Insight type: Article

The African Continental Free Trade Area (AfCFTA) represents a monumental shift in Africa’s economic landscape, aiming to create a single market for goods and services across 54 countries, encompassing over 1.3 billion people. AfCFTA seeks to eliminate tariffs on 90 percent of goods, facilitate the movement of capital and people, and promote investment and sustainable development. According to the World Bank, the agreement could boost Africa’s income by up to USD 450 billion by 2035 and lift 30 million people out of extreme poverty.

 

Corporate governance is especially important for family businesses, which navigate unique challenges arising from their intertwined ownership structures and family dynamics. Effective corporate governance enables family businesses to balance these complexities, fostering stability, growth and harmony. We set out some salient themes to consider.

Family businesses are inherently complex, as they operate at the intersection of personal relationships and professional responsibilities. This unique dynamic often creates fertile ground for conflicts to arise, driven by differing values, goals, roles, expectations and communication styles among family members. If left unresolved, these conflicts can jeopardise business performance and continuity as well as the familial bonds that sustain it. Therefore, addressing and mitigating potential disputes is crucial for the long-term success of the family and their enterprise.

One of the most complex and sensitive issues family enterprises face is the remuneration of family members. Ensuring that compensation is fair and effective requires a nuanced approach that balances familial aspirations with the financial and operational sustainability of the business.

Tanzania’s mining sector has undergone transformative changes in recent years, making it an increasingly attractive destination for foreign investors. With a more pragmatic approach to regulation, a focus on critical minerals, and strategic government initiatives – particularly in relation to local value addition and beneficiation – the country is positioning itself as a leader in Africa’s mining industry at a time when several other traditional mining jurisdictions are struggling to attract investment.

There are a host of critical issues which we generally reflect on when commencing a discussion with a family. These would include (in no particular order of priority) the following:

1. the business lines operated, including but not limited to any existing joint ventures plus other relevant issues which may be unique to that family and the country or countries in which the businesses are located (for example, political risk issues which require considering the use of BITs to strengthen the legal position of a family);
2. the corporate governance (or lack thereof) of a business which may include having in place a remuneration or dividend policy;
3. religious background and its importance (for example the applicability of Sharia’h principles on the succession planning);
4. educational backgrounds of the family members and an overview of the family dynamics and “politics”;
5. role of spouses and female family members (interestingly the issue of spouses and female family members continues to be a topic of debate in certain jurisdictions);
6. the long term aims and aspirations of the patriarch and/or significant owners (this in itself is a complicated discussion as we aim to get to the bottom of the vision and key drivers, how family relationships are viewed and the outcomes ideally sought by the family); and
7. understanding the overall debt and equity make-up of the businesses.

We have, over many years, been advising family-owned businesses on estate and succession planning, the inter-generational movement of wealth, governance and a host of other pertinent issues including, family business remuneration challenges. It has been and continues to be an intriguing journey for us, having to consider cultural and religious sensitivities, highly driven patriarchs, entitlement culture, generational differences in terms of vision and priorities and lack of family cohesion. Additionally, the applicable legal and tax regimes, complicated economic conditions like exchange controls, currency issues, and political turmoil challenge not only the business side of making money and growth but, additionally, family relationships. These are all crucial factors for consideration. 

The Kingdom of Saudi Arabia (KSA) is undergoing a transformative shift in its economy. In 2016, the KSA launched the Saudi Vision 2030, an initiative to, among others, attract foreign and domestic investment by improving the regulatory environment and enhancing business opportunities. A key piece of this transformation came on 11 August 2024, when the Saudi Ministry of InvestmenMISA) introduced an updated Investment Law under Royal Decree No. (M/19) Investment Law 2024-1446 (New Law), replacing the foreign investment law from Royal Decree No. (M/1) 5/1/1421H (Old Law). The New Law will take effect 180 days after its publication, on or around 7 February 2025.

Arbitration is a preferred dispute resolution mechanism in Kenya, valued for its efficiency, confidentiality, and flexibility. However, corruption poses significant challenges in this landscape. As the fight against corruption intensifies across all business stages, allegations increasingly surface in commercial disputes and arbitration proceedings. These claims may arise as strategic tactics, excuses for avoiding obligations, or genuine efforts to address irregularities and misconduct.

Partners Aisha Abdallah and Abbas Esmail and Senior Associate Odhiambo Obonyo spoke to Navacelle Law to highlight how allegations of corruption impact arbitral jurisdiction, the validity of awards, and the role of courts in Kenya.