The 2018 AGOA Forum: A turning point for US-Africa commercial relations?

The 2018 AGOA Forum—named for the African Growth and Opportunity Act passed in 2000 and extended three years ago to 2025—could be a turning point in U.S.-African commercial relations. AGOA abolished import duties on more than 1,800 products manufactured in eligible countries sub-Saharan Africa (those with established or making continuous progress with market-based economy, rule of law and pluralism, elimination of trade and investment barriers to the U.S., human rights, labor standards, fight against corruption, and economic policy to reduce poverty among others). Another 5,000 products are eligible for duty-free access under the Generalized System of Preferences program. As of today, 40 African countries are AGOA-eligible.


Africa’s trade ministers will be coming to Washington the week of July 9, riding the momentum of having adopted the African Continental Free Trade Agreement in March. Once fully implemented, the AfCFTA, as it is known, requires members to remove tariffs on 90 percent of goods and to allow free access to goods, services, and commodities. The AfCFTA is central to accelerated regional integration and economic development across the region.

While Africa is forging new trade relations internally, the Trump administration has a new proposal for future U.S.-Africa trade relations, and wants to establish “a free trade agreement that could serve as a model for developing countries.” Kenya, Côte d’Ivoire, and Ghana are under consideration as partners for developing the first model according to sources in the Trump administration.

The question for this AGOA Forum is whether it can forge a common vision between Trump administration officials and Africa’s trade ministers on how to structure a post-AGOA trade relationship. Specifically, can Africa’s continental free trade ambitions, embedded in the AfCFTA, be harmonized with the Trump administration’s model free trade agreement based on a single country?

The AfCFTA should be the ideal tool to foster U.S.-Africa commercial relations, with an agreement between Africa at the continental level and the United States. American corporations benefit from a continental approach versus a country-specific one. In fact, by 2030, Africa will be home to 1.7 billion people and $6.7 trillion of combined customer and business spending. The AfCFTA presents the opportunity for a single point of entry, reduced cost of doing business, economies of scale, lower tariffs, and increased commercial transaction—which could contribute to job creation in the U.S. However, the AfCFTA still has to come into force, and some African countries, including economic powerhouses like Nigeria, have not yet joined the initiative. It is therefore critical for the African Union to adopt a more proactive strategy for its relations with the U.S. and propose an attractive continental partnership to the U.S. to advance mutual interests.

The task will not be easy for the African Union and the AfCFTA and, on the surface, it is hard to see where compatibility will be found in the differing approaches to the future of U.S.-African trade relations. In fact, the U.S. tried to forge a free trade agreement with South Africa and the Southern African Customs Union more than a decade ago and was unsuccessful. Moreover, U.S. free trade agreements are comprehensive, complex, and take time to negotiate. Given the rapid rise of China’s trade with the continent and the European Union’s Economic Partnership Agreements—which increasingly puts American goods at a significant tariff disadvantage in a growing number of African markets—a singular model trade agreement could do little to bolster the U.S. trade and investment position across an African continent working to fully integrate into the global economy. Moreover, Africa is seeking a regional approach to its trading relationships and not a country-by-country process.

While the U.S. Trade Representative works to develop a future U.S.-trade relationship with Africa, a positive Trump Africa legacy could revolve around its support for the bipartisan BUILD Act (Better Utilization of Investments Leading to Development Act), which is making its way through Congress and, if passed, would create the U.S. International Development Finance Corporation (USIDFC). The new agency would transform the existing Overseas Private Investment Corporation by doubling its size and enabling it to make equity investments of up to 20 percent in U.S. projects, among other new capabilities. As Africa is the largest part of OPIC’s current investment portfolio, the proposed USIDFC promises to be a key part of any enhanced U.S. commercial engagement in Africa.


The 2018 AGOA Forum could be a turning point for U.S.-Africa commercial relations. The African Union has already made important progress by organizing an annual AGOA mid-term review, along with its partner organizations (the United Nations Economic Commission for Africa and the regional economic communities), to help organize the AGOA Forum. However, if Africans do not succeed at putting a continental approach on the agenda during the forum, they should quickly follow up with an evidence-based comprehensive strategy that will provide options to the U.S. to best serve mutual interests, advance the continental perspective and Agenda 2063, and make America more competitive in a context where China and the European Union are winning. A win-win strategy is the way forward from both sides.

Post contributed by guest blogger Landry Signe, a David M. Rubenstein Fellow at Brookings’ Africa Growth Initiative and is not affiliated with Covington & Burling LLP. This piece was also cross-posted on Brookings’ Africa in Focus blog.

Recent Media Interviews on African Business Trends

Witney Schneidman, Chair of Covington’s Africa Practice, recently participated in a number of media interviews where he discussed various business trends on the continent. Below are links to those interviews.

  •  An interview with CGTN that compared the commercial approaches of China and the United States in Africa. LINK
  • CNBC-Africa’s Closing Bell had Witney Schneidman on their program to discuss Cyril Ramaphosa’s first 100 days at the President of South Africa. LINK
  • An interview with CNBC’s Squawk Box regarding the Chinese commercial presence in Africa. LINK

What Companies Need to Know About France’s Loi Sapin II Anti-Corruption Law

On June 3, 2018, French tycoon Vincent Bolloré warned investors that Groupe Bolloré—a logistics provider with extensive operations in former French colonies in Africa—may suffer negative commercial and financial consequences as a result of a corruption investigation initiated by French authorities. Mr. Bolloré was questioned for two days by French police in April 2018 over allegations that Groupe Bolloré’s global advertising agency, Havas, provided improper benefits to the Presidents of Guinea and Togo in exchange for lucrative business contracts. Mr. Bolloré’s prediction on the investigation was bleak; he noted that the investigation will “last for 10 years, raids will be carried out, people will be questioned, the press will cover it day-to-day.”

The Groupe Bolloré investigation is one of the first high-profile investigations by French authorities since the December 2016 passage of France’s new anti-corruption law, titled “Loi relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique,” (“The law on transparency, the fight against corruption and the modernisation of economic life”), but commonly referred to as “Loi Sapin II,” given its sponsorship by former French Finance Minister Michel Sapin.

Commentators have pointed to the Groupe Bolloré investigation as a game-changer in French enforcement of anti-corruption laws, one that marks the ushering in of a new era of accountability for French businesses operating in Africa. We have previously covered developments relating to Loi Sapin II here and here. Below, we outline key aspects of the Loi Sapin II regime and its broader implications for companies operating in Africa.

Background on Loi Sapin II

Although France joined the Organization for Economic Co-Operation and Development (OECD) Anti-Corruption Convention in 1997, as recently as 2012 the OECD has pressed France to improve its anti-corruption enforcement efforts. Notably, US anti-corruption enforcers have brought several high-profile Foreign Corrupt Practices Act (“FCPA”) enforcement actions in recent years against French companies, each with significant financial penalties, and French enforcers have been criticized for taking no or limited action in some of those matters.

Loi Sapin II is notable in a number of respects. Specifically, the law (1) expands the extraterritorial reach of France’s anti-corruption laws; (2) obligates certain business organizations to implement compliance programs; (3) creates a new anti-corruption agency, the Agence Francaise Anticorruption (“AFA”); (4) improves protections for whistleblowers; and (5) creates a settlement framework known as the Convention judiciaire d’intérêt public (“CJIP”), which has been likened to a deferred prosecution agreement (“DPA”) under US practice.

  1. Extraterritorial Reach of Loi Sapin II

 Perhaps the most important change in Loi Sapin II is the elimination of a dual criminality requirement for prosecution of extraterritorial conduct, significantly extending the ability of French authorities to reach corrupt conduct occurring overseas. Previously, French authorities had jurisdiction to prosecute offenses committed outside of French territory where: (1) the victim or wrongdoer were French citizens; (2) the alleged conduct was unlawful under the law of the local jurisdiction and French law; and (3) either the victim or the relevant foreign authority filed a complaint. Loi Sapin II removes these requirements, and also permits prosecution of persons or entities (regardless of their citizenship or nationality) who carry out all or part of their economic activity on French territory.

  1. Mandatory Compliance Program Requirements

 Article 17 of Loi Sapin II imposes mandatory compliance program requirements for French companies that employ 500 or more employees with gross revenue of more than €100 million, as well as all consolidated subsidiaries of parent companies that meet the aforementioned size and revenue requirements. As of June 9, 2017, companies that meet these criteria were required to implement the following measures: (1) an anti-corruption code of conduct; (2) internal and external whistleblowing procedures; (3) risk-mapping that considers the company’s industry focus and geographic coverage; (4) third-party due diligence procedures; (5) internal and external accounting controls; (6) anti-corruption training; and (7) an internal monitoring and assessment system. In December 2017, the AFA published recommendations for the implementation of these measures. An English version of the AFA’s Guidelines can be viewed here.

  1. Powers of AFA

 The AFA replaces the previous Service Central de Prévention de la Corruption (“Central Service for the Prevention of Corruption”). It is anticipated to have four times as many staff as its predecessor agency (more than 60 compared to 16) and a budget of €10–15 million. While the AFA does not have the power to investigate or prosecute bribery allegations, it has substantial powers to ensure that covered entities comply with Article 17 requirements. This includes the power to request documents, conduct site visits, and interview personnel during such site visits. As an enforcement mechanism, the AFA is empowered to impose fines against companies that fail to comply with program requirements, as well as relevant company leadership. Fines may also be imposed for refusal to share information requested by AFA.

  1. Whistleblower Protections

 Loi Sapin II includes stronger whistleblower protections than were previously available under French law. These protections extend to any disinterested person who in good faith reports a violation of French law or an issue that poses a serious threat to the public interest of which he or she has personal knowledge. Companies are required to guarantee confidentiality and protect the identity of whistleblowers (Article 9), and are prohibited from retaliating against whistleblowers (Article 10). To enjoy the law’s protections, a whistleblower must first report suspected wrongdoing to his or her supervisor; only when the supervisor does not act within a reasonable timeframe or in the event of imminent danger is the employee permitted to report directly to the authorities. Loi Sapin II also provides immunity to whistleblowers (Article 7); and anyone found to create an “obstacle” to the filing of a whistleblowing report may face a fine of €15,000 and up to one year in prison, while revealing a whistleblower’s identity carries a potential two-year prison sentence and a fine of up to €30,000.

  1. CJIPs

 Loi Sapin II introduced a resolution mechanism for enforcement actions known as the “CJIP” (short for “convention judiciaire d’intérêt public”) into French Criminal Law. Similar to deferred prosecution agreements employed by US authorities, CJIPs are negotiated settlements that apply to corporate entities. Under a CJIP, an organization may, without pleading guilty, agree to a combination of monetary remedies and compliance measures for alleged violations of Loi Sapin II. Like US DPAs, CJIPs may require the imposition of corporate compliance monitors. While France’s CJIP regime does not include a formal framework for assessing credit in a resolution for a company’s cooperation in the government’s investigation or voluntary disclosure of potential misconduct, we expect that these issues will prove to be significant factors in French prosecutors’ decisions whether to proceed by CJIP, and, if so, the remedies under a CJIP.

Considerations for Companies Subject to Loi Sapin II Operating in Africa

With the Loi Sapin II regime still in its relative infancy, trends are difficult to predict with confidence. However, we see two immediate takeaways for companies subject to Loi Sapin II:    

  1. Companies Should Be Prepared for Significantly Increased Risk of Investigation of Extra-Territorial Conduct Under Loi Sapin II

It is perhaps too early to predict whether the Groupe Bolloré investigation will prove to be the tip of the spear in an aggressive anti-corruption enforcement campaign by French prosecutors over the coming years. However, we would expect more high-profile investigations to follow, and the combination of Loi Sapin II’s extensive extra-territorial reach and its whistleblower provisions significantly increases the likelihood that corrupt conduct abroad will come to the attention of French prosecutors. This raises the stakes for French companies dealing with allegations of corruption abroad. Companies finding themselves in this position would be well-advised to conduct internal investigations that are sufficiently prompt and thorough to withstand pressure-testing from enforcement authorities, and also to take swift remedial actions, including appropriate enhancement to anti-corruption policies and controls. While time will tell, as French enforcers begin to hit their stride and the investigation and resolution process under Loi Sapin II becomes more mature, we expect that there will be increased focus on issues of self-reporting, cooperation, and remediation, much as is the case in US and UK investigations. Moreover, recent enforcement actions have demonstrated increasing cooperation between French authorities and foreign enforcers, including US enforcers, raising the prospect of investigations and enforcement actions with multiple regulators at the table.

  1. Loi Sapin II’s Compliance Program Requirements Will Require Significant Resources and Consistent Efforts

Entities subject to Loi Sapin II’s mandatory compliance program requirements must grapple  with a series of requirements and AFA oversight of their compliance programs. Although the AFA has indicated that it does not wish to dictate the specific methods through which companies achieve their compliance objectives, the AFA guidance will undoubtedly inform the measures that companies subject to Article 17 of Loi Sapin II (and perhaps companies not strictly subject to Article 17) put in place to meet its requirements. The AFA guidance is largely consistent with OECD best practices and the guidance that has emerged relating to the FCPA and UK Bribery Act; indeed, the AFA has indicated that it sought to integrate into its recommendations the requirements of international anti-bribery legislation to ensure that French standards are consistent with international best practices. Accordingly, companies that have already implemented compliance programs consistent with the guidance relating to the FCPA and/or the UK Bribery Act and are subject to the Article 17 compliance program requirements in France will likely be able to retain the core elements of their compliance programs, although additional measures may be required to meet some of the prescriptive requirements set forth in Loi Sapin II.

What this means in practice is that companies subject to Article 17 may not have the luxury of a prolonged timeframe to build a mature and effective compliance program. What is more, the AFA guidelines, which include detailed methodologies for risk assessment and monitoring the effectiveness of compliance programs, make clear that a “check the box” approach will be insufficient. As a result, companies that are subject to Article 17 would be well served to seek advice from professionals with experience implementing, and sustaining, compliance programs that pass muster with US and UK authorities. Moreover, even after initial implementation processes are complete, companies subject to Article 17 would be best advised to perform periodic assessments of the effectiveness of their programs.


This blog was prepared by Covington attorneys qualified to practice law in the United States and the United Kingdom. It does not constitute French law advice. Covington partners with French counsel with anti-corruption expertise to provide integrated anti-corruption compliance advice that takes into account French law as well as the international best practices that have developed under the US Foreign Corrupt Practices Act, the UK Bribery Act, and other international anti-corruption laws and conventions. If you have further questions about Loi Sapin II or Covington’s anti-corruption work in Africa, please contact Ben Haley at or Sarah Crowder at

The Roggeveld Wind Farm in South Africa

On 4 April 2018, Covington’s client Building Energy, a multinational company operating in the renewable energy industry, signed a power purchase agreement (PPA) with the South African state owned utility Eskom Holdings SOC Ltd (Eskom) to build, own and operate a 147 MW wind plant in Roggeveld (on the border of the Western and Northern Cape provinces of South Africa). Building Energy had been awarded preferred bidder status under Round 4 of the South African Department of Energy Renewable Independent Power Producer Procurement (REIPPP) programme for the wind project in April 2015. The Roggeveld wind farm will generate around 613 GWh per year and the energy generated will provide energy to 49,200 households every year, while avoiding the emission of about 502,900 tons of CO2 emissions. Construction work is scheduled to begin in 2018 and the commercial operation date is foreseen to be in April 2021. Matteo Brambilla (Building Energy’s Managing Director for Africa and the Middle East) commented “We are delighted to have signed the agreement in the presence of Minister of Energy of South Africa, for the construction of the Roggeveld plant, which represents our first wind farm in South Africa. We are also excited to develop two of the 2.3GW of renewable energy projects allocated by South African Government in the first major investment deal under President Cyril Ramaphosa”.

The REIPPP programme was implemented to assist the development of the renewable energy sector and encourage private investment in South Africa. The national renewable energy target is for 18,800MW to be supplied by renewable energy by 2030. Furthermore, the programme is designed to contribute to developing foreign investment, socio-economic and environmentally sustainable growth. The REIPPP programme has already delivered 5,243 MW in the space of four years, projects covered by the programme mainly consist of solar photovoltaic, concentrated solar power, biomass, landfill gas, small hydropower and biogas. A large spectrum of funding mechanisms have been utilised, ranging from a variety of foreign private equity, local private equity and large commercial and development banks. Some of the funding is composed of local private equity funds for black economic empowerment purposes to represent surrounding communities. The so-called “Broad Based Black Economic Empowerment” (B-BBEE) legislation is a central part of the South African government’s economic strategy. The B-BBEE policies are an enabling framework that allows government to implement a standard framework for the measurement of B-BBEE across all sectors of the economy. The aim is to increase the number of black individuals that manage, own and control the country’s economy, and to decrease racially based income inequalities. In public sector projects, achieving B-BBEE goals is a significant evaluation criterion.

In the past year the energy sector in South Africa has faced a series of political turbulence pertaining to several factors. The country’s economic volatility was evident when a cabinet reshuffle carried out by former President Jacob Zuma in March 2017 ultimately resulted in South Africa’s economic outlook taking a turn for the worst when credit ratings agencies downgraded the country’s sovereign rating. This was followed by the resignation of President Jacob Zuma, earlier this year, who was subsequently replaced by Cyril Ramaphosa. Eskom has also shown some reluctance to sign PPAs relating to twenty-seven independent power producer projects under the REIPPP programme. The signing was further delayed in March 2018 by an application brought in the North Gauteng High Court by the National Union of Metalworkers of South Africa (NUMSA) and the civic group “Transform Republic of South Africa”, to interdict Eskom from signing the twenty-seven outstanding renewable energy deals. The application alleged that (i) the entry into the PPAs would damage Eskom’s financial position and (ii) the purchase price in the PPAs over the next twenty years exceeded Eskom’s short-run marginal cost and the average price of electricity. The North Gauteng High Court ruled against NUMSA and was of the view that a case for urgency had not been made. As a result the new energy minister, Jeff Radebe, was not prevented from signing the PPAs, including the Roggeveld PPA. The projects are expected to create over 61,000 jobs and draw investment worth 56 billion Rand to the economy, according to the energy department. The conclusion of the projects marks a new dawn for South Africa’s REIPPP programme, as this reaffirms the government’s commitment to renewable energy and reinforces President Ramaphosa’s national agenda.

IP Protection Checklist for Tech Startups

As a startup founder, there are a number of issues vying for your attention on a daily basis, most of which are essential to the success of your business. Issues such as differentiating your product from competitors, developing stellar code, creating effective advertising, hiring the right staff and of course securing enough capital to fund it all. But how long have you spent planning an effective intellectual property (“IP”) strategy for your product? While creating the next “Big Thing”, it’s important not to overlook this crucial step because adequately protecting your company’s IP will not only help protect your brand, it will increase your competitive advantage, could help position your company as an appealing acquisition target and may increase your company’s valuation. For any savvy investor, due diligence into a company’s assets is a prerequisite to any substantial investment; for a tech company, this means that its IP assets will be scrutinized almost immediately. Therefore, incorporating an effective IP strategy into your company’s corporate development from the outset is essential to ensuring your most valuable assets remain protected. Below is a checklist of the types of IP protections most relevant for startups.

Don’t Publicly Disclose Your Product Before Evaluating its Patentability

If your technology can qualify for patent protection, and you decide that seeking patent protection is the right next step for your company (as opposed to protecting your proprietary invention as a trade secret, discussed below), filing a patent application should be your first step. Remember, patents only give you the right to exclude others from making, using or selling your claimed invention; patents do not give you the right to actually make, use or sell the claimed invention. This is why conducting diligence into your company’s “freedom to operate” (i.e., determining whether third party patents exist) is an important part of your product development activities. This is especially true in the saturated consumer electronics industry, where components of your invention may be covered under separate patents owned by others. If you hope to receive global protection for your technology, it is crucial that you file a patent application before making any public disclosures–and yes, this includes pitch competitions! This is because, in order to obtain patent protection in some countries, you must avoid disclosing your invention anywhere in the world before filing a patent application. Therefore, failing to file a patent application before publicly disclosing your product could have seriously adverse consequences on your ability to obtain worldwide patent protection.

  • File a patent application before you publicly disclose your product.
  • Determine whether other patents exist that impact your ability to commercialize your product (including its components).
  • Reevaluate your patents regularly as your product evolves. When applicable, consider filing new patent applications on new features.

Register Trademarks During Entity Formation

Once you’ve made the decision to form a company, your first step is typically to register your company with the relevant business authority in your jurisdiction. In the US, this will be your state’s division of corporations or the secretary of state’s office. No matter where you are, one of the most important parts of this application process is registering and gaining approval of your company’s name. However, it’s important to remember that approval of your company’s name only prevents duplication of company names (and often only at the local level). Therefore, conducting a trademark search in target markets will help you determine if someone else is already using your desired company name or trademark. In other words, just because you’re the only “Born to IPO, Inc.” in your state doesn’t mean that “Born to IPO” isn’t a protected trademark. Building a recognizable brand takes time, so get a head start and file a trademark application for your company’s name and logo. Also, consider registering your domain name. This prudent step may save you from territorial trademark rights disputes with other companies unknowingly using the same or a confusingly similar brand, or even worse, from having your trademark or domain held hostage by cyber-squatters who may register domain names and file trademark applications after seeing your public disclosures. If you qualify, use the Madrid System to register your mark in nearly 100 countries via a single application.

  • Save yourself the hassle of having to change your company’s name or logo by first conducting a trademark search.
  • File a trademark application and register your domain name at this time to protect your company’s name, logo and web address.

Be Careful When Asking Your Best Friend to Help You Code

You’ve got your big idea, a registered entity and some cash. Now it’s time to focus on building and launching that minimum viable product. So you hire contractors, ask your best friend to pitch in and help you code and your cofounders work around the clock to try and get your product to market. When the dust settles, you’ll notice that a lot of the people who worked on your product are long gone– and sometimes on less than friendly terms. Without the right contractual protections, they may leave with the rights to the IP they helped develop. Therefore, don’t overlook the importance of putting in place contractual protections with contractors, founders and employees.

  • Require all contractors, founders and employees to sign written contracts that include a present assignment of any IP they developed to the company.

Think Before Copying Code

Copyright gives the author of an original piece of protectable work exclusive rights for such work’s use and distribution. Among the types of works protectable are books, music, motion pictures and software code. Although copyright ownership is automatic upon creation of the original work, protection against infringers isn’t. For example, in the US, you can’t sue an infringer unless the copyright has been registered with the U.S. Copyright Office. Registering your copyright would also make you eligible to recoup statutory damages such as attorneys’ fees and court costs, and would allow US Customs to halt the importation of infringing or counterfeit works. If your country is a member of an international copyright convention (the Berne Convention and the Universal Copyright Convention being the two principal ones) or a bilateral agreement, your registered work may also benefit from copyright protection internationally. It’s important to keep in mind that it is extremely rare for any software product to be made up of code 100% owned by the distributor as most software is used under license.  This raises two important issues to consider when reusing code: 1.) does the license you’re utilizing permit commercial distribution or use at all, and if so, to what extent? and 2.) does the license have requirements for redistribution? The latter consideration is common in Open Source Software (OSS) licenses, which typically require that you make attribution to the original developer, forward the underlying license terms with any distribution that includes the OSS and distribute derivative works under the same license (which in turn may require making your source code available).

  • Where possible, obtain the full breadth of copyright protection for your original works of authorship by registering it with the appropriate copyright authority within your jurisdiction.
  • Carefully analyze any reused code to determine the rights and obligations that come with the license.
  • Avoid using third-party pictures, music, or writings on your website, marketing materials or products without consent as this could lead to costly disputes with the copyright holder.

Protect Your Sensitive Information

While patents are often viewed as the holy grail of IP, in reality patents can be difficult to obtain and enforce (especially for software-based inventions), there are numerous costs involved, and the quid pro quo of filing for a patent is public disclosure of the invention. Regardless of whether your IP assets qualify for patent protection, consider whether they may be protectable as trade secrets. Generally, trade secrets meet three criteria: 1. it is not generally known or ascertainable outside of your organization,  2. you derive a business advantage from the information not being generally known, and 3. you take reasonable efforts to preserve its secrecy. Unlike the other forms of IP discussed, no official registration procedure exists for trade secrets. Instead, rights are procured and maintained solely by the efforts you undertake to preserve the information’s secrecy. This means restricting access to sensitive information within your organization (including by employees and contractors) and limiting disclosure among third parties to those who have a need to use or review the information (including customers, suppliers and prospective acquirers). This can be accomplished via security measures (both technical and digital) and the use of written confidentiality agreements.

  • Require all employees, agents (including executives and board members) and contractors who will have access to sensitive information to sign non-disclosure agreements.
  • Construct physical and digital barriers to restrict access to sensitive

Although easy to overlook during the hectic early stages of establishing a business, a thoughtful IP strategy could provide serious value for your startup in both the long and short term. Consider the types of IP that will have the biggest impact on your business and consider whether patent, trademark, copyright or trade secret protection is appropriate. Considering the importance of a tech company’s IP assets to its viability, safeguarding your IP could prove to be the most important investment you make.

Project Finance Master Class: Addressing Africa’s Infrastructure Deficit

There are ample studies that quantify Africa’s infrastructure deficit in terms of projects and funding. The World Bank estimates $93 billion of annual upkeep investment is needed for projects and Ernst and Young estimates that there are some 800 projects, largely in the power and transportation sectors, that require approximately $700 billion in new investments.

Less well understood is the skills deficit on the continent that is an impediment to these projects being developed. In particular, African governments and state-owned entities have a critical role to play with project developers to ensure that contracts, studies and documents related to these projects are executed effectively and efficiently. On the other hand, outside developers, financial institutions, and other professional service firms need to better understand local regulations and challenges faced by governments across the continent.

Given this situation, a group of stakeholders have come together to develop strategies to address  these gaps. This effort is predicated on the notion that skills development and local knowledge are critical aspects of addressing Africa’s infrastructure deficit.

Covington & Burling LLP, Kaplan & Stratton, Fieldstone Africa, and USAID’s Power Africa Initiative are organizing a Project Finance Master Class in Nairobi, Kenya on June 4-6, 2018. The African Legal Support Facility of the African Development Bank is also supporting this initiative. Intended for African government ministries, regulators, and state-owned off-takers, project developers, and infrastructure companies, the master class seeks to strengthen the enabling environment for project finance transactions by providing important technical skills training and creating a platform for the exchange of best practices.

If you would like more information or would like to participate, please contact Kamala Murugesu of Covington at

Competing in Africa: China, the European Union, and the United States

Given recent developments in the global economy, especially Brexit and the Trump administration’s “America First” policy, it is worth assessing how Africa’s three largest commercial partners—China, the European Union, and the United States—are likely to impact the region in the near future as it relates to trade and investment trends.

The China-in-Africa story may be increasingly familiar, but its complexity cannot be overstated. As China’s domestic growth began to surge at the end of the last century, demand for natural resources and job creation forced China to look for markets abroad. Africa was a willing partner, due to its abundance of commodities and need for infrastructure development.


China’s role on the African continent has been defined by the financing of more than 3,000, largely critical, infrastructure projects, according to the AidData Project. China has extended more than $86 billion in commercial loans to African governments and state-owned entities between 2000 and 2014, an average of about $6 billion a year. In 2015, at the sixth Forum on China-Africa Cooperation (FOCAC), President Xi Jinping pledged $60 billion in commercial loans to the region, which would increase lending to at least $20 billion a year if that pledge is fulfilled.

As a result, China has become the region’s largest creditor, accounting for 14 percent of sub-Saharan Africa’s total debt stock, according to Foresight Africa 2018. In Kenya, for example, the volume of Chinese loans to the government is six times larger than that of France, the country’s second-largest creditor. The FOCAC that will be held in Beijing later this year is likely to continue this trend of extending commercial loans for infrastructure projects.

While China’s level of foreign direct investment (FDI) is relatively low, accounting for just over 5 percent of total FDI inflows into the region in 2015, two-way trade has grown 40 times over the last 20 years and now exceeds $200 billion. More recently, there has been a surge in Chinese private investment combined with a continued, but more limited, state engagement. A 2017 McKinsey study reports that there are more than 10,000 Chinese-owned firms operating in Africa today, about a third of whom are involved in manufacturing. Notably, French academic Tierry Pairault points out that the overwhelming majority of these enterprises are small and micro businesses. McKinsey also reports that Chinese investment in Africa increasingly contributes to job creation, skills development, and the transfer of new technologies, practices more generally associated with Western business norms.

As China works to implement the Belt and Road Initiative, the largest public works program ever, the issue of China’s commercial loans and the subsequent debt incurred by African governments is likely to increase as a public policy concern. There is room to limit the negative consequences of these loans: China should consider transitioning toward a blended financing model, based on Western and Chinese sources of financing, for its support of Africa’s much-needed infrastructure projects. In addition, Africa would benefit if China were to more actively open tenders to international competition as opposed to tying commercial loans to the exclusive use of Chinese companies and materials on terms that are often opaque. A larger portion of grants, as opposed to a singular reliance on commercial loans, even at concessional rates, would be in Africa’s interest.


While the history of colonialism continues to haunt the Europeans—see the viral video of President Akufo-Addo declaring his intent to free Ghana from aid while sharing a stage with French President Macron—when it comes to doing business, language, local knowledge, and historical connections matter.

The launch of the Africa-EU Strategic Partnership and the first-ever summit between the 27 members of the EU and the 54 nations of Africa in 2007 seem to have hit a reset of sorts in the two regions’ relationship. Indeed, over the last decade, the EU has worked, with a large degree of success, to transition to a partnership model based on reciprocal trade. The fifth EU-Africa Summit took place in Abidjan in 2017 against a background in which two-way trade exceeds $300 billion. In association with the summit, the EU pledged to mobilize more than $54 billion in “sustainable” investment for Africa by 2020.

The EU is shoring up its commercial position in Africa through a web of free trade agreements, or Economic Partnership Agreements (EPAs), which Brussels is negotiating or has concluded with 40 African nations in sub-Saharan Africa. The EPAs provide European companies with preferential access to markets across the region and will liberalize about 80 percent of imports over 20 years. Progress on concluding the EPAs is not without its challenges. Not surprisingly, Nigeria contends that an EPA undermines its industrialization strategies, and Brexit detracts from the EU ability’s to negotiate as a common market.

A comprehensive EU trade strategy combined with a private sector that has historic ties to local markets sets the stage for continued growth and influence by European firms in the African market. In addition, the EU is well positioned to share lessons learned from its decades of experience with regional economic integration as, especially as the Continental Free Trade Agreement was signed by most African Union members in Kigali on March 21.


Since 2000, U.S.-African commercial relations have been based on the African Growth and Opportunity Act (AGOA), a non-reciprocal trade agreement that grants about 40 countries duty-free access for approximately 6,400 products to the U.S.

AGOA has had a mixed legacy, given its goal of growing Africa’s export markets rather than building two-way trade and investment partnerships. AGOA has helped integrate trade and investment into the U.S.-Africa policy dialogue and led to the creation of more than a million jobs, directly and indirectly, on the continent. However, only approximately 300 of the available product lines are utilized and a relatively small number of countries—principally South Africa, Lesotho, Kenya, Mauritius, and Ethiopia—have taken advantage of AGOA to establish a significant volume of non-oil exports to the U.S. At the same time, the EU’s assertive free trade strategy and China’s surge in trade and commercial loans have left the U.S. in need of a new commercial strategy.

In fact, the U.S. commercial engagement in Africa is waning: Over the last five years, U.S. exports to sub-Saharan Africa have averaged $19 billion. Two-way trade has fallen from a high of $100 billion in 2008 to $39 billion in 2017, largely due to U.S. energy self-sufficiency.

In addition, summits are central to setting government priorities, especially as it relates to trade and investment targets. While the Obama administration held the first-ever summit with African leaders in 2014, the EU has held five summits with Africa, and China is about to hold its seventh heads-of-state dialogue.

Indeed, the U.S. commercial impact in Africa should be more significant than it is. With $54 billion of FDI stock, the U.S. is the largest investor on the continent. There are an estimated 600 U.S. companies in South Africa and more across the continent, including some of the largest American companies. The U.S. business model is welcomed across the continent, given the general practice of U.S companies to hire and promote locally, invest socially and reject corruption, among other practices.

There are important building blocks that could enhance the U.S. commercial presence in the region.

Between 2005 and 2017, the U.S. Millennium Challenge Corporation (MCC) invested more than $6.5 billion in 14 sub-Saharan African countries through completed or ongoing compacts in infrastructure, health, education, and other sectors. These compacts are designed to drive investment into projects deemed too risky for the private sector, promote economic growth, and enhance regional economic integration in Africa. It is worth noting that MCC investments are grants that are implemented through open-tender bids. While a competitive tender model is a critical component of the agency’s commitment to international best practices, finding more ways to involve American companies should be a priority for the MCC.

USAID’s Power Africa initiative, in many respects, has become the flagship U.S. program on the continent. The program is addressing a critical need: About 600 million people on the continent do not have a reliable supply of electricity. Over the last four years, Power Africa has developed a transactional model, based on public and private partnerships, that has led to 80 projects valued at more than $14.5 billion that are now either online, under construction, or have reached financial close. More than a third of these transactions involve the U.S. private sector, and more than 10.6 million businesses and homes now have electricity as a result of this initiative.

Finally, last month, Congress introduced the BUILD Act, which would create the U.S. International Development Finance Corporation (IDFC) by integrating parts of USAID into the U.S. Overseas Private Investment Corporation (OPIC). The potentially transformative nature of this legislation is in the fact that the IDFC would have a $60 billion lending cap, double the amount that OPIC currently can lend, and could make equity investments up to 20 percent of the total equity of a project. This will make the U.S. more competitive with Chinese state-backed funds, which often take a similar equity position in their projects. Given that Africa comprises the largest share of OPIC’s investment portfolio (27 percent), or $6.2 billion, the proposed IDFC is likely to be a significant benefit to the U.S. commercial engagement in Africa.

The challenge for the Trump administration is to develop a coherent trade strategy for Africa that builds on AGOA, is based on reciprocity, and utilizes existing programs to enhance the U.S. commercial presence on the continent. Given President Trump’s alleged derogatory remarks about African nations and Secretary of State Rex Tillerson’s abrupt firing while on a visit to the continent, the administration has yet to show that Africa is a priority for the U.S. Fortunately, investing in Africa remains a priority for the U.S. Congress.


China’s commercial presence on the continent will continue to grow, raising the principal concern that China’s significant role in addressing Africa’s infrastructure deficit could be offset by its contribution to a new, and ultimately unsustainable, African debt burden. The EU will work to implement its trade relationship, which will provide European companies competitive tariff advantages. In many respects, the U.S. Congress is driving U.S. policy toward Africa with its numerous and highly relevant legislative initiatives. However, until the executive branch provides diplomatic and policy leadership, the U.S.-Africa partnership will not fulfill its considerable potential.

Post contributed by guest blogger Joel Wiegert, Former State Department official who served in Angola, Tanzania, Ghana, and South Africa and is not affiliated with Covington & Burling LLP. This piece was also cross-posted on Brookings’ Africa in Focus blog.

The Technology Bank

Artificial intelligence and big data are some of the new technologies dominating discourse in 2018.  These technologies are expected to change the way that we travel, learn, and transact.  However, this forecast is less clear for the least developed countries (LDCs).

According to a United Nations study, science and technology and resource and development remain limited in LDCs—several of which are in Africa. Though Africa contains various tech hubs such as Kenya’s Silicon Savannah and Rwanda’s Innovation City, the concern is that without the infrastructure to adapt and absorb existing technologies, it will be difficult for these LDCs to upgrade industries, effectively partner with high tech businesses, and contribute to sustainable development.

So, the question is: how do we overcome the technological divide?

In late 2017, the U.N. General Assembly and Member States operationalized a new mechanism that may provide an answer to this question.  This mechanism is called the Technology Bank.

The Technology Bank is a new entity guided by a Council of thirteen independent experts in science, technology, and innovation (STI) and development cooperation.  The Bank’s goal is threefold:

(1) Improve LDCs’ scientific research and innovation base,

(2) Promote networking among research institutions, and

(3) Help LDCs access and utilize critical technologies.

Set to begin operations in 2018, the Technology Bank could present a window of opportunity to tap into and expand innovation in Africa.

Important for stakeholders, here are three key features of the Bank:

  1. Activities Are Rooted in Sustainable Development

Drawing from technology-driven growth objectives in the Istanbul Program of Action, U.N. Member States in the 2015 Addis Ababa Action Agenda, negotiated the Technology Bank as one of over one hundred concrete measures for implementing the sustainable development goals (SDGs).

Sustainable Development Goal 17 specifically envisions the Technology Bank as a means to build robust STI bases by improving technology access, acquisition, and utilization (SDG target 17.8).  The Bank would facilitate North-South, South-South, and triangular cooperation on and access to STI knowledge-sharing (SDG target 17.6).  Cooperation would also focus on the development, transfer, dissemination, and diffusion of environmentally sound technologies on favorable terms (SDG target 17.7).

The Technology Bank also advances collaboration to support other sustainable development goals, which include:

  • Ensuring access to affordable and clean energy (SDG 7),
  • Building industry, innovation, and infrastructure (SDG 9), and
  • Fostering sustainable cities and communities (SDG 11).

To achieve these goals, the Bank’s Charter allows organizations, firms, and other stakeholders to enter into agreements with the Bank (art. 4(c), 9(c)).  In this way, the Technology Bank is designed with an eye towards long-term collaboration and technological change.

  1. Structured to Provide Innovation Support and Reinforce Intellectual Property Rights

A) Innovation Support via STIM Unit

STIM, also known as the Science, Technology and Innovation Supporting and Enabling Mechanism, is the Banks’ first unit.  STIM aims to strengthen LDCs’ capacities, both to attract outside technology and to “generate homegrown research and innovation and take them to market.”  According to the 3-year Strategic Plan, STIM will promote the development and implementation of national and regional STI strategies.  It will also foster collaboration between LDC researchers, research institutions, and public entities.

B) Reinforced Intellectual Property Rights through IP Bank

The second unit, Intellectual Property Bank (IP Bank), is designed to assist LDCs in building national and regional capacities in the areas of IP rights and technology related regulations by helping LDCs:

  • Secure relevant IP at negotiated or concessionary rates,
  • Obtain technical assistance to identify appropriate technologies,
  • Protect IP for technologies facilitated by Technology Bank, and
  • Protect IP rights derived by LDC inventors.

C) Coordination though the Management Support, Partnerships and Coordination Unit

This third unit aims to ensure synergies and coherence across the different work streams of the Technology Bank, and coordinate with relevant stakeholders on Bank activities.

With effective management of IP rights through the IP Bank, there may be more opportunity for businesses in computer technology and pharmaceuticals, to engage with African entrepreneurs.  Meanwhile leveraging knowledge networks and facilitating technology transfer in STIM may present an opportunity to make technological building blocks more widely available, while supporting human and institutional capacity to innovate.  All three units are designed to work in concert to achieve the action items in the Strategic Plan.

  1. Resources Require Continued Investment

Initial resources for the Bank will come from the host country, Turkey.  As part of the host and contribution agreements, Turkey pledged to contribute approximately USD 2 million annually for five years, and provide personnel and offices for the premises in Gebze.  In January 2018, Norway invested approximately USD 1,070,550.  Under the Charter, these and other contributions will be kept in a Trust, subject to audit by the U.N. Board of Auditors.

Additional resources, however, require input from Member States.  According to U.N.- OHRLLS estimates, the Technology Bank would require an annual budget of USD 35-40 million.  Therefore, the overall sustainability of the Technology Bank, may be determined by stakeholder contribution.

It has been said that “the poorest countries in the world cannot eradicate poverty, achieve strong and sustainable development and build resilience without expanding their scientific and technological bases”  and that the pace of new knowledge creation is too rapid for any one country to attempt to go alone.  The Technology Bank, as it is envisaged, may have the potential to support Africa’s capacity to meet this challenge.  With the ability for stakeholders to participate in the Bank’s sustainable development activities, partner with African innovators, and contribute funds, entities now have another avenue to support new technologies in Africa.

Is Cryptocurrency a Viable Solution for the Unbanked in Africa?

When bitcoin entered the public’s eye for the first time in 2013, it was touted as one of the greatest inventions for the unbanked in Africa. The World Bank estimates that of the 2 billion people without access to the modern financial system, a third live in Sub-Saharan Africa. In recent months, bitcoin and cryptocurrency as whole have received much attention. Further, the underlying blockchain technology has gained mainstream acceptance. While the potential of such technology seems to be limitless, the question remains whether cryptocurrency is a viable solution for the unbanked in Sub-Saharan Africa.

On its face, Bitcoin appeared to be the front runner and ideal candidate for cross-border transactions, especially remittance payments.  However, the volatile nature of the cost associated with such transactions as well as the lack of a robust cryptocurrency ecosystem, has limited the effectiveness of Bitcoin on the African continent.

For many, the cost to send money into Africa through banks and wire services can be a challenge, with transaction fees usually in the range of at least 10 percent. Intra-African money transfer is even more expensive and the cost can rise to as high as 17 percent. Although Bitcoin was initially cheaper with the average transaction fee being only a few cents, in recent months, the transaction fee has proven to be extremely volatile. In December 2017, the average transaction fee climbed to as high as 50 USD, while in March 2018, it dropped to about 2 USD. Because the transaction fee within the bitcoin network does not depend on the amount of bitcoins being sent, for smaller transactions, the cost of transaction would be prohibitively high.

An additional problem lies in the cost of exchanging Bitcoin into local currency, and the lack of an ecosystem to support such exchanges. Because merchants do not universally accept Bitcoin as a means of payment, recipients of cryptocurrency must deal with the issue of converting into local currency. With low demand for bitcoin in sub-Saharan Africa, the ecosystem to support cryptocurrency is currently not robust enough to make the exchange market liquid.

New cryptocurrency platforms also face strong competition from existing fintech companies such as M-Pesa, the ubiquitous mobile money in Kenya. M-Pesa is supported by Safaricom, the biggest telecommunication company in the Kenya market with more than 70 percent of the market share. In 2015, Safaricom stopped its business with other Bitcoin payment processing companies, further limiting the ability of new cryptocurrency companies to break into the Kenyan market. Moreover, Kenya’s high court has held that Safaricom is not legally required to conduct business with such companies, giving the telecommunications company a semi-monopoly and adding further obstacles to the advancement of cryptocurrency technologies in Kenya.

The history of BitPesa, one of the oldest and best-funded blockchain companies in Africa, is illustrative of the difficulty in offering bitcoin remittance service in Africa, but also the potential the underlying technology has to solve banking issues on the continent. BitPesa initially aimed to provide a consumer level cross-border remittance service. However, when faced with the challenges highlighted above, BitPesa pivoted to provide a business-to-business (B2B) payment service instead. Currently, BitPesa is best used by entrepreneurs in Africa who utilize it as a foreign exchange and B2B cross-border payment system for large transactions. BitPesa has been gaining traction in recent time with over 6,000 customers across the continent, demonstrating that the future of cryptocurrency on the continent of Africa may be going in an upward trajectory.

As cryptocurrency and blockchain technology mature, and transaction costs are reduced, using cryptocurrency as a means of remittance may become a reality for many in Sub-Saharan Africa. Further, cryptocurrency and blockchain technology are gaining acceptance among African millennials who desire to not only use the technology but find ways to learn and innovate upon it. With the demand for cryptocurrency on the rise universally, and a growing base of millennials understanding the underpinnings of the technology, it is foreseeable that in the near future, cryptocurrency could very well be a solution for the unbanked in Sub-Saharan Africa.

For more information on the current state of blockchain technology including a synopsis of the use of cryptocurrency in various countries in Africa, please visit the Global Blockchain Business Council Annual Report located here.

Covington’s Africa Practice Will Be at SXSW

Covington’s Africa Practice is looking forward to being a sponsor of the first-ever Africa House at South By Southwest (SXSW) this year.

Launched in 1987, with a mission to foster discussion and collaboration in the music and art scene, SXSW has morphed into the ultimate gathering place for creatives, innovators, and technologists. Held in Austin, Texas each year, the event now draws politicians, corporates, and others seeking to experience the latest digital trends, hear from rising talent in film and music, or discuss significant public policy issues. Last year, there were over 60,000 “South By” attendees from 100 different countries.

Africa House will showcase the region’s emerging status as a global player in technology, entrepreneurship, and design. At the house, participants will experience pitch competitions, workshops, immersive panels, performances, and networking opportunities for all things Africa.

Africa has become a hotbed of tech activity. Just as the continent skipped landlines and went directly to mobile phones, it is skipping traditional forms of banking, agricultural, and various other sectors by utilizing technology to spur economic growth.

At Africa House, a panel entitled: “Big Law & Africa: How Covington Is Supporting The Continent’s Technology Boom,” will cover how government policies and regulations impact the continent’s tech progress.

The panel will include Covington’s experience in helping aspiring companies tackle difficult regulatory and policy questions as they look to grow and expand. Covington seeks to ensure that entrepreneurs are well positioned to address complex topics such as privacy and data security, cybersecurity, and anti-corruption and anti-money laundering. Navigating the legal structures of the U.S., E.U., and various African markets is complicated. And, we will share our experience in advising emerging tech companies on how to comply with global best practices and ensure they have a strong foundation to succeed.

Africa House at SXSW will be open on March 10th and 11th at the Parker Jazz Club in Austin, Texas.