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THE FUTURE OF FREE TRADE AREA IN AFRICA; HOW TO MAKE IT WORK WRITTEN BY: MARY MARTINS (LL.B, BL)

Diverse Law Uncategorized August 21, 2021

INTRODUCTION

At the 2012 AU Summit, Heads of State and Government adopted a Decision on the Establishment of a Continental Free Trade Area and endorsed the Action Plan on Boosting Intra-Africa Trade which identifies seven areas of cooperation namely: trade policy; trade facilitation; productive capacity; trade related infrastructure; trade finance; trade information; and factor market integration. These are expected to lay the foundation for the establishment of a Continental Customs Union at a later stage.

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The impact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

The African Continental Free Trade Agreement represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion. Implementing AfCFTA would:

  • Lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day;
  • Boost Africa’s income by $450 billion by 2035 (a gain of 7 percent) while adding $76 billion to the income of the rest of the world.

  • Increase Africa’s exports by $560 billion, mostly in manufacturing.
  • Spur larger wage gains for women (10.5 percent) than for men (9.9 percent).
  • Boost wages for both skilled and unskilled workers—10.3 percent for unskilled workers, and 9.8 percent for skilled workers.

The chart

THE CHALLENGES

The provision of the Treaty will potentially affect current company rules regarding minimum capital, directorship and shareholding in many African countries. It will also have effect on capital control exchange regulation and local content rules. There is the need to harmonise existing rules such as the rules of origin which differ between various RECs on the continent. This ranges from 60 percent of local content of total raw materials used for wholly produced goods originating from the ECOWAS region to 40% material content rule in COMESA to a more complex product specific low import and high valueadded requirements in SADC.

A CALL FOR ACTION

I strongly believe that the real issues for the Nigerian Economic Submit Group are not with the AfCFTA treaty but potentially its implementation. African countries need to; review and harmonise trade policies, identify areas of competitive advantage, build institutional capacity, address non-tariff barriers, develop safeguards, build roboust infrastructure and engage with stakeholders.

In conclusion, in order to make the Treaty work, Africa needs to learn from itself in terms of experiences from its existing RECs and also from the rest of the world. Eliminating tariffs is good but a larger impact on boosting trade requires the removal of nontariff barriers, reforms of services sector and improvement of trade facilitation measures.

THE STRATEGIC ROLES AFRICAN LAWYERS PLAY IN THE IMPLEMENTATION OF THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) WRITTEN BY: MARY MARTINS LL. B (BOWEN UNIVERSITY BL (NIGERIAN LAW SCHOOL)

Diverse Law Uncategorized August 21, 2021

THE BACKGROUND & OBJECTIVE OF AfCFTA

African Continental Free Trade Area (AfCFTA) is a flagship project of Agenda 2063 of the Africa Union- Africa’s own development vision. It was approved by the 18th ordinary Session of Assembly of Heads of State and Government, held in Addis Ababa, Ethopia in January 2012 which adopted the decision to establish a Continental Free Trade Area. This initiative whose immediate implementation would impact socio-economic development, enhance confidence and the commitment of Africans as well as the owners and drivers of Agenda 2063.[1] The aspirations of Agenda 2063 for a continental market with the free movement of persons, capital, goods and services, which are crucial for deepening economic integration, socioeconomic development, gender equality and, more broadly, enhanced competitiveness and industrial development among African nations. This Article seeks to provide insights into various aspects of the AfCFTA’s development; The next steps required to make the Agreement fully operational;The various component parts that remain to be negotiated, and; The role lawyers will play in the process.

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The impact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures. The African Continental Free Trade Agreement represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion.

Implementing AfCFTA would  boost the incomes of nearly 68 million others who live on less than $5.50 a day; boost Africa’s income by $450 billion by 2035 (a gain of 7 percent) while adding $76 billion to the income of the rest of the world; increase Africa’s exports by $560 billion, mostly in manufacturing; spur larger wage gains for women (10.5 percent) than for men (9.9 percent), and ; boost wages for both skilled and unskilled workers—10.3 percent for unskilled workers, and   9.8 percent for skilled workers.

According to Article 3 of the African Continental Free Trade Area, the general objectives of the AfCFTA are to:

(a) create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent and in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063;

(b) create a liberalised market for goods and services through successive rounds of negotiations;

(c) contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs;

(d) lay the foundation for the establishment of a Continental Customs Union at a later stage;

 (e) promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties;

 (f) enhance the competitiveness of the economies of State Parties within the continent and the global market;

(g) promote industrial development through diversification and regional value chain development, agricultural development and food security; and

(h) resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.[2]

STATUS OF RACTIFICATION BY EACH MEMBER STATE

The AfCFTA aims at accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations. As at 7th July 2021, 37 countries have deposited their instruments of ratification (ordered by date): Ghana, Kenya, Rwanda, Niger, Chad, Eswatini, Guinea, Côte d’Ivoire, Mali, Namibia, South Africa, Congo, Rep., Djibouti, Mauritania, Uganda, Senegal, Togo, Egypt, Ethiopia, Gambia, Sahrawi Arab Democratic Rep., Sierra Leone, Zimbabwe, Burkina Faso, São Tomé & Príncipe, Equatorial Guinea, Gabon, Mauritius, Central African Rep., Angola, Lesotho, Tunisia, Cameroon, Nigeria, Malawi, Zambia, and Algeria.[3]

Parliamentary/Cabinet approval has been received for Seychelles and Burundi. Somalia is pending.[4]

Implications of Ratifying & Domesticating a Treaty

Once a country signs a treaty, it is obliged under international law to refrain from any act which could defeat the object or purpose of the treaty until it formally revokes its signature. That a country is yet to domesticate a treaty into its local law does not shift its obligation with respect to the international framework.[5]

However, domestication of a treaty is particularly important because of the applicability of the provisions of the treaty in domestic courts. Furthermore, domesticating a treaty into local law makes provisions of such treaty justiciable in that jurisdiction. For instance, the African Charter which was domesticated by the first National Assembly of Nigeria in 1983 did not only make justiciable some provisions of Chapter II of the defunct 1979 Constitution that were hitherto non-justiciable, but also constitutes the legal basis for the enforcement of people’s rights in Nigerian court since neither the 1999 Constitution or any other law in force in Nigeria makes provision for the enforcement of people’s rights.[6]

Thus, in order for Nigerian courts to adjudicate over AfCFTA-related matters, the AfCFTA must be enacted into law by the National Assembly. This was iterated in the case of Abacha v. Fawehinmi (2000) 77 LCRN 1261 – 1262 where while interpreting section 12 of the Constitution, Nigeria’s Supreme Court echoed:[7]

An international treaty entered into by the Government of Nigeria does not become binding until enacted into law by the National Assembly. An international treaty has no such force of law as to make its provisions justiciable in our courts.”[8]

POTENTIAL BENEFITS OF THE AGREEMENT UPON RACTIFICATION

The AfCFTA has the potential to put in place mechanisms to address many of the non-tariff challenges frustrating intra-African trade. It could do so in a manner which will provide more certainty and predictability and improve the trade facilitation environment. The potential dynamic benefits of the AfCFTA are particularly important. Larger integrated markets may well be more attractive to investors and along with new investment could come new technologies and learning that could boost productive capacity.

African countries that ratify the agreement consent to liberalize 90% of tariff lines. This means that countries will reduce, and ultimately eliminate, tariffs on 90% of products traded under the AfCFTA. Least Developed Countries (LDCs) are expected to accomplish this over a 10-year period, and non-LDCs over a five-year period. Sensitive products, of up to 7% of tariff lines, will be fully liberalized over 13 years for LDCs and 10 years for non-LDCs. Finally, 3% of tariff lines will be excluded from tariff liberalization.

STEPS REQUIRED TO MAKE THE AGREEMENT OPERATIONAL

There are five additional instruments that will support AfCFTA operationalization. These are:

(1) Rules of origin, which ensure that products traded within the market actually originate from within the continent and are therefore subject to tariff preferences;

(2) An online portal for tariff negotiations, which facilitates discussions between states, customs unions and regional groupings on tariff liberalization;

(3) An online mechanism for monitoring, reporting and elimination of non-tariff barriers (NTBs); (4) A pan-African payment and settlement system, which makes it possible for African companies to clear and settle intra-African trade transactions in their local currencies; and

(5) The African Trade Observatory, which will provide stakeholders up-to-date and reliable trade data, as well as information about exporters and importers in countries.

National and Regional strategies have been adopted by Member States’ to ensure the implementation of AfCFTA. The United Nations Economic Commission for Africa (ECA) is playing a key role in providing support to the AfCFTA process. ECA is collaborating with the African Union Commission (AUC) and various partners to advocate for AU Member States’ AfCFTA ratification and implementation, sensitization around the AfCFTA and technical support to the negotiations. The technical support includes help with the preparation of negotiating texts and liberalization modalities, and assistance in developing tariff offers for the East African Community (EAC) and Economic Community of Central African States.[9]

East African Community (ECA’s) technical support also extends to assistance in the preparation of national AfCFTA strategies. Forty-one countries, including 21 (twenty-one) LDCs and 4 (four) Regional Economic Communities (RECs), are at various stages in preparing these strategies, which identify strategic areas of national interest and relevant interventions to ensure that countries and regions fully participate and benefit from the agreement. So far, 11 (eleven) of the 41 (fourty-one) countries and RECs have validated AfCFTA implementation strategies. The strategies aim at complementing the broader development framework of each country or region, especially in relation to trade and industrialization policies. Some are already implementing their AfCFTA strategies and have a National Committee in place to ensure proper coordination of implementation, policy coherence and effective domestication of the agreement.[10]

In Côte d’Ivoire for example, the government has released the AfCFTA National Committee budget to implement priority actions of the AfCFTA national strategy, and in September 2020, its committee trained 200 owners and operators of SMEs in four cities on the use of the continental online tool for monitoring, reporting and elimination of NTBs. Togo held a training for customs authorities and affiliated institutions to improve their knowledge of the AfCFTA. Sierra Leone is developing an industrial policy and special economic zones policy to create a conducive environment for the industrial sector to grow and contribute to the diversification of the economy.[11]

In Nigeria, Mr. Francis Anatogu, Senior Special Adviser to the President on Public Sector Matters, said that the Nigerian Customs Service, NCS, is now working on the administrative protocols for the implementation of the AfCFTA. Anatogu who is also the Secretary of the National Action Committee, NAC, for Nigeria’s AfCFTA implementation, also said that efforts are ongoing in most of the 36 states of the country for the takeoff of Nigeria’s participation.[12]

The National Action Committee, NAC, according to him, has already embarked on states mobilization programme, which has covered four states, in a bid to ensure that all Nigerian businesses are sensitized and prepared to take advantage of the scheme.[13]

THE ROLE AFRICAN LAWYERS PLAY IN THE OPERATION AND IMPLEMENTATION OF THE AGREEMENT

African Lawyers need to be strategically poised for this next level of trade in Africa and will be crucial to the successful implementation of the Africa Continental Free Trade Area (AfCFTA) Agreement. We need to familiarise ourselves and be proactive with the global trade trends and debates. This will greatly contribute to the success and competence in trade law and business in Africa. Also, African lawyers must in addition, continue to engage in negotiation, join professional associations and advocate for policy reforms as this will greatly contribute to the ease of doing business not only in Africa but globally.

A doctoral student at University of Toronto, Canada, Mariam Momodu at an interview with Africa Legal contributed to the role of lawyers in the implementation of AfCFTA, she said;

“African Lawyers have an added responsibility to be proactive while advising their clients, in light of the AfCFTA.  A direct implication of the AfCFTA will be increased regulatory competition among African countries. It is only natural for investors and entrepreneurs alike to be more inclined to locate or operate their business in a country with a more favorable regulatory climate. This could be on tough trade decisions surrounding questions like, for instance, how can clients increase their share of regional and continental markets? What immediate strategic decisions do clients need to take to position themselves for cross-border growth? What legal impediments might they face? By thinking ahead of clients, lawyers are not only adding significant value but will also be catalysts for the private sector involvement that is required for the AfCFTA to succeed.”

In the vast majority of cases, the dispute will fall within the commercial contract between the transacting parties and where dispute arises African lawyers will come to play and lawyers will make use of an appropriate and modern dispute resolution mechanism that will support the growth of intra-African trade. African lawyers serve as key personnel in the African market space and actively explore their participation in intra-African trade in goods, services and investment, which will drive great success to the implementation of the AfCFTA.

The legal status of corporations or business entities trading or carrying on business across one or more African countries vary from the informal to the formal. These include family businesses micro, small and medium sized enterprises (MSME) that, constitute the vast majority of business entities, as well as large companies.[14] The ability to access such business support services require the role of lawyers in order to prevent disputes arising from commercial transaction.

Generally, disputes can arise between two or more private, commercial or business entities. It may also include a state or a state agency performing a commercial transaction and acting in a commercial capacity. The current framework for the resolution of such commercial disputes are through litigation before national courts (1), mediation (2) or arbitration (3). For completeness, investment disputes between African states and African investors may also arise under these transactions and these may be resolved through investment arbitration- In all these capacities African lawyers have roles to play.

1. Litigation

The 54 independent African countries all have a State sponsored judiciary with clearly defined court hierarchies. In the vast majority of African states, these court structures are contained in their written constitutions which also provide detailed appeal structures.[15] Citizens of African states generally have constitutionally protected rights of access to their national courts to pursue the vindication of their legal rights. However, the timeline for pursuing claims before the courts of most African states is notoriously long,[16] with most of the judicial systems dating back to the colonial period, and with very little modernisation having been made. This inefficiency in the court systems is balanced with low court fees (in comparison to court fees payable in developed jurisdictions) which supports access to the courts and litigation as the primary dispute resolution mechanism.

The current reality however, is that only 17 (seventeen)of the 54 (fifty-four) African states have harmonised their business laws with a supranational court as the final arbiter of disputes arising from the business laws. One practical way for litigants to ameliorate the impact of the differences mentioned above, on their cross-border transactions, is to refer to African lawyers. Such referral will add to their transactions cost and cost of dispute resolution. This will have a negative impact on MSMEs and operators in the informal sector who are the main drivers of intra-African trade in goods and services.

2. Mediation

The word, ‘mediation’ is used in a very broad sense to refer to all non-adjudicative alternative dispute resolution (ADR) processes. The basic idea behind all such processes is to empower the disputants to manage their dispute and its resolution either by themselves or with the intervention of a third party neutral. Such processes align well with traditional dispute resolution processes of various pre-colonial African communities. These traditional processes (which remain in use) are applied to resolve all types of disputes including, civil, family, communal and commercial disputes. With reference to the enforcement of decisions from such traditional dispute resolution processes, each community formulated its own enforcement measures.

It is the flexibility of the process that makes mediation attractive. Thus, mediation, an attractive tool which empowers the parties to find solutions to their disputes with the help of a third party neutral, is a developing system, which must be encouraged in the implementation of AfCFTA. Hence, African lawyers will be sort to resolve dispute arising from intra-African trade vide this mechanism.

3. Arbitration

Arbitration is an adjudicative dispute resolution process in which the parties give the control or power to determine their dispute to a neutral third party, the arbitral tribunal. The tribunal determines the dispute and the rights and obligations of the disputants. In arbitration, the parties need to persuade the arbitral tribunal of the validity of their claims. This is unlike in most mediation processes where the disputants communicate with each other, even when the communication is through a third party neutral. In this way, arbitration is likened to litigation before national courts, only private, and the arbitrator is likened to a private judge. In arbitration therefore, the disputants receive a final determination or decision by the arbitral tribunal over their dispute, just as they do in litigation. This gives some degree of certainty and finality.[17]

Nation states accord a certain status to arbitral awards and the vast majority of African jurisdictions, accord to arbitral awards the same status as a final judgment of their national (first instance) courts.[18] This status is priceless to arbitration as a private dispute resolution mechanism. It effectively means that the arbitration process covers the equivalent of the first instance court proceeding that would have had jurisdiction over the dispute, only better. The arbitral hearing process is better because the findings of the arbitral tribunal on the facts generally, cannot be reopened and the award can only be challenged on very limited grounds and not open to full blown appeal as the judgment of a national court.[19] In addition, there are currently 38 African states that are members of the New York Convention under which foreign arbitral awards can be enforced or challenged also on very limited grounds, in 159 jurisdictions globally.[20]

As already mentioned, arbitration is a recognised dispute resolution mechanism in practically all African states, particularly for the resolution of commercial or business disputes. In support of this process, all but one, of the states in Africa (South Sudan) have enacted into law, modern (and in some cases not so modern) arbitration legislations.[21] Though there is no continent-wide arbitration law,[22] there is a uniform arbitration law binding on the seventeen OHADA member states.[23] Some of these national legislations are currently under review while, in our view, a majority of the laws need to be reviewed to modernise their provisions so they remain fit for use by sophisticated commercial parties. Interestingly, 55% of the respondents to the 2018 SOAS Arbitration in Africa survey, believe their national arbitration laws are effective with 45% believing their national arbitration laws are not effective or need review.[24] Thus there is legislative framework for the operation of arbitration in almost all African countries evidencing the acceptance of the dispute resolution mechanism by African States.

In conclusion, African lawyers needs a supportive judiciary to thrive. African lawyers and judges, over the years, have started making the transition from aversion to support Intra-African trade. Such support must be sustained through the continued: training of judges and lawyers, engagement between the national and continental trade communities, and African judiciaries, publication of commercial-related judgements from African judiciaries, and increased expert support for African legislatures revising their trade laws.

OPPORTUNITIES AND BENEFITS FOR AFRICAN LAWYERS IN THE IMPLEMENTATION OF AfCFTA

The overall consensus of the panel in the East Africa International Arbitration Conference (EAIAC)’s AfCFTA: Implementation and Dispute Resolution webinar, was that significant gains can be made from the African Continental Free Trade Area (AfCFTA)’s promotion of intra-Africa trade, with strong potential to promote industrialisation. The panel spoke positively of AfCFTA’s impact on trade, with keynote speaker Professor David Luke, coordinator of the African Trade Policy Centre at the United Nations Economic Commission for Africa, saying its implementation is much needed to create a free trade-type environment in Africa.[25]

At the panel discussion it was agreed that there will be an array of opportunities for legal practitioners to advise on compliance and implementation of the terms of AfCFTA, and for advising on the utilisation of the Dispute Resolution Mechanism (DRM). Luke also noted the importance of the service protocol, which enables practitioners to provide legal services outside their borders, whether that be directly, via commercial presence, or by establishing firms through mergers and acquisitions. Also at this seminar, a Director at Kenyan law firm Anjarwalla & Khanna, Luisa Cetina, emphasised the myriad of opportunities the agreement has brought to the African legal sector, especially in dispute resolution. Government and state bodies, as well as private companies, will all be looking for legal representation and guidance in relation to AfCFTA’s implementation, compliance and disputes arising under the agreement, she said.[26]

Anjarwalla & Khanna also gave a highlight on the huge demand for international trade lawyers across the continent. If a customs union is eventually adopted, and the full liberalisation of trade in Africa reached under AfCFTA, a lawyer trained in one African country could cross the border to work in a neighbouring country, explained Cetina, another great opportunity for legal practitioners.[27]

Numerous opportunities exist for the international legal community especially because Ghana is hosting the Secretariat. These benefits may not only be enjoyed by lawyers but also legal academics and even law students, some of which include:[28]

Foreign Direct Investors

Ghana hosting the Secretariat projects the country as a peaceful and politically stable nation. This will attract more foreign investors who may choose to establish businesses in Ghana. Potential investors (clients) all over the world may contact lawyers in their respective countries to facilitate doing business in Ghana. These lawyers may further require assistance from Ghanaian lawyers to register these businesses and offer related services. These international legal liaisons are beneficial for the legal profession.[29]

Opportunities in Dispute Settlement

Disputes are bound to arise with such trade organisations. Under AfCFTA, a dispute settlement body (DSB) is expected to settle these disputes with the assistance of a Panel. The Panel has a right to seek information and technical advice from any source that it deems appropriate, seek information from any relevant source and consult experts to obtain their opinion on any matter. Lawyers, judges and legal academics worldwide who have the relevant expertise may be useful in this regard. The knowledge and experience gathered from settling disputes arising from trade organisations from other continents will serve as excellent precedents and have persuasive effect.[30]

Academic Collaborations and Research

The Secretariat is required to organise training workshops and seminars for staff and state parties to build the capacity required for the implementation of AfCFTA on the continent. This offers a great avenue for international trade law academics to serve as facilitators for such seminars and trainings. New academic areas of study relating to the AfCFTA may also be rolled out in the various law faculties globally which will require experts and academicians with the requisite experience to teach.[31]

International Law Experience and Exchange Programs

Hosting of the AfCFTA Secretariat in Ghana presents an opportunity for International Law students to visit Ghana to witness some of the international dispute settlement mechanisms and undertake internships with the Secretariat. The Secretariat is likely to hold most of the dispute settlement sessions which will afford law students and practitioners worldwide a learning opportunity in international trade law.[32]

Ghana hosting the Secretariat comes with certain benefits and good prospects for the international legal community. The AfCFTA Secretariat being hosted in Ghana is a step in the right direction and the international legal community should brace itself to take advantage of the opportunities it presents.[33]

Conclusion

I will conclude with the words ofGreg Falkof, Partner, Evershed Sutherland, London and Kunle Ajagbe, Partner, AIDAN, Lagos, Nigeria in their article- Nigeria’s lawyers run the rule over free trade deal .[34]

“Every specialist area of legal practice, from corporate finance and employment to litigation, intellectual property and environmental law will require a degree of harmonization across a range of different African jurisdictions to allow for truly freer trade. Though AfCFTA will have the benefit of the European Union example to follow, the road ahead is far from smooth. African Lawyers are expected to play key roles in designing and then implementing the new policies.”[35]

ENDNOTES

 [1] https://afcfta.au.int/en/about accessed 6th August 2021

[2] Article 3, African Continental Free Trade Area (AfCFTA) Agreement

[3] https://www.tralac.org/resources/infographic/13795-status-of-afcfta-ratification.html accessed 6th August 2021

[4] Ibid

[5] https://www.lexology.com/library/detail.aspx?g=bdf24d01-f933-4773-bfc0-edd0f91e3b97 accessed 6th August, 2021

[6] Ibid

[7] Ibid

[8] Ibid

[9] https://trade4devnews.enhancedif.org/en/op-ed/implementing-afcfta-2021 accessed 6th August, 2021

[10] Ibid

[11] Ibid

[12] https://www.vanguardngr.com/2021/03/fg-steps-up-action-to-implement-afcfta-protocols/ accessed 6th August 2021

[13] Ibid

[14] According to a 2016 study by McKinsey Global Institute, 56% of the largest companies in Africa are wholly owned by Africans and these operate in food and agricultural sector. State owned enterprises account for 17% of these companies and operate mainly in resources, utilities and transportation sectors. The remaining 27% are foreign-based multinational corporations. See: https://qz.com/782196/mckinseys-africa-2016-reporthighlights-africas-fast-growing-corporate-companies/ [last visited 6th August, 2021].

[15] For some examples, see: Part VII of the 1999 Constitution of the Federal Republic of Nigeria (as amended); Chapter 11 of the 1992 Constitution of Ghana; Title VI of the 1990 Constitution of Benin Republic; Chapter 10 of the 2010 Constitution of Kenya; and Part 3 of Chapter 3 of the 2012 Constitution of Egypt

[16] One notable exception is Rwanda. According to the World Bank Ease of Doing Business Report, 2018, it takes 280 days from the filing of a dispute to the payment of the judgment sum. See: http://www.doingbusiness.org/data/exploreeconomies/rwanda#enforcing-contracts [last accessed 6th August, 2021].

[17] Arbitration awards generally have res judicata effect but are still subject to enforcement and annulment proceedings, though on limited grounds. See for example, Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration, (6th ed., Oxford University Press, 2015) pp. 559-560

[18] For the position under the laws of various African states, see, John Miles, Tunde Fagbohunlu and Kamal Shah, Arbitration in Africa, a Review of Key Jurisdictions, (Sweet & Maxwell, 2016); and Lise Bosman (general editor) Arbitration in Africa: A Practitioner’s Guide, (Kluwer Law International, 2013).

[19] 1 National arbitration laws also set out the grounds for such challenge. See for example, arts. 34 and 36 of the UNCITRAL Model Law

[20] The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958 with text available at: https://uncitral.un.org/sites/uncitral.un.org/files/mediadocuments/uncitral/en/new-york-convention-e.pdf [last visited 6th August 2021].

[21] See Table 2 below for a list of these national arbitration laws.

[22] This is in the sense of a similar agreement to the European Convention on International Commercial Arbitration of 1961 available at: https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII2&chapter=22&clang=_en [last visited 6th August 2021].

[23] The Uniform Arbitration Act, 1999 was revised in November 2017 effective March 2018.

[24] SOAS Arbitration in Africa Survey at p. 32

[25] https://iclg.com/alb/15796-afcfta-a-window-of-opportunity accessed 6th August 2021

[26] Ibid

[27] Ibid

[28] https://www.lexology.com/library/detail.aspx?g=d3064b43-60e0-47e0-b38b-57935811f906 accessed 6th August 2021

[29] Ibid

[30] Ibid

[31] Ibid

[32] Ibid

[33] Ibid

[34] https://iclg.com/alb/8500-nigeria-slawyers-run-the-rule-over-free-trade-deal accessed 6th August 2021.

[35] Ibid

ELECTRONIC AND DIGITAL EVIDENCE ADMISSIBILITY OF E-SIGNATURE IN NIGERIA: LIMITS, BURDEN, AND OPPORTUNITY WRITTEN BY: MARY MARTINS LL. B (BOWEN UNIVERSITY) BL (NIGERIAN LAW SCHOOL)

Diverse Law Uncategorized August 21, 2021

INTRODUCTION

What is Evidence?

Black’s Law Dictionary defines “evidence” as something, including testimony, documents and tangible objects that tends to prove the existence or non- existence of an alleged fact.

This article seeks to examine the mode of admissibility of electronically generated evidence in Nigeria. 

Types of Evidence?

These classification according to legal writers and classification in compliance with the provisions of the Act. These are; Primary and Secondary Evidence, Direct or Testimonial Evidence, Circumstantial Evidence, Real Evidence, Documentary Evidence and Electronic Evidence.

What is Electronic and Digital Evidence?

In discussing electronically generated evidence, first, one must establish that the basis of admissibility of this type of evidence is contained in Sections 4-13 of the Evidence Act, 2011 which elaborate on details of fact, popularly referred to as “relevancy of facts”.

Prior to the Evidence Act 2011, the various laws on evidence from 1958 to 2011, were silent on the admissibility of electronic evidence. Admissibility of such evidence depended on fulfilling the requirements that governed the admissibility of documents generally.

Therefore, there is paucity of reported Nigerian cases touching on the admissibility of electronic evidence in the Nigerian legal proceedings.

A case had been decided by the Supreme Court on the admissibility of electronic evidence. That is the case of Dr Imoro Kubor v Hon. Seriake Henry Dickson 2013) 4 NWLR (Pt.1345), 534.

Also, Section 84 of the Evidence Act makes elaborate provisions for the admissibility of electronically generated evidence. From the wordings of section 84(1), it is clear that the admissibility of the computer generated evidence can only sail through only and if the conditions spelt out in section 84(2) of the Act is fulfilled.

The conditions referred to in subsection (i) of this section are;

a)  that the documents containing the statement was produced by a computer during a period over which the computer was used regularly to store or process information for the purpose of any activities regularly carried on over that period, whether for profit or not, by anybody, whether corporate or not, or by any individual;

b)   that over that period, there was regularly supplied to the computer in the ordinary course of those activities information of the kind contained in the statement or of the kind contained in the statement of the kind from which the information so contained is derived;

c)   that throughout the material part of that period, the computer was operating properly or if not, that in any respect in which it was not operating properly, or was out of operation, during that part of that period, was not such as to affect the production of the document or the accuracy of its contents and

d)  that the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of those activities.

What is Electronic-Signature and What Is the position of the law on E-signature?

An electronic signature is not defined in any Nigerian statute, but the U.S Electronic Signatures in Global and National Commerce Act, defines it as “ an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign a record.”

According to Section 17 of the Cybercrimes (Prohibition and Prevention etc) Act, 2015 provides that “ electronic signature in respect of purchases of goods, and any other transactions shall be binding.” Section 93(2) of the Evidence Act, 2011 acknowledges that an electronic signature satisfies the rule of law as to signature. The joint provision of these laws grants legitimacy to an online transaction that requires a signature and effectively made it binding on parties to it as well as satisfying the requirement of the law.

Section 93(3) of the Evidence Act, 2011 provides that “a signature may be proved in any manner, including by showing that a procedure existed by which it is necessary for a person, in order to proceed further with a transaction, to have executed a symbol or security procedure for the purpose of verifying that an electronic record is that of the person.” The provision covers the procedure for authentication, proving the execution and verifying the authenticity which is more apposite in the context of Digital Signature.

Digital/E-signature is binding in Nigeria and admissible in Nigerian Courts as long as the requirement of the law is satisfied. Section 84 of the Evidence Act, 2011 provides the procedure for tendering of electronic evidence.

What are the limits, burden and Opportunity of Electronic-Signature in Nigeria?

According to Section 93 of the Evidence Act 2011, electronic signatures are accepted as satisfactory evidence that a document was properly signed. This is further affirmed by section 17 (1) (a) of the Cybercrimes (Prohibition, Prevention, Etc) Act, 2015 (the Act) which provides that electronic signatures relating to purchase of goods and any other transactions are binding. Any other transactions would include transactions to provide services.

However, Section 17(2) (a)-(h) of the Cybercrimes Act provides certain transactions to be excluded from contractual transactions that are valid by virtue of electronic signatures, such as:

Creation and execution of wills, codicils, and or other testamentary documents; Death certificate; Birth Certificate; matters of family law such as marriage, divorce, adoption and other related issues; Issuance of court orders, notices, official court documents such as affidavit, pleadings, motions and other related judicial documents and instruments; Any cancellation or termination of utility services; and others listed in the Act.

Conclusion

The Supreme Court in the case of Esso West Africa Inc. V. T. Oyegbola (1969) NMLR 19, decided almost five decades ago said that “the law cannot be and is not ignorant of the modern business methods and must not shut its eyes to the mysteries of computer.”

Hence, the law cannot be blind to the reality of our daily living in modern life. The internet has reduced the traditional idea and necessitated the law to stay abreast and relevant. The use of digital/e-signature has no doubt ease doing of transactions and it is hoped the scope can be expanded to accommodate other transactions currently restricted under Section 17(2)(a) – (h) of the Cybercrimes Act, 2015. It is hoped that filing of court processes can be fully automated soon and even service of processes can be done in the same way to ease the stress of legal practitioners and everyone concerned.

It is pertinent to state that the Council of Legal Education and the National Universities Commission should find a way to introduce the teaching of electronic evidence in Nigerian universities as a core course; this should encourage or compel law students (as potential lawyers) to acquire knowledge of computers skills.

In conclusion, Electronic signatures can also provide a means of progressing transactions at this time as they are valid and enforceable. To prevent future disputes, contracting parties can amend existing contracts to include an addendum stating electronic signatures would be binding on the parties and where relevant, agree on procedures for confirming/authenticating electronic signatures. The addendum may also include a clause on sufficiency of documents signed in counterparts.

INTERNATIONAL TRADE AND BUSINESSES; AN INSIGHT INTO NIGERIAN REGULATORY FRAMEWORK

Diverse Law Uncategorized August 13, 2021

INTERNATIONAL TRADE AND BUSINESSES; AN INSIGHT INTO NIGERIAN REGULATORY FRAMEWORK

BY

PHILIPS ADEKEMI AND EDUN OLUWATIMILEHIN

  1. INTRODUCTION

Globalization and the varying human and capital resources have greatly emphasized International trade as a great driver of economic growth and development and it is not hyperbolic to state that no country can survive without international trade. Nigeria is ranked as one of the African countries with the largest market for goods and services. It is estimated that over US$ 500 million worth of goods and services are produced in Nigeria. Hence, the impact of domestic and international trade on the Nigerian economy cannot be undermined. No doubt, here is a great connection between international trade and economic growth and development.

Economic growth is measured by the Gross Domestic Product in Nigeria. GDP[1] is the total monetary or market value of all the finished goods and services produced within a country in a specific period. It functions as a comprehensive measurement of the country’s economic health[2]. Nigeria has a GDP estimate of $410 million out of which the oil and gas sector accounts for 80 percent of this figure.[3]

This article seeks to examine the operation of trade and businesses in Nigeria vis a vis the regulatory framework.

  1. CONCEPT OF A FREE TRADE ZONE

Free trade is an economic policy that allows countries to import and export goods without any tariff barriers. It is derived from the concept of free market idea in international trade. By producing goods the country has a comparative advantage, free trade allows for an increase in the export of goods and services of the producing country which in turn advance the economic growth of such country.

A Free Trade Zone or Foreign Trade Zone[4] is a special geographical area where goods and services are manufactured, imported, and re-exported under certain regulations and generally not subject to customs duty. Free Trade zones are usually situated around areas with geographic advantages for trade. The rationale for exempting businesses that operate in the free trade zone is to boost foreign direct investment, increase employment rate in the regions the FTZs are located and overall generate income for the country. Nigeria has two Free Trade Zones: the general and specialized free trade zones. The Oil and Gas Export Free Zone is the only specialized zone regulated by the Oil and Gas Free Zones Authority. The Nigeria Export Processing Zones Authority regulates the general free trade zones in Nigeria.

  1. OPERATION OF FREE TRADE ZONES IN UAE

There are over thirty free zones operating in Dubai. A Free Zone Authority offers business licenses to foreign-owned businesses. Each free Zone is designed around one or more industry and only offers Licenses (for a Free Zone Enterprise (FZE), to Companies within those categories. The Free Zones in the UAE region have greatly improved the economic growth of the country as these free zones offer services in the trading, tourism, and industrial sectors. The Dubai Multi Commodities Centre is home to over 7,000 registered companies and actively employs over 1.2 million citizens. Also, the Dubai International Financial Centre contributes 35 percent to the rate of the Foreign Direct Investment of the country’s economy.  The Jebel Ali Free Zone under the management and supervision of the Jebel Ali Free Zone Authority contributes about 42% to the Foreign Direct Investment of the Company.

  1. The Nigeria Export Processing Zones Authority

Is the regulatory body for the management of all Export Processing Zones in Nigeria. The body is responsible for promoting and facilitating local and international investments in Nigeria into licensed Export Processing Zones. Since its establishment, NEPZA has promulgated investment procedures, operational guidelines, and regulations for Export Processing Zones in Nigeria. The regulatory body has also encouraged private and public sector involvement in the operation and development of Export processing Zones. It is important to mention that trade activities permissible in the Export Processing Zones include:

  • Manufacturing of goods for export,
  • Warehousing, Freight forwarding and Customs Clearance
  • Handling of duty-free goods, Banking, stock exchange and other financial services
  • Insurance and re-insurance.
  • International Commercial arbitration services.

  • REGULATORY FRAMEWORK ON FREE TRADE AND COMPETITION IN NIGERIA

The outbreak of the novel Covid-19 pandemic has affected the eventual signing and commencement of the African Continental Free Trade Agreement (“AfCFTA or the Agreement”). It is in this vein that African Head of States have scheduled to consider January 1, 2021 as the new implementation date for the Agreement.[5]. Nigeria in the bid to create jobs and diversify her economy and increase foreign exchange has introduced several policies focused on empowering manufacturers in country and for the exploration of the various economic opportunities in the Nigerian market.

  • Approval of Foreign Investments and Protection to business trade in Nigeria

The need for a centralized and coherent investment promotional effort in Nigeria led to the establishment of the Nigeria Investment Promotional Commission (“the Commission”) under the NIPC Act its functions include but not limited to coordination, administration of investments and provision of advice to the Federal Government (FG) on the general development of the Nigerian economy[6]. Section 19 and 20 of the NIPC Act mandates foreign investors intending to establish a business enterprise in Nigeria to incorporate or register the entity under the provisions of the Companies and Allied Matters Act (CAMA). While the NIPC Act does not set out the criteria a proposed foreign investment must satisfy before admission into Nigeria, it however ensures that an admitted foreign investor must be capable of meeting the developmental goals of Nigeria. Also, the Presidential Enabling Business Environment Council (PEBEC) was established to provide an action plan on the removal of all difficulties affecting the ease of doing business in Nigeria.

  • Protection against Expropriation and Nationalization

Section 25 of the NIPC Act protects foreign investors and local investors from the risks of expropriation and nationalization. The law further states that in any event where the FGN expropriate or nationalize the asset of a foreign investor, such affected investor is entitled to compensation without any delay from the Federal Government of Nigeria. In addition, the Act [7] allows for easy repatriation in convertible currency of compensation. This clearly reveals the aim of the act which is to provide a great measure of assurance for investors.

  • Protection against Currency Risk

The ability to repatriate convertible currency to meet obligations ranks top among several factors a foreign investor considers in reach a decision on the country to invest. .[8] By implication, it is guaranteed under the NIPC Act that the Nigerian government will not with the instrumentality of the law or any administrative Act prevent the transfer of proceeds of an investor’s investments.[9] While the section is silent as to the computation of time relating convertibility of fund out of the host state, the computation of a reasonable time is considered under the Multilateral Investment Guarantee Agency Convention (MIGA) which places an obligation on contracting parties to act within a reasonable time after the receipt of the investor’s application for a transfer[10].

  • Effective Dispute Resolution

The medium of settling investment disputes under an investment code or treaty is as important as the protection of trade and investment in a country. Section 26 of the NIPC Act is instructive with regards to the mode of settlement of investment disputes in Nigeria. It states:

                (1)  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.

                (2)  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;

                (a)  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

                (b) 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

                (c)  In accordance with any other national or international machinery for the settlement of  investment disputes agreed on by the parties.

                (3) 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 Disputes Rules shall apply.

In view of the above, a framework on how disputes which arise out of trade agreements or FDI will be resolved will instill a level of confidence in the Nigerian market wherein an investor can settle any trade or commercial transaction related disputes In line with international best practices.

  • INVESTMENT OPPORTUNITIES FOR MSMES IN NIGERIA UNDER THE AfCFTA

Nigeria is Africa’s largest market and a gateway to the African business hub with an increasing population of over 200 million, a consumer market of almost $500bn yearly, and a middle class of circa 29 million people. The commencement of AfCFTA is forecasted to boost intra-Africa trade through the creation of a single market of over 1.2 billion people and a cumulative GDP of over $3.4 trillion. Therefore, the impact of AfCFTA on MSMEs largely depends on the preparedness of various sectors of the economy.[11] AfCFTA, arguably the largest free trade agreement in the world is set to remove over ninety percent of tariffs on goods traded among member States. The agreement amongst other things allows a free flow of movement within the continent, thereby enabling the creation of a single market economy.

  • How does MSMEs benefit from AfCFTA?

The focal point of the AfCFTA is the promise of a zero tariff for over ninety percent on goods traded between African States. The effect of this is that manufacturers or producers can increase their production rate as their goods can now be sold locally and generally to a larger African market. The removal of trade duties helps to reduce the production cost of several goods hence making them competitive across all markets. [12]

Creation of New Market

One of the major challenges faced by MSME operators in Nigeria is their inability to compete with foreign counterparts. This AfCFTA seeks to solve this challenge as Nigerian manufacturers will be able to export and explore the opportunities available within the markets in Africa to sell their goods. We believe that this will allow for a fair competition.

Attraction of foreign investments

The commencement of AfCFTA breaths a fresh air to the several factors that affect foreign investment in Nigeria. The agreement will allow investors to set up their manufacturing factories close to where raw materials are accessible and allow the importation of foreign currency by foreign investors.

Creation of Jobs

The commencement of AfCFTA will allow for easy movement across the borders of member States. By implication, it is projected that the increase in trade activities will require business hubs across board to seek the employments of talents from various parts of the continent and solidify its staff strength. This will in turn increase the creation of jobs and lower the unemployment rate in the signatory countries.

Increase Export activities

The commencement of AfCFTA seeks to ensure an increment in the export activities of primary producers in countries where raw materials are available in large quantities. The finance, logistics, real estate sectors are expected to witness a major boost in their business due to the increase in the demand of these services.

  • Overview of Trade Competition in Nigeria

The Federal Competition and Consumer Protection Act regulate competition in the Nigerian trade sector. There are however specific sector legislations. The FCCPA establishes the Federal Competition and Consumer Commission and the FCCPT. The responsibilities of the FCCPC[13] AND FCCPT[14] include:

  1. Adequate market regulation
  2. Protection of businesses
  3. Ensure the access of all citizens to safe products
  4. Secure the protection of rights for all consumers in Nigeria
  5. Promote fair and efficient competitive markets in the Nigerian economy.

It is believed that the FCCPA would help promote economic competitiveness in the country and strengthen the framework for encouraging and supporting small and medium scale businesses. The law seeks to give a breather of hope to consumer of various goods and services from unjust trade practices in the Nigerian sphere.

Application

The FCCPA applies to a body or corporate agency of the Federal Government or a body corporate or agency of a subdivision of the Federation, if such body corporate or agency engages in commercial activities, Federal, State and Local Government Agencies of Nigeria that engages in commercial activities and all commercial entities aimed at making profit and geared towards the satisfaction of demand from the public. The Commission also has the power to conduct investigations either on its own accord or at the request of any person or body corporate into a sector of the economy or into a particular type of agreement across various sectors especially where it appears that there are grounds for believing that a monopoly situation may exist in relations to the production, distribution or export of goods and services.

  • Competition in the Nigerian Oil and Gas Sector

Nigeria is the tenth largest oil producer in the world and the third largest in Africa. Its economy is largely dependent upon its oil sector as it accounts for ninety-five percent of Nigeria’s foreign exchange earnings. A large percentage of the oil produced in Nigeria is produced through joint venture, hence the presence of International Oil Companies. The upstream and downstream sectors form a major viable component of the oil sector as it contributes over ninety percent of the exports of the country. The Nigerian Oil and Gas Industry Content Development Act (Local Content Act) is one of the principal legislations that regulate the exploration, distribution and marketing of oil and gas in Nigeria. The Act applies to all operations in the Nigerian oil and gas industry including Exploration and Production/Service Companies.

The Act seeks to promote indigenous participation in the oil and gas industry as Nigerian independent operators shall be given exclusive consideration in the award of oil blocks, oil field licences and in all projects for which contract is to be awarded in the oil and gas industry[15]. The Act establishes the Nigerian Content Development Monitoring Board; the Board is saddled with the responsibility of ensuring the continuous growth of Nigerian content in all oil and gas transactions and projects in the Nigerian Oil and Gas Industry. [16]

To a large extent, competition in the Nigerian Oil and Gas sector is regulated by the Local Content Act and the Federal Competition and Consumer Protection Act as well as other sector specific laws. While the Local Content Act seeks to promote indigenous participation in the oil and gas sector, in reality we see that the

sector is majorly dominated by foreigners and multinational companies as they possess the monetary and technical resources in exploring our major resource.

  • Conclusion

Stakeholders have expressed their fears on the implementation of AfCFTA such as loss of job and the probability of dumping goods in the economies of member States. While these fears are quite genuine, they do not override the numerous benefits of the agreements. In addition, Trade Liberalization has over the years not proven counter-intuitive especially where there is an established regulatory framework.  Additionally, the commencement of the agreement will create jobs as many industries will expand businesses in other member States.  While the agreement is set to commence at a future date, Governments of member States should lend their support in ensuring the implementation of AfCFTA by taking proactive steps in ensuring that the economic space in their country allows the AfCFTA thrive.


[1] Gross Domestic Product

[2] Investopedia.

[3] Data by Country economy.com

[4] As referred in other jurisdictions.

[5] https://iclg.com/alb/10078-nigeria-embraces-a-free-trade-future accessed on the 2/5/2020

[6]https://uk.practicallaw.thomsonreuters.com/w0164262?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

[7] Section 3 of the Nigeria Investment Protection Commission Act

[8] Section 24 of the Nigeria Investment Protection Commission Act.

[9] Section 24 of the NIPC Act and 15 of the Foreign Exchange Monitoring & Miscellaneous Provision Act (FEMMPA)

[10] https://connectnigeria.com/articles/2019/12/how-the-afcfta-will-impact-small-businesses-in-nigeria/amp/ accessed on the 3/5/2020.

[11] https://punchng.com/regulatory-framework-for-foreign-investment-in-nigeria/ accessed on the 4/5/2020.

[12] https://nairametrics.com/2019/07/08/how-afcfta-affects-your-business-benefits-and-disadvantages/ accessed on the 4/5/2020

[13] Federal Competition and Consumer Commission

[14] Federal Competition and Consumer Tribunal

[15] Section 3(1) of the Local Content Act

[16] Section 5 of the Local Content Act.

Publicity Committee

Diverse Law Uncategorized July 22, 2021

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Diverse Law Uncategorized July 21, 2021

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