Infrastructure development in Africa- what role can UK legal services play?
Africa is growing; according to the World Bank, six of the world’s ten fastest growing economies are in Africa. Furthermore, it is predicted that between 2018 and 2035 the world’s ten fastest growing cities will be in Africa, and that by 2034 Africa will have a larger working-age population than India or China.
This rapid development has created a strain on physical and social infrastructure. Africa now has infrastructure needs of US$130–170 billion a year according to the African Development Bank, and an infrastructure financing gap of approximately $108 billion a year.
African governments, therefore, need to attract a significant amount of investment in order to accelerate the infrastructure development required for sustainable economic growth.
To achieve this, they need to overcome the perception of the high risks of undertaking projects in Africa. Many sub-Saharan African countries score poorly in the World Bank’s ease of doing business index, and this undermines investor confidence.
Given the huge opportunities, what role can English law and UK law firms play in helping overcome the challenges facing infrastructure development in Africa?
1. English law offers confidence to international investors –
For reasons stated in a previous blog, English law is often chosen by parties to govern international and cross-border transactions due to its well-established reputation.
Investors see English law as being both pragmatic and commercial, creating certainty between contracting parties. Additionally, investors believe in the independence of the judiciary and trust that in the event of a dispute, the matter will be dealt with in a transparent and efficient manner by experts in the field.
Using English law to govern financing agreements gives investors the reassurance they require to invest in jurisdictions that are sometimes deemed “risky”.
2. UK law firms have high levels of infrastructure experience –
UK law firms can bring a significant amount of international infrastructure experience to bear in Africa. Taking BCLP as an example, we have an established infrastructure team that advises governments, sponsors, lenders and procuring authorities on all aspects of international infrastructure development and investment. We are also familiar with how to structure procurements and how to attract financing for projects.
Drawing on this experience, we understand the common issues that arise on projects in Africa and the myriad of contractual relationships that need to be established and navigated.
This experience of working on infrastructure projects in a number of African countries, as well as in other jurisdictions worldwide, allows us to understand key stakeholder priorities when doing business in Africa.
The use of English law and the involvement of UK law firms can play an important role in giving private sector investors’ confidence when investing in infrastructure assets in Africa. Using English law, UK law firms can ensure structuring and executing bankable infrastructure projects use international best practice in bringing these large transactions to a successful close.
To find out more please email the team at legalservicesaregreat@justice.gov.uk
