Q & A with Jacqueline Muna Musiitwa

Matters of Law and Investment

Jacqueline Muna Musiitwa, Esq is Founder and Managing Partner of Hoja Law Group, a boutique law firm based in New York and Kigali, Rwanda. The firm represents governments, businesses and non-profits in aspects of political, corporate and intellectual property law. Hoja Law Group also advises investors investing in Africa and African businesses contracting with foreign businesses.

Musiitwa is also Founder of Transitional Trade, a non-profit whose mission is to promote social trade, investment and entrepreneurship in post-conflict countries and transitional communities.  She is the 2011 Ibrahim Leadership Fellow at the World Trade Organization.  She was previously an advisor to the Rwandan Minister of Justice on legal matters related to trade, investment and regional integration. Musiitwa has also been an Adjunct Professor of Law at universities in the US and Rwanda.

Musiitwa is a thought leader, speaker and writer on African issues. She is an Archbishop Desmond Tutu fellow 2011 (African Leadership Institute) and a Young Global Leader 2011 (World Economic Forum).  She has completed executive education at the Harvard Kennedy School and Oxford Said School and holds degrees from Davidson College and the University of Melbourne.

For those who have followed ISOKO Institute’s Q & A series, ill-defined laws (to varying degrees across the continent) have emerged as a common inhibitor to attracting FDI to Africa. ISOKO Institute was privileged to speak with Ms. Musiitwa on matters related to law and investment.

ISOKO: In our interview series, the lack of rule of law has emerged as a common inhibitor to attracting FDI to Africa. First of all, would you agree that this is a top inhibitor to attracting FDI? Why or why not?

Musiitwa: Rule of law is one of many inhibitors to doing business in Africa.  Once this and other related problems such as corruption and creating credible institutions (legal, accounting, trade related etc) are adequately addressed, then Africa’s competitiveness internally as well as with the rest of the world will increase.  If Africa wants be a true global player it has to play by the rules.

ISOKO: For those readers that may not know, what is rule of law?

Musiitwa: Rule of law is comprised of several elements: fair and impartial courts; clear laws and precedents that are respected and followed (in the case of common law countries); local enforcement of foreign judgments and arbitration awards; and strong legal and supporting institutions e.g. accounting, anti-corruption.

Rule of law is not only necessary for the proper functioning of society, it is critical for investor confidence. Though law is an evolving field, having laws that do not change at the whim of government or industry increases investor confidence. Without rule of law the operating environment is too unpredictable, which increases both the cost and risk of doing business.

The enforcement of laws is the role of government; however, the private sector and civil society also have a role to play as far as monitoring activities domestically to make sure that the investment climate remains prosperous. When aspects of the investment climate are deteriorating, it is essential for them to either bring this matter to the government’s attention where necessary or work among themselves to rectify the situation.

ISOKO: I realize that legal frameworks will vary a great deal from one country to another and perhaps even from one region to another, but can you paint a picture of the legal situation that foreign investors might encounter upon coming to Africa? In other words, when someone says that a lack of rule of law is a problem in many African countries what do they mean?

Musiitwa: Every country has a unique legal system.  Even though the various systems can broadly be put into common law, civil law and other legal systems, countries usually have locally adapted ways of making and enforcing laws.  Therefore, it is important for investors to be familiar with local laws and to retain good local counsel to advise on local aspects of deals.

However, there is an increasing trend towards regional integration in Africa. For instance, the African Union aims for a continental free trade agreement by 2017.  So far, many of the existing regional blocs have made progress. For instance, the Organization for the Harmonization of Business Law in Africa (OHADA) is a system with sixteen members that has streamlined business laws and implemented institutions in order to attract foreign investment not only to their individual countries but also to West and Central Africa as regional blocs. Further, the East African Community has taken significant steps towards execution of the common market, customs union and ancillary matters related to integration.

Oftentimes the phrase “rule of law” is used too broadly.  I think it is necessary to do the research about specific countries and identify their respective challenges.  Otherwise, many problems risk being masked. A problem I have consistently faced has been the lack of laws or the lack of clear laws. For instance, I was working on an energy deal in a country and the country did not have strong laws dealing with energy generally, much less dealing with the complexities of the commodity being dealt with in the contract.

ISOKO: Whose responsibility is it to remedy these types of issues?

Musiitwa: It is the role of government to build and sustain transparent, fair and sustainable institutions that support a country’s investment climate.  The judiciary must ensure that it is impartial.  The legislature must be well informed about various issues before passing the requisite laws.  The executive must also identify issues of national importance and ensure the macro goals are accomplished.  Government has the duty to inform as many people as possible of the investment opportunities available.

Investors must also demand and prod the government for the necessary legal and regulatory infrastructure they need in order to effectively operate.  Investors (foreign, local and diaspora) have different needs, so unless they specify what they need there is the risk that government will not create the most applicable laws for their needs.

ISOKO: Where do you see progress being made in this arena? Is there an African state, province or city that has a model legal framework?

Musiitwa: Rwanda has done a phenomenal job of improving its investment climate over the years.  The World Bank’s Doing Business report, which ranks countries based on various indicators that determine ease of doing business in countries, has consistently ranked Rwanda as a top performer.  South Africa, Mauritius, Botswana also consistently do well.  However, these statistics should be viewed with other indicators such as those dealing with governance as well as corruption.

ISOKO: Where do we go from here?

Musiitwa: One of the constraints to investing in Africa is that there is not always readily available information about what is going on in industry. As such, research institutions and think tanks have a critical role to play in not only identifying problems but also coming up with innovative and multi-disciplinary solutions to problems.  Immediate and ongoing needs include the need for better data collection and compilation of statistics related to investment and writing briefs to be distributed to potential investors and the government.  Additionally, some governments need assistance putting laws, regulations and policies on the Internet.

The private sector in Africa is in many ways still defining itself.  Multinational corporations, state owned corporations, SMEs and microenterprises rarely speak as one or a few voices.  As such, if each level of the various groups of industry would share information and lobby government as a single group concerning the laws they need to be more effective, it would be beneficial in informing government of industry needs.