Negotiating contracts in Africa: How continent sells out its birthright

Negotiating contracts in Africa is like a dark art. An art only mastered by multinational companies seeking to have control of natural resources, infrastructure projects and make as much money as they could at the expense of often poor but resource-rich countries.

The stories of contract negotiations in Africa are littered with stories of a president signing off a contract on his sick bed, to one military leader signing one before he overthrew his predecessor – this man signed a contract on his way to occupy the presidential palace as he toppled a dictator. In recent times a former president was seen representing a company with whom his government had signed a questionable energy supply contract that tied his country to this company in unfavourable terms – this company is making millions from an already over inflated contract which compels the country to supply free fuel to power an energy plant from which the company sells power to citizens at exorbitant prices.

Africa is not poor, but the continent’s wealth seem to be in the hands of multinational companies because uninformed, greedy and even ignorant politicians have signed away deals, some in very complicated contracts that are advantageous to the foreign companies.

Negotiation skills in Africa

Africans are socially skillful in negotiations. Every day in markets across the continent, citizens negotiate with each other. But it appears when it comes to negotiating important deals in the interest of the larger populations, some considerations other than the bigger interest of everyone take over, leading to bad deals, more in the mode of win-lose.

A resource-rich continent like Africa needs to hone its negotiation skills to be able to make more favourable deals in the interest of its people.

The International Economic Agreements Negotiations Workshop

The reality of negotiations in Africa came to the fore this week when the Economic Commission for Africa (ECA) organized a three-day negotiating skills workshop in Accra, Ghana, under the theme: Building Africa’s Negotiating Capacity for Improved Engagement with the World. The international workshop is the third in the series.

The participants were however, a curious group of practitioners in the civil society space, with very little or no presence of the political class who take the final decisions in contracts signing often as noted, against good advice and judgement from professionals.

Opening the workshop, the Deputy Minister of Trade and Industry for Ghana, Carlos Ahenkorah pointed out the lack of negotiation skills in Africa and emphasized the need for capacity building in the area on the continent.

On the first day of the workshop a case study of the recently signed deal between Uganda and a consortium including GE to develop that country’s oil refinery was looked at. It turns out Uganda would very likely lose out more than make any meaningful gains from that contract.

Parts of that single contract seem to include multilateral and bilateral agreements, including undecided issues on taxation. Moreover, it appears, the companies in the Albertine Graben Refinery Consortium led by GE includes Yaatra Ventures LLC, Intracontinent Asset Holdings Ltd, and Italy’s Saipem SpA intend to hire top lawyers to negotiate the tax deals on this contract.

But meanwhile, Ugandan politicians are touting the success of the deal with its attendant windfall of creating some 15,000 direct jobs and 150,000 indirect jobs when there are no Ugandans yet with the skills required for those jobs.

This same lack of negotiation skills accounts for the situation in the cocoa sector in Africa. While Africa is the largest supplier of cocoa in the world, the continent gets only a meager 2 per cent of the $100 billion a year revenue from the chocolate industry.

There is also the oil and precious metal sectors, where Africa is the biggest producer but gets just a fraction of the total revenue values of these industries.

It is convenient to say Africa is her own enemy. How a continent can be so rich and yet so poor beats all reason, and yet that is the reality. It appears, those who seem to benefit most from these poorly negotiated contracts are the ones who will continue to sign them, but that must change if Africa would benefit from her rich resources.

By Emmanuel K. Dogbevi
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