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Africa Commercial Insights, Issue 11


  • Dodd-Frank in Africa: A roll-back of regulation in the extractive sector
  • Tanzania: Scrutiny on foreign workers intensifies
  • Ghana: Telcos oppose Bank of Ghana’s mobile money intermediary

For more information on IPSA’s Africa Services, click here.


Dodd-Frank in Africa: A roll-back of regulation in the extractvie sector

The Issue: In February the Trump administration signed legislation that repeals Rule 13q-1 of the Securities and Exchange Commission (SEC). This ruling – covered by the ACI earlier last year (Issue 2) – focused specifically on the extractives sector and would have brought into effect the payment disclosure provisions of section 1504 of the 2010 Dodd-Frank Act. Concerns have been raised by anti-corruption activists that the repeal of this ruling, which required extraction companies to publicly disclose payments to governments related to the commercial development of oil, natural gas, or minerals, will weaken corporate accountability and transparency in the natural resources sector.

The Insight: That the first piece of legislation signed into law by President Trump was the repeal of Rule 13q-1 is indicative of his promise to roll-back business regulations. Rule 13q-1 was opposed by several major US extractive companies when it was introduced for fear that it would place an unreasonable compliance burden on US firms, putting them at a competitive disadvantage. Anonymous sources from within the Trump administration suggested to the press that additional rules within the Dodd-Frank framework may also yet be targeted, including a requirement that companies disclose if their products contain “conflict minerals”. Both rulings will have clear implications for Africa in particular, where many countries have a history of weak governance and transparency. In an era of growing public awareness and animosity across Africa towards governments and companies that engage in corrupt practices, however, foreign companies in the extractives sector would be unwise to see this as an opportunity to weaken their due diligence and compliance frameworks. A number of African states including – notably Senegal, Ghana, and Tanzania – are making real efforts to become more compliant with the Extractive Industries Transparency Initiative (EITI) guidelines.  This may be in part from mounting evidence that being an EITI signatory leads to greater inflows of both aid and foreign direct investment. Whilst enthusiasm for the EITI will vary from state to state in Africa, the continent’s general trajectory is likely to be towards greater transparency.

Tanzania: Scrutiny on foreign workers intensifies

The Issue: Last week the Tanzanian government issued a 30-day notice to foreign employees, employers and employment agencies to ensure they are in possession of the appropriate work permits. Tanzania’s Labour Commissioner issued a public notice stating that many firms were non-compliant and in violation of the Non-Citizen (Employment Regulations) Act No. 1/2015. The announcement comes in the wake of charges against Yusuph Manji’s Quality Group earlier in the month for illegally hiring 25 foreigners without working permits.

The Insight: This is not the first time the Tanzanian government has made a point of clamping down on foreign employment. These moves are often indicative of a lingering resentment within the general population of foreign labour taking local jobs. The 2015 Act, for example, required firms to put a succession plan in place that would ensure that Tanzanian citizens were eventually capable of succeeding foreign nationals brought in to address skill gaps in the local market. An IPSA source in the Private Equity sector in Tanzania cautioned against an interpretation of this notice, however, which predicted further harsh clamp downs or envisioned particular nationalities or sectors being targeted. The source noted that this move is best understood under President Magufuli’s wider drive to put in place effective administrative systems that make Tanzania a more attractive place for business, emphasising measures to tackle corruption in particular. Whilst this recent notice from the Labour Commissioner will impose a degree of administrative burden for companies, the verification is process is relatively straight-forward and IPSA’s Tanzania source envisions that this will pose little concern to those firms with sound compliance structures in place.

Ghana: Telcos oppose Bank of Ghana’s mobile money intermediary

The Issue: The Bank of Ghana (BoG) has reportedly put on hold the billion-dollar deal it handed to private sector IT company, Sibton Switch, to run a platform aimed at making banks, mobile money platforms and other payment systems in Ghana interoperable. The deal, which received a mixed reaction from Ghana’s business community when it was announced in July last year – particularly from the country’s telecom operators –  has allegedly been suspended following public outcry over whether such an intermediary was necessary, given the likely cost implications for consumers

The Insight: The temporary suspension of the deal will be welcomed by telecoms operators in Ghana, who have previously condemned the move to impose upon them a third-party intermediary in mobile money transactions across networks. As per international standards, the telecom operators in the country have already introduced cross-network mobile money transactions. Some industry players argue that they are better placed to implement interoperability on their own, and do not need a costly third party that will only increase transactional costs. In a letter written to the BoG in January, the Ghana Chamber of Telecommunications argued that the proposed fees being charged by the switch (Sibton) are too high, and could ultimately undermine the success of the entire project. A well-placed telecoms source based in Accra explained to IPSA that apart from the outrageous sum of the contract awarded to Sibton – over GH¢4 bn ($850m) –   telecom operators see the move by the BoG as a deliberate side-stepping of the Ghana Interbank Payment and Settlement Systems (GhIPSS), which currently manages a similar platform. The source added that aside from the cost implications, there is added concern that the switch would pose an operational risk for the industry, and would represent a Single Point of Failure (SPoF). This means if the switch goes down, the whole industry would effectively grind to a halt.


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