hectares and the investment is up to approximately $25 million, the governor of the province where it will be located can approve the investment. There has been no update to the law since the introduction of provincial level State Secretaries with the new government in 2020. APIEX has the authority to approve any project between $25 million-$40 million. The Minister of Economy and Finance must approve national or foreign investment between $40 -$225 million. If the investment (national or foreign) occupies an area of 10,000 hectares or an area superior to 100,000 hectares for a forestry concession, or it amounts to more than $225 million, the project must be approved by the Council of Ministers.

Competition and Anti-Trust Laws

Law 10/2013, passed on April 11, 2013, and known as the Competition Law, established a modern legal framework for competition in Mozambique and created the Competition Regulatory Authority. A budget has still not been allocated to this body, but the government appointed a director in April 2020.

The framework is inspired by the Portuguese competition enforcement system. Violating the prohibitions contained in the Competition Law (either by entering into an illegal agreement or practice or by implementing a concentration subject to mandatory filing) could result in a fine of up to 5 percent of the turnover of the company in the previous year. Competition Regulatory Authority decisions may be appealed in the Judicial Court in Maputo, for cases leading to fines or other sanctions, or to the Administrative Court for merger control procedures.

Expropriation and Compensation

While there have been no significant cases of nationalization since the adoption of the 1990 Constitution, Mozambican law holds that “when deemed absolutely necessary for weighty reasons of national interest or public health and order, the nationalization or expropriation of goods and rights shall (result in the owner being) entitled to just and equitable compensation.” No American companies have been subject to expropriation issues in Mozambique since the adoption of the 1990 Constitution.

Dispute Settlement

ICSID Convention and New York Convention

Mozambique acceded in 1998 to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Investor-State Dispute Settlement

For disputes between U.S. and Mozambican companies where a Bilateral Investment Treaty (BIT) violation is alleged, recourse via the international Alternative Dispute Resolution may also be available. No investment disputes in the past ten years have involved U.S. investors. Investors who feel they have a dispute covered under the BIT should contact the U.S. Embassy.

International Commercial Arbitration and Foreign Courts

In 1999, the Parliament passed Law no. 11/99 (Law on Arbitration), which allows access to modern commercial arbitration for foreign investors. The Judicial Council approved Resolutions No. 1/CJ/2017 and No. 2/CJ/2017 in 2017, creating the Regulations of Mediation Services in Judicial Courts and the Judicial Mediators’ Code of Conduct. These new resolutions are designed to promote the mediation process as an alternative to litigation. Labor and commercial arbitration are recognized by local courts as well as cases judged internationally.

The Center of Arbitration, Conciliation, and Mediation (CACM) offers commercial arbitration. During 2019, CACM handled 22 cases of commercial arbitration, and another ten cases are in process. CACM has 316 arbitrators, 12 of which are international. One of the main constraints to the use of arbitration is that many contracts do not incorporate a clause that allows conflicts to be resolved via arbitration instead of in the courts.

Bankruptcy Regulations

In June 2014, the GRM passed a comprehensive legal regime for bankruptcy, streamlining the bankruptcy process and setting the rules for business recovery. Globally, Mozambique stands at 86 of 190 economies on the ease of resolving insolvency issues, according to the 2019 Doing Business Report.

In the 2020 World Bank Doing Business Report, Mozambique ranked 86 overall for resolving insolvency, scoring well above average for sub-Saharan Africa, but below South Africa and Mauritius in the most recent report.

5. Protection of Property Rights

Real Property

The legal system recognizes and protects property rights to buildings and movable property. Private ownership of land, however, is not allowed in Mozambique. Land is owned by the State. The government grants land-use concessions called DUATs (Direitos de Uso e Aproveitamento de Terra, or a land-use title) for periods of up to 50 years, with options to renew for an additional 50 years. Essentially, land-use concessions serve as proxies for land titles. There is no robust market in land use rights and land use titles are not easily transferable. The process to award land concessions is not transparent and the government at times has granted overlapping land concessions that often require lengthy negotiation to resolve. It takes an average of 90 days to issue a land title for most of the concessions. Banks in Mozambique rely on property other than land – cars, private houses, and infrastructure – as collateral, as it is not possible to securitize property for lending purposes.

In urban areas, the DUAT of a plot passes automatically to the purchaser following the sale of a house or building. In rural areas, the purchaser of physical infrastructure or improvements and crops must request authorization from the government for the DUAT to be transferred. This requirement is often cited as a barrier for loans in the agricultural sector and is seen as a potential barrier to investment in the agriculture sector and the transition to more intensive, commercial forms of agriculture.

Investors should be aware of the requirement to obtain endorsement of their projects in terms of land use and allocation at a local level from the affected communities. APIEX assists investors in finding land for development and obtaining appropriate documentation, including agricultural land. The government advises companies on relocating individuals currently occupying land designated for development; however, companies are ultimately responsible for planning and executing resettlement programs.

Intellectual Property Rights

Intellectual property rights (IPR) enforcement in Mozambique remains sporadic and inconsistent. Mozambique’s National Inspectorate of Economic Activities (INAE) has increased seizures, confiscating Hewlett-Packard (HP) toner cartridges, Nike, Adidas, Ralph Lauren, and other falsely branded merchandise in several raids in 2019. However, in general, enforcement and prosecutions are limited. Pirated DVDs and other counterfeit goods are commonly sold in Mozambique.

The Parliament passed a copyright and related rights bill in 2000, which, when combined with the 1999 Industrial Property Act, brought Mozambique into compliance with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The law provides for the security and legal protection of industrial property rights, copyrights, and other related rights. In addition, Mozambique is a signatory to the Bern Convention, as well as the New York and Paris Conventions.

Despite enforceable laws and regulations protecting intellectual property rights (IPR and providing recourse to criminal or administrative courts for IPR violations, it remains difficult for investors to enforce their IPR. The registration process is relatively simple. and private sector organizations have been working with various government entities on an IPR taskforce to combat IPR infringement and related public safety issues stemming from the use of counterfeit products.

Mozambique is not included in he United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/details.jsp?country_code=MZ  .

7. State-Owned Enterprises

Mozambique’s State-owned enterprises (SOEs) have their origin in the socialist period directly following independence in 1975, with a variety of SOEs competing with the private sector in the Mozambican economy. Government participation varies depending on the company and sector. SOEs are managed by the Institute for the Management of State Participation (IGEPE – Portuguese acronym). Following past privatization and restructuring programs, IGEPE now holds majority and minority interests in 128 firms, down from 156. IGEPE’s holdings are listed on its website: http://www.igepe.org.mz/ 

Some of the largest SOEs, such as Airports of Mozambique (ADM) and Airlines of Mozambique (Travel – airports and air transportation), and Electricity of Mozambique (Energy & Mining – electrical utility), have monopolies in their respective industries. In some cases, SOEs enter into joint ventures with private firms to deliver certain services. For example, Ports and Railways of Mozambique (CFM-Portuguese acronym) offers concessions for some of its ports and railways. Many SOEs benefit from state subsidies. In some instances, SOEs have benefited from non-compete contracts that should have been competitively tendered. SOE accounts are generally not transparent and not thoroughly audited by the Supreme Audit Institution. SOE debt represents an unknown, but potentially significant liability for the GRM. SOEs were also at the heart of the hidden debt scandal revealed in 2016.

In March 2018, the Parliament passed a new law that broadens the definition of state-owned enterprises (SOEs) to include all public enterprises and shareholding companies. The law seeks to unify SOE oversight and harmonize the corporate governance structure, placing additional financial controls, borrowing limits, and financial analysis and evaluation requirements for borrowing by SOEs. The law requires the oversight authority to publish a consolidated annual report on SOEs, with additional reporting requirements for individual SOEs. The Council of Ministers approved regulations for the SOE law in early 2019, but there has still not been a meaningful increase in public disclosure by the state owned companies.

Privatization Program

Mozambique’s privatization program has been relatively transparent, with tendering procedures that are generally open and competitive. Most remaining parastatals operate as state-owned public utilities, with government oversight and control, making their privatization more politically sensitive. While the government has indicated an intention to include private partners in most of these utility industries, progress has been slow.

9. Corruption

Corruption is a major concern in Mozambique. Though Mozambique has made progress developing the legal framework to combat corruption, the policies and leadership necessary to ensure effective implementation have been insufficient. While the 2016 hidden debt scandal involving a cadre of former government officials is the most infamous example of government corruption, it is not the only case.

However, the government is taking concerted action to address the problem. In 2019, Mozambique made a string of arrests of 20 politically connected individuals related to the hidden debt case. The government also moved forward with cases against the former Minister of Transport and Communications Paulo Zucula, the former CEO of the national airlines (LAM – a parastatal), and Mateus Zimba, former director of Sasol. In 2019, the government in cooperation with the IMF also released a Diagnostic Report on Transparency, Governance and Corruption outlining 29 measures to fight corruption and improve transparency. The full report is available online at: https://www.imf.org/en/Publications/CR/Issues/2019/08/23/Republic-of-Mozambique-Diagnostic-Report-on-Transparency-Governance-and-Corruption-48613 .

Thanks in part to these efforts, Mozambique rose six places on Transparency International’s 2019 Corruption Perceptions Index, and now ranks 146 out of 180 countries in 2019.

Mozambique’s civil society and journalists remain vocal on corruption-related issues. Action related to the hidden debt scandal is being led by a civil society umbrella organization known as the Budget Monitoring Forum (FMO, Forum de Monitoria de Orcamento) that brings together around 20 different organizations for collective action on transparency and corruption related issues. Another civil society organization, the Center for Public Integrity (CIP, Centro de Integridade Publica), also continues to publicly pressure the government to act against corrupt practices. CIP finds that many local businesses are closely linked to the government and have little incentive to promote transparency.

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Ana Maria Gemo
Central Anti-Corruption Office (Gabinete Central de Combate a Corrupcao)
Avenida 10 de Novembro, 193
+258 82 3034576
gabinetecorrupção@yahoo.com.br

Contact at “watchdog” organization

Fatima Mimbire
Project Coordinator Extractive Industries
Center for Public Integrity (Centro de Integridade Publica)
Rua Fernão Melo e Castro, 124
+258 82 5293957
fatima.mimbire@cipmoz.org

10. Political and Security Environment

The greatest security concern in Mozambique is the growing Islamic insurgency in the country’s northern provinces. What started as a homegrown threat in October 2017, likely emboldened by Tanzania-based extremist leaders, has evolved into a more organized insurgency, and was officially recognized by the Islamic State (IS) as an affiliate organization in June 2019. IS now provides support to the combatants in northern Mozambique and frequently claims credit for their attacks. The violence has resulted in an estimated 930 deaths and led to more than 150,000 internally displaced persons in Cabo Delgado Province (CDP). Since 2017, the IS-affiliate has carried out more than 250 deliberate attacks against unarmed civilians, creating a high risk for atrocities committed by the violent extremist organization. 2020 is on pace to be the conflict’s deadliest year.

The Islamic State-affiliate primarily operates in CDP, which is also the site of the major LNG investments being led by Total and the ENI/ExxonMobil consortium, but maintains networks in neighboring Niassa and Nampula provinces, and has proven capable of attacking villages in southern Tanzania. In early 2019, the insurgents killed a contractor associated with the LNG project and there have since been several other victims among LNG company staff. However, to date, the insurgents’ target remains villages and government forces and institutions. While the violence has not directly impacted the LNG project site, it has raised costs and put a damper on follow-on investments in CDP that could provide services to the projects in a more permissive security environment. Mozambique’s military and police forces have often proved ineffective in defending many communities in CDP. While the GRM is in need of outside military assistance, the continued use of private military companies risks further aggravating local grievances.

In March 2020, the GRM announced the creation of the Integrated Development Agency of the North. The United States and other international partners look forward to working with this new agency to address the underlying socio-economic drivers of violent extremism in Cabo Delgado.

In addition, following Mozambique’s largely peaceful elections in October 2019, there has been a resurgence of violence in central Mozambique led by a Renamo splinter group known as the “Junta” despite the definitive ceasefire and peace agreement signed in August 2019. Renamo denies any connections to or support for the Junta. Until recently, the splinter group primarily targeted road transport along the major north-south and east-west highways that pass through Manica and Sofala provinces. However, in April 2020, the group attacked a logging camp killing one expatriate worker and wounding several others. The Junta leader does not recognize the leader of the Renamo party and has stated that the attacks will continue until the government enters into direct negotiations with him.

Nigeria

3. Legal Regime

Transparency of the Regulatory System

Nigeria’s legal, accounting, and regulatory systems comply with international norms, but application and enforcement remain uneven.  Opportunities for public comment and input into proposed regulations sometimes occur.  Professional organizations set standards for the provision of professional services, such as accounting, law, medicine, engineering, and advertising.  These standards usually comply with international norms.  No legal barriers prevent entry into these sectors.

Ministries and regulatory agencies develop and make public anticipated regulatory changes or proposals and publish proposed regulations before their application.  The general public has opportunity to comment through targeted outreach, including business groups and stakeholders, and during the public hearing process before a bill becomes law.  There is no specialized agency tasked with publicizing proposed changes and the time period for comment may vary.  Ministries and agencies do conduct impact assessments, including environmental, but assessment methodologies may vary.  The National Bureau of Statistics reviews regulatory impact assessments conducted by other agencies.  Laws and regulations are publicly available.

Fiscal management occurs at all three tiers of government: federal, 36 state governments and Federal Capital Territory (FCT) Abuja, and 774 local government areas (LGAs).  Revenues from oil and non-oil sources are collected into the federation account and then shared among the different tiers of government by the Federal Account Allocation Committee (FAAC) in line with a statutory sharing formula.  All state governments can collect internally generated revenues, which vary from state to state.  The fiscal federalism structure does not compel states to be accountable to the federal government or transparent about revenues generated or received from the federation account.  The federal government’s finances are more transparent as budgets are made public and the financial data are published by the Central Bank of Nigeria (CBN), Debt Management Office (DMO), the Budget Office of the Federation, and the National Bureau of Statistics.  The state-owned oil company’s (Nigerian National Petroleum Corporation) financial data is very opaque.

The DMO puts Nigeria’s total debt stock at USD 84 billion as of December 2019 – USD 27.7 billion or nearly 33 percent of which is external.  The total debt figures presented by the DMO usually do not include off-balance-sheet financing such as sovereign guarantees.

International Regulatory Considerations

Foreign companies operate successfully in Nigeria’s service sectors, including telecommunications, accounting, insurance, banking, and advertising.  The Investment and Securities Act of 2007 forbids monopolies, insider trading, and unfair practices in securities dealings.  Nigeria is not a party to the WTO’s Government Procurement Agreement (GPA).  Nigeria generally regulates investment in line with the WTO’s Trade-Related Investment Measures (TRIMS) Agreement, but the government’s local content requirements in the oil and gas sector and the Information and Communication Technology (ICT) sector may conflict with Nigeria’s commitments under TRIMS.

In 2013, the National Information Technology Development Agency (NITDA), under the auspices of the Ministry of Communication, issued the Guidelines for Nigerian Content Development in the ICT sector.  The Guidelines require original ICT equipment manufacturers, within three years from the effective date of the guidelines, to use 50 percent local manufactured content and to use Nigerian companies to provide 80 percent of value added on networks.  The Guidelines also require multinational companies operating in Nigeria to source all hardware products locally; all government agencies to procure all computer hardware only from NITDA-approved original equipment manufacturers; and ICT companies to host all consumer and subscriber data locally, use only locally manufactured SIM cards for telephone services and data, and to use indigenous companies to build cell towers and base stations.  Enforcement of the Guidelines is largely inconsistent.  The Nigerian government generally lacks capacity and resources to monitor labor practices, technology compliancy, and digital data flows.  There are reports that individual Nigerian companies periodically lobby the National Assembly and/or NITDA to address allegations (warranted or not) against foreign firms that they are in non-compliance with the Guidelines.

The goal is to promote development of domestic production of ICT products and services for the Nigerian and global markets, but the guidelines pose risks to foreign investment and U.S. companies by interrupting their global supply chain, increasing costs, disrupting global flow of data, and stifling innovative products and services.  Industry representatives remain concerned about whether the guidelines would be implemented in a fair and transparent way toward all Nigerian and foreign companies.  All ICT companies, including Nigerian companies, use foreign manufactured equipment as Nigeria does not have the capacity to supply ICT hardware that meets international standards.

Nigeria is a member of the Economic Community of West African States (ECOWAS), which implemented a Common External Tariff (CET) beginning in 2015 with a five-year phase in period.  An internal CET implementation committee headed by the Fiscal Policy/Budget Monitoring and Evaluation Department of the NCS was set up to develop the implementation work plans that were consistent with national and ECOWAS regulations.  The CET was slated to be fully harmonized by 2020, but in practice some ECOWAS Member States have maintained deviations from the CET beyond the January 1, 2020, deadline.  The country has put in place a CET monitoring committee domiciled at the Ministry of Finance, consisting of several ministries, departments, and agencies (MDAs) related to the CET.  Nigeria applies five tariff bands under the CET:  zero duty on capital goods, machinery, and essential drugs not produced locally; 5 percent duty on imported raw materials; 10 percent duty on intermediate goods; 20 percent  duty on finished goods; and 35 percent duty on goods in certain sectors such as palm oil, meat products, dairy, and poultry that the Nigerian government seeks to protect.  The CET permits ECOWAS member governments to calculate import duties higher than the maximum allowed in the tariff bands (but not to exceed a total effective duty of 70 percent) for up to 3 percent of the 5,899 tariff lines included in the ECOWAS CET.

Legal System and Judicial Independence

Nigeria has a complex, three-tiered legal system comprised of English common law, Islamic law, and Nigerian customary law.  Most business transactions are governed by common law modified by statutes to meet local demands and conditions.  The Supreme Court is the pinnacle of the judicial system and has original and appellate jurisdiction in specific constitutional, civil, and criminal matters as prescribed by Nigeria’s constitution.  The Federal High Court has jurisdiction over revenue matters, admiralty law, banking, foreign exchange, other currency and monetary or fiscal matters, and lawsuits to which the federal government or any of its agencies are party.  The Nigerian court system is slow and inefficient, lacks adequate court facilities and computerized document-processing systems, and poorly remunerates judges and other court officials, all of which encourages corruption and undermines enforcement.  Judges frequently fail to appear for trials and court officials lack proper equipment and training.

The constitution and law provide for an independent judiciary; however, the judicial branch remains susceptible to pressure from the executive and legislative branches.  Political leaders have influenced the judiciary, particularly at the state and local levels.

The World Bank’s publication, Doing Business 2020, ranked Nigeria 73 out of 190 on enforcement of contracts, a significant improvement from previous years.  The Doing Business report credited business reforms for improving contract enforcement by issuing new rules of civil procedure for small claims courts which limit adjournments to unforeseen and exceptional circumstances but noted that there can be variation in performance indicators between cities in Nigeria (as in other developing countries).  For example, resolving a commercial dispute takes 476 days in Kano but 376 days in Lagos.  In the case of Lagos, the 376 days includes 40 days for filing and service, 194 days for trial and judgment, and 142 days for enforcement of the judgment with total costs averaging 42 percent of the claim.  In Kano, however, filing and service only takes 21 days with enforcement of judgement only taking 90 days, but trial and judgment accounts for 365 days with total costs averaging lower at 28 percent of the claim.  In comparison, in OECD countries the corresponding figures are an average of 589.6 days and averaging 21.5 percent of the claim and in sub-Saharan countries an average of 654.9 days and averaging 41.6 percent of the claim.

Laws and Regulations on Foreign Direct Investment

The NIPC Act of 1995 allows 100 percent foreign ownership of firms, except in the oil and gas sector where investment remains limited to joint ventures or production-sharing agreements.  Laws restrict industries to domestic investors if they are considered crucial to national security, such as firearms, ammunition, and military and paramilitary apparel.  Foreign investors must register with the NIPC after incorporation under the Companies and Allied Matters Decree of 1990.  The NIPC Act prohibits the nationalization or expropriation of foreign enterprises except in case of national interest, but the Embassy is unaware of specific instances of such interference by the government.

Competition and Anti-Trust Laws

After years of debate, the Nigerian government enacted the Federal Competition and Consumer Protection (FCCPC) Act in February 2019.  The act repealed the Consumer Protection Act of 2004 and replaced the previous Consumer Protection Council with a Federal Competition and Consumer Protection Commission while also creating a Competition and Consumer Protection Tribunal to handle issues and disputes arising from the operations of the Act.  Under the terms of the Act, businesses will be able to lodge anti-competitive practices complaints against other firms in the Tribunal.  The act prohibits agreements made to restrain competition, such as price fixing, price rigging, collusive tendering, etc. (with specific exemptions for collective bargaining agreements and employment, among other items).  The act empowers the President of Nigeria to regulate prices of certain goods and services on the recommendation of the Commission.

The law prescribes stringent fines for non-compliance.  The law mandates a fine of up to 10 percent of the company’s annual turnover in the preceding business year for offences.  The law harmonizes oversight for consumer protection, consolidating it under the FCCPC.

Expropriation and Compensation

The FGN has not expropriated or nationalized foreign assets since the late 1970s, and the NIPC Act of 1995 forbids nationalization of a business or assets unless the acquisition is in the national interest or for a public purpose.  In such cases, investors are entitled to fair compensation and legal redress.  A U.S.-owned waste management investment expropriated by Abia State in 2008 is the only known U.S. expropriation case in Nigeria.

Dispute Settlement

ICSID Convention and New York Convention

Nigeria is a member of the International Center for Settlement of Investment Disputes and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (also called the “New York Convention”).  The Arbitration and Conciliation Act of 1988 provides for a unified and straightforward legal framework for the fair and efficient settlement of commercial disputes by arbitration and conciliation.  The Act created internationally-competitive arbitration mechanisms, established proceeding schedules, provided for the application of the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules or any other international arbitration rule acceptable to the parties, and made the New York Convention applicable to contract enforcement, based on reciprocity.  The Act allows parties to challenge arbitrators, provides that an arbitration tribunal shall ensure that the parties receive equal treatment, and ensures that each party has full opportunity to present its case.  Some U.S. firms have written provisions mandating International Chamber of Commerce (ICC) arbitration into their contracts with Nigerian partners.  Several other arbitration organizations also operate in Nigeria.

Investor-State Dispute Settlement

Nigeria’s civil courts have jurisdiction over disputes between foreign investors and the Nigerian government as well as between foreign investors and Nigerian businesses.  The courts occasionally rule against the government.  Nigerian law allows the enforcement of foreign judgments after proper hearings in Nigerian courts.  Plaintiffs receive monetary judgments in the currency specified in their claims.

Section 26 of the NIPC Act of 1995 provides for the resolution of investment disputes through arbitration as follows:

  • Where a dispute arises between an investor and any Government of the Federation in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.
  • Any dispute between an investor and any Government of the Federation in respect of an enterprise to which this Act applies which is not amicably settled through mutual discussions, may be submitted at the option of the aggrieved party to arbitration as follows:
    1. in the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act; or
    2. in the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or
    3. in accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties.
  • Where in respect of any dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Dispute Rules shall apply.

Nigeria is a signatory to the 1958 Convention on Recognition and Enforcement of Foreign Arbitral Awards.  Nigerian Courts have generally recognized contractual provisions that call for international arbitration.  Nigeria does not have a Bilateral Investment Treaty or Free Trade Agreement with the United States.

Bankruptcy Regulations

Reflecting Nigeria’s business culture, entrepreneurs generally do not seek bankruptcy protection.  Claims often go unpaid, even in cases where creditors obtain judgments against defendants.  Under Nigerian law, the term bankruptcy generally refers to individuals whereas corporate bankruptcy is referred to as insolvency.  The former is regulated by the Bankruptcy Act of 1990, as amended by Bankruptcy Decree 109 of 1992.  The latter is regulated by Part XV of the Companies and Allied Matters Act Cap 59 1990 which replaced the Companies Act, 1968.  The Embassy is not aware of U.S. companies that have had to avail themselves of the insolvency provisions under Nigerian law.

5. Protection of Property Rights

Real Property

The Nigerian government recognizes secured interests in property, such as mortgages.  The recording of security instruments and their enforcement remain subject to the same inefficiencies as those in the judicial system.  In the World Bank Doing Business 2020 Report, Nigeria ranked 183 out of the 190 countries surveyed for registering property, a decline of one point over its 2019 ranking.  Property registration in Lagos required an average of 12 steps over 105 days at a cost of 11.1 percent of the property value while in Kano registering property averages 11 steps over 47 days at a cost of 11.8 percent of the property value.

Fee simple property rights remain rare.  Owners transfer most property through long-term leases, with certificates of occupancy acting as title deeds.  Property transfers are complex and must usually go through state governors’ offices, as state governments have jurisdiction over land ownership.  Authorities have often compelled owners to demolish buildings, including government buildings, commercial buildings, residences, and churches, even in the face of court injunctions.  Acquiring and maintaining rights to real property can be problematic.

Clarity of title and registration of land ownership remain significant challenges throughout rural Nigeria, where many smallholder farmers have only ancestral or traditional use claims to their land.  Nigeria’s land reforms have attempted to address this barrier to development but with limited success.

Intellectual Property Rights

Nigeria’s legal and institutional infrastructure for protecting intellectual property rights (IPR) remains in need of further development and more funding, even though there are laws on the books for enforcing most IPR. The areas in which the legislation is deficient include online piracy, geographical indications, and plant and animal breeders’ rights.  A bill to establish the industrial property commission to take over the functions of registration of trademarks, patents, designs, plant varieties, animal breeders and farmers’ rights, and supervise the new registries created under the industrial property act has been in the works since 2016.  No new IPR legislation has been enacted.

Copyright protection in Nigeria is governed by the Copyright Act of 1988, as amended in 1992 and 1999, which provides an adequate basis for enforcing copyright and combating piracy.  The Nigerian Copyright Commission, a division of the Ministry of Justice, administers the Act.  The International Anti-Counterfeiting Coalition (IACC) has long noted that the Copyright Act should be amended to provide stiffer penalties for violators. Nigeria is a member of the World Intellectual Property Organization (WIPO) and in 2017 passed legislation to ratify two WIPO treaties that it signed in 1997:  the Copyright Treaty and the Performances and Phonograms Treaty.  These treaties address important digital communication and broadcast issues that have become increasingly relevant in the 18 years since Nigeria signed them.  The  Draft Copyright Bill in 2016 was revised to bring it into compliance with these two treaties and sent to the National Assembly in 2017, but it was never enacted.

In 2013, he Ministry of Communication Technology (MCT) issued local content guidelines (Guidelines for Nigerian Content Development in Information and Communications Technology) that  raised IPR concerns. Among other issues,  there is concern about the future ability of the Nigerian government to protect data and trade secrets because of the localization processes requiring the disclosure of source code and other sensitive design elements as a condition of doing business.  The ICT industry in Nigeria has pushed back strongly against several of the measures in those guidelines, which remain in effect but have not been fully enforced.  While the NITDA does not currently require in-country product manufacturing due to the difficult business environment in Nigeria, it has noted that it would continue to press for local ICT capacity building programs.

Violations of Nigerian IPR laws continue to be widespread largely due to a culture of inadequate enforcement.  That culture stems from several factors, including insufficient resources among enforcement agencies, lack of political will and focus on IPR, porous borders, entrenched trafficking systems that make enforcement difficult (and sometimes dangerous), and corruption.  The Nigerian Copyright Commission (NCC) has primary responsibility for copyright enforcement but is widely viewed as understaffed and underfunded relative to the magnitude of the IPR challenge in Nigeria.  Nevertheless, the NCC continues to carry out enforcement actions on a regular basis.  According to its report for 2018, the NCC conducted  five anti-piracy operations and seized 288 copyrighted works, including DVDs, books, MP3s, and software.  Anti-piracy operations in 2018 led to  seven arrests.

The NCS has general authority to seize and destroy contraband.  Under current law, copyrighted works require a notice issued by the rights owner to Customs to treat such works as infringing, but implementing procedures have not been developed and this procedure is handled on a case- by-case basis between the NCS and the NCC.  Once seizures are made, the NCS invites the NCC to inspect and subsequently take delivery of the consignment of fake goods for purposes of further investigation because the NCC has the statutory responsibility to investigate and prosecute copyright violations.  The NCC bears the costs of moving and storing infringing goods.   If, after investigations, any persons are identified with the infringing materials, a decision to prosecute may be made. Where no persons are identified or could be traced, the NCC may obtain an order of court to enable it to destroy such works.  The NCC works in cooperation with rights owners’ associations and stakeholders in the copyright industries on such matters.

Nigeria is not listed in the United States Trade Representative (USTR) Special 301Report or the Notorious Markets List. For additional information about treaty obligations and points of contact at local IP offices, please see the WIPO country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

The Nigerian government does not have an established practice consistent with the OECD Guidelines on Corporate Governance for state-owned enterprises (SOEs), but SOEs do have enabling legislation that governs their ownership.  To legalize the existence of state-owned enterprises, provisions have been made in the Nigerian constitution under socio-economic development in section 16 (1) of the 1979 and 1999 Constitutions respectively.  The government has privatized many former SOEs to encourage more efficient operations, such as state-owned telecommunications company Nigerian Telecommunications and mobile subsidiary Mobile Telecommunications in 2014.

Nigeria does not operate a centralized ownership system for its state-owned enterprises.  The enabling legislation for each SOE stipulates its ownership and governance structure.  The Boards of Directors are usually appointed by the President on the recommendation of the relevant Minister.  The Boards operate and are appointed in line with the enabling legislation which usually stipulates the criteria for appointing Board members.  Directors are appointed by the Board within the relevant sector.  In a few cases, however, appointments have been viewed as a reward to political affiliates.

The Nigerian National Petroleum Corporation (NNPC) is Nigeria’s most prominent state-owned enterprise.  NNPC Board appointments are made by the presidency, but day-to-day management is overseen by the Group Managing Director (GMD).  The GMD reports to the Minister of Petroleum.  In the current administration the President has retained that ministerial role for himself, and the appointed Minister of State for Petroleum acts as the de facto Minister of Petroleum in the President’s stead.  The National Assembly passed a Petroleum Industry Governance Bill in March 2018, but the President sent it back to the National Assembly requesting amendments.  The bill would clarify regulatory, policy, and operational roles in the petroleum sector and pave the way for partial privatization of NNPC.

NNPC is Nigeria’s biggest and arguably most important state-owned enterprise and is responsible for exploration, refining, petrochemicals, products transportation, and marketing.  It owns and operates Nigeria’s four refineries (one each in Warri and Kaduna and two in Port Harcourt), all of which operate far below capacity, if at all.  Nigeria’s tax agency receives taxes on petroleum profits and other hydrocarbon-related levies, while the Department of Petroleum Resources under the Ministry of Petroleum Resources collects rents, royalties, license fees, bonuses, and other payments.  In an effort to provide greater transparency in the collection of revenues that accrue to the government, the Buhari administration requires these revenues, including some from the NNPC, to be deposited in the Treasury Single Account.

Another key state-owned enterprise is the Transmission Company of Nigeria (TCN), responsible for the operation of Nigeria’s national electrical grid.  Private power generation and distribution companies have accused the TCN grid of significant inefficiency and inadequate technology which greatly hinder the nation’s electricity output and supply.  TCN emerged from the defunct National Electric Power Authority as an incorporated entity in 2005.  It is the only major component of Nigeria’s electric power sector, which was not privatized in 2013.

Privatization Program

The Privatization and Commercialization Act of 1999 established the National Council on Privatization, the policy-making body overseeing the privatization of state-owned enterprises, and the Bureau of Public Enterprises (BPE), the implementing agency for designated privatizations.  The BPE has focused on the privatization of key sectors, including telecommunications and power, and calls for core investors to acquire controlling shares in formerly state-owned enterprises.

The BPE has privatized and concessioned more than 140 enterprises since 1999, including an aluminum complex, a steel complex, cement manufacturing firms, hotels, a petrochemical plant, aviation cargo handling companies, vehicle assembly plants, and electricity generation and distribution companies.  The electricity transmission company remains state-owned.  Foreign investors can and do participate in BPE’s privatization process.  The BPE also retains partial ownership in some of the privatized companies.  (It holds a 40 percent stake in the power distribution companies.)

The National Assembly has questioned the propriety of some of these privatizations, with one ongoing case related to an aluminum complex privatization the subject of a Supreme Court ruling on ownership.  In addition, the failure of the 2013 power sector privatization to restore financial viability to the sector has raised criticism of the privatized power generation and distribution companies.  Nevertheless, the government’s long-delayed sale in 2014 of state-owned Nigerian Telecommunications and Mobile Telecommunications shows a continued commitment to the privatization model.

9. Corruption

Foreign companies, whether incorporated in Nigeria or not, may bid on government projects and generally receive national treatment in government procurement, but may also be subject to a local content vehicle (e.g., partnership with a local partner firm or the inclusion of one in a consortium) or other prerequisites which are likely to vary from tender to tender.  Corruption and lack of transparency in tender processes has been a far greater concern to U.S. companies than discriminatory policies based on foreign status.  Government tenders are published in local newspapers, a “tenders” journal sold at local newspaper outlets, and occasionally in foreign journals and magazines.  The Nigerian government has made modest progress on its pledge to conduct open and competitive bidding processes for government procurement with the introduction of the Nigeria Open Contracting Portal in 2017 under the Bureau of Public Procurement.

The Public Procurement Law of 2007 established the Bureau of Public Procurement as the successor agency to the Budget Monitoring and Price Intelligence Unit.  It acts as a clearinghouse for government contracts and procurement and monitors the implementation of projects to ensure compliance with contract terms and budgetary restrictions.  Procurements above 100 million naira (about USD 277,550) reportedly undergo full “due process,” but government agencies routinely flout public procurement requirements.  Some of the 36 states of the federation have also passed public procurement legislation.

The reforms have also improved transparency in procurement by the state-owned NNPC.  Although U.S. companies have won contracts in numerous sectors, difficulties in receiving payment are not uncommon and can deter firms from bidding.  Supplier or foreign government subsidized financing arrangements appear in some cases to be a crucial factor in the award of government procurements.  Nigeria is not a signatory to the WTO Agreement on Government Procurement.

In 2016, Nigeria announced its participation in the Open Government Partnership, a potentially significant step forward on public financial management and fiscal transparency.  The Ministry of Justice presented Nigeria’s National Action Plan for the Open Government Partnership.  Implementation of its 14 commitments has made some progress, particularly on the issues such as tax transparency, ease of doing business, and asset recovery.  The National Action Plan, which ran through 2019, covered five major themes:  ensuring citizens’ participation in the budget cycle, implementing open contracting and adoption of open contracting data standards, increasing transparency in the extractive sectors, adopting common reporting standards like the Addis Tax initiative, and improving the ease of doing business.  Full implementation of the National Action Plan would be a significant step forward for Nigeria’s fiscal transparency, although Nigeria has not fully completed any commitment to date.

Businesses report that bribery of customs and port officials remains common and often necessary to avoid extended delays in the port clearance process, and that smuggled goods routinely enter Nigeria’s seaports and cross its land borders.

Domestic and foreign observers identify corruption as a serious obstacle to economic growth and poverty reduction.  Nigeria scored 26 out of 100 in Transparency International’s 2019 Corruption Perception Index, with an overall ranking of 146 out of the 180 countries, a two-point drop since 2018.  The Economic and Financial Crimes Commission (EFCC) Establishment Act of 2004 established the EFCC to prosecute individuals involved in financial crimes and other acts of economic “sabotage.”  Traditionally, the EFCC has achieved the most success in prosecuting low-level Internet scam operators.  A relative few high-profile convictions have taken place, such as a former governor of Adamawa State, a former governor of Bayelsa State, a former Inspector General of Police, and a former Chair of the Board of the Nigerian Port Authority.  However, in the case of the convicted governor of Bayelsa State, the President of Nigeria pardoned him in 2013.  The case of the former governor of Adamawa, who was convicted in 2017, is under appeal, and he is currently free on bail.

Since taking office in 2015, President Buhari has focused on implementing a campaign pledge to address corruption, though his critics contend his anti-corruption efforts often target political rivals.  Since then, the EFCC arrested a former National Security Advisor (NSA), a former Minister of State for Finance, a former NSA Director of Finance and Administration, and others on charges related to diversion of funds intended for government arms procurement.

The Corrupt Practices and Other Related Offences Act of 2001 established an Independent Corrupt Practices and Other Related Offences Commission (ICPC) to prosecute individuals, government officials, and businesses for corruption.  The Corrupt Practices Act punishes over 19 offenses, including accepting or giving bribes, fraudulent acquisition of property, and concealment of fraud.  Nigerian law stipulates that giving and receiving bribes constitute criminal offences and, as such, are not tax deductible.  Since its inauguration, the ICPC has secured convictions in 71 cases (through 2015, latest data available) with nearly 300 cases still open and pending as of July 2018.  In 2014, a presidential committee set up to review Nigeria’s ministries, departments, and agencies recommended that the EFCC, the ICPC, and the Code of Conduct Bureau (CCB) be merged into one organization.  The federal government, however, rejected this proposal to consolidate the work of these three anti-graft agencies.

Nigeria gained admittance into the Egmont Group of Financial Intelligence Units in 2007.  In July 2017 the Egmont Group suspended Nigeria due to concerns about the Nigeria Financial Intelligence Unit’s operational autonomy and ability to protect classified information. It lifted the suspension in September 2018 due to the Nigerian government’s efforts to address the Egmont Group’s concerns, through the passage of the Nigerian Financial Intelligence Agency Act in July 2018.

The Paris-based Financial Action Task Force (FATF) removed Nigeria from its list of Non-Cooperative Countries and Territories in 2006.  In 2013, the FATF decided that Nigeria had substantially addressed the technical requirements of its FATF Action Plan and agreed to remove Nigeria from its monitoring process conducted by FATF’s International Cooperation Review Group.  Nigeria, as a member of the Inter-governmental Action Group Against Money Laundering in West Africa, is an associated member of FATF.

The Nigeria Extractive Industries Transparency Initiative (NEITI) Act of 2007 provided for the establishment of the NEITI organization, charged with developing a framework for transparency and accountability in the reporting and disclosure by all extractive industry companies of revenue due to or paid to the Nigerian government.  NEITI serves as a member of the international Extractive Industries Transparency Initiative, which provides a global standard for revenue transparency for extractive industries like oil and gas and mining.  Nigeria is party to the United Nations Convention Against Corruption.  Nigeria is not a member of the OECD and not party to the OECD Convention on Combating Bribery.

Resources to Report Corruption

Economic and Financial Crimes Commission
Headquarters:  No. 5, Fomella Street, Off Adetokunbo Ademola Crescent, Wuse II, Abuja, Nigeria.
Branch offices in Ikoyi, Lagos State; Port Harcourt, Rivers State; Independence Layout, Enugu State; Kano, Kano State; Gombe, Gombe State.
Hotline: +234 9 9044752 or +234 9 9044753

Independent Corrupt Practices and Other Related Offences Commission:
Abuja Office – Headquarters
Plot 802 Constitution Avenue, Central District, PMB 535, Garki Abuja
Phone/Fax: 234 9 523 8810   Email: info@icpc.gov.ng

10. Political and Security Environment

Political, religious, and ethnic violence continue to affect Nigeria.  The Islamist group Jama’atu Ahl as-Sunnah li-Da’awati wal-Jihad, popularly known as Boko Haram, and the ISIS-WA have waged a violent campaign to destabilize the Nigerian government, killing tens of thousands of people, forcing over two million to flee to other areas of Nigeria or into neighboring countries, and leaving more than seven million people in need of humanitarian assistance in the country’s northeast.  Boko Haram has targeted markets, churches, mosques, government installations, educational institutions, and leisure sites with improvised explosive devices (IEDs) and suicide vehicle-borne IEDs across nine northern states and in Abuja.  In 2017, Boko Haram employed hundreds of suicide bombings against the local population.  Women and children were forced to carry out many of the attacks.  There were multiple reports of Boko Haram killing entire villages suspected of cooperating with the government.  ISIS-WA targeted civilians with attacks or kidnappings less frequently than Boko Haram.  ISIS-WA employed targeted acts of violence and intimidation against civilians in order to expand its area of influence and gain control over critical economic resources.  As part of a violent and deliberate campaign, ISIS-WA also targeted government figures, traditional leaders, and contractors.

President Buhari has focused on matters of insecurity in Nigeria and in neighboring countries.   While the two insurgencies maintain the ability to stage forces in rural areas and launch attacks against civilian and military targets across the northeast, Nigeria is also facing rural violence in the Nigeria’s north-central states caused by criminal actors and by conflicts between migratory pastoralist and farming communities, often over scarce resources.  Another major trend is the rise in kidnappings for ransom and attacks on villages by armed gangs.

Due to challenging security dynamics throughout the country, the U.S. Mission to Nigeria has significantly limited official travel in the northeast and travel to other parts of Nigeria requires security precautions.

Decades of neglect, persistent poverty, and environmental damage caused by oil spills have left Nigeria’s oil rich Niger Delta region vulnerable to renewed violence.  Though each oil-producing state receives a 13 percent derivation of the oil revenue produced within its borders, and several government agencies, including the Niger Delta Development Corporation (NDDC) and the Ministry of Niger Delta Affairs, are tasked with implementing development projects, bureaucratic mismanagement and corruption have prevented these investments from yielding meaningful economic and social development in the region.  Niger Delta militants have demonstrated their ability to attack and severely damage oil instillations at will as seen when they cut Nigeria’s production by more than half in 2016.  Attacks on oil installations have since decreased due to a revamped amnesty program and continuous high-level engagement with the region.

Other security challenges facing Nigeria include thousands of refugees fleeing to Nigeria from Cameroon’s English-speaking region due to tensions there and kidnappings for ransom.

Republic of the Congo

3. Legal Regime

Transparency of the Regulatory System

Lack of transparency poses one of the greatest hurdles to FDI, as investors must navigate an opaque regulatory bureaucracy. Companies routinely find themselves embroiled in tax, customs, and labor disputes arbitrated by court officials who make decisions that do not conform with Congolese law and ROC Ministry of Justice regulations.

ROC has no known informal regulatory processes managed by nongovernmental organizations or private sector associations.

The government develops new regulations internally and rarely requests input from industry representatives. Various ministries have regulatory authority over the individual industries in their area of responsibility, with overall authority coordinated by the Ministry of Economy. The government does not usually offer a formal, public comment period.

The accounting, legal, and regulatory procedures are transparent. ROC uses Francophone Africa’s OHADA – the Organization for Business and Customs Harmonization, or Organisation pour l’Harmonisation en Afrique du Droit des Affaires – system of accounting, legal, and regulatory procedures.

The government does not normally make draft bills or regulations available for public comment.

The government publishes new laws and regulations in ROC’s Official Journal. The Official Journal is available for download at the website of the Secretary General of the Government maintains the Official Journal online at http://www.sgg.cg.

Each government ministry has an inspector general that conducts oversight to ensure that government agencies follow administrative processes. The office of the president additionally has an inspector general who supervises the entire government.

The government announced no new regulatory system, including enforcement reforms, during the reporting period.

The inspector general process is not legally reviewable and not accountable to the public.

No known instances exist where the government made public scientific studies or quantitative analyses on the impact of regulations.

The government makes transparent some public finances and debt obligations, including explicit and contingent liabilities. The Ministry of Finance publishes the arrangements on its website, https://www.finances.gouv.cg/.

International Regulatory Considerations

ROC participates as a member in the Economic Community of Central African States (CEEAC), a regional economic cooperation community, and in the Economic and Monetary Community of Central Africa (CEMAC), a monetary union of six Central African states. These regional economic organizations control much of the national regulatory system.

ROC’s regulatory system for business disputes and regulations governing company registration structure and incorporation incorporate Francophone African regulatory norms promulgated by OHADA – the Organization for Business and Customs Harmonization, or Organisation pour l’harmonisation en Afrique du droit des affaires.

ROC participates as a member country of the World Trade Organization (WTO). The government does not provide information as to whether or not it notifies the WTO Committee of all draft regulations relating to Technical Barriers to Trade. ROC signed the WTO Trade Facilitation Agreement but has not begun implementing the agreement.

Legal System and Judicial Independence

The French civil law legal system serves as the basis of the Congolese legal system.

OHADA, the Organization for Business and Customs Harmonization, or Organisation pour l’harmonisation en Afrique du droit des affaires, provides the basis for ROC’s national commercial law, which also incorporates provisions unique to ROC. A commercial court exists in ROC but has not convened since 2016.

The judicial system remains independent in principle, however, in practice the executive branch has intervened in the judicial system.

Appellate courts exist and receive appeals of enforcement actions. Public Law 6-2003, which established the country’s Investment Charter, states that Congolese law will resolve investment disputes. Judgments of foreign courts are difficult to enforce in ROC. Though the government does not usually deny those judgments outright, it may propose process or procedural delays that prolong the matter indefinitely without resolution.

Laws and Regulations on Foreign Direct Investment

ROC’s Commercial Court has authority over any legal disputes involving foreign investors. Investors may also file legal complaints in the OHADA court – based in Abidjan, Cote d’Ivoire – which has jurisdiction throughout Francophone Africa. ROC’s Hydrocarbons Law and Mining Code of 2016 contain industry-specific regulations for foreign investments.

The ROC Agency for Business Creation, or Agence Congolaise Pour la Création des Entreprises (ACPCE), serves as a “one-stop shop” for establishing a business. Its website has limited information about laws, rules, and reporting requirements: http://www.acpce.cg/.

Competition and Anti-Trust Laws

No agencies review transactions for competition-related concerns, either domestic or international in nature. Ministries in general monitor individual industries and review industry-related transactions.

Expropriation and Compensation

The ROC government may legally expropriate property if it finds a public need for a given public facility or infrastructure (e.g. roads, hospitals, etc.).

No recent history of expropriation regarding private companies exists. Historically, however, the ROC government has expropriated private property from Congolese citizens to build roads and stadiums. Law entitles the claimants to fair market value compensation, but the government made such compensation inconsistently.

Beginning in 2012, the ROC government expropriated the land of Congolese private property owners in the Kintele suburb of Brazzaville to build a state-of-the-art sports complex for the 2015 African Games. The government offered no compensation, and property owners complained of a lack of legal recourse against the government.

Dispute Settlement

ICSID Convention and New York Convention

ROC is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). The ROC government has not ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

There is no specific domestic legislation providing for enforcement of awards under the ICSID Convention.

Investor-State Dispute Settlement

ROC is a member of the Organization for the Harmonization of Business Law in Africa (OHADA), which includes binding international arbitration of investment disputes.

ROC has a Bilateral Investment Treaty (BIT) with the United States. U.S. investors have made no recent claims under the agreement.

There have been two investment disputes involving U.S. entities in the past ten years.

In one, a company successfully negotiated a settlement with ROC authorities after filing suit in a New York district court. In the second, a company successfully sued ROC in U.S. and French courts over non-payment for goods and services, however, the ROC government refused to recognize the judgements. Congolese courts subsequently issued their own judgements in favor of the ROC government. The ROC government no longer responds to attempts by the company or intermediaries to engage on this dispute.

Local courts have rarely recognized and enforced foreign arbitral awards issued against the government.

There is no known history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

There is no known alternative dispute resolution (ADR) mechanisms available in ROC. ROC inconsistently abides by international arbitration for any treaty, international convention, or organization of which it is a member. In practice, arbitral judgments are difficult to enforce.

Commercial courts constitute the domestic arbitration bodies within the country. The commercial court legislation and structure follows French commercial legislation and structure.

Local courts inconsistently recognize and enforce foreign arbitral awards. ROC law allows for the recognitions of foreign judgments when the relevant laws appear sufficiently similar to Congolese law. Congolese courts have not accepted any foreign arbitral awards in recent years.

Post is not aware of any investment disputes involving state owned enterprises in recent years.

Bankruptcy Regulations

ROC has no specific law that governs bankruptcy. As a member of OHADA, the Organization for Business and Customs Harmonization or Organisation pour l’harmonisation en Afrique du droit des affaires, ROC applies OHADA bankruptcy provisions in the event of corporate or individual insolvency. No laws criminalize bankruptcy. ROC does not have a credit bureau or other credit monitoring authority serving the country’s market.

5. Protection of Property Rights

Real Property

The government enforces property rights, though companies and individuals cite inconsistent enforcement. Mortgages and liens exist. A generally reliable recording system exists.

No known regulations prohibit land lease or acquisition by foreign investors.

The government has no definitive registry of untitled land.

Property ownership can transfer to other owners if the property remains unoccupied for 10 consecutive years while having been simultaneously occupied by another user (squatter).

Intellectual Property Rights

As a member of the Economic and Monetary Community of Central Africa (CEMAC), ROC participates in the African Intellectual Property Organization (AIPO). AIPO manages a single copyright system for all member states. Additionally, as a member of the World Trade Organization (WTO), ROC must ensure that intellectual property legislation conforms to WTO norms and standards. The Ministry of Commerce leads on issues related to counterfeit products. Local authorities have historically seized and destroyed contraband items, such as medical supplies and food products. The ROC government reportedly uses unlicensed software on its computers. Intellectual property rights (IPR) infringement remains uncommon overall.

The government has not enacted any new IPR-related laws or regulations in the past year. ROC maintains no formal system of tracking and reporting seizures of counterfeit goods.

ROC is not included in the United States Trade Representative (USTR)Special 301 Report or the Notorious Markets List.

ROC is a member of the World Intellectual Property Organization (WIPO). For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en.

7. State-Owned Enterprises

As a former people’s republic, state-owned enterprises (SOEs) dominated the Congolese economy of the 1970s and 1980s. The number of SOEs remains comparatively small following a wave of privatization in the 1990s. The national oil company (SNPC), electricity company (E2C), and water supply company (LCDE) constitute the largest remaining SOEs. SOEs report to their respective ministries.

Constraints on SOEs operating in the non-oil sector appear sufficiently monitored and subject to civil society and media scrutiny. The operations of SNPC, however, continue to present transparency concerns. SOEs must publish annual reports subject to examination by the government’s supreme audit institution. In practice, these examinations do not always occur.

The government publishes no official list of SOEs.

Private companies may compete with public companies and have in some cases won contracts sought by SOEs. Government budget constraints limit SOEs’ operations.

Privatization Program

ROC has no known program for privatization.

9. Corruption

ROC adopted a law against corruption by public officials, “Code de Transparence dans les Finances Publiques,” on March 9, 2017. The ROC government inconsistently enforces the law.

The corruption law applies to elected and appointed officials. It does not extend to family members of officials or to political parties.

No specific laws or regulations address conflict-of-interest in awarding contracts or government procurement.

ROC does not encourage or require private companies to establish internal codes of conduct that prohibit bribery of public officials.

Some private companies, multinationals in particular, use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.

ROC serves as a party to the UN Anticorruption Convention.

ROC does not provide protection to non-governmental organizations (NGOs), to include NGOs investigating corruption.

U.S. companies routinely cite corruption as an impediment to investment, particularly in the petroleum sector, where corruption practices remain prolific.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Emmanuel Ollita Ondongo
Président
Observatoire Anti-Corruption
Centre Ville, Brazzaville, République du Congo
+242 06 944 6165 or +242 05 551 2229
emmallita2007@yahoo.fr

Contact at a “watchdog” organization:

Christian Mounzeo
President
Rencontre pour la Paix et les Droits de l’Homme (RPDH, the local chapter of “Publish What You Pay” – Publiez Ce Que Vous Payez)
B.P. 939 Pointe-Noire, République du Congo
+242 05 595 52 46
http://www.rpdh-cg.org/

10. Political and Security Environment

Congo has experienced several periods of politically-motivated violence and civil disturbance since its independence in 1960. The most recent period ended in December 2017, when anti-government forces in the Pool region – which surrounds the capital of Brazzaville – signed a ceasefire agreement with the government that has held since that signing.

There are no known examples of damage to commercial projects and/or installations in the past ten years. Civil disturbances have occasionally resulted in damage to high-profile, public places such as police stations.

The political environment is noticeably calmer since the end of the 2017 legislative elections.

Rwanda

3. Legal Regime

Transparency of the Regulatory System

The GOR generally employs transparent policies and effective laws largely consistent with international norms.  Rwanda is a member of the U.N. Conference on Trade and Development’s international network of transparent investment procedures.  The Rwanda eRegulations system is an online database designed to bring transparency to investment procedures in Rwanda.  Investors can find further information on administrative procedures at:  https://businessprocedures.rdb.rw/.

Rwandan laws and regulations are published in the Government Gazette and online at http://primature.gov.rw/index.php?id=97 .  Government institutions generally have clear rules and procedures, but implementation can sometimes be uneven.  Investors have cited breach of contracts and incentive promises, and the short time given to comply with changes in government policies, as hurdles to comply with regulations.  For example, in 2019 the GOR submitted a draft law that was passed by Parliament the same year, banning single use plastic containers.  Investors in the beverage and agro-processing sectors expressed concern that the law would have a serious impact on their operations, that alternative packaging was not available in some cases, and that the GOR did not consult effectively with stakeholders before submitting it.  The law built on a ban on the manufacture and use of polyethylene bags introduced in 2008.

There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review them.  There is no informal regulatory process managed by nongovernmental organizations.  Regulations are usually developed rapidly in an effort to achieve policy goals and sometimes lack a basis in scientific or data-driven assessments.  Scientific studies, or quantitative analysis (if any) conducted on the impact of regulations, are not generally made publicly available for comment.  Regulators do not publicize comments they receive.  Public finances and debt obligations are generally made available to the public before budget enactment.  Finances for State Owned Enterprises (SOE) are not publicly available but may be requested by civil society organizations with a legitimate reason.

There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations.  Legal, regulatory, and accounting systems are generally transparent and consistent with international norms but are not always enforced.  The Rwanda Utility Regulation Agency (RURA), the Office of the Auditor General (OAG), the Anticorruption Division of the RRA, the Rwanda Standards Board (RSB), the National Tender Board, and the Rwanda Environment Management Authority also enforce regulations.  Consumer protection associations exist but are largely ineffective.  The business community has been able to lobby the government and provide feedback on some draft government policies through the PSF, a business association with strong ties to the government.  In some cases, the PSF has welcomed foreign investors to positively influence government policies.  However, some investors have criticized the PSF for advocating to businesses about government policies rather than advocating business concerns to the government.

The American Chamber of Commerce launched in November 2019, and a European Chamber of Commerce launched in March 2020.  Both are coordinating policy advocacy efforts to improve the business environment for American, European and other foreign firms in Rwanda.  The Chinese also have a Chamber of Commerce registered in China and active in Rwanda.

International Regulatory Considerations

Rwanda is a member of the EAC Standards Technical Management Committee. Approved EAC measures are generally incorporated into the Rwandan regulatory system within six months and are published in the National Gazette like other domestic laws and regulations.  Rwanda is also a member of the standards technical committees for the International Standardization Organization, the African Organization for Standardization, and the International Electrotechnical Commission. Rwanda is a member of the International Organization for Legal Metrology and the International Metrology Confederation. The Rwanda Standards Board represents Rwanda at the African Electrotechnical Commission. Rwanda has been a member of the WTO since 22 May 1996 and notifies the WTO Committee on Technical Barriers to Trade on draft technical regulations.

Legal System and Judicial Independence

The Rwandan legal system was originally based on the Belgian civil law system. However, since the renovation of the legal framework in 2002, the introduction of a new constitution in 2003, and the country’s entrance to the Commonwealth in 2009, there is now a mixture of civil law and common law (hybrid system). Rwanda’s courts address commercial disputes and facilitate enforcement of property and contract rights. Rwanda’s judicial system suffers from a lack of resources and capacity but continues to improve. Investors occasionally state that the government takes a casual approach to contract sanctity and sometimes fails to enforce court judgments in a timely fashion. The government generally respects judicial independence, though domestic and international observers have noted that outcomes in high-profile politically sensitive cases appeared predetermined.

In August 2018, the GOR created a Court of Appeal in an attempt to reduce backlogs and expedite the appeal process without going to the Supreme Court. The new Court of Appeal arbitrates cases handled by the High Court, Commercial High Court, and Military High Court. The Supreme Court continues to decide on cases of injustice filed from the Ombudsman Office and on constitutional interpretation. Based on Article 15 of Law 76/2013 of 11/09/2013, the Office of the Ombudsman has the authority to request that the Supreme Court reconsider and review judgments rendered at the last instance by ordinary, commercial, and military courts, if there is any persistence of injustice.  More information on the review process can be found at https://ombudsman.gov.rw/en/?Court-Judgement-Review-Unit-1375 . A Tax Court is yet to be established in Rwanda. In 2019, the RDB announced the government’s intent to create a commercial division at the Court of Appeal to fast-track resolution on commercial disputes.

Laws and Regulations on Foreign Direct Investment

National laws governing commercial establishments, investments, privatization and public investments, land, and environmental protection are the primary directives governing investments in Rwanda.  Since 2011, the government reformed tax payment processes and enacted additional laws on insolvency and arbitration.  The 2015 Investment Code establishes policies on FDI, including dispute resolution (Article 9).  The RDB keeps investment-related regulations and procedures at:  http://businessprocedures.rdb.rw .

According to a WTO policy review report dated January 2019, Rwanda is not a party to any countertrade and offsetting arrangements, or agreements limiting exports to Rwanda.

A new property tax law was passed in August 2018.  The new law removes the provision that taxpayers must have freehold land titles to pay property taxes.  Small and medium enterprises (SMEs) will receive a two-year tax trading license exemption upon establishment.

In April 2018, the GOR passed a new law to streamline income tax administration and to clarify the law.  The new law can be accessed here: http://www.primature.gov.rw/media-publication/publication/latest-offical-gazettes.html?no_cache=1&tx_drblob_pi1%5BdownloadUid%5D=464 .

Competition and Anti-Trust Laws

Since 2010, a Competition and Consumer Protection Unit was created at the Ministry of Trade and Industry (MINICOM) to address competition and consumer protection issues.  The government is setting up the Rwanda Inspectorate, Competition and Consumer Protection Authority (RICA), a new independent body with the mandate to promote fair competition among producers.  The body will reportedly aim to ensure consumer protection and enforcement of standards.  To read more on competition laws in Rwanda, please visit:  http://www.minicom.gov.rw/index.php?id=136.

Market forces determine most prices in Rwanda, but, in some cases, the GOR intervenes to fix prices for items considered sensitive in Rwanda.  RURA, in consultation with relevant ministries, sets prices for petroleum products, water, electricity, and public transport.  MINICOM and the Ministry of Agriculture have fixed farm gate prices, or the market value of a cultivated product minus the selling costs, for agricultural products like coffee, maize, and Irish potatoes from time to time.  On international tenders, a 10 percent price preference is available for local bidders, including those from regional economic integration bodies in which Rwanda is a member.

Some U.S. companies have expressed frustration that while authorities require them to operate as a formal enterprise that meets all Rwandan regulatory requirements, some local competitors are informal businesses that do not operate in full compliance with all regulatory requirements.  Other investors have claimed unfair treatment compared to SOEs, ruling party-aligned or politically connected business competitors in securing public incentives and contracts.

More information on specific types of agreements, decisions and practices considered to be anti-competitive, or abuse of dominant position, in Rwanda can be found here: https://rura.rw/fileadmin/Documents/docs/ml08.pdf 

Expropriation and Compensation

The 2015 Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated.  A new expropriation law came into force in 2015, which included more explicit protections for property owners.

A 2017 study by Rwanda Civil Society Platform argues that the government conducts expropriations on short notice and does not provide sufficient time or support to help landowners fairly negotiate compensation.  The report includes a survey that found only 27 percent of respondents received information about planned expropriation well in advance of action.  While mechanisms exist to challenge the government’s offer, the report notes that landowners are required to pay all expenses for the second valuation, a prohibitive cost for rural farmers or the urban poor.  Media have reported that wealthier landowners have the ability to challenge valuations and have received higher amounts.  Political exiles and other embattled opposition figures have been involved in taxation lawsuits that resulted in their “abandoned properties” being sold at auction, allegedly at below market values.

Dispute Settlement

ICSID Convention and New York Convention

Rwanda is signatory to the International Center for Settlement of Investment Disputes (ICSID) and the African Trade Insurance Agency (ATI).  ICSID seeks to remove impediments to private investment posed by non-commercial risks, while ATI covers risk against restrictions on import and export activities, inconvertibility, expropriation, war, and civil disturbances.

Rwanda ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 2008.

Investor-State Dispute Settlement

Rwanda is a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the EAC.  Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency convention.  Under the U.S.-Rwanda BIT, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels.  Disputes between U.S. investors and the GOR in recent years have been resolved through international arbitration, court judgments, or out of court settlements.  Judgments by foreign courts and contract clauses that abide by foreign law are accepted and enforced by local courts, though they lack capacity and experience to adjudicate cases governed by non-Rwandan law.  There have been a number of private investment disputes in Rwanda, though the government has yet to stand as complainant, respondent, or third party in a WTO dispute settlement.  Rwanda has been a party to two cases at ICSID since Rwanda became a member in 1963; one of these cases is an ongoing case brought by an American investor against Rwanda.  SOEs are also subject to domestic and international disputes.  SOEs and ruling party-owned companies party to suits have both won and lost judgments in the past.

International Commercial Arbitration and Foreign Courts

In 2012, the GOR launched the Kigali International Arbitration Center (KIAC).   KIAC case handling rules are modeled on the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules.  By July 2019, KIAC reviewed 115 cases worth USD 64 million in claims involving petitions from 19 different nationalities since 2012.  Some businesses report being pressured to use the Rwanda-based KIAC for the seat of arbitration in contracts signed with the GOR.  Because KIAC has a short track record and its domiciled in Rwanda, these companies would prefer arbitration take place in a third country, and some have reported difficulty in securing international financing due to KIAC provision in their contracts.

Bankruptcy Regulations

Rwanda ranks 38 out of 190 economies for resolving insolvency in the World Bank’s 2020 Doing Business Report and is number two in Africa.  It takes an average of two and a half years to conclude bankruptcy proceedings in Rwanda.  The recovery rate for creditors on insolvent firms was reported at 19.3 cents on the dollar, with judgments typically made in local currency.

In April 2018, the GOR instituted a new Insolvency and Bankruptcy Law.  One major change is the introduction of an article on “pooling of assets” allowing creditors to pursue parent companies and other members of the group, in case a subsidiary is in liquidation.  The new law can be accessed here:  http://org.rdb.rw/wp-content/uploads/2018/06/Insolvency-Law-OGNoSpecialbisdu29April2018.pdf 

5. Protection of Property Rights

Real Property

The law protects and facilitates acquisition and disposition of all property rights.  Investors involved in commercial agriculture have leasehold titles and are able to secure property titles, if necessary.  The 2015 Investment Code states that investors shall have the right to own private property, whether individually or in association with others.  Foreign investors can acquire real estate, though there is a general limit on land ownership.  While local investors can acquire land through leasehold agreements that extend to 99 years, the lease period for foreigners has been as limited to 49 years, in some cases.  Such leases are theoretically renewable, but the law is new enough that foreigners generally have not yet attempted to renew a lease.  Mortgages are a nascent but growing financial product in Rwanda, increasing from 770 properties in 2008 to 13,394 in 2017, according to the RDB.

Intellectual Property Rights

The 2015 Investment Code guarantees protection of investors’ intellectual property rights (IPR), and legitimate rights related to technology transfer.  IPR legislation covering patents, trademarks, and copyrights was approved in 2009.  A Registration Service Agency, which is part of the RDB, was established in 2008 and has improved IPR t protection by registering all commercial entities and facilitating business identification and branding.  The RDB and the RSB are the main regulatory bodies for Rwanda’s intellectual property rights law.  The RDB registers intellectual property rights, providing a certificate and ownership title.  Every registered IPR title is published in the Official Gazette.  The fees payable for substance examination and registration of IPR apply equally to domestic and foreign applicants.  Since 2016, any power of attorney that a non-resident grants to a Rwandan-based industrial property agent must be notarized. (Previously, a signature would have been sufficient.)

Registration of patents and trademarks is on a first time, first right basis, so companies should consider applying for trademark and patent protection in a timely manner.  It is the responsibility of the copyright holders to register, protect, and enforce their rights where relevant, including retaining their own counsel and advisors.  Through the RSB and the RRA, Rwanda has worked to increase IPR protection, but many goods that violate patents, especially pharmaceutical products, make it to market nonetheless.  As many products available in Rwanda are re-exports from other EAC countries, it may be difficult to prevent counterfeit goods without regional cooperation.  Also, investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner.

Rwanda conducts anti-counterfeit goods campaigns on a regular basis, but statistics on IPR enforcement are not publicly available.  A few companies have expressed concern over inappropriate use of their intellectual property.  While the government has offered rhetorical support, enforcement has been mixed.  In some cases, infringement has stopped, but in other cases, companies have been frustrated with the slow pace of receiving judgment or of receiving compensation after successful legal cases.

As a COMESA member, Rwanda is automatically a member of African Regional Intellectual Property Organization.  Rwanda is also a member of the World Intellectual Property Organization (WIPO) and is working toward harmonizing its legislation with WTO Agreement on the Trade-Related Aspects of Intellectual Property (TRIPS).  Rwanda has yet to ratify WIPO Internet Treaties, though the government has taken steps to implement and enforce TRIPS Agreement. In addition to TRIPS, Rwanda is a party to the following treaties and conventions:  the Paris Convention; the Berne Convention; the Patent Cooperation Treaty; the Madrid Protocol; the Hague Agreement; and the Brussels Convention.   Rwanda is not a party to the following treaties and conventions: the Beijing Treaty; the Budapest Treaty; Locarno Agreement; the Marrakesh Treaty; the Nairobi Treaty; the Nice Agreement; the Phonograms Convention; the Singapore Treaty; the Strasbourg Agreement ; the Trademark Law Treaty; the Vienna Convention; the WIPO Copyright Treaty; and the WIPO Performance and Phonograms Treaty.

Rwanda is not included in the United States Trade Representative (USTR)Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

Rwandan law allows private enterprises to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations.  Since 2006, the GOR has made efforts to privatize SOEs; reduce the government’s non-controlling shares in private enterprises; and attract FDI, especially in the ICT, tourism, banking, and agriculture sectors, but progress has been slow.  Current SOEs include water and electricity utilities, as well as companies in construction, ICT, aviation, mining, insurance, agriculture, finance, and other investments.  Some investors complain about competition from state-owned and ruling party-aligned businesses.  SOEs and utilities appear in the national budget, but the financial performance of most SOEs is only detailed in an annex that is not publicly available.  The most recent state finances audit report of the OAG also covers SOEs and has sections criticizing the management of some of the organizations.   SOEs are governed by boards with most members having other government positions.

State-owned non-financial corporations include Ngali Holdings, Horizon Group Ltd, REG, Water and Sanitation Corporation, RwandAir, National Post Office, Rwanda Printery Company Ltd, King Faisal Hospital, Muhabura Multichoice Ltd, Prime Holdings, Rwanda Grain and Cereals Corporation, Kinazi Cassava Plant, and the Rwanda Inter-Link Transport Company.  State-owned financial corporations include the NBR, Development Bank of Rwanda, Special Guarantee Fund, Rwanda National Investment Trust Ltd, ADF, BDF and the Rwanda Social Security Board.  The GOR has interests in the BoK, Rwanda Convention Bureau, BSC, CIMERWA, Gasabo 3D Ltd, AoS, KTRN, Dubai World Nyungwe Lodge, and Akagera Management Company, among others.

Privatization Program

Rwanda continues to carry out a privatization program that has attracted foreign investors in strategic areas ranging from telecommunications and banking to tea production and tourism.  As of 2017 (latest data available), 56 companies have been fully privatized, seven were liquidated, and 20 more were in the process of privatization.  RDB’s Strategic Investment Department is responsible for implementing and monitoring the privatization program. Some observers have questioned the transparency of certain transactions, as a number of transactions were undertaken through mutual agreements directly between the government and the private investor, some of whom have personal relationships with senior government officials, rather than public offerings.

9. Corruption

Rwanda is ranked among the least corrupt countries in Africa, with Transparency International’s 2019 Corruption Perception Index putting the country among Africa’s four least corrupt nations and 51st in the world.  The government maintains a high-profile anti-corruption effort, and senior leaders articulate a consistent message emphasizing that combating corruption is a key national goal.  The government investigates corruption allegations and generally punishes those found guilty.  High-ranking officials accused of corruption often resign during the investigation period, and many have been prosecuted.  Rwanda has ratified the UN Anticorruption Convention.  It is a signatory to the OECD Convention on Combating Bribery.  It is also a signatory to the African Union Anticorruption Convention.  U.S. firms have identified the perceived lack of government corruption in Rwanda as a key incentive for investing in the country.  There are no local industry or non-profit groups offering services for vetting potential local investment partners, but the Ministry of Justice keeps judgments online, making it a source of information on companies and individuals in Rwanda at www.judiciary.gov.rw/home/ .  The Rwanda National Public Prosecution Authority issues criminal records on demand to applicants at www.nppa.gov.rw .

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

Mr. Anastase Murekezi, Chief Ombudsman , Ombudsman (Umuvunyi)
P.O Box 6269, Kigali, Rwanda
Telephone: +250 252587308
omb1@ombudsman.gov.rw / sec.permanent@ombudsman.gov.rw

Mr. Felicien Mwumvaneza, Commissioner for Quality Assurance Department (Anti-Corruption Unit) Rwanda Revenue Authority
Avenue du Lac Muhazi, P.O. Box 3987, Kigali, Rwanda
Telephone: +250 252595504 or +250 788309563
felicien.mwumvaneza@rra.gov.rw / commissioner.quality@rra.gov.rw

Mr. Obadiah Biraro, Auditor General, Office of the Auditor General
Avenue du Lac Muhazi, P.O. Box 1020, Kigali, Rwanda
Telephone: +250 78818980 , oag@oag.gov.rw

Contact at “watchdog” organization

Mr. Apollinaire Mupiganyi , Executive Director , Transparency International Rwanda
P.O: Box 6252 Kigali, Rwanda
Telephone: +250 788309563,
amupiganyi@transparencyrwanda.org / mupiganyi@yahoo.fr

10. Political and Security Environment

Rwanda is a stable country with relatively little violence.  According to a 2017 report by the World Economic Forum, Rwanda is the ninth safest country in the world.   Gallup’s Global Law and Order Index report of 2018 ranked Rwanda 2nd safest place in Africa.  Investors have cited the stable political and security environment as an important driver of investments.  A strong police and military provide a security umbrella that minimizes potential criminal activity.

The U.S. Department of State recommends that U.S. citizens exercise caution when traveling near the Rwanda-Democratic Republic of the Congo (DRC) border, given the possibility of fighting and cross-border attacks involving the Democratic Forces for the Liberation of Rwanda (FDLR) and other groups opposed to the GOR.  Relations between Burundi and Rwanda are tense, and there is a risk of cross-border incursions and armed clashes.  Since 2018, there have been a few incidents of sporadic fighting in districts bordering Burundi and in Nyungwe National Park.

Grenade attacks aimed at the local populace occurred on a recurring basis between 2008 and 2014 in Rwanda.  There have been several cross-border attacks in Western Rwanda on Rwandan police and military posts reportedly since 2016.  Despite occasional violence along Rwanda’s borders with the DRC and Burundi, there have been no incidents involving politically motivated damage to investment projects or installations since the late 1990s.  Relations with Uganda are also tense, but leaders continue to emphasize they are seeking a political solution.  Rwanda has not allowed commercial traffic to cross the Rwandan-Ugandan border since February 2019 forcing most, if not all, commercial traffic to the Rwandan-Tanzanian border.  In May 2020, the Rwandan-Tanzania border crossings were negatively impacted due to the influx of Tanzanian truck drivers infected with COVID-19.

Please see the following link for State Department Country Specific Information:   https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/Rwanda.html