ALN-Legal-Notes-October-2015

ALN is an alliance of independent top-tier African law firms.
BOTSWANA | BURUNDI | ETHIOPIA | KENYA | MALAWI | MAURITIUS | NIGERIA | RWANDA | SUDAN | TANZANIA | UGANDA | ZAMBIA
VOLUME NO 14 | ISSUE 3 | OCTOBER 2015
Inside this Issue
THE AFRICA HOTLIST
Where to Place your Bets
GLOBAL BUSINESS IN THE UAE
Changes to the Business and Legal Environment
WHY INVEST IN AFRICA?
Views from a Regulator and an Investor
EAST OR WEST, SOUTH IS BEST?
Investing through South Africa
ISLAMIC FINANCE IN KENYA
New growth opportunities
FAST ON THE METRO
Recent legal developments in Ethiopia
TIGHTENING THE COPPER BELT
Developments in Zambia’s mining laws
And so much more ...

A WORD FROM THE CHAIRMAN
A
frica and her potential cannot be ignored. With the continent accelerating towards the realisation of its potential, the business world
has taken notice and continues to look for and find linkages to the continent. These connections have been integral to Africa acting
as the engine for growth for the rest of the world.
With many businesspeople using Dubai as a base from which to pursue opportunities across Africa, the city has quickly evolved into a financial
and operational hub serving as a strategic link between the continent and investment interest in the East. Global businesses are also settling
on Dubai as the ideal launch pad for African operations. Indeed Dubai has become a catalyst for the growth of trade between African nations
and the rest of the world.
It is with this in mind that ALN established its regional office in Dubai, a decision that served and continues to serve both our African and
international clients well. This has allowed ALN to promote business with the continent and serve as a bridge between investment interest
in the East and opportunities in Africa. In addition to this, we have continued to host our international conference in the city for the second
consecutive year following its great success last year. Our conference continues to provide an environment in which investors searching for
information and lucrative investment opportunities on the continent are able to meet with African business people and stakeholders, and
broker business deals. We also, due to our understanding of the continent, are able to promote discussions on opportunities on the continent
and solutions that help investors navigate the business environment in Africa.

We, as the leading alliance of top tier independent law firms in Africa, are also best placed to connect business people with the best legal
advice offered by our over 600 lawyers working from fifteen cities across Africa, who live and work in Africa and therefore best understand
the issues on the ground. We also have strong representation across Africa and are therefore able to provide you with first class excellent legal
services.
This edition of Legal Notes serves to highlight our legal expertise, the ALN Conference, as well as the various positive changes we are
experiencing at ALN; such as the adoption of a new member in Ethiopia and the move of ATZ Law Chambers, our member in Tanzania.
I hope that you will enjoy reading this edition and that it will provide you with a great deal of insight into the legal developments in Africa.
Dr. Cheick Modibo Diarra
ALN Chairman
cmd@africalegalnetwork.com
Africa: Building Bridges

LegalNotes 1
Africa: Bridging the Gulf
It gives me immense pleasure to extend a personal warm welcome
to you. Thank you for attending the ALN Annual Conference on
21st and 22nd October 2015. AC&H and ALN are honoured to
be your hosts.
This year’s theme is: “Africa: Bridging the Gulf”
Africa remains the leading FDI destination globally, and with
her economies abuzz with old and new opportunities. Africa
undoubtedly remains a “hot” investment destination.
Dubai is acknowledged globally as a strategic investment hub
permitting companies in the GCC, Asia and Europe to route
investments into Africa. The UAE’s first world infrastructure and
conducive taxation regime, which includes a network of double
tax agreements with a number of African countries makes it the
perfect conduit for investment into Africa. Further, the DIFC with
its common law based legal and judicial system provides comfort
to investors in terms of enforcement of legal rights.
The UAE is becoming one of Africa’s leading investment partners,
and accounted for 6% of total FDI into Africa in 2014. At ALN and
AC&H, we have worked and advised on numerous investment
transactions into Africa. AC&H was also instrumental in bringing
about the signing of the Memorandum of Guidance between
the DIFC Courts and Kenyan Courts in relation to the mutual
recognition of judgements. The Memorandum was signed at the
2014 ALN annual conference in Dubai.
And with you, we aim to continue to be part of the African
success story. We have arranged an interesting array of panellists,
including leading investors, bankers and government officials who
will discuss topical business and trade issues relevant to Africa.
And of course, I cannot sign-off without assuring you that we
will make all efforts to make your stay pleasant and comfortable.
Shukran!
Atiq Anjarwalla
Managing Partner, AC&H Legal Consultants
aanjarwalla@ach-legal.com
Africa: The Whole Nine Yards
Welcome to this Edition of Legal Notes.
Africa as a whole remains a hot investment destination, and we at
ALN continue to beat the African drum and share the story of
Africa’s development.
The ALN Annual Conference is taking place in Dubai, UAE in
October 2015.
With this in mind, we have prepared a bouquet of articles
highlighting the opportunities for growth and the legal
developments in ALN countries.
In our editorial feature article, Africa’s Hotlist, we focus on 4 of the
top 10 investment destinations in Africa: South Africa, Nigeria,
Kenya and Ethiopia.
We speak to Senior Partners in ALN firms in these countries, and
get their candid thoughts on why their jurisdictions have received
so much investor focus, and what they are doing to stay at the top.
We are delighted to feature a double dose of investment insight in
our Guest Column, having been privileged to interview two leading
faces of investment in Africa: Mrs. Anne Muchoki, director of the
Kenya Investment Authority, and Mr. Ashish Thakkar, Founder and
Managing Director of Mara Group, which has business operations
in 25 countries in Africa.
This, and so much more from our member countries makes this
Edition an insightful read.
As always, ALN is on hand to walk with you “the whole nine yards”
in getting your deal through.
Anne Kiunuhe
Editor
Partner, Anjarwalla & Khanna
ak@africalegalnetwork.com

2 LegalNotes
CONTENTS
This publication is designed to inform readers of legal issues in various African jurisdictions.
The contents of this newsletter are intended to be of general use only and should not be relied upon without seeking
specific advice on any matter. If you would like to subscribe to Legal Notes or any other ALN publication, visit
www.africalegalnetwork.com. For further information on Legal Notes, contact legalnotes@africalegalnetwork.com
Editorial Team: Anne Kiunuhe - ak@africalegalnetwork.com | Elizabeth Karanja - ewk@jmilesarbitration.com |
Wanjiru Mutung’u Kariuki - wm@africalegalnetwork.com | Faith Kaari Ben - fkb@africalegalnetwork.com
THE AFRICA HOTLIST
Where to Place your Bets .........................................................................................................................................................................................................................................3
An Regulator’s View - Anne Muchoki; Ken Invest...................................................................................................................................................................................................6
An Investor’s View - Ashish Thakkar; Mara Group..................................................................................................................................................................................................7
YOU CAN’T HAVE IT ALL
Local participation issues in African investment.......................................................................................................................................................................................................8
Investing through South Africa..............................................................................................................................................................................................................................10
ALL EYES STILL ON RWANDA
Fostering investment via new legal regime ..........................................................................................................................................................................................................12
REIN IN THE NAIRA
New foreign exchange controls in Nigeria............................................................................................................................................................................................................14
New growth opportunities....................................................................................................................................................................................................................................16
NEW HOPE FOR THE MINERS
Uganda lifts ban on export of unprocessed minerals...........................................................................................................................................................................................18
Changes to the Business and Legal Environment.................................................................................................................................................................................................20
ALN SPECIAL
ALN Annual International Conferences and 2015 hosts......................................................................................................................................................................................21
UNDERGROUND FORTUNES
Regulation of the mining sector in Kenya.........................................................................................................................................................................................................22
WHEN MANY CEASARS AGREE
Kenya’s expanding network of double tax treaties...............................................................................................................................................................................................24
LOOKING INTO THE PRISM
New transparency laws in Tanzania’s mining sector.............................................................................................................................................................................................26
FAST ON THE METRO
Recent legal developments in Ethiopia..................................................................................................................................................................................................................28
WHAT’S IN THE PIPELINE
New oil & gas laws in Tanzania..............................................................................................................................................................................................................................30
TIGHTENING THE COPPER BELT
Developments in Zambia’s mining laws................................................................................................................................................................................................................32
ROLLING OUT THE RED CARPET
Proposed Changes to Special Economic Zones in Kenya.....................................................................................................................................................................................33
TENANCY LAWS IN ZAMBIA
A Landlord Nightmare, a Tenant’s Prerogative......................................................................................................................................................................................................34
SECURITY UNDER THREAT
Tests to Mortgagee Rights in Uganda...................................................................................................................................................................................................................36
NAVIGATING THE SHIFTING GOAL POSTS
Murky M&A Regulation in Tanzania.....................................................................................................................................................................................................................38

LegalNotes 3
THE AFRICA HOTLIST
Where to Place your Bets
Introduction
Africa, as a whole, remains THE hot investment
destination, enjoying an extended courtship
with many investment partners. But whilst the
“honeymoon” is not yet over, to be wise, the
Continent needs to make good preparations to
ensure a sustainable “marriage”.
Firstly, the numbers: According to the FT’s fDi
Intelligence, even as the global FDI market grew
by a margin 1% in 2014, Africa enjoyed a 65%
increase in capital investment, to an estimated
USD 87 Billion, accounting for 13% of global
FDI. Over 450 companies invested in Africa in
2014, with a total of 660 FDI projects.
Among the top 10 investment destinations in
sub-Saharan Africa are Nigeria, South Africa,
Kenya and Ethiopia.
In this edition of Legal Notes, we take a closer
look at these hot destinations. What makes
them so attractive? What are the challenges?
How can they stay at the top? We pose these
questions to Senior ALN Partners who have
Elizabeth Karanja
Assistant Director
JMiles & Co.
ewk@jmilesarbitration.com
Anne Kiunuhe
Partner
Anjarwalla & Khanna
ak@africalegalnetwork.com
Karim Anjarwalla
Peers say: “He is
very diligent and
hard-working and
his thoroughness
distinguishes him.”
- Chambers Global
2015
but will definitely revolutionise company and
business law and further cement Kenya’s
position as a hub”, Mr. Anjarwalla adds.
South Africa is another gateway which leads
as the top FDI destination in Africa. Aside from
resource wealth and a good legislative
framework, its mature financial infrastructure is
a major driver for investment. According to
Mr. John Smelcer, Partner at Webber
Wentzel in Johannesburg, the country is home
to some of the continent’s biggest lenders and
insurers. This has not only encouraged FDI, but
has also seen South African corporates
diversifying their portfolios offshore. An
example of this is Brait’s recent private equity
acquisition of retail and fitness industry assets
in the UK.
Ethiopia boasted over 30 major FDI projects in
2014, totalling USD 2.8 Billion. Mr. Mesfin
Tafesse, founder of Mesfin Tafesse &
Associates in Addis Ababa attributes the
growth to relative political stability, existing
market demand, and attractive incentive
packages to investors.
With a large labour force, a burgeoning middle
class and abundance in natural resources,
decades of experience in these powerhouse
economies, and get their valuable insight.
What is with the allure?
Mr. Karim Anjarwalla, Managing Partner at
Anjarwalla & Khanna in Nairobi, attributes
Kenya’s USD 2.2 billion worth of FDI in 2014,
and its position as a gateway to Africa to several
factors, including: resource wealth;
decentralisation of power with the devolved
system of government; a growing middle class;
Kenya’s geo-political position as a port country
and logistical hub; and improvements in law
and policy. “A new Companies Act was enacted
in September 2015. It is a welcome development
from the old law, which is based on the 1948
English Companies Act. It has teething issues,
New Business Laws In Kenya!
Business Regulation In Kenya Is Set To
Significantly Change With The Introduction
Of New Laws In September 2015, Including:
• The Companies Act, 2015, Which
Overhauls The Current 1948
Companies Act.
• The Insolvency Act 2015 Which
Consolidates And Overhauls Laws
Relating To Insolvency In Kenya
Previously Contained In The
Bankruptcy Act And The 1948
Companies Act.
• The Business Registration Service Act,
2015 And The Special Economic Zones
Act, 2015.
• Anjarwalla & Khanna will host a
seminar in November 2015 to discuss
the new laws.

4 LegalNotes
Africa’s largest economy, Nigeria, does not
disappoint. It raked in over USD 10 billion in
FDI. Mr. Gbolahan Elias, Senior Partner at
G. Elias & Co. in Lagos also attributes investor-
friendly government policies and Anglophone
education and skills as among the big drivers
for investment in Nigeria.
Hot sectors and trends among
investment partners
With most countries in Africa having
development agendas to reach middle-income
status in the next 10 to 20 years, a huge focus
for investors and governments has been
exploitation of natural resources, and the
development of physical infrastructure.
According to Mr. Tafesse, Ethiopia’s 5 main
sectors are presently manufacturing (in which
projects doubled from 2013), agriculture,
electricity and power, infrastructure and mining.
Some of Ethiopia’s large projects include the
Gilgel Gibe 3 project which has been
commissioned with 1,850 MW of power into
the national grid, and the Great Renaissance
Dam (GERD) which will inject 6,000 MW of
power into the national grid.
Africa for renewable energy projects.
Mr. Anjarwalla notes this to be in line with the
Government’s Vision 2030 development blue
print, which places a lot of focus on developing
geothermal and wind energy. Other major sectors
were: finance, in which Anjarwalla & Khanna
advised on the Government’s USD 2 Billion
sovereign bond and subsequent tap-in for USD
750 million; IT and telecommunications; and real
estate.
According to Mr. Elias, major sectors and
transactions in Nigeria included FMCG, in which
G.Elias & Co. advised on the development of Arla-
Tolaran dairy products factory in Lagos, and real
estate, in which Eagle Hills Abu-Dhabi; a UAE real
estate company, entered into a joint venture with
the Federal Government of Nigeria to develop
Centenary City, Abuja’s city within a city.
.
Which sectors need an increased
focus?
There has been a lot of focus on industrial
development sectors like manufacturing,
infrastructure, oil & gas and mining. This is
welcome as it has created large scale
employment and given Africa a great
opportunity to exploit untapped resources.
However, the past year has seen shocks in the
minerals and metals market, with the global
price of iron ore falling by over 40% due to
weakened demand from China, and further
shocks in the oil & gas market, with the price of
oil falling by 60% in the six months between
June 2014 and January 2015.
Further, Africa still does not have a strong base
of investment in essential sectors like agriculture,
basic housing, education and health. Although
these sectors are top priorities under the United
Nation’s Millennium Development Goals
(MDGs), they have been largely ignored when it
Gbolahan Elias
is highly regarded
for his “intellect,
experience and
ability to deliver.”
Chambers Global 2015
comes to FDI. Putting it in perspective, out of
the major FDI projects in 2014, food and
tobacco accounted for 2% of total FDI, being
USD 2.6 Billion. It is not surprising, as FDI is
profit driven. There needs to be more
government engagement and promotion for
FDI in these sectors, in order to achieve holistic
development.
Mr. Smelcer notes that there is a great need to
invest in education and training, especially as
Africa is forecasted to have the world’s largest
labour force by 2040. “In South Africa,
secondary school enrolment is only 40% and
UNESCO forecasts that Africa will be home to
half of the world’s illiterate. This trend has to be
reversed,” he says. Mr. Anjarwalla agrees on
the need to focus investment in essential
sectors. In agriculture, he points out that the
need for development is not just in developing
the large scale agriculture projects, but in
improving all value chains, including processing,
packaging, transportation and storage.
According to Mr. Tafesse, “the [Ethiopian]
Government’s policy focus on the manufacturing
industry accounts for low priority of some of
these sectors. There needs to be attractive
incentive packages and strong promotional
work, backed by information”. Agro-processing,
cotton farming and low cost housing have huge
potential in Ethiopia, which is being under-
utilised.
The deal with the Middle East
The Middle East has definitely been coming in
strong into Africa and the UAE flew the flag at
number 7, with USD 5 Billion invested over 32
projects. This was a 10% increase from
investment in 2013, and represented 6% of
total FDI into Africa. The top UAE investments
into Africa are Nigeria’s Centenary City in Abuja
by Eagle Hills Abu Dhabi and Julphar
Pharmaceutical’s investment in Ethiopia. In
Kenya, Al Futtaim acquired a stake in Kenya’s
CMC Motors in 2014 for USD 90 million. Majid
Al Futtaim (MAF) Retail has leased 16% of the
Two Rivers mall in Nairobi ahead of its completion
in October 2015.
From Saudi Arabia, ACWA Power and its
partners have won two contracts to build two
concentrated coal power plants in Morocco, and
South Africa has seen a lot of activity in
financial services, oil & gas, energy &
infrastructure and FMCG. Mr. Smelcer notes
Abraaj Group’s private equity acquisition of
Libstar and its subsidiaries, who are heavily
involved in FMCG in South Africa as one of the
landmark transactions. Another notable FMCG
transaction was SABMiller’s soft drinks unit’s
merger with the Coca Cola Company’s South
Africa operations to create an African bottling
giant.
In Kenya, energy has perhaps been the biggest
sector. For 2014, the country was ranked first in
Mesfin Tafesse
Commentators
describe him as “a
first-class lawyer
and a top choice in
Ethiopia.” -
Chambers Global
2015

LegalNotes 5
are building a third in South Africa. From Qatar,
Qatar National Bank (QNB), the Gulf’s largest
bank became a dominant shareholder in
Ecobank Transnational Incorporated ,the leading
pan-African bank after increasing its stake to
23.5 %.
There is expected to be a lot more investment
from the Middle East coming into Africa.
The buzz on local content
African governments have been keen to foster
local inclusion in development projects, and an
issue that has been the subject of recent debate
is local content.
For South Africa, the Government has developed
a range of policy instruments to support
localisation, in addition to BBBEE, there are
localisation targets in the Preferential
Procurement Policy Framework Act which
targets localisation in renewable energy.
Mr. Smelcer considers that by and large,
investors are not deterred by local content
requirements as long as there is policy certainty
and continuity.
Kenya also has sectoral local content legislation
proposed in the mining and oil & gas sectors.
Although local content is a good thing for
training, employment and skills & technology
transfer, it should properly considered, and
balanced to be in tune with local realities. As an
example, Kenya has developed draft local
content regulations within its Petroleum
(Exploration, Development & Production) Bill
2014. Under the proposed regulations, a
petroleum agreement or licence will only be
granted to a company where at least one of the
shareholders is an indigenous company (51%
local owned) with at least 5% equity participation
in the oil company. There are also provisions for
80% local participation in executive and senior
management positions and 100% local
participation in non-managerial and other
positions. There is a need to weigh up
whether certain skills are available locally and
perhaps stagger the requirements, so that local
content is mutually beneficial and not misused
for the benefit of a few well-connected
individuals.
Staying ahead of the game
Africa is regarded by many as “high risk, high
reward”, but the risks have improved drastically
over the past 5 years. Of course, the continent is
not a one-size fits all, and experiences vary from
country to country.
For Nigeria, the key areas for improvement as
seen by Mr. Elias are infrastructural deficits;
poorly developed regulations; insecurity; slow
moving court systems and corruption. There
needs to be better resourced courts; consistency
of government policy; and greater government
commitment in tacking insecurity.
Insecurity remains an issue for Kenya, but
Mr. Anjarwalla notes that there have been
improvements, with the Government dedicating
USD 2.28 billion to the army and the police in its
2015/2016 budget. What the Government
needs to work on better, is managing the
perception of insecurity. Other areas that need
work in Kenya are: corruption, which the
increasing digitisation of Government services
should reduce; and improving efficiencies and
transparency in the judiciary.
The Ethiopian Government is already hard at
work on improving the business environment in
the context of its Growth and Transformation
Plans (GTPs) I and II. GTP I (2010 – 2015) and
GTP II (2015 – 2020) are Ethiopia’s stepped 10
year plans focused on achieving middle income
status by 2025. At present, the Government is
aggressively establishing industrial parks in all
the 11 regions in Ethiopia. There are efforts in
reforming the civil service and judiciary. Further,
the Ethiopian Investment Commission is
providing a one stop service of investment
incentives. Land acquisition for investors as all
land is the property of the State, cannot be
subject to sale or exchange, and is allocated to
investment projects on a government priority
basis. Mr. Tafesse reasons that a solution to this
could lie in the development and expansion of
industrial zones.
Conclusion
Africa is still the hottest frontier.
The continent is abundant with resources, some
of which are still being discovered. There is a
growing population and a rapidly expanding
middle class. There is a base for both skilled and
unskilled labour, and a ready market for goods
and services. With investor appetite and
improving government policies and engagement,
the best is yet to come.
John Smelcer
Heads the Oil &
Gas Sector Group
at Webber Wentzel
and his expertise in
Africa related
projects has been
recognized by
Chambers Global
and IFLR1000.

6 LegalNotes
Q: Why invest in Africa?
Mrs. Muchoki: Investors are driven by returns.
Africa has high returns. African now has the
youngest population in the world. GDP per
capita income is growing and people have
more purchasing power. With innovative
financial solutions like Mpesa, everyone has
their bank in their hands.
Q: Which sectors are seeing the
most focus?
Mrs. Muchoki: A major sector is Infrastructure.
Various governments have ambitious
development agendas. Companies like GE are
heavily invested in power projects. Agriculture
is now receiving increased attention, with
investment projects set in Kenya for pyrethrum,
cotton (1 million acre Galana farm), and the
Sondu Miriu irrigation scheme. In Health, GE
and Phillips have invested in cutting edge
medicalequipmentleasing. Telecommunications
and IT is also a major sector, and the Kenya
government is making headway in its plans to
develop Konza City, which is set to be Africa’s
Silicon Valley. In September 2015, at the
UN Headquarters in New York, President
Kenyatta received a prestigious sustainable
development award from the International
TelecommunicationsUnionforthegovernment’s
use of ICT in sustainable dev elopment.
The President also announced plans to launch
Enterprise Kenya, a fund aimed at supporting
innocation in ICT.
Q: Africa has had diplomatic visits
from the East and the West.
What effect have these
diplomatic efforts had on
investment?
Mrs. Muchoki: it is simple, business people
listen to politicians. Diplomatic visits bring with
them a show of confidence and legitimacy - if
your President can go there, so can you. In July
2015, President Obama made a “homecoming”
visit to Kenya where he also presided over the
6th Annual Global Entrepreneurship Summit.
This had an impact as American investors
pledged more to Kenya. This year Kenya
will host the World Economic Forum (WEF)
Ministerial meeting in December, the first
time this has been held in Africa. At the
UN General Assembly in September 2015,
President Kenyatta and President Shinzo Abe
of Japan agreed that Kenya will in 2016
host the Tokyo International Conference in
African Development (TICAD), the first to be
held in Africa.
Q: Are there particular investment
sectors you feel are largely
ignored in Africa and that the
government or investors should
focus on?
Mrs. Muchoki: Sectors such as agriculture and
health which were previously on a back burner
are now taking centre stage. More than sectors,
are the people. There should be greater
empowerment and opportunities for women
and the youth. Over 75% of the population is
the youth. They need mentorship and
opportunities in employment and
entrepreneurship. Our diaspora is staggering
with high calibre decision making professionals.
They should be motivated to come back and
impact their skills at home in Africa.
Q: What are the main impediments
to current and future investment
in Africa?
Mrs. Muchoki: Availability of information is a
big issue. There needs to be better developed
information portals for investors to access
information on areas of potential investment,
and requirements and regulations for investment
in chosen sectors. In Kenya, there is a
cabinet committee chaired by the President
which is looking into this, and KenInvest
is working toward a one-stop-shop of
investor information. Sector-wise, the Kenyan
Ministry of Mining is also working on a central
database of mining information. Most
governments have worked hard in the recent
past to tackle setbacks to investment such as
poor legislation and regulation, fragmented
business set-up requirements and poor
infrastructure.
Q: In your view, how best can
African government and their
peoples derive the highest
benefits from foreign
investments?
Mrs. Muchoki: There needs to be more training
and mentorship of locals. Local content
and inclusiveness laws are necessary. KenInvest
is working on a National Investment Policy to
be concluded in December 2015 that is aimed
at effecting more local participation. For this to
be feasible, local businesses need to pull
their weight, and work harder to be investor –
ready. The trend of local businesses not having
income returns, audited accounts and other
international business best practices needs to
end.
Q: Any last gems of advice?
Mrs. Muchoki: Kenya is like a champagne
bottle waiting to pop. Our biggest asset is
people. Come here, engage the people, and
your investment will flourish.
Africa has had a lion’s share of global FDI. But that is not enough.
The continent still needs more investment in order to meet its
development objectives. What have governments done in order to
ensure this? What plans do they have for the future? We speak with
Mrs. Anne Muchoki, Chairperson of the Kenya Investment Authority
and an investment advisor in her own right, on an African country’s
take on investment. Anne Muchoki is also a director at KCB Bank. She
holds a BA (Hons) Degree in Politics and Economics from the University
of London and an MBA from Brunel University, London, as well as an
MSC in Commercial Property Management from Liverpool, John
Moores University. She is an Associate of the Royal Institution of
Chartered Surveyors and a registered real estate agent.
Anne Muchoki
Chairperson
Kenya Investment Authority
(KenInvest)
A Regulator’s View

LegalNotes 7
identify the skills gap as being one of the key
risks to doing business in Africa. When Mara set
up a call center business from scratch a few
years ago, we had to recruit several thousand
people in ten different countries. The skills did
not exist but we put training mechanisms in
place and today there is an oversupply of the
skills we require.
Q: In your view, how best can
African government and their
peoples derive the highest
benefits from foreign
investments?
Mr. Thakkar: Equitable and strategic
partnerships are important for Africa to reap
the highest benefits from foreign investments.
On a company level, we have found this model
of partnerships works for us. We look for
partners with international companies with
substantial industry expertise and merge this
with our deep local understanding of the
region. Small and medium enterprises make up
90% of Africa’s businesses. This is an attractive
sector with tremendous potential if the right
investments and policies are deployed. They
need to grow and be more sophisticated. We
need a practical and innovative way to address
the skills and training gap for many of our
youth. I strongly believe mentorship can provide
the crucial horizontal and vertical interaction
amongst peer groups and industry leaders and
will lead to fewer mistakes in the long term.
Q: Any last gems of advice?
Mr. Thakkar: Africa is the next big thing, there
is no doubt about that. For foreign investors,
the biggest mistake is to treat it as a homogenous
entity. We have many different cultures,
parliaments, political and regulatory systems.
You cannot engage with Africa from a distance
- you need seek first-hand knowledge of the
market. With that, the future is very bright.
Q: Why invest in Africa?
Mr. Thakkar: There has never been a better
time to invest in Africa. The population is
growing and more people are moving to cities,
where they are taking up jobs, making more
money, and demanding housing, energy, food,
telecommunications and financial services.
Q: Which sectors are seeing the
most focus?
Mr. Thakkar: Over the next decade, we
will see the commercial, residential and
industrial real estate market taking off.
Telecommunications is growing, and will
continue to do so. There is definitely
an agricultural revolution taking shape in
Africa, which is essential for food security.
Financial services is nascent, which is why
in 2013, Bob Diamond and I launched Atlas
Mara, with the goal to be sub-Saharan Africa’s
premier financial institution. Two-thirds of
adult Africans do not have a bank account, let
alone access to savings, credit or insurance. We
plan to be a game-changer in this sector by
providing innovative banking services.
Q: Africa has had diplomatic visits
from the East and the West.
What effect have these
diplomatic efforts had on
investment?
Mr. Thakkar: Diplomatic efforts have made
their mark. The U.S Africa Summit, convened
by President Barack Obama is a great example
of concerted efforts to change the nature
of investments on the continent. There was
a clear message from the Summit - Africa
offers exciting investment possibilities for
US companies. To generate shared prosperity
and guarantee a stable business environment,
investment must be responsible in order
to create a more equitable investment climate
in Africa.
Q: Are there particular investment
sectors you feel are largely
ignored in Africa and that the
government or investors should
focus on?
Mr. Thakkar: The future is youth and
technology. Success stories of mobile payment
show that, if deployed appropriately, the mobile
ecosystem has the potential to address Africa’s
development challenges and drive economic
growth. Mobile penetration is already showing
promising results - at 52% in 2012 and is
expected to grow to around 79% by 2020. Our
exciting new venture, Mara Sokoni will
capitalize on Africa’s growing technology
sector, dominated by the youth, and will
provide an eco-system of technology platforms
designed to connect Africans across the
continent through e-commerce, m-commerce,
last mile logistics, and a social media platform.
Q: What are the main impediments
to current and future investment
in Africa?
Mr. Thakkar: On a macro level, infrastructure
remains a key obstacle to investment and trade
within Africa. On a micro level, many businesses
The Africa investment scene is more vibrant than ever. Why is
this so? We are privileged to get an investor’s view from
Mr. Ashish J. Thakkar, Executive Chairman of Mara Sokoni and
Founder of Mara Group and Mara Foundation. Mr. Thakkar
started his first business in 1996 at the age of 15 with a $5,000
loan. Since then, he has driven the growth of the Mara Group
from a small IT business in Uganda to a globally recognised
multi-sector investment group. Mara Group employs over 11,000
people across 25 African countries in sectors spanning technology,
banking, real estate and infrastructure. Mr. Thakkar also serves
as Chair of the United Nations Foundation, Global
Entrepreneurship Council.Ashish J. Thakkar
Founder & Managing Director
Mara Group
An Investor’s View

8 LegalNotes
Introduction
Africa has developed exponentially over the past
10 years. From 2001- 2010, 6 of the world’s 10
fastest-growing economies were in sub-Saharan
Africa.
What is undeniable is that Africa is no longer
the investment “wild west” of the 20th century
and early 2000s, when inexperience, corrupt
governments and desperation for investment
caused laxity in regulations, endemic corruption,
and carte blanche investment contracts. Now,
with improvements in education, law and
constitutionalism, and access to information,
most African countries have a more literate
and knowledgeable populace, with high
expectations of its governments and of investors.
Africa has the youngest population in the world.
Local participation issues in African investment
Elizabeth Karanja
Assistant Director
JMiles & Co.
ewk@jmilesarbitration.com
YOU CAN’T HAVE IT ALL
According to the World Bank, between 2000
and 2008, Africa’s working age population (15-
64 years) grew by 25% from 443 million to 550
million. The continent’s labour force will reach
1 billion by 2040, more than China and India.
These people need employment, food and
social and environmental security.
Governments have reacted through the
development of legislation on local content
and local participation; taxation and royalties;
environmental protection; protection of rights
and interests of local communities; and labour
and immigration legislation. Most of the
legislative and policy changes, and in some
instances, some of the community action has
been legitimate. However, in some instances,
investors have been the subject of politically
motivated legislative changes and community
demonstrations. Investors should therefore
carefully consider these new emerging issues,
and make conscious efforts to be compliant with
local legislation and circumstances. In certain
other unjustified circumstances, contracts
together with international treaty regimes
can offer investors adequate protections for
investment.
Growing local content legislation
Although the nature of local content may
differ among countries, this entails recruiting
and training locals, procuring local goods
and services, local equity participation, and
provision of social amenities such as health and
water facilities. Local content legislation is now
common in oil and gas production, mining,
agriculture, and telecommunication.
Among the sector specific local content
legislation are: Ghana’s Petroleum (Local
Content and Local Participation) Regulations
2013 which apply to the petroleum sector;
Uganda’s Petroleum (Exploration, Production
and Development) Act 2013 which provides
for employment of Ugandans and contracting
local goods and services; and Tanzania’s Model
Production Sharing Agreement 2013 which has
local content requirements in the extractive
industry.
There is a trend in some countries towards
extending local content in nearly all sectors
as seen in South Africa’s Broad Based Black
Economic Empowerment (BBBEE) policy and
Nigeria’s Local Content Act which covers local
content in foreign investments generally.
Hamisi Mgandi
Lawyer
JMiles & Co.

LegalNotes 9
Some legislative or social community action can
make investment unviable. To guard against
this, investors are advised to:
(a) negotiate comprehensive contractual
provisions when contracting with
governments, such as: change in law;
change in tax; and force majeure;
(b) in large development investments, negotiate
government support letters or government
guarantees;
(c) take advantage of investment risk insurance
and investment risk guarantees provided by
large development finance institutions, such
as the World Bank’s Multilateral Investment
Guarantee Agency (MIGA) and AfDB’s
political risk insurance cover;
(d) take advantage of protections offered
under Bilateral Investment Treaties (BITs),
if there are any between the investor’s
State, and the target African State. BITs
offer protections such as fair and equitable
treatment, protection from nationalisation,
among others; and
(e) take advantage of investment dispute
resolution mechanisms such as under the
International Centre for Settlement of
Investment Disputes (ICSID). About 45
African countries have signed the ICSID
Convention.
Conclusion
With a better understanding of local legislation,
access to information and the right advisors,
investment in Africa should continue to be
highly rewarding.
Developing labour and
immigration laws and policy
Most African countries have been enacting
progressive employment legislations that adopt
majorly the International Labour Organisation
(ILO) Conventions. These laws regulate
minimum wage; minimum working hours; paid-
up leave and overtime; and protection against
fair termination of employment contracts.
Labour issues that have caused interference in
foreign investment include the right to form
or join trade unions and the right to strike.
Perhaps the most famous is the August 2012,
mining workers’ protests in South Africa, which
resulted in over 70 fatalities and affected billions
of dollars of revenue for Lonmin, the world’s
largest supplier of precious metal (the Marikana
protests).
Various countries, including Kenya, have
immigration laws which allow employment
of expatriates on the basis that there are no
skilled locals for the post, and which require,
as a condition for work permits, the training of
locals.
.
Taxation reforms
Tax laws have seen several reforms
featuring increased government participation,
introduction of indirect taxes, increased
royalties based on gross rather than the net
back value, increased income tax rates and
transfer pricing, introduction of capital gains
tax, and benefit-sharing requirements with the
local communities.
For example, in 2012, Ghana increased its
royalties from 3% to 5% of the revenue
accrued and its corporate income tax rate for
mining from 25% to 35%. Zambia raised its
withholding tax from 0% to 15%. In January
2015, Kenya introduced a capital gains tax of
5% on property and equities and a separate
CGT regime for extractive industries which is
effectively 30% for residents and 37.5% for
non-residents. The Finance Act 2015 however
abolished CGT for listed securities effective 1st
January 2016.
Increased protection of rights and
interests of local communities
TThere has been increased recognition and
protection of the rights and interests of
communities living around major investment
projects. Such developments include recognition
and protection of rights of aboriginal peoples to
land based on traditional values and customs;
enhanced protection of the right of the locals
to participate in all decisions that are likely to
affect them; and the locals’ right to free, prior
and informed consent in major investments.
Most environmental laws contain provisions for
environmental and social impact assessments
and public participation.
Investment protection mechanisms
Investors should strive to comply with local
laws and regulations and understand the
realities on the ground, including any social
and community issues which may affect
the investment.
[JMiles & Co.] provides specialist services in the
fields of international arbitration, investigation
and legal consultancy out of Africa. JMiles
& Co. has represented clients in investment
arbitration, and international commercial
arbitration before tribunals of the ICC, LCIA
and ad hoc arbitration. JMiles & Co. is also a
member of ICC Fraudnet.

10 LegalNotes
Introduction
South Africa has always been positioned as a
platform for organisations to move into other
parts of the continent. As a result, depending
on the industries in which they operate, many
organisations have chosen to establish their
regional headquarters there. It is not difficult to
see why.
Why the attraction?
South Africa has strong capital
markets and a robust services
sector. It is home also to the
continent’s biggest lenders
and largest insurers. This
financial infrastructure
coupled with growth
opportunities not only in
new sectors (such as oil and
gas), growing sectors (such
as agribusiness, food &
beverage, retail, transport,
telecommunications and
others) and traditional sectors
(such as mining and metals), is
what makes South Africa an
attractive base for foreign direct
investment into the country and onto
the continent.
Adherence to the rule of law and South Africa’s
strong legislative framework has always played
a positive role in securing foreign direct
investment. The 2014 Foreign Direct Investment
(FDI) Confidence Index by A.T. Kearney ranks
South Africa as the thirteenth most attractive
destination for FDI globally. Pricing and
Investing through South Africa
consumer purchasing power also count in
South Africa’s favour.
As a result of these factors, business leaders
remain optimistic about future prospects
despite short-term challenges, and the
country definitely remains a gateway into
Africa.
Other countries, such as Nigeria and Kenya, are
also seen as potential gateways into their
regions and rather than be seen as competitors,
each of the gateways should find ways to
collaborate on telling the African growth story
for the benefit of the whole continent.
A number of South African corporates
have also diversified their portfolios
by acquiring assets offshore.
Examples of these include
transactions completed by
Woolworths, Oceana, and
Brait, the latter of which
represents a private equity
firm acquiring retail and
fitness industry assets in
the United Kingdom.
Sectors driving
growth in South
Africa
Financial services, private
equity, oil and gas, energy and
infrastructure, and retail are the
sectors which are most actively
driving growth. We have noticed that
industries serving the emerging middle
class, particularly the fast-moving consumer
goods (FMCG) market in Africa, have received
increasing focus.
One example of this is the Abraaj Group’s
acquisition of Libstar and its subsidiaries, which
is a precedent-setting private equity transaction
Christo Els
Senior Partner
Webber Wentzel
Christo.Els@webberwentzel.com

LegalNotes 11
banking or insurance spaces under one
regulatory body.
Essentially, all legislation and additional
regulation of legislation often creates work for
law firms and we are aware of numerous new
laws and regulations which will come into force
in the near future.
Challenges faced by foreign
investors
Africa has numerous legal systems and the
challenges investors face can differ depending
on which region or country is involved.
Stumbling blocks could include not knowing
which legal system applies, as well as the
uncertainty relating to the application of
regulations. However, uncertain regulations and
related delays are found throughout the world,
and are not Africa specific.
There is huge potential for economic growth in
Africa, which is a large and complex market.
Regulations alone do not generally hinder
business in the region and could essentially be
enabling, provided that there is certainty
regarding their application. At times the
uncertainty of application, and the delays that
are caused by this, are what hinders business
rather than the regulations themselves.
Conclusion
Doing business in Africa is no more risky than in
many other countries or jurisdictions. Africa
comprises many emerging economies which, by
their nature, provide less certain environments,
but these risks are offset by the higher growth
margins which can be attained.
and represents a unique investment into the
FMCG sector in Africa by a global fund. This
transaction, among others, demonstrates
investor confidence in the pan-African FMCG
sector. It also comes at a time when the number
of private equity deals in Africa is the highest
since the global financial crisis of 2008. A
further example in the FMCG sector is the
merger of SABMiller’s African soft-drink units
with South Africa’s second-largest Coca-Cola
bottler and with the Coca-Cola Company’s local
operations to create an African bottling
champion.
Although the mining industry is currently under
severe pressure due to the commodities cycle,
this sector still drives significant work flow as
mining companies restructure their operations.
Legislation supporting investment
in South Africa
All investment plans announced by the
government have the ability to have a positive
impact on the economy. In particular, the
increased investments into infrastructure and
the renewable energy projects announced by
[Webber Wentzel] is one of
South Africa’s leading law
firms providing clients with
innovative solutions to their
most complex legal issues.”
the government should see significant
opportunities for job creation and economic
growth.
South Africa is gearing up for major inward
bound investment off the back of the Gas IPP
programme being driven by the Department of
Energy and the National Treasury that will seek
bids to import LNG into South Africa’s market,
develop gas-fired power and be a catalyst for
developing South Africa’s gas economy. The
investment opportunity will be sizeable and
provide investors with a way to gain exposure
to the significant potential presented by the
emerging frontier oil and gas industry in South
Africa and the wider region.
The Promotion and Protection of Investment
Bill should also provide more certainty around
investments and is expected to be further
refined and debated; the amendments to the
Black Economic Empowerment Codes of Good
Conduct came into force earlier this year and
may cause companies to re-evaluate their
status in relation to the amendments; and the
Financial Sector Regulation Bill (Twin Peaks)
seeks to regulate financial institutions in the

12 LegalNotes
[K-Solutions & Partners]
stands out in Rwanda
for its highly respected
business law practice,
which includes activity in
banking, mining, telecoms
and real estate.”
Introduction
Rwanda is a raving success story on the African
continent. The country emerged from decades
of intense civil war and genocide against the
Tutsi in 1994, to a period of remarkable
stability, which has provided a backdrop for
steady economic growth.
Real GDP has increased at an average of 8%
over 2008-2014 period and nominal GDP
reached USD7.5 billion in 2013. The growth of
GDP per capita in 2013 was USD 693 from USD
644 in 2012 and the GDP target is USD 1,240
by 2017. Rwanda is expected to reach about
USD 1.12 billion of FDI by end of the year 2015,
compared to just over USD 103 million in 2004.
It is no wonder that Rwanda was ranked to be
among the top ten African best investment
destinations in an August 2015 report by South
Africa-based Rand Merchant Bank.
The economy is dominated by value added
ALL EYES STILL ON RWANDA
Fostering investment via new legal regime
Julien Kavuruganda
Partner
K-Solutions & Partners
Julien@ksolutions-law.com
Emmanuel Muragijimana,
Associate
K-Solutions & Partners
emmanuel@ksolutions-law.com
agricultural and service activities. There has also
been increased FDI in other sectors such as
natural resources. A good legal and regulatory
regime is central to investment, and Rwanda
has been growing steadily in this regard.
Rwanda has also been ranked among the safest
countries in the world according to the Gallup
Global Law and Order 2015 report. Rwanda has
also been recognised by the UN Secretary
General as the 5th largest contributor of peace
keepers worldwide.
Finally, Rwanda has been on several occasions
ranked among developing countries in the
world that are dynamic performers when it
comes to social and economic growth.
A new legal framework for
investment
Rwanda’s investment law has been in place since
2005. There were challenges in that: investment
law incentives were not directed to priority
activities; additional incentives given to companies
created market distortions; and some incentives
created loopholes that only a few big businesses
exploited to reduce their tax.
It was decided that the law should be repealed and
replaced with a more flexible and adapted law
which incentivized priority sectors and removed
identified loopholes. It is in that perspective that
the law n° 06/2015 of 28/03/2015 relating to
investment promotion and facilitation (the
Investment Code) was formulated in May 2015, to
replace the law of 2005.
Set priorities
Under the old investment law, the Rwandan
Development Board (RDB) was established in
2008 to facilitate and fast track new investment
projects. RDB has chosen energy, agriculture,
tourism and ICT as priority sectors in which to
target investment.
The rationale of the Investment Code is to have
more targeted incentives that will not only aid
investment promotion but also provide
opportunity for the emerging sectors to grow
and thrive.
Under the Investment Code, all business sectors
shall be open to private investment regardless
of the origin of the investor (local and foreign).
Investors are encouraged to invest in priority
economic sectors such as export, industrial
manufacturing, energy, tourism, mining,
transport, information and communication
technologies, financial services and construction
of low-cost housing.

LegalNotes 13
Rwanda
Rwanda’s government has
implemented impressive regulatory
reforms since 2008. These include
a new Intellectual Property law, a
law on arbitration and conciliation
in commercial matters (2008), a law
establishing the Kigali International
Arbitration Centre (2010) and a new
company law adopted in 2009. The
World Bank Group ranked Rwanda
amongst the world’s top business
climate reformers in 2011 and 2012.
Currently, Rwanda is ranked 46th out
of 189 economies in the World Bank’s
Doing Business Report 2015.
Rights and protection of investors
Under the Investment Code, a foreign investor
may invest and purchase shares in an investment
enterprise in Rwanda and shall be given equal
treatment with Rwandan investors with regard
to incentives and investment facilitation.
Investors’ capital is protected. Under Article 8 of
the Investment Code repatriation of capital and
assets is allowed upon fulfilling all tax
obligations in Rwanda. Investors have a right to
own private property, whether individually or in
association with others. The Investment Code
guarantees that no action to expropriate an
investor’s property in public interest shall be
taken, unless the investor is given fair
compensation in accordance with relevant
laws.
Investors’ intellectual property rights and
legitimate rights related to technology transfer
are also required to be guaranteed.
Investment registration
In order to qualify for the incentives provided
for by law, an investor is required to register
with the RDB. An investor who fulfils the
registered investment enterprise shall be
amicably settled. When an amicable settlement
cannot be reached, parties are required to refer
the dispute to arbitration as agreed upon in a
written agreement between both parties.
Rwanda is also enforcing foreign awards in less
than 30 days. Where no arbitration procedure is
provided under a written agreement, both
parties should refer the matter to the competent
commercial court in Rwanda which can issue a
decision in 2-3 months.
Conclusion
Rwanda has come a long way since 1994. It has
established a stable government, secured peace
and safety in its territory. It has made great
strides in restoring and reforming the economy
and in 2010 was named by the World Bank as
the world’s top reformer. It has articulated an
inspiring vision of its future – Vision 2020 – that
sees the country reaching middle-income status
over the next 5 years.
The country is on the cusp of development, and
with the new Investment Code, there are
greater things to be seen in the future.
registration requirements referred to in the
Investment Code is required to be issued with
an investment certificate within 48 hours from
the date of receipt of the complete application
by RDB.
Investment incentives
Under the Investment Code, investors who
have secured investment certificates are eligible
for the various incentives, including: preferential
corporate income tax rate of 0%; preferential
corporate income tax rate of 15%; corporate
income tax holiday of up to 7 years; corporate
income tax holiday of up to 5 years; exemption
of customs tax for products used in Export
Processing Zones; exemption of Capital Gains
Tax; Value Added Tax refund; accelerated
depreciation; and immigration incentives.
The Investment code provides for the conditions
applicable for each incentive.
Dispute resolution
According to the Investment Code, any dispute
arising between a foreign investor and one or
more public organs in connection with a

14 LegalNotes
[G. Elias & Co.]
They approach every
assignment with the same
degree of professionalism.”
Introduction
May 2015 marked a watershed in Nigeria’s 55
year old political history. For the first time, a
democratic transfer of federal executive power
took place from the ruling party to an opposition
political party.
Despite the smooth political transition rising
inflation, falling crude oil prices, dwindling
foreign revenues and a weak currency -the
Naira- remain prevalent.
The Central Bank of Nigeria (CBN) has
introduced several measures to check
speculation in the Naira and the consequent
impact on the Nigerian economy. This article
discusses the regulatory measures taken by the
CBN and examines their impact on trade and
investment.
REIN IN THE NAIRA
New foreign exchange controls in Nigeria
Onyinye Chukwu
Senior Associate
G. Elias & Co.
onyinye.chukwu@gelias.com
CBN’s directives to regulate foreign
exchange
One of the functions of the CBN, as the primary
regulator of the Nigerian banking and financial
services sector, is to build the nation’s reserves
and maintain a stable Naira. Between February
and August 2015, the CBN issued several
regulations (CBN Circulars), which:
(i) restricted the use to which repatriated
export proceeds in foreign currency
domiciliary accounts could be put;
(ii) restricted access to the CBN-regulated
foreign exchange or interbank market by
exporters who fail to repatriate proceeds of
oil and non-oil exports within the specified
timelines;
(iii) prohibited the payment in foreign currency
for goods bought or services in respect of
transactions consummated in Nigeria;
(iv) imposed limits on Naira denominated credit
and debit card transactions outside Nigeria;
(v) excluded from the official foreign exchange
market, the purchase of foreign exchange
for specified items including eurobonds,
foreign currency denominated bonds and
share purchases; and
(vi) prohibited cash deposits of foreign currency
in domiciliary accounts.
It is hoped that the CBN Circulars will, at least
in the interim, stem the tide of foreign capital
outflows from Nigeria and stabilize the value of
the Naira relative to other major international
currencies. The regulatory actions are also
aimed at encouraging local production of goods
and services, not just for the local market but
also for the export market, thus generating
much-needed foreign revenues.
Key concerns in Trade and
Investment
The CBN Circulars have been criticized as
“knee-jerk” reactions to the economic problems
that have arisen largely due to inadequate (or
lack of) planning by the managers of the
Nigerian economy, Nigeria’s over-dependence
on crude oil revenues and the absence of an
indigenous export-oriented manufacturing
sector. Nigeria’s oil-based economy is highly
dependent on imported goods and services.
Access to and control of foreign exchange is
thus critical to ensuring growth of Nigeria’s
economy.

LegalNotes 15LegalNotes 15
Nigeria
Nigeria is one of the gateways
to investments in Africa due to
its enormous human and natural
resources, the large population
and a ready market for goods and
services alike. The Nigerian economic
climate is investment-friendly and
the government has been proactive
in its bid to attract foreign direct
investments. The significant reforms
in most sectors of the Nigerian
economy in the last 10 years have
led to a large inflow of foreign direct
investment into Nigeria, particularly in
the telecommunications, oil and gas,
and, more recently, the electric power
sector as a result of which Nigeria
is now ranked as Africa’s largest
economy with a GDP of over US$ 500
billion.
The CBN’s prohibition of foreign currency
deposits in domiciliary accounts may hamper
legitimate requests for foreign exchange and
transactions that do not readily lend themselves
to big-ticket foreign currency purchases from
the interbank market. Medical bills and school
fees are ready examples. Other unintended
‘victims’ of the CBN policies are small businesses
and medium scale enterprises. In the absence of
a strong manufacturing base, businesses risk
failure by reason of the foreign exchange
controls. Fortunately, the CBN has sought to
address this concern by emphasizing that
legitimate applications for foreign exchange will
be entertained and given priority.
Another concern is that the measures may lead
to the creation of an alternative (unofficial)
foreign exchange market. This would ultimately
lead to speculation and unnecessary pressure
on the local currency.
There is also the risk of default under existing
contracts where payment obligations may
become impossible to perform as access to
foreign exchange for items covered under the
contracts are barred.
Conclusion
The measures taken by the CBN offer short
term respite to the weak Naira, but they will not
achieve long term solutions to Nigeria’s forex
liquidity crisis. What is required is a diversified
economy, with a strong manufacturing and
agriculture base. Prior to the discovery of crude
oil in Nigeria, export revenues from agricultural
produce constituted up to 50 per cent of
Nigeria’s foreign earnings. That is no longer the
case.
The agricultural sector needs to be revitalized
with increased bank lending to it and the
provision of support services by relevant
government agencies. The obvious benefits of a
diversification policy are employment creation,
increased productivity in the manufacturing and
agricultural sectors, foreign earnings from
manufactured goods and agricultural produce
geared towards the export market. It is only
then that wealth can be meaningfully created
and foreign earnings increased. This should be
the economic policy thrust of government, in
order to generate sufficient foreign exchange to
meet the demands of the Nigerian economy.

16 LegalNotes
Nicole Gichuhi
Associate
Anjarwalla & Khanna
ag@africalegalnetwork.com
ties with the Middle East and South-East
Asia; a growing Muslim population; financial
literacy on Shariah-compliant products amid
policymakers; and the reformist attitude of the
Central Bank of Kenya (CBK) and the Capital
Markets Authority (CMA).
Kenya as a hub for Islamic
Finance
Kenya has been nurturing its ambition of
becoming a regional Islamic finance hub for
some time now. It has 2 fully fledged Shariah-
compliant banks; 7 conventional banks
offering Islamic finance; and several licensed
takaful (Insurance) and retakaful (re-insurance)
businesses.
In 2015, the CMA launched its master plan,
as part of a broad 10-year strategy designed
to boost capital markets in Kenya’s economy.
Under the master plan, the CMA declared
its intention to make the country a centre of
excellence in Islamic finance, a key priority.
Under its new real estate investment trust (REIT)
regulations, the CMA provides for the creation
of Islamic REITs.
In insurance, the Insurance Regulatory Authority
has also rolled out Takaful Operational
Guidelines to allow Takaful windows to
operate in the country. The Takaful Operational
Guidelines are still awaiting Parliamentary
approval. Once the guidelines come into force,
it is likely that we will see new Takaful windows
being opened.
In April 2015, the Government signed a
memorandum of understanding with the State
New growth opportunities
Introduction
Islamic finance is the new frontier for growth and has witnessed considerable progress in the
global finance industry in recent years. According to the AfDB, in 2014, the global Islamic finance
investments were estimated at about USD 2 trillion and are estimated to surpass the USD 4 trillion
mark by the year 2020, with Africa accounting for about 2.4% of global Islamic banking assets and
2.8% of Islamic fund management assets.
The Islamic finance market has been growing in Kenya, powered by several factors including:
existing funding gaps, particularly in power, infrastructure, health and SMEs; strong economic

LegalNotes 17
[Anjarwalla & Khanna] It
continues to prove itself as
one of the top firms in the
country.”
of Qatar on the establishment of the Nairobi
International Financial Centre (NIFC). The
NIFC is one of the flagship projects of Kenya’s
Vision 2030 development blueprint. The NIFC
is expected to have a well-functioning financial
system to attract international capital issuers
and investors, as well as act as a gateway for
financing into the eastern and southern Africa
regions.
For the Islamic finance industry, these
developments signify the Government’s
commitment to advance Kenya’s position as an
Islamic finance hub.
Opportunities for growth
There is great potential for Islamic finance in
investment financing for both the Government
and the corporate sector in Kenya to satisfy the
current project funding deficit. According to the
National Treasury Cabinet Secretary of Kenya,
the country’s annual infrastructure budget
deficit currently stands at around USD 2 billion.
Against this backdrop, Kenya has been gearing
up to issue its debut sovereign Islamic bond
(Sukuk), following in the footsteps of Senegal’s
successful USD 208 million Sukuk in 2014 and
South Africa’s USD 500 million Sukuk. Sukuks
are Shariah-compliant bonds that do not pay
interest to investors, but instead pay out profits
based on income from underlying assets. If
issued, Kenya’s Sukuk will act as a catalyst
for corporate institutions to follow suit and
promote much needed overseas investment in
Kenya’s infrastructure.
This will be an exciting area to watch as the
country’s infrastructure and energy financing
needs will make Sukuks increasingly viable,
especially if the country is keen on attracting
funds from investors who favour Shari’ah
compliant instruments as well as potential
Sukuk issuers.
The private sector has also witnessed activity
in Shariah compliant bonds. Kurwitu Ventures
Limited, which is listed on the growing market
segment (GEMS) of the Nairobi Securities
Exchange, has issued Shariah compliant bonds.
FCB Capital, the investment branch of First
Community Bank, Kenya’s second fully fledged
Islamic bank, has launched plans to issue a
series of local currency Sukuk as well as Islamic
capital market products for the GEMS.
Challenges
Despite positive growth, Islamic finance faces
challenges at both regional and global levels. In
Kenya, the Islamic finance industry is governed
by national and international regulatory
and supervisory frameworks developed for
conventional finance. Unlike conventional
financial models, Islamic finance models strictly
adhere to investment principles based on risk-
sharing and not risk-transfer.
These Shariah principles emphasize on bans on:
charging interest (Riba), products with excessive
uncertainty (Gharar), gambling (Maysir), and
financing of prohibited activities (Haram), and
are not always in harmony with the national
laws. For instance, section 16 of the Banking
Act of Kenya requires banks to pay interest
on savings accounts, provided the minimum
balance is maintained. This is contrary to
Shariah law which strictly prohibits the payment
of interest.
Additionally, the current Kenyan tax framework
does not afford a level playing field for Islamic
finance products and services, which are
susceptible to adverse taxation because they
involve multiple transfers of the assets backing
them. The laws need to be updated to accord
tax neutrality to Islamic finance transactions.
Based on the above, there is a critical need to
align existing laws to support Shariah models
in order to develop Islamic finance further.
Other African governments including Tanzania
and Uganda are reviewing their laws to
accommodate Islamic finance, further attesting
to the fact that the business case for Islamic
finance in East Africa is indeed proven.
Other key challenges facing the growth of
Islamic finance in Kenya include: lack of clear
CBK guidelines on disclosure of profits earned
on Islamic assets; lack of a clear understanding
of the core Shariah principles since they
differ from conventional banking models; the
misconception that Islamic finance is available
for Muslims only; and shortage of trained or
experienced professionals in the Islamic finance
field.
A good outlook ahead
Despite some challenges, the market for Sharia-
compliant financial services will continue to
grow. A key feature of global Islamic finance
is the Sukuk market, which supports private
foreign direct investment flows, not only from
investors in capital surplus countries such as
Bahrain, Qatar, Saudi Arabia and the United
Arab Emirates, but also from institutional
investors in markets such as Malaysia, the
United Kingdom and the United States.
There is also potential for the development of
secondary markets for trading Sukuk bonds,
which will likely provide more comfort for
investors.
Aside from the Sukuk market, the Islamic
market holds potential in the medium-run.
As incomes rise, consumers will demand
more sophisticated financial products at more
competitive prices. Given the sizeable Muslim
population in the country and arising awareness
of Islamic finance, there is definitely room for
the growth.

18 LegalNotes
The challenge, however, has always been and
remains, how best to exploit the sector to its full
potential.
The ban on unprocessed minerals
Notwithstanding the promise and endowment
in mineral resources, Uganda’s mining sector
seems beset with a host of both legal and policy
setbacks. Since 2011, it has been grappling
with the effects of a Government ban on the
export of unprocessed mineral ore.
The justification for the export ban was that
mineral ore was an exhaustible resource that
faced a real risk of depletion by the miners,
without any long term contribution to the
infrastructural development of the country.
According to the Government, exporting ore
was equivalent to selling “mere soil” with no
significant returns to the economy in terms of
value addition and employment opportunities.
The Government hoped that the ban would
enable sustainable growth through job creation
in the mining sector, particularly iron ore,
vermiculite, gold, copper, tin, tungsten, nickel,
zinc and tantalum.
Non-compliance with the ban would have
adverse consequences, particularly on the
renewal of a licence.
Impact of the ban
Investors in the mining sector protested the ban
arguing that it was a major hindrance to
business. It is estimated that 90% of junior
exploration companies that existed in 2010
closed down as a result of the ban.
Introduction
Uganda’s mining sector has for a long time held much promise. Its mineral wealth consists of a
variety of both metallic and industrial minerals. A recent aerial survey of 80% of Uganda confirmed
that its mineral potential includes among others, 6 million tonnes of copper, 5.5 million tonnes of
cobalt, and an additional 110 metric tonnes of iron deposits, over and above the 300 metric tonnes
previously discovered. Uganda also has 5 million troy ounces of gold and an additional 55 million
metric tonnes of vermiculite, 3.5 million tonnes of tin and 25 million tonnes of limestone.
Apollo N. Makubuya
Partner
MMAKS Advocates
makubuya@mmaks.co.ug
Fiona N. Magona
Senior Associate
MMAKS Advocates
magona@mmaks.co.ug
Uganda lifts ban on export of unprocessed minerals
NEW HOPE FOR THE MINERS

LegalNotes 19
According to investors, the Government’s value
addition plan requiring investors to establish
local processing plants to refine the minerals
into value added products for export, was not
feasible. In their view, the volume of electricity
required for the plants may not be available in
Uganda, and would inflate the already
substantial investment required to set up the
necessary facilities.
The ban significantly slowed down operations,
causing mining companies to terminate
contracts, lay off workers and restructure loans
with commercial institutions. This was
aggravated by the fact that the ban was a
blanket ban on the exportation of all
unprocessed minerals in the country, with no
time limits or indication as to when the ban
would end.
Actions of the Stakeholders in the
Mining Industry
The effects of the ban galvanised investors and
other stakeholders in the sector to lobby for a
lifting of the ban. The miners under the Uganda
Chamber of Mines and Petroleum argued that
earnings from mineral exports had significantly
dropped since the implementation of the ban,
and that smuggling of ore was likely to rise
since formal exports had been blocked. They
maintained that there was no risk of the
resources being depleted, since the volumes of
exports were still low and most of the mining
activities were at exploratory stage.
The Good News
Following intensive lobbying by the private
sector, the 4-year ban on unprocessed mineral
ore in Uganda was partially lifted at a meeting
with the President, government officials, and
various stakeholders in the mining sector in late
August 2015.
The President was agreeable to lifting the ban,
with the exception of iron ore and copper. He
explained that the continuing ban on iron ore
was due to the high freight costs of importing
steel particularly in light of the various dams
being constructed in Uganda, using steel. He
noted the fact that iron ore was sold at USD 33
per metric tonne yet its product Steel sells at
about USD 700, which translated to a loss of
approximately USD 667. Regarding the ban on
copper, the Chinese had been requested to
process the “blister copper” into “cathode
copper” instead of importing the latter.
The President supported the decision for the
partial ban arguing that other economies had
benefited from similar bans, for instance
Indonesia, which banned the export of bauxite
to China in a bid to have it locally processed by
Chinese investors into aluminium. The ban
generated jobs and spurred on the economy.
Way Forward
The partial lifting of the ban has been well
received by sector players. According to
independent research and reports, Uganda’s
revenue from mineral exports had fallen from
Uganda Shillings 208.5 billion in 2011/2012
financial year to Uganda Shillings 168.4 billion
in 2014/2015. Uganda could now raise as much
as USD 2.15 billion in royalties from iron ore
(USD 800 million), gold (USD 550 million),
vermiculite (USD 200 million) and limestone
(USD 600 million).
The question whether the continuing ban on
iron ore and copper will achieve the objective of
maximising gains on refined materials, remains
to be tested. Whilst a cloud of anticipation
for a complete lifting of the ban looms,
the general consensus across the African
continent is that refined minerals fetch higher
revenues on the global market, hence countries
endowed with mineral wealth are encouraged
to focus on wealth creation through value
addition to their minerals, and skills transfer
through the employment of the communities
involved.
Pending the complete lifting of the ban, the
partial ban has removed a bottleneck for
investors engaged in the mining and
development of other minerals within Uganda,
placing it back on a competitive platform with
other major mining players in the region. The
ban has also brought into sharp focus the issue
whether there are adequate structures and
systems in place to encourage and support
investment in the mining sector. Earlier in
2015, representatives of small scale and
artisanal miners met with senior government
officials, with a proposal for the establishment
of a national mineral processing plant that
would be capitalised to buy the unprocessed
minerals from them. This option remains to be
explored together with legislative, policy
changes and other considerations required to
enable the full exploitation of the sector’s
potential.

20 LegalNotes
It is envisaged that the ADGM will, in due
course, develop into a centralised business zone
to channel investments into the UAE. As the
ADGM evolves with time, it will be interesting
to see whether the ADGM is positioned at par
with the decade-old DIFC, or whether it
emerges as a distinct player in the UAE financial
services space, creating a niche for itself.
The ADGM, in time, may provide a platform for
businesses where other existing free zones may
not be adequate or suitable. We may see the
landscape evolve to one which is similar to
London’s 2 distinct financial markets: the
Alternative Investment Market (AIM) and the
London Stock Exchange (LSE), whereby the
former has a less stringent, faster and more
cost-effective listing process as compared to the
latter.
New Companies Law in Dubai
In March 2015, the UAE government issued a
new Commercial Companies Law: Federal Law
No. 2 of 2015 on Commercial Companies(the
New Companies Law), replacing the pre-
existing Federal Law No. 8 of 1984.
One of the main changes introduced in the
New Companies Law is in relation to the
number of shareholders (minimum and
maximum) which a limited liability company
(LLC) can have. The minimum number of
permitted shareholders has been reduced from
2 shareholders to 1; thus resulting in greater
benefits for UAE nationals who wish to start a
business independently under the LLC umbrella.
In relation to Public Joint Stock Companies
(PJSCs), the rules relating to share capital,
founders, management, Initial Public Offerings
(IPOs), financial assistance and takeovers have
also changed, which should allow the founders
Introduction
The United Arab Emirates (UAE) has long been
regarded as a global business gateway, not just
for foreign investors coming into the Middle
East but also to investors who desire to explore
other jurisdictions such as Africa and South
Asia. Some of the reasons for this have been
the UAE’s favourable tax regime, the
development of special economic zones and
free zones, a vibrant financial and professional
services industry based in free zones like the
Dubai International Financial Centre (DIFC), and
a progressive legal system that is steadily
evolving to adapt to the demands of the
modern day investor.
2015 has seen various changes in the UAE legal
sphere, many of which are geared towards
fostering investments in the UAE. This article
briefly highlights some of the changes.
The Abu Dhabi Global Market
The Emirate of Abu Dhabi has established the
Abu Dhabi Global Market (ADGM). The ADGM
is a financial free zone with developed
infrastructure, a favourable business
environment and a sound regulatory framework
for new businesses.
The ADGM has a 3-pillar system:
• the Financial Services Regulatory
Authority, which regulates and monitors
compliance with applicable laws, rules and
regulations;
• the Registration Authority, which
manages all aspects of incorporation,
registration and licensing of legal entities;
and
• the ADGM Courts, which provide business
friendly dispute resolution services.
Darryl Barretto
Associate
Anjarwalla Collins & Haidermota
dbarretto@ach-legal.com
Changes to the Business and Legal Environment
of PJSCs to exercise greater control after their
shares are listed on the stock exchange. This
should encourage UAE companies to list on
local markets and serve as an incentive for
strategic partners to invest in such companies.
Prior to the issue of the New Companies Law,
there was much speculation surrounding
foreign ownership restrictions and whether it
would be removed completely or at least
relaxed. Despite the changes to the law on
other matters discussed, the foreign ownership
limits under the New Companies Law remain
unchanged. As such, foreign investors are still
generally limited to 49% ownership in an
onshore UAE company.
Draft Foreign Investment Law
Foreign investors are awaiting the issue of the
draft Foreign Investment Law, which is currently
in its final stages and is expected to be issued
towards the end of 2015. If approved, the
Foreign Investment Law would allow 100%
foreign investments in UAE onshore companies
which are involved in specific business activities
or sectors.
While it is not yet clear which sectors will be
impacted by the Foreign Investment Law, the
expectation is that the sectors will relate in
some manner to social infrastructure, such as
education and healthcare.
Conclusion
The recent developments discussed above are
geared towards further establishing the UAE as
a favourable business destination and
investment gateway to other jurisdictions. Of
course, further changes are anticipated since
the UAE continuously strives to adapt itself to
the evolving global business environment.

LegalNotes 21
ALN Special
ALN ANNUAL INTERNATIONAL CONFERENCES
ALN’s international conferences are held annually with the aim of connecting Africa to the
international market and promoting business with and on the continent. Each year, our
conferences bring together top business leaders and professionals, with deep experience of
working in Africa. Our conferences continue to provide an environment in which investors
searching for information and lucrative investment opportunities on the continent are able
to meet with African business people and stakeholders, and broker business deals.
During our conferences, we are able to promote panel discussions on opportunities on the
continent and solutions that help investors navigate the business environment in Africa due
to our deep understanding of the continent. Our panel discussions highlight hard business
issues, practical experiences, and live opportunities based on the candid insights and
experiences of the panelists, most of whom have extensive African investment experience
and reflect the hot spots for business on the continent.
In November 2014, ALN together with AC&H Legal Consultants, ALN’s regional office in
UAE, hosted its first international conference outside Africa at The Palace, Dubai. The event
was a great success attracting over 300 delegates from all over the world and many
dignitaries from Africa and the UAE.
Building on the success of this event, ALN will once again be hosting its Annual Global
Conference - “Africa: Bridging the Gulf” at the Park Hyatt, Dubai in October 2015. The two
day Conference will bring together business leaders, decision makers, strategic advisors from
Africa and international investors from the UAE, GCC, China, Singapore, Japan, South
Korea, India, Europe, UK, and USA; who all share a common passion for doing business in
Africa.
It will also provide a forum for investors and other stakeholders to hold conversations on
industry sectors and regions that provide the greatest investment potential in Africa. In
addition, it will highlight the challenges facing business and investment on the ground in
Africa, and explore the avenues to navigate through Africa’s dynamic business environment.
Please visit our website www.africalegalnetwork.com for more information on our events.
ALN 2015 ANNUAL GLOBAL CONFERENCE: MEET
YOUR HOSTS!
Anjarwalla Collins & Haidermota Legal Consultants (AC&H)
AC&H is the regional office of ALN. The firm was founded in 2011
with Mr. Atiq Anjarwalla as Managing Partner, in order to better
service the growing needs of ALN clients. Our lawyers are qualified
in Lebanon, Kenya, Nigeria, United Kingdom, India and Pakistan.
AC&H provides solutions to clients seeking to use the UAE as a
global platform to expand existing operations or, to set up new
businesses in the free zones of the UAE. The team is well versed in
corporate and commercial matters including: Hospitality, FMCG,
Energy, Healthcare, Education, Private Equity, Intellectual Property
and Banking & Finance.
At AC&H and ALN we are committed to assisting clients in Bridging
the Gulf to and from Africa.
The family of AC&H and ALN warmly welcomes you to Dubai!

22 LegalNotes
Introduction
Kenya is rich in minerals and natural resources
including: mineral sands, titanium, gold,
limestone and fluorspar. However, these
resources did not in the past see a steady focus,
and until recently, mineral exports contributed
to less than 1% of the country’s GDP.
International recognition of Kenya’s mining
potential was heightened in 2014, with Base
Resources’ exportation of 25,000 tonnes of
titanium from Kenya to China.
The recent mineral finds have over time
highlighted the need for a progressive mining
law regime that would boost foreign investment,
whilst at the same time ensuring that Kenya
and its people benefit from the mineral
exploitation.
Up until 2013, the administration of the Mining
Act fell within the mandate of various ministries,
such as the Ministry of Environment and Natural
Resources. With the restructuring of the
UNDERGROUND FORTUNES
Regulation of the mining sector in Kenya
national government in 2013, this mandate
has since been transferred to a standalone
Ministry for Mining, a sign of the growing
importance of the mining sector to the Kenyan
economy. However, Kenya has still been
operating under an antiquated Mining Act
(Cap.306, Laws of Kenya), which is in need of
improvement.
Earlier in 2015, a new Mining Bill was to
proceed to a third reading in Parliament,
setting the stage for the Bill to be passed into
law later in the year. Under the Constitution,
legislation to govern agreements relating to
natural resources is to be enacted by
Parliament within five (5) years of the date the
Constitution came into force (27th August,
2010). Parliament has extended the
constitutional deadline for enactment of such
legislation by a further one (1) year from 27th
August, 2015. As a result of the constitutional
extension, the legal regime governing the
mining sector under the current Mining Act
remains in force.
Below are some of the highlights of the Mining
Bill as it affects the current Mining Act, which
may be of interest to local and foreign investors.
A change in the ownership of
minerals
Under the current Mining Act, all unextracted
minerals (other than common minerals) are
vested in the Government, subject to any rights
granted or recognized under any law in any
other person.
The Mining Bill proposes that all minerals in
Kenya are held by the national government, in
trust for the people of Kenya.
Expanded powers of the Cabinet
Secretary for Mining
Under the current Mining Act, the Commissioner
of Mines and Geology is the officer responsible
for the general administration of the Act
including, among other things, the granting,
issuing, revoking, suspending or renewing
prospecting rights, exclusive prospecting licenses
and leases.
The Mining Bill proposes that the Cabinet
Secretary for Mining shall be the Principal
Officer with wide ranging functions, including
those previously exercised by the Commissioner
of Mines and Geology. These include: (i) the
general administration of the proposed law; (ii)
making regulations to prescribe procedures for
the negotiation, grant, revocation, suspension
or renewal of mineral rights; (iii) designating
areas reserved for small or large scale operations;
(iv) restricting or excluding mining areas from
operations; and (v) declaring certain minerals to
Akash Devani
Senior Partner
Anjarwalla & Khanna
ard@africalegalnetwork.com
Fidel Mbaya
Principal Associate
Anjarwalla & Khanna
fmm@africalegalnetwork.com

LegalNotes 23
be strategic minerals for socio economic
development or national security purposes.
Changes in the granting of
prospecting and mining licences
Under the current Mining Act, a prospecting
right may only be issued to an adult (or person
acting as an agent for a partnership or company)
who in the opinion of the Commissioner for
Mining and Geology is able to understand the
Act and its regulations and has not previously
been issued with a prospecting right.
The Mining Bill has expanded this definition and
proposes that a mineral right shall be granted
to; (i) an adult of sound mind who is an
undischarged bankrupt and has the required
technical capacity, expertise, experience and
financial resources and is not otherwise
disqualified under any other written law; or (ii)
a company registered and established in Kenya
that is not in the process of winding up and is
not in liquidation. The directors of such
companies shall demonstrate the required
technical capacity, expertise, experience and
financial resources. This provision seems to be
aimed at reducing the incidences of speculation
in the mining sector.
Under section 18 of the current Mining Act, an
exclusive prospecting licence may be granted by
the Commissioner to any person who holds a
prospecting right.
The Mining Bill proposes to provide for licences
and permits that authorise the right holder to
engage in either large scale or small scale
operations. The specific licences and permits are
as shown in Fig1. and Fig2:
Mineral rights on private and
community land
The Mining Bill proposes that mineral rights
shall not be granted with respect to private or
community land without the express consent
of: (i) the landowner (in the case of private
land); and (ii) the authority obligated by law
relating to community land and the National
Land Commission if the community land is
un-alienated (in the case of community land). In
both cases, the applicant will have to enter into
legal binding agreements with the affected
landowners or community, for the conduct of
prospecting operations and for payment of
compensation.
TYPE OF LICENCE DURATION OF
LICENCE
RIGHTS CONFERRED BY LICENCE
Prospecting licence Not exceeding 3 years Exclusive rights to carry out prospecting
operations
Retention licence Not exceeding 2 years Exclusive rights to conduct prospecting opera-
tions and apply for a mining licence
Mining licence Not exceeding 25
years or the forecast
life of the mine,
whichever is shorter
Exclusive rights to conduct mining operations
in respect of minerals or mineral deposits
Fig1.Large Scale Operations
Fig2. Small scale operations
Licences for large scale operations may be issued to both local and foreign investors, save for
such conditions and restrictions as are set out in the Mining Bill.
TYPE OF PERMITS DURATION OF
PERMIT
RIGHTS CONFERRED BY PERMIT
Prospecting permit Not exceeding 5 years
and renewable for a
further term
Rights to carry out prospecting operations
Mining permit Not exceeding 10
years
Exclusive rights to conduct mining operations
The Mining Bill proposes that persons eligible for permits for small scale operations must be
local investors who are citizens of Kenya or body corporates wholly owned by Kenyan citizens.
However, we understand that Parliament in its debate of the Mining Bill, is reviewing this position
to allow up to 40% ownership by foreign investors of body corporates engaging in small scale
operations.
Local participation in the mining sector
The Mining Bill proposes that the Cabinet Secretary shall prescribe limits on capital expenditure in
mining companies. Mining companies whose planned expenditure falls over the prescribed limits
shall, within 4 years of obtaining a mining licence, offload at least 20% of the company’s equity at
the local stock exchange. An extension of time for offloading equity may be granted by the Cabinet
Secretary where the market conditions do not allow for a successful completion of an offering at
the local stock exchange.
The Mining Bill also proposes that, as condition of a grant of a mineral right by the Cabinet
Secretary, a mineral right holder shall ensure transfer of skills and capacity building to citizens of
Kenya and shall submit a detailed programme for recruitment and training of citizens of Kenya,
while the Cabinet Secretary shall prescribe regulations governing the term and number of
expatriates. Additionally, the Mining Bill provides that the holder of a mineral right shall give
preference in employment to citizens of Kenya.
Conclusion
If passed into law, the Mining Bill is bound to cause drastic changes in the Kenyan mining sector
as we know it. Present and future investors will need to familiarise themselves with these changes
and plan for the transition. We are keenly following the developments around the proposed new
law and will endeavour to keep you appraised of the progress.

24 LegalNotes
WHEN MANY CEASARS AGREE
Kenya’s expanding network of double tax treaties
Kenyan trend on DTTs
With the aim of encouraging increased foreign
investment in the country, Kenya has concluded
DTTs with a number of countries as shown in
Fig. 1 below.
Where a business is operating in both Kenya
and in a contracting state that Kenya has a DTT
with, the respective DTT will set out the tax
calculation methods, definitions and the rate
for various taxes that will be applicable to
individuals and companies resident in the
contracting state. DTTs offer certainty for
foreign investors as they will be cushioned from
Paul Mutegi
Associate
Anjarwalla & Khanna
mmp@africalegalnetwork.com
Introduction
In a bid to further encourage foreign investment,
Kenya has been ramping up its efforts to agree
double tax treaties (DTTs) with investor
countries. Kenya at present has 9 DTTs which
are in force, and 10 other DTTs which are
awaiting entry into force.
A DTT is an arrangement entered into between
two countries, which affords relief from double
taxation of income tax and any taxes of similar
character, imposed by the laws of the respective
countries. Under most DTTs, the provisions rank
higher than local legislation and therefore, in
case of an inconsistency, both contracting
states have an assurance that the DTT text will
be honoured by the other party. Indeed, in
Kenya’s case, the Income Tax Act (Chapter 470,
Laws of Kenya) (the ITA) specifies that a DTT will
override the ITA with respect to a tax rate
prescribed in the DTT.
amendments on the Kenyan domestic taxation
law.
DTTs ordinarily provide for Mutual Assistance
Procedures (MAP) available to a tax payer
whenever a tax dispute arises that may lead to
double taxation of the same income. MAP is
particularly important where there is uncertainty
about the meaning of certain DTT or local tax
legislation. The DTT requires that the two
governments reach a mutually agreed position
to avoid double taxation of the same income.
DTTs also provide for exchange of information
between contracting states and thereby
Kenneth Njuguna
Principal Associate
Anjarwalla & Khanna
kkn@africalegalnetwork.com
DTTs in force DTTs signed awaiting entry into force
United Kingdom Islamic Republic of Iran
Germany Seychelles
Canada Nigeria
Denmark South Africa
Norway United Arab Emirates
Zambia
East African
Community member
States:
Burundi
Rwanda,
Tanzania
Uganda
India Netherlands
France Mauritius
Sweden Kuwait
South Korea
Fig1. Kenya Double Tax Treaties (DTTs)

LegalNotes 25
Subject matter UK% Germany &
Canada %
Denmark, Norway,
Sweden & Zambia%
India% France %
Management & Professional fees 12.5 15 20 17.5 20
Royalties 15 15 20 20 20
Rent on immovable property 30 30 30 30 30
Rent on movable property 15 15 15 15 15
individual or by a person not ultimately owned
by the individuals. A ‘person’ is defined to
include an individual, company, partnership,
trust, government, or similar body or association.
It should however be noted that this restriction
ordinarily does not apply for a company that is
listed in the contracting state.
The intention of the restriction is to prevent
abuse of DTTs through treaty shopping whereby
taxpayers exploit the differences between
various countries’ DTTs and channel investments
through the least tax burdensome, without
corresponding investment in either contracting
state. While the intention behind this new
restriction is noble, it risks rendering some DTTs
ineffective. In particular, the United Arab
Emirates, Seychelles and Mauritius are
destinations for setting up holding companies
for international investors based elsewhere in
the world. By virtue of this provision, such
international investors would not benefit from
the DTT. This would place Kenya at a
disadvantage with respect to treaty benefits,
where investments are channeled through such
countries.
Conclusion
Kenya is clearly making strides towards further
positioning itself as an investment hub in Africa.
Investors seeking to invest in Kenya stand to
benefit heavily from the expanding Kenya DTT
network. However, one of the impediments
Kenya faces in fully capitalizing on its DTT
network is that there is an apparent lethargy in
executing all the relevant diplomatic documents
necessary for a DTT to come into force, leading
to an undue delay between execution of the
DTT and its effective date. This needs to be
remedied to allow residents of the relevant
contracting states the opportunity to benefit
from their state’s DTT.
Kenya
Kenya’s economy, East Africa’s largest,
has experienced considerable growth
in the past few years. The country
enjoys some particular advantages
including a reasonably well-educated
labour force, a vital port that serves
as an entry point for goods destined
for countries in the East African and
Central African interior, abundant
wildlife, miles of attractive coastline,
increasing discoveries of natural
resources and a government that is
committed to implementing business
reforms.
assisting tax administrators with the prevention
of tax evasion.
We provide a summary of withholding tax rates
applicable under various Kenyan DTTs in Fig2.
Qualification to benefit under a DTT
The Finance Act, 2014 introduced a restriction
on the applicability of DTTs that Kenya has
concluded with other countries. Under the new
restriction, benefits under a DTT concluded
between Kenya and another contracting state
shall not be available to a resident person of the
other contracting state if 50% or more of the
underlying ownership of that person is held by
an individual or individuals who are not
residents of that other contracting state.
‘Underlying ownership’ is defined as an interest
in the person held directly, or indirectly through
an interposed person or persons, by an
Fig2. Withholding Tax Rates under DTTs

ALN-Legal-Notes-October-2015

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