The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Legal expert: “Reforms bring hope in Africa’s pursuit of equitable growth”

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"We should develop institutions that can effectively handle corruption," says Jacqueline Musiitwa, Esq, founder of Hoja Law Group, a firm that advises companies doing business in Africa. Photo: Allan Akombo / Oxfam America

Jacqueline Musiitwa discusses the Africa rising narrative and the need for legal and governance reforms to bring lasting change.

Allan Akombo is a freelance journalist in Nairobi.

With one of the fastest economic growth rates globally, the narrative of Africa’s economic renaissance has only become stronger in recent times.

Buoyed by bigger infrastructure investment, increased agricultural production, and buoyant service sectors, Sub-Saharan African economies are expected to grow a healthy 4.6 percent in 2015, and to pick up to 5.1 percent by 2017, way above the world average of 3 percent.

Behind this trend is a chain of ongoing legal and governance reforms as various African countries strive to become more competitive and attract more trade and investment.

Jacqueline Musiitwa, Esq is the founder and managing partner of the Hoja Law Group, a firm started in 2008 that advises on commercial, political, and intellectual property law for companies doing business in Africa. She will be a featured guest next Wednesday at CQ Roll Call’s policy breakfast briefing, Building Self-Reliance: The Future of Foreign Aid, sponsored by Oxfam.

Though this professor of law has served as an advisor to the Director General of the World Trade Organization on trade policy, as well as to the Rwandan Justice Ministry on investment, trade, infrastructure and private sector development, she is increasing her scope of improving Africa’s standing in the world through her focus on the importance of good governance and rule of law.

“I want to shift from deal making to mind shifting,” Musiitwa says.

I sat down with her in her office in Nairobi recently to talk about how legal reform on the African continent is, as she describes it, “intertwined with inclusive and sustainable development.”

Allan Akombo: There are a lot of media narratives about Africa rising lately. Is it accurate?

Jacqueline Musiitwa: Yes, the Africa numbers are growing fast and Africa has all the ingredients for success: growth, increased stability, improved regulations, and focus on regional integration.

But there is lack of inclusive growth. When you get out on the streets of African cities and rural areas, you realize how much the growth is not trickling down to everyone and this brings questions about sustainability of the current model.

Current growth is not sustainable in the long term because of the youth bulge. Most of Africa’s growth is also mineral resource based, which is tricky because we don’t control factors such as global prices and it does not account for large scale employment.

The awakening is truthful, but we need to tell the objective narrative and pay attention to all parts of the African people.

Akombo: What is the place of legal and governance reforms in Africa’s socio-economic transformation?

Musiitwa: There is no doubt that legal reform has now become a priority for many African jurisdictions, and most of them are simply modernizing the laws they inherited during colonization. More countries are walking this path more so that they get to accommodate the realities of the day, and a few countries are adopting fundamental changes to boost competitiveness.

Several African countries including Kenya, Egypt, and Zimbabwe have recently adopted new constitutions, while others such as Liberia, South Sudan and Somalia have started progressively legislating for the first time in over three decades to boost their political and investment credentials.

Akombo: You’ve worked in Rwanda. Does it offer a good example of legal reform?

Rwanda, perhaps, presents one of Africa’s brightest examples in terms of yielding positivity in legal and governance reforms. A few years back Rwanda dumped its 19th century Belgian civil law systems roots for Common Law and replaced French with English as its primary business language. In fact, Rwanda was the first country in the world to voluntarily adopt a common law legal system.

These amendments were mainly put in place to improve Rwanda’s overall business environment. They did not disappoint.

From Rwanda’s 158th position in the World Bank’s 1998 Doing Business survey, which ranks countries according to their ease of investments, Rwanda jumped to 32nd position in 2014.

Akombo: How is Africa addressing wealth redistribution, especially land reforms?

Musiitwa: A popular change, which has been made by many African countries upon achieving independence was the rebalancing of property ownership. Although often contested by foreign investors, indigenization laws and quotas have been introduced in some African jurisdictions. For example, in South Africa where almost 80 percent of the population is black, it was judged necessary to pass the Black Economic Empowerment Act in 2003 to readjust the inequalities generated by decades of apartheid.

With respect to land, many countries removed the ability for anyone to own freeholds, such as Nigeria or Zambia. Some countries go further and discriminate between foreigners and citizens, while Rwanda, one of the world’s biggest business reformers, refused to go down that route.

In Kenya, for example, radical changes were made to land ownership terms with leaseholds being slashed from 999 years to just 99 years with an eye towards more regular redistribution of ownership rights. This mainly affected leases issued before independence in the late 1800s and early 1900s, with most of the land under this category belonging to foreign firms that occupy large tracts of land, which support key economic activity in Kenya such as flower, tea, coffee and horticultural farming. Once a land lease expires, the parcel reverts to Kenya’s National Land Commission as the main custodian of the government land.

Akombo: With so much revenue being generated from oil and mining, why haven’t extractive industries resulted in growth for Africa?

Musiitwa: Big companies come around to explore and export resources from Africa, and we expect governments to come in and ensure the wealth is distributed to the people. But we need to have in place the requisite laws to guide the exploitation of resources and ensure wealth is preserved domestically.

Laws on key subjects such as wealth repatriation and value addition of products can help address this challenge and preserve the well-being of a jurisdiction. For example a country doesn’t need to export raw materials and import a more expensive finished product from the same raw material. Adding value to a product locally preserves jobs and wealth.

Also, natural resources in Africa currently don’t employ as many people as is ideal. That is why countries need to diversify into industries that have greater employment opportunities. It is interesting to note that countries such as Kenya, Rwanda, and Ethiopia have grown immensely even without exploiting natural resources.

Akombo: There is an up-shoot of investor interest in Africa. How can these opportunities be tapped without the danger of running into exploitative contracts or deals?

Musiitwa: Most African legal frameworks and policies are still copy and paste legacy laws from the colonial times. There needs to be development of local content policies that bind a certain percentage of contracts for local citizens and that increase local ownership and engagement in the economy. Also, until we have women involved in key decisions, the equation is not complete.

Governments should open contracts and put them up on the internet for public scrutiny to help deal with exploitation. A lot of investors are open to scrutiny, except in areas where they may expose their strategies to the competition.

Akombo: How can companies navigate legal challenges to thrive in Africa?

Musiitwa: To thrive in Africa, companies should partner with a local entities and service providers. Local lawyers are much more useful than global ones without the relevant context.  The firms should also engage with the government on what needs to be done in line with the existing development strategy.

In Africa, there is a lot of value in public-private partnerships that hasn’t been tapped.

Akombo: Are regional economic blocs a panacea to Africa’s economic challenges?

Musiitwa: Africa will not be able to compete if it remains a legally and economically fragmented region, however well governed and competitive each individual state is. For this reason, regional integration has once again become a hot topic.

Africa today boasts of the several integration blocs including the East African Community (EAC), Economic Community of West Africa States (ECOWAS), the Southern Africa Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA), which have seamless laws of key areas such as taxes.

The success of Africa’s integration will be based on the full cooperation between political leaders, business, citizens, and a unified mission for sustainable and inclusive growth for all. Leaders need to set the agenda and demonstrate consistent political will.

Akombo: Despite its vast resources, Africa has not met full expectations of development and growth. What has been the challenge?

Musiitwa: Local populations have a role in growing business, but governments in Africa do not always do to encourage them. People need affordable loans, entrepreneurial coaching, sportive laws, basically an enabling environment.

We should develop institutions that can effectively handle corruption, and better skills for populations to properly manage the resources they have.

If we can address the weak leadership and weak institutions, then the resource curse will be a thing of the past and even more economic opportunities will open up for Africa.

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Join Jacqueline Musiitwa on Wednesday, March 25th in Washington, DC to discuss the #FutureOfAid. She will be a featured guest at CQ Roll Call’s policy breakfast briefing, Building Self-Reliance: The Future of Foreign Aid, sponsored by Oxfam.

You can also join Musiitwa, who will be the featured guest at the Monthly Breakfast Series of the Modernizing Foreign Assistance Network on Friday, March 27th. She will discuss the critical need for donors to engage with local nongovernmental actors, including private sector and civil society, to ensure that development cooperation is based on accountability. For more details, email:  Jill MacArthur, jmacarthur@modernizeaid.net

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This interview is part of an Oxfam series that highlights local leaders who are standing up for accountability, making demands of their government, and getting results in the fight against injustice. Though Oxfam may not fund every project or organization featured in the series, Oxfam stands in solidarity with all those around the world working to right the wrong of poverty.

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  1. verncalderone@gmail.com'jamtangan

    I do agree with all the ideas you have presented on your post.
    They are really convincing and can certainly work. Still,
    the posts are too brief for beginners. May you please prolong them a little from next time?
    Thank you for the post.

    Reply

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