Corruption remains one of the greatest barriers to foreign investment in Africa and investors should be prepared to take extra measures to protect their business and reputation, a new report by global law firm Hogan Lovells has revealed.
Foreign investors are also looking beyond traditional investment destinations like Kenya, Nigeria and South Africa, citing unmanageable corruption levels among their reasons, according to the firm’s Global Bribery and Corruption Review
Meanwhile, Kenya’s neighbor Tanzania is gaining traction as a favorable investment option following the election of President John Magufuli and his strong stance against corruption.
“To increase responsible investment, a number of African leaders have made public their stances on anti-bribery and corruption. In the last six years, presidents Buhari, Condé, Magufuli of Nigeria, Guinea, and Tanzania respectively were each democratically elected to the presidency of their countries on promises to tackle corruption. They are also enshrining their anticorruption attitudes in law,” says the review.
Kenya is catching up though, with the most recent major step being President Uhuru Kenyatta’s assent to a Bill against bribery in the private sector in December 2016, in a move to extend the fight against corruption from the public sector.
Hogan Lovell’s market-leading global Investigations and White Collar Fraud (IWCF) team wrote the seventh annual edition of the Global Bribery and Corruption Review.
“2016 saw an uptick in FCPA enforcement, and increased international cooperation coupled with the FBI’s three new dedicated teams indicates that 2017 will likely see a further increase in coordinated, cross-border, corporate enforcement actions in 2017,” said Crispin Rapinet, global head of the IWCF practice at Hogan Lovells.
The review examines the latest international developments and significant cases in anti-bribery and corruption regulation and enforcement, and anticipates trends for 2017.
The document also considers Africa’s commitment to creating a conducive environment for international investors, especially concerning tackling corruption. The continent continues to attract foreign direct investment from various quarters.
With a market of one billion people, including a growing middle class, disposable incomes are changing as well as consumer habits. China is a big foreign investor into Africa; indeed, almost all African countries benefit in some way from Chinese investment. Construction, manufacturing and financial services account for some 50% of China’s foreign direct investment (FDI).
“For various reasons, bribery and corruption remain rampant throughout the continent. That’s partly because, historically, the economy has been run in a way that makes it hard to detect bribery and corruption and partly because it seems to have become pretty much normalized. The barriers to doing business are not coming down: there’s a massive gap in infrastructure, for example, and there’s widespread corruption,” says the review.