forecast in the aftermath of the recent global economic freefall suggests that the future is unpredictable for the developed and even more, the developing economies of the world. Existing still are daunting challenges, notable of which is the appropriate approach to manage adverse outcomes of measures and generally enhance FDI inflows to African states.
Some African states have recognized this fact and are taking strategic reform and policy measures.
Stakeholders representing various sectors of the economy in different parts of Africa recently converged in Nigeria at the 4th NCMG African ADR Summit to discuss and strategise on the role of ADR in Global the economy and investments in Africa.
Amidst a changing global economy and investment environment, the Summit explored the possibilities of a common regional order on dispute resolution which can help address the present and future challenges to the growth of FDI in Africa. The relevance of the tool of negotiation and the role for the courts in the new order, at the domestic and regional plane, also attracts a robust discourse from a carefully selected panel and participants drawn from diverse backgrounds.
Below are reports from papers, comments and recommendations made at the summit.
The Nigerian Banking Sector Reforms: Effects on
Investment Promotion
. Interest increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets
The Governor of the CBN, Mr. Sanusi Lamido at the Summit stressed that a stable financial system provides a solid foundation for promoting sustainable economic activities through attracting investment into the economy. Noting that investments naturally gravitate to the appropriate environment, which is defined by features including stable macroeconomic fundamentals, sound and stable financial system, virile legal and institutional frameworks which ensures contract enforcements, property rights and competition, as well as functional and efficient infrastructure to promote productivity.
While the Central Bank of Nigeria has mandates that directly promote stable macro economy and sound financial system, The CBN governor observed that the mandates of the Central bank is tangential to the attainment of a virile legal and institutional frameworks, and functional and efficient infrastructure to promote productivity.
Shedding light on the cause of the recent CBN action, otherwise called ‘the Sanusi Tsunami’, he explained that the consequences of the global crisis including a slump in the crude oil prices and capital inflows combined with domestic exuberance created challenges in the banking sector. Hence, the measures so far taken by CBN are done in good faith, and with the singular purpose of addressing the apparent lax credit policies and concentration of credit which have led to severe assets deterioration and significant capital erosion in some Nigerian banks.
CBN took proactive steps to prevent further deterioration by, the replacement of chief executive/executive director of nine banks, injection of N620 billion into eight banks to beef-up their capital to prevent a systemic banking crisis, and initiation of investigation into infractions. According to the CBN Chieftain, the injection of fund by CBN is consistent with similar action by central banks in advanced economies to deal with liquidity problem.
The Governor was optimistic about the outcome of the CBN actions, as presently, it is believed that interest is increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets. This brings, in his view, along with it importation and impartation of skill and expertise, which are hitherto inadequate in the Nigerian financial system.
“the injection of fund by CBN is consistent with similar actionby central banks in advanced economies to deal with liquidity problemâ€
Reform process in the banking sector he says has also brought to focus the importance in establishing an Asset Management Company which among other things, will address systemic liquidity squeeze and inhibition of credit growth; enable banks to resume lending to the real sector and stimulate economic growth; remove the pressure on banks to sell down shares to recover loans and impact the capital market positively; and ultimately boost investments.
In his further view, the reform intervention has boosted the capacity of the financial system to efficiently allocate capital by instilling risk management principles which aid the banking system in its role mobilising savings, intermediating and promoting investment while achieving the right balance between risks and returns.
Sanusi intoned that the recent reforms have illustrated Nigeria’s zero tolerance for poor corporate governance culture. He outlined other current strategic agenda of the Bank as including; ensuring exchange rate and price stability; managing interest rate for stability and development; macroeconomic coordination; vigorous pursuit of the developmental roles of the Central Bank; improvement of the payments system; financial sector diversification and regulatory reforms; and integrating Nigeria’s financial system into the African regional and global system.
. Centrality of labour to
investments
Justice Babatunde Adejumo in his presentation explained that investors make use of labour in conception and implementation of their ideas. This is because ttraditionally, labour is a factor of production. Also, if investors are not certain of service terms and safety of lives for their experts, investment is uncertain. When disputes occur, he stressed, labour rights are often at the heart of the issue.
Justice Adejumo related how he once had the opportunity to ask some of his colleagues in the developed part of the world, some questions relating to why the rest of the world is growing and Africa seems to be crawling. The response he received was most interesting, he recalled: No foreign investor will invest in an environment where the determination of disputes is allowed to go through the hierarchy of courts. The consequence of such process, he explicated, is worsened where the disputes in issue center on industrial relations.
Justice Adejumo in his conclusion, noted that since business men consider time as the essence of business, it is important that ADR is supported so that the landscape of industrial relations in Africa can become more efficiently managed and become a major booster to Africa’s investment quest.
. Enforcement of the rights of people are critical to economic and investments growth
Professor Yemi Osinbajo in his comments, emphasized the need for Africa to make its environment right for local investment, before it can attract Foreign Direct Investment, explaining that security (of lives and property) and the observance of and enforcement of the rights of people are critical to economic and investments growth.
Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in court, the security of lives and property, and protection of the rights of individuals before bringing their business into a particular region.
Buttressing his views, the erudite professor explained that, if robberies, kidnappings and offences involving violence are rampant and perpetrators are not being apprehended, tried, convicted because of problems within the administration of justice system – cost of doing business rises and many local & foreign investors will be unwilling to invest in certain types businesses. Consequently, he suggested, before making effort to woo foreign investors, Africa must get the environment right for local investment first.
“Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in courtâ€
Regrettably however, argued Osinbajo, surveys in Nigeria for instance show that fewer criminal prosecutions and convictions are being recorded, despite anecdotal evidence of rise in crime. Ineffective law enforcement is thus a serious disincentive to business and commerce even as long delays in judicial resolution of civil disputes have serious implications for the economy.
Professor Osinbajo’s recommendations for a more effective court system include ADR and the Multi-Door Courthouse, noting that these two can well help in reducing the risk being posed by an ineffective justice system to investments in Africa. Other measures may include reforms of Civil Procedure Rules, awarding more stringent costs regime for dilatory tactics; prescribing that interlocutory Appeals should terminate at the Court of Appeal. It was also his view that there is the need for all stakeholders including the Chief Justices, the Attorney Generals, and Legislative Heads to collaboratively interact with the view of solving the myriad challenges being faced by the court system in Africa.
. Africa’s portion in terms of the distribution of FDI low
With statistical evidence, Mr Rick Ashley in his presentation argued that Africa’s portion in terms of the distribution of FDI remains very low, and sub-Saharan Africa appears to be the hardest hit.
Outlining the salient challenges facing Africa’s investments drive, Mr Ashley observed that courts in Africa remain slow and at best unpredictable, and reform process of the legal system also appears slow.
In his view, although global turmoil has resulted in all businesses reassessing their attitude to risk management and mitigation, particularly in the financial sector, the fundamentals of what the investors want still remain the same; investors want easily understood, clear, predictable systems in which they can operate and manage potential disputes. The opportunities in this are enormous, he mentioned. A predictable system will help broaden the reach of global FDI into Africa and entrench appropriate risk management strategies.
Mr Ashley suggested in his conclusion, a common regional order on dispute resolution as offering the best opportunity for Africa to improve its investment flow and peoples’ lives.
. CBN, ADR and investments in Africa
Reacting to the question on how faith can be built in Africans for investment in Africa, Mr Tunde Lemo took the view that a friendly business environment must first be created. For instance, he contended, most people of Africa can note the negative impact of delay on the justice system and ultimately on investments. According to the Central Bank Deputy Governor, a system where people borrow money and resort to protracted litigation with a view of frustrating payment through the instrumentality of the court leaves much to be desired.
Mr. Lemo made it clear that the CBN is not aversed to ADR, particularly in relation to matters filed against the institution in the law courts. However, he expressed doubt as to the applicability of ADR to matters in which crimes are being alleged against some executives of the banks whose removal was a fall out of the reform process.
. High Interest Rates
On the issue of high interest rate, Tunde Lemo also explained that interest rate in nations including Nigeria is not arbitrarily fixed. Rather, it is an outcome of several factors. Mr Lemo noted that most African nations are rated as high risk environment, due to their poor state of infrastructure such as power, high inflation rate, delay in the enforcement of contracts, and insecurity of properties. In nations where the foregoing have been effectively addressed, interest rates are comparatively low.
. Investment barriers in Africa
The following have been commonly identified as obstacles to the flow of direct investments in Africa:
A court system that frustrates the smooth conduct of commercial activity delays in the adjudication of cases, and an erosion of confidence in the justice delivery system, which is a serious disincentive to business and investment domestic exuberance in the financial sector inhospitable regulatory framework for the observance of and enforcement of intellectual property and other rights potential of professional negotiation and other non-litigation dispute resolution mechanisms are yet to be tapped in addressing the challenges confronting the court system and more importantly in driving African economies and growth
Recommendations
. Through appropriate reforms, Africa must make its environment right for and encourage existing investors. Only then can it hope to successfully woo more, especially, foreign investors;
. In order to ensure the creation of an enabling environment for investments, all stakeholders in governance including the Judiciary, Executive and the Legislature must work together with the singular purpose of addressing the challenges which hinder the courts in fulfilling its role as an agent of investment growth in Africa;
. Major reforms are particularly required in the rules and procedures of courts to minimise the use of courts in ways and manners that frustrate business. In this regard, reforms should accommodate the relevance of Alternative Dispute Resolution in transforming Judges more into case managers, and Lawyers into problem solvers;
. Reform in the court system should also recognise and make the activities of legal practitioners in ADR count towards their consideration for appointment as a Senior Advocate or the equivalence in respective African States. This will no doubt motivate the practice of ADR in the justice delivery sector;
. The political and business leaders across all sectors in Africa should recognise and embrace the increasing relevance of ADR to their activities and most importantly, in addressing, whenever necessary, the myriad agitations stemming from the reform process that has become inevitable in the aftermath of global economic meltdown;
. Reform should highlight the need for appropriate training and re-training in ADR Skills, for all stakeholders in the Judiciary, Executive, Legislature and Private Enterprise; and
. A partnership among all stakeholders is urgent to ensure that all investment-related disputes are amenable to ADR.
GLOBAL ECONOMY AND INVESTMENTS IN AFRICA: Turning adversity into opportunity through negotiation and the courts
Report by NCMG
Africa lags behind other regions of the world in the competition for and distribution of global Foreign Direct Investments (FDI) inflows. Yet in an era of globalized world economy, increased inflows of FDI can play an important role in the development efforts of the African region. As the competition for FDI becomes intensified, forecast in the aftermath of the recent global economic freefall suggests that the future is unpredictable for the developed and even more, the developing economies of the world. Existing still are daunting challenges, notable of which is the appropriate approach to manage adverse outcomes of measures and generally enhance FDI inflows to African states.
Some African states have recognized this fact and are taking strategic reform and policy measures.
Stakeholders representing various sectors of the economy in different parts of Africa recently converged in Nigeria at the 4th NCMG African ADR Summit to discuss and strategise on the role of ADR in Global the economy and investments in Africa.
Amidst a changing global economy and investment environment, the Summit explored the possibilities of a common regional order on dispute resolution which can help address the present and future challenges to the growth of FDI in Africa. The relevance of the tool of negotiation and the role for the courts in the new order, at the domestic and regional plane, also attracts a robust discourse from a carefully selected panel and participants drawn from diverse backgrounds.
Below are reports from papers, comments and recommendations made at the summit.
The Nigerian Banking Sector Reforms: Effects on
Investment Promotion
. Interest increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets
The Governor of the CBN, Mr. Sanusi Lamido at the Summit stressed that a stable financial system provides a solid foundation for promoting sustainable economic activities through attracting investment into the economy. Noting that investments naturally gravitate to the appropriate environment, which is defined by features including stable macroeconomic fundamentals, sound and stable financial system, virile legal and institutional frameworks which ensures contract enforcements, property rights and competition, as well as functional and efficient infrastructure to promote productivity.
While the Central Bank of Nigeria has mandates that directly promote stable macro economy and sound financial system, The CBN governor observed that the mandates of the Central bank is tangential to the attainment of a virile legal and institutional frameworks, and functional and efficient infrastructure to promote productivity.
Shedding light on the cause of the recent CBN action, otherwise called ‘the Sanusi Tsunami’, he explained that the consequences of the global crisis including a slump in the crude oil prices and capital inflows combined with domestic exuberance created challenges in the banking sector. Hence, the measures so far taken by CBN are done in good faith, and with the singular purpose of addressing the apparent lax credit policies and concentration of credit which have led to severe assets deterioration and significant capital erosion in some Nigerian banks.
CBN took proactive steps to prevent further deterioration by, the replacement of chief executive/executive director of nine banks, injection of N620 billion into eight banks to beef-up their capital to prevent a systemic banking crisis, and initiation of investigation into infractions. According to the CBN Chieftain, the injection of fund by CBN is consistent with similar action by central banks in advanced economies to deal with liquidity problem.
The Governor was optimistic about the outcome of the CBN actions, as presently, it is believed that interest is increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets. This brings, in his view, along with it importation and impartation of skill and expertise, which are hitherto inadequate in the Nigerian financial system.
“the injection of fund by CBN is consistent with similar actionby central banks in advanced economies to deal with liquidity problemâ€
Reform process in the banking sector he says has also brought to focus the importance in establishing an Asset Management Company which among other things, will address systemic liquidity squeeze and inhibition of credit growth; enable banks to resume lending to the real sector and stimulate economic growth; remove the pressure on banks to sell down shares to recover loans and impact the capital market positively; and ultimately boost investments.
In his further view, the reform intervention has boosted the capacity of the financial system to efficiently allocate capital by instilling risk management principles which aid the banking system in its role mobilising savings, intermediating and promoting investment while achieving the right balance between risks and returns.
Sanusi intoned that the recent reforms have illustrated Nigeria’s zero tolerance for poor corporate governance culture. He outlined other current strategic agenda of the Bank as including; ensuring exchange rate and price stability; managing interest rate for stability and development; macroeconomic coordination; vigorous pursuit of the developmental roles of the Central Bank; improvement of the payments system; financial sector diversification and regulatory reforms; and integrating Nigeria’s financial system into the African regional and global system.
. Centrality of labour to
investments
Justice Babatunde Adejumo in his presentation explained that investors make use of labour in conception and implementation of their ideas. This is because ttraditionally, labour is a factor of production. Also, if investors are not certain of service terms and safety of lives for their experts, investment is uncertain. When disputes occur, he stressed, labour rights are often at the heart of the issue.
Justice Adejumo related how he once had the opportunity to ask some of his colleagues in the developed part of the world, some questions relating to why the rest of the world is growing and Africa seems to be crawling. The response he received was most interesting, he recalled: No foreign investor will invest in an environment where the determination of disputes is allowed to go through the hierarchy of courts. The consequence of such process, he explicated, is worsened where the disputes in issue center on industrial relations.
Justice Adejumo in his conclusion, noted that since business men consider time as the essence of business, it is important that ADR is supported so that the landscape of industrial relations in Africa can become more efficiently managed and become a major booster to Africa’s investment quest.
. Enforcement of the rights of people are critical to economic and investments growth
Professor Yemi Osinbajo in his comments, emphasized the need for Africa to make its environment right for local investment, before it can attract Foreign Direct Investment, explaining that security (of lives and property) and the observance of and enforcement of the rights of people are critical to economic and investments growth.
Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in court, the security of lives and property, and protection of the rights of individuals before bringing their business into a particular region.
Buttressing his views, the erudite professor explained that, if robberies, kidnappings and offences involving violence are rampant and perpetrators are not being apprehended, tried, convicted because of problems within the administration of justice system – cost of doing business rises and many local & foreign investors will be unwilling to invest in certain types businesses. Consequently, he suggested, before making effort to woo foreign investors, Africa must get the environment right for local investment first.
“Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in courtâ€
Regrettably however, argued Osinbajo, surveys in Nigeria for instance show that fewer criminal prosecutions and convictions are being recorded, despite anecdotal evidence of rise in crime. Ineffective law enforcement is thus a serious disincentive to business and commerce even as long delays in judicial resolution of civil disputes have serious implications for the economy.
Professor Osinbajo’s recommendations for a more effective court system include ADR and the Multi-Door Courthouse, noting that these two can well help in reducing the risk being posed by an ineffective justice system to investments in Africa. Other measures may include reforms of Civil Procedure Rules, awarding more stringent costs regime for dilatory tactics; prescribing that interlocutory Appeals should terminate at the Court of Appeal. It was also his view that there is the need for all stakeholders including the Chief Justices, the Attorney Generals, and Legislative Heads to collaboratively interact with the view of solving the myriad challenges being faced by the court system in Africa.
. Africa’s portion in terms of the distribution of FDI low
With statistical evidence, Mr Rick Ashley in his presentation argued that Africa’s portion in terms of the distribution of FDI remains very low, and sub-Saharan Africa appears to be the hardest hit.
Outlining the salient challenges facing Africa’s investments drive, Mr Ashley observed that courts in Africa remain slow and at best unpredictable, and reform process of the legal system also appears slow.
In his view, although global turmoil has resulted in all businesses reassessing their attitude to risk management and mitigation, particularly in the financial sector, the fundamentals of what the investors want still remain the same; investors want easily understood, clear, predictable systems in which they can operate and manage potential disputes. The opportunities in this are enormous, he mentioned. A predictable system will help broaden the reach of global FDI into Africa and entrench appropriate risk management strategies.
Mr Ashley suggested in his conclusion, a common regional order on dispute resolution as offering the best opportunity for Africa to improve its investment flow and peoples’ lives.
. CBN, ADR and investments in Africa
Reacting to the question on how faith can be built in Africans for investment in Africa, Mr Tunde Lemo took the view that a friendly business environment must first be created. For instance, he contended, most people of Africa can note the negative impact of delay on the justice system and ultimately on investments. According to the Central Bank Deputy Governor, a system where people borrow money and resort to protracted litigation with a view of frustrating payment through the instrumentality of the court leaves much to be desired.
Mr. Lemo made it clear that the CBN is not aversed to ADR, particularly in relation to matters filed against the institution in the law courts. However, he expressed doubt as to the applicability of ADR to matters in which crimes are being alleged against some executives of the banks whose removal was a fall out of the reform process.
. High Interest Rates
On the issue of high interest rate, Tunde Lemo also explained that interest rate in nations including Nigeria is not arbitrarily fixed. Rather, it is an outcome of several factors. Mr Lemo noted that most African nations are rated as high risk environment, due to their poor state of infrastructure such as power, high inflation rate, delay in the enforcement of contracts, and insecurity of properties. In nations where the foregoing have been effectively addressed, interest rates are comparatively low.
. Investment barriers in Africa
The following have been commonly identified as obstacles to the flow of direct investments in Africa:
A court system that frustrates the smooth conduct of commercial activity delays in the adjudication of cases, and an erosion of confidence in the justice delivery system, which is a serious disincentive to business and investment domestic exuberance in the financial sector inhospitable regulatory framework for the observance of and enforcement of intellectual property and other rights potential of professional negotiation and other non-litigation dispute resolution mechanisms are yet to be tapped in addressing the challenges confronting the court system and more importantly in driving African economies and growth
Recommendations
. Through appropriate reforms, Africa must make its environment right for and encourage existing investors. Only then can it hope to successfully woo more, especially, foreign investors;
. In order to ensure the creation of an enabling environment for investments, all stakeholders in governance including the Judiciary, Executive and the Legislature must work together with the singular purpose of addressing the challenges which hinder the courts in fulfilling its role as an agent of investment growth in Africa;
. Major reforms are particularly required in the rules and procedures of courts to minimise the use of courts in ways and manners that frustrate business. In this regard, reforms should accommodate the relevance of Alternative Dispute Resolution in transforming Judges more into case managers, and Lawyers into problem solvers;
. Reform in the court system should also recognise and make the activities of legal practitioners in ADR count towards their consideration for appointment as a Senior Advocate or the equivalence in respective African States. This will no doubt motivate the practice of ADR in the justice delivery sector;
. The political and business leaders across all sectors in Africa should recognise and embrace the increasing relevance of ADR to their activities and most importantly, in addressing, whenever necessary, the myriad agitations stemming from the reform process that has become inevitable in the aftermath of global economic meltdown;
. Reform should highlight the need for appropriate training and re-training in ADR Skills, for all stakeholders in the Judiciary, Executive, Legislature and Private Enterprise; and
. A partnership among all stakeholders is urgent to ensure that all investment-related disputes are amenable to ADR.
forecast in the aftermath of the recent global economic freefall suggests that the future is unpredictable for the developed and even more, the developing economies of the world. Existing still are daunting challenges, notable of which is the appropriate approach to manage adverse outcomes of measures and generally enhance FDI inflows to African states.
Some African states have recognized this fact and are taking strategic reform and policy measures.
Stakeholders representing various sectors of the economy in different parts of Africa recently converged in Nigeria at the 4th NCMG African ADR Summit to discuss and strategise on the role of ADR in Global the economy and investments in Africa.
Amidst a changing global economy and investment environment, the Summit explored the possibilities of a common regional order on dispute resolution which can help address the present and future challenges to the growth of FDI in Africa. The relevance of the tool of negotiation and the role for the courts in the new order, at the domestic and regional plane, also attracts a robust discourse from a carefully selected panel and participants drawn from diverse backgrounds.
Below are reports from papers, comments and recommendations made at the summit.
The Nigerian Banking Sector Reforms: Effects on
Investment Promotion
. Interest increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets
The Governor of the CBN, Mr. Sanusi Lamido at the Summit stressed that a stable financial system provides a solid foundation for promoting sustainable economic activities through attracting investment into the economy. Noting that investments naturally gravitate to the appropriate environment, which is defined by features including stable macroeconomic fundamentals, sound and stable financial system, virile legal and institutional frameworks which ensures contract enforcements, property rights and competition, as well as functional and efficient infrastructure to promote productivity.
While the Central Bank of Nigeria has mandates that directly promote stable macro economy and sound financial system, The CBN governor observed that the mandates of the Central bank is tangential to the attainment of a virile legal and institutional frameworks, and functional and efficient infrastructure to promote productivity.
Shedding light on the cause of the recent CBN action, otherwise called ‘the Sanusi Tsunami’, he explained that the consequences of the global crisis including a slump in the crude oil prices and capital inflows combined with domestic exuberance created challenges in the banking sector. Hence, the measures so far taken by CBN are done in good faith, and with the singular purpose of addressing the apparent lax credit policies and concentration of credit which have led to severe assets deterioration and significant capital erosion in some Nigerian banks.
CBN took proactive steps to prevent further deterioration by, the replacement of chief executive/executive director of nine banks, injection of N620 billion into eight banks to beef-up their capital to prevent a systemic banking crisis, and initiation of investigation into infractions. According to the CBN Chieftain, the injection of fund by CBN is consistent with similar action by central banks in advanced economies to deal with liquidity problem.
The Governor was optimistic about the outcome of the CBN actions, as presently, it is believed that interest is increasing in the banking sector with more international financial corporations indicating willingness to participate in the Nigerian financial markets. This brings, in his view, along with it importation and impartation of skill and expertise, which are hitherto inadequate in the Nigerian financial system.
“the injection of fund by CBN is consistent with similar actionby central banks in advanced economies to deal with liquidity problemâ€
Reform process in the banking sector he says has also brought to focus the importance in establishing an Asset Management Company which among other things, will address systemic liquidity squeeze and inhibition of credit growth; enable banks to resume lending to the real sector and stimulate economic growth; remove the pressure on banks to sell down shares to recover loans and impact the capital market positively; and ultimately boost investments.
In his further view, the reform intervention has boosted the capacity of the financial system to efficiently allocate capital by instilling risk management principles which aid the banking system in its role mobilising savings, intermediating and promoting investment while achieving the right balance between risks and returns.
Sanusi intoned that the recent reforms have illustrated Nigeria’s zero tolerance for poor corporate governance culture. He outlined other current strategic agenda of the Bank as including; ensuring exchange rate and price stability; managing interest rate for stability and development; macroeconomic coordination; vigorous pursuit of the developmental roles of the Central Bank; improvement of the payments system; financial sector diversification and regulatory reforms; and integrating Nigeria’s financial system into the African regional and global system.
. Centrality of labour to
investments
Justice Babatunde Adejumo in his presentation explained that investors make use of labour in conception and implementation of their ideas. This is because ttraditionally, labour is a factor of production. Also, if investors are not certain of service terms and safety of lives for their experts, investment is uncertain. When disputes occur, he stressed, labour rights are often at the heart of the issue.
Justice Adejumo related how he once had the opportunity to ask some of his colleagues in the developed part of the world, some questions relating to why the rest of the world is growing and Africa seems to be crawling. The response he received was most interesting, he recalled: No foreign investor will invest in an environment where the determination of disputes is allowed to go through the hierarchy of courts. The consequence of such process, he explicated, is worsened where the disputes in issue center on industrial relations.
Justice Adejumo in his conclusion, noted that since business men consider time as the essence of business, it is important that ADR is supported so that the landscape of industrial relations in Africa can become more efficiently managed and become a major booster to Africa’s investment quest.
. Enforcement of the rights of people are critical to economic and investments growth
Professor Yemi Osinbajo in his comments, emphasized the need for Africa to make its environment right for local investment, before it can attract Foreign Direct Investment, explaining that security (of lives and property) and the observance of and enforcement of the rights of people are critical to economic and investments growth.
Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in court, the security of lives and property, and protection of the rights of individuals before bringing their business into a particular region.
Buttressing his views, the erudite professor explained that, if robberies, kidnappings and offences involving violence are rampant and perpetrators are not being apprehended, tried, convicted because of problems within the administration of justice system – cost of doing business rises and many local & foreign investors will be unwilling to invest in certain types businesses. Consequently, he suggested, before making effort to woo foreign investors, Africa must get the environment right for local investment first.
“Foreign investors always assess ‘risk’ factors which include the time it takes to resolve disputes in courtâ€
Regrettably however, argued Osinbajo, surveys in Nigeria for instance show that fewer criminal prosecutions and convictions are being recorded, despite anecdotal evidence of rise in crime. Ineffective law enforcement is thus a serious disincentive to business and commerce even as long delays in judicial resolution of civil disputes have serious implications for the economy.
Professor Osinbajo’s recommendations for a more effective court system include ADR and the Multi-Door Courthouse, noting that these two can well help in reducing the risk being posed by an ineffective justice system to investments in Africa. Other measures may include reforms of Civil Procedure Rules, awarding more stringent costs regime for dilatory tactics; prescribing that interlocutory Appeals should terminate at the Court of Appeal. It was also his view that there is the need for all stakeholders including the Chief Justices, the Attorney Generals, and Legislative Heads to collaboratively interact with the view of solving the myriad challenges being faced by the court system in Africa.
. Africa’s portion in terms of the distribution of FDI low
With statistical evidence, Mr Rick Ashley in his presentation argued that Africa’s portion in terms of the distribution of FDI remains very low, and sub-Saharan Africa appears to be the hardest hit.
Outlining the salient challenges facing Africa’s investments drive, Mr Ashley observed that courts in Africa remain slow and at best unpredictable, and reform process of the legal system also appears slow.
In his view, although global turmoil has resulted in all businesses reassessing their attitude to risk management and mitigation, particularly in the financial sector, the fundamentals of what the investors want still remain the same; investors want easily understood, clear, predictable systems in which they can operate and manage potential disputes. The opportunities in this are enormous, he mentioned. A predictable system will help broaden the reach of global FDI into Africa and entrench appropriate risk management strategies.
Mr Ashley suggested in his conclusion, a common regional order on dispute resolution as offering the best opportunity for Africa to improve its investment flow and peoples’ lives.
. CBN, ADR and investments in Africa
Reacting to the question on how faith can be built in Africans for investment in Africa, Mr Tunde Lemo took the view that a friendly business environment must first be created. For instance, he contended, most people of Africa can note the negative impact of delay on the justice system and ultimately on investments. According to the Central Bank Deputy Governor, a system where people borrow money and resort to protracted litigation with a view of frustrating payment through the instrumentality of the court leaves much to be desired.
Mr. Lemo made it clear that the CBN is not aversed to ADR, particularly in relation to matters filed against the institution in the law courts. However, he expressed doubt as to the applicability of ADR to matters in which crimes are being alleged against some executives of the banks whose removal was a fall out of the reform process.
. High Interest Rates
On the issue of high interest rate, Tunde Lemo also explained that interest rate in nations including Nigeria is not arbitrarily fixed. Rather, it is an outcome of several factors. Mr Lemo noted that most African nations are rated as high risk environment, due to their poor state of infrastructure such as power, high inflation rate, delay in the enforcement of contracts, and insecurity of properties. In nations where the foregoing have been effectively addressed, interest rates are comparatively low.
. Investment barriers in Africa
The following have been commonly identified as obstacles to the flow of direct investments in Africa:
A court system that frustrates the smooth conduct of commercial activity delays in the adjudication of cases, and an erosion of confidence in the justice delivery system, which is a serious disincentive to business and investment domestic exuberance in the financial sector inhospitable regulatory framework for the observance of and enforcement of intellectual property and other rights potential of professional negotiation and other non-litigation dispute resolution mechanisms are yet to be tapped in addressing the challenges confronting the court system and more importantly in driving African economies and growth
Recommendations
. Through appropriate reforms, Africa must make its environment right for and encourage existing investors. Only then can it hope to successfully woo more, especially, foreign investors;
. In order to ensure the creation of an enabling environment for investments, all stakeholders in governance including the Judiciary, Executive and the Legislature must work together with the singular purpose of addressing the challenges which hinder the courts in fulfilling its role as an agent of investment growth in Africa;
. Major reforms are particularly required in the rules and procedures of courts to minimise the use of courts in ways and manners that frustrate business. In this regard, reforms should accommodate the relevance of Alternative Dispute Resolution in transforming Judges more into case managers, and Lawyers into problem solvers;
. Reform in the court system should also recognise and make the activities of legal practitioners in ADR count towards their consideration for appointment as a Senior Advocate or the equivalence in respective African States. This will no doubt motivate the practice of ADR in the justice delivery sector;
. The political and business leaders across all sectors in Africa should recognise and embrace the increasing relevance of ADR to their activities and most importantly, in addressing, whenever necessary, the myriad agitations stemming from the reform process that has become inevitable in the aftermath of global economic meltdown;
. Reform should highlight the need for appropriate training and re-training in ADR Skills, for all stakeholders in the Judiciary, Executive, Legislature and Private Enterprise; and
. A partnership among all stakeholders is urgent to ensure that all investment-related disputes are amenable to ADR.