AFRICA GUIDE - LOCAL OWNERSHIP AND EMPOWERMENT - Bowmans
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AFRICA GUIDE – LOCAL OWNERSHIP AND EMPOWERMENT
BOWMANS Africa Guide – Local Ownership and Empowerment
Contents
04 Introduction
06 Our Firm
07 Our Footprint in Africa
08 Botswana
12 Kenya
16 Madagascar
18 Namibia
22 Nigeria
26 South Africa
30 Tanzania
34 Uganda
36 Zambia
40 Zimbabwe
44 Key Contacts
2 3
BOWMANS Africa Guide – Local Ownership and Empowerment
Introduction
T his guide deals with frequently asked
questions relating to local ownership
and local management requirements,
An increasing number of jurisdictions in
Sub-Saharan Africa are introducing new local
empowerment regulations or amending existing
empowerment and foreign land ownership regulations. There are also significant penalties
restrictions in various Sub-Saharan African which apply in the case of non-compliance, or
jurisdictions, providing a snapshot of the misrepresentation regarding empowerment
relevant regulations in 10 countries as at status (otherwise known as ‘fronting practices’).
1 March 2017. These jurisdictions include Namibia, South
Africa, Zambia and Zimbabwe.
It has been prepared in collaboration with our
relationship firms in Botswana, Madagascar, Please do not hesitate to contact us if you
Namibia, Nigeria, Zambia and Zimbabwe. would like to discuss the content of this
The contact details for each of these firms guide in more detail.
are included at the end of the relevant
country sections. Ashleigh Hale
Co-head of Corporate
Local ownership and empowerment
requirements differ from country to country
and have been generally informed by the
country’s particular political history and The contents of this publication are for
socio-economic environment. Many of the reference purposes only. It is not a substitute
regulations discussed in this guide seek to for detailed legal advice. If you require further
redress historic economic imbalances among information, please contact one of the key
certain local population groups and to protect contacts listed at the end of this document.
indigenous populations.
In some countries the regulations are sector
based, so local ownership requirements are
being applied in sectors such as aviation,
financial services, mining/oil and gas, private
security and telecommunications. In a few
of the countries covered in this guide, namely
Namibia, South Africa, Zambia and Zimbabwe,
local ownership and empowerment
regulations apply to both private companies
and state institutions and across all sectors of
the economy.
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Contents page Contents page
BOWMANS Africa Guide – Local Ownership and Empowerment
Our Firm Our Footprint
in Africa
We help our clients overcome legal complexity W e are present in six countries in
Africa: Kenya (Nairobi), Mauritius
and unlock opportunity in Africa.
(Moka), South Africa (Cape Town, Durban,
Johannesburg), Tanzania (Dar es Salaam),
Uganda (Kampala) and Zambia (Lusaka).
O ur track record of providing specialist
legal services in the fields of corporate
law, banking and finance law and dispute
At the inaugural IFLR1000 Awards for
Sub-Saharan Africa (2020), we received 10
awards across four jurisdictions confirming
We work closely with our alliance firms in
Ethiopia (Aman Assefa & Associates Law
Office) and Nigeria (Udo Udoma & Belo-
resolution, spans over a century. our leadership when it comes to advising on Osagie). These are two of the leading Uganda
multijurisdictional mergers and acquisitions in corporate and commercial law firms in their
Ethiopia
With eight offices in six African countries and Africa. At the African Legal Awards (2020), jurisdictions.
over 400 specialist lawyers, we draw on our we won awards in three categories and were
unique knowledge of the business and socio- highly commended in a further four categories We have developed best friends relationships
political environment to advise clients on a including African Law Firm of the Year – Large with PFI Partnerships in Malawi and Taciana
wide range of legal issues. Practice. Peão Lopes & Advogados Associados in
Mozambique, and regularly work with leading Nigeria Kenya
Everywhere we work, we offer clients a We received awards in three out of four law firms in other countries such as Angola,
service that uniquely blends expertise in the categories at the Dealmakers East Africa Botswana, Ghana, Ivory Coast, Namibia, Tanzania
law, knowledge of the local market, and an Awards (2019): top legal adviser in the M&A Rwanda, South Sudan and Zimbabwe. Malawi
understanding of their businesses. Our aim Category for both deal flow and deal value
Zambia
is to assist them to achieve their objectives and advised on the Deal of the Year. In the We have a comprehensive database of all the
as smoothly and efficiently as possible while Dealmakers South Africa Awards (2020), law firms we work with in the rest of Africa
minimising the legal and regulatory risks. we were placed third for both transaction covering such countries as Algeria, Egypt,
value and transaction volume in the General Morocco and French-speaking West Africa.
Mauritius
Our clients include corporates, multinationals Corporate Finance Category and fourth for South Africa
and state-owned enterprises across a range of both deal value and deal volume in the M&A We are representatives of Lex Mundi, a global Mozambique
industry sectors as well as financial institutions Category. association with more than 160 independent
and governments. law firms in all the major centres across
the globe. Lex Mundi gives us the ability to
Our expertise is frequently recognised by connect our clients with the best law firms in
independent research organisations. Most each of the countries represented. Bowmans offices
recently, Mergermarket identified us as the
number one legal adviser for Africa by number
of completed deals in 2020.
Alliance firms
Best friends
Significant transaction
or advisory experience
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Contents page Contents page
BOWMANS Africa Guide – Local Ownership and Empowerment
Botswana
1. Local ownership targets or restrictions peanut butter, bottling of water, production of
traditional sour milk, packaging, manufacture
The Minister of Investment, Trade and Industry of floor polish, manufacture of traditional
has made regulations reserving certain trades leather products, manufacture of traditional
and businesses only for citizens of Botswana crafts, manufacture of signage including
and/ or companies that are wholly-owned by electronic signage, manufacture of fencing
citizens of Botswana. However, the Minister materials excluding gum poles, manufacture
may exercise a discretion to nevertheless of candles, ice making and meat processing.
award a licence to a joint venture of a medium
sized business enterprise between a citizen and 2. Other impacting factors such as skills
a non-citizen for a reserved business or trade. development, enterprise development,
This is on condition that the citizen partner employee related, procurement
has at least a 51% share in the joint venture, related targets or restrictions
or where the citizen partner has written to
the Minister confirming that he or she has The Public Procurement and Asset Disposal
accepted participation in the joint venture Act, 2001 (PPAD) gives preferential treatment,
with less than a 51% share in the joint venture. in respect of state procurement, to Botswana
citizens or companies wholly owned by
The reserved activities include agricultural Botswana citizens. The Minister of Finance
shops, amusement arcades, baby shops, and Economic Development may from
bookshops, car washes, cell phone shops, time to time reserve certain contracts only
cleaning services, commercial hardware for Botswana citizens or Botswana-owned
shops, cosmetics shops, curio shops, companies, or may implement preferential
department stores, dry clean stores, dry procurement schemes that favour Botswana
clean depots, electric or electronics stores, citizens and Botswana owned contractors over
florist stores, fresh produce stores, funeral those of non-citizens. Contracts awarded to
parlours, furniture shops, general clothing non-citizen and/ or foreign contractors may
stores, general dealers, general hire services, contain requirements for such contractors
gymnasiums, haberdasheries, hair or beauty to sub-contract to Botswana contractors.
parlours, household shops, industrial hardware
shops, internet cafés or copy shops, jewellery The level of preference in preferential
shops, laundromats, motor dealers, optician schemes is in the following order:
shops, petrol filling stations, pharmacies
or chemist stores, plant hire services, 1. joint ventures between citizen contractors;
restaurants, sunglass shops, supermarkets, 2. sole citizen contractors;
toy shops, wholesalers and workshops. 3. joint ventures between citizen and
BOOKBINDER BUSINESS LAW non-citizen contractors; and
In addition, certain small-scale manufacturing 4. association agreements between citizen
Chabo Peo | Obakeng E. Lebtose enterprises are reserved for Botswana citizens sub-contractors and foreign contractors.
or companies wholly owned by Botswana
citizens. These include the manufacture The Localisation Policy, which is based on
of school uniforms, manufacture of school the Revised National Policy on Incomes,
furniture, manufacture of burglar bars, Employment and Profits, 2005, is a state-driven
manufacture of protective clothing, milling policy that aims to encourage businesses
of sorghum, manufacture of cement bricks operating in Botswana, especially foreign-
and baked earth (mud) bricks, baking of owned companies, to employ citizens rather
bread and confectionery, manufacture of than non-citizens of the same or similar
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Contents page Contents page
BOWMANS Africa Guide – Local Ownership and Empowerment
qualifications and experience. The Localisation The CEDA Guidelines mandate that CEDA
Policy is based on the Revised National Policy services and products must be open only to
on Incomes, Employment, Prices and Profits, citizens. A citizen entrepreneur may, however,
2005. Where a company has employed more apply for funding or assistance for joint
than five non-citizens it must submit, to the venture programs involving a non-citizen. The
Ministry of Employment, Labour Productivity Credit Guarantee Scheme is a product offered
and Skills, a five-year plan for the training by CEDA only to citizen-owned companies.
and development of Botswana citizens for
capacity to replace the non-citizen employees. The Local Enterprise Authority provides
development support and entrepreneurship
The Citizen Entrepreneurial Development training to citizen-owned SMMEs and
Agency (CEDA) provides subsidised loans, to joint ventures involving a citizen
structured financing, training and mentoring or a citizen-owned company.
to businesses. The Citizen Entrepreneur
Mortgage Assistance Equity Fund provides 3. Foreign land ownership restrictions
equity finance to distressed Botswana
citizen businesses that face foreclosure from Although foreign individuals and entities
commercial banks. The Credit Guarantee can purchase land rights in Botswana, in
Scheme provides guarantees to loans extended terms of the Land Control Act, 1975, the
by commercial banks to citizen-owned small, approval of the Ministry of Agricultural
medium and micro enterprises (SMMEs) and Development and Food Security must be
pays a certain percentage in case of default. obtained to purchase agricultural land.
4. Penalties for non-compliance
In Botswana, foreign In terms of the PPAD, any person who
contravenes provisions of the Act will be
participation in certain
guilty of an offence and subject to a fine
reserved activities is generally (of not less than BWP 10 000 but not more
than BWP 100 000) and, in the case of an
prohibited. Where approval
individual, a fine or imprisonment (for a
is granted in respect of these term not exceeding three years) or both.
activities, foreign participation
is limited to 49%. Local BOOKBINDER BUSINESS LAW
9th floor, iTowers North
procurement requirements
Lot 54368, CBD Gaborone
are imposed on all companies. Botswana
T: +267 391 2397
Foreign land ownership is
possible, although approval www.bookbinderlaw.co.bw
must be obtained in respect
of agricultural land.
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Contents page Contents page
BOWMANS Africa Guide – Local Ownership and Empowerment
Kenya
1. Local ownership targets or restrictions 1.5 Insurance companies
1.1 Pension fund/ scheme administrators The Insurance Act, 2012, provides that not less
than one third of the paid-up share capital of an
In terms of the Retirement Benefits Act, 1997, insurance company must be owned by Kenyan
at least 60% of the paid-up share capital citizens, a partnership whose partners are all
of a scheme administrator must be held by Kenyan citizens or that is wholly owned by the
Kenyan citizens, unless the administrator Kenyan Government. The Insurance Act further
is a bank or an insurance company. provides that at least 60% of the ownership of an
insurance broker must be held by East African
1.2 Telecommunications companies citizens or by a company or partnership which
is wholly owned by East African citizens.
The Information and Communications Technology
Sector Guidelines, 2011, issued by the Minister 1.6 Aviation companies
of Information and Communication under the
Information and Communications Act provide Regulations 5 and 12 of the Civil Aviation (Licensing
that 20% of the ownership of each licensee must of Air Services) Regulations, 2009, provides that
be held by Kenyans from at least the end of the the applicant for a licence under the regulations
third year from the date of issue of the licence. is required to be a citizen of Kenya or, if a body
corporate or a partnership, have 51% of its voting
1.3 Mining companies rights ultimately held by the Kenyan Government,
a Kenyan citizen or both. The Kenyan Civil Aviation
The Mining (Local Equity Participation) Authority (KCAA) may exempt a person from
Regulations, 2012, issued under the previous this requirement having regard to the special
Mining Act makes the granting of every mining nature of the air service provided or proposed
licence conditional on local equity participation to be provided by such person. In addition, the
amounting to at least 35% in respect of the mineral KCAA may accept any person eligible under a
right. Further, the new Mining Act, 2016, provides criterion set out in any multilateral agreement
for the Cabinet Secretary to prescribe limits on or arrangement to which Kenya is a signatory.
capital expenditure. A holder of a mining licence
whose planned capital expenditure exceeds the 1.7 Voluntary requirements
prescribed amount is required to list at least 20%
of its equity on a local stock exchange within Investors seeking to invest in Kenya can opt
three years after commencement of production. to obtain an investment certificate under the
However, the holder of a mining licence may apply Investments Promotions Act, 2014. Whether
in writing to the Cabinet Secretary to execute that certificate will be issued depends on a
an equitable alternative mechanism that will number of factors, including the extent to
allow the company to meet this requirement. which the investment will contribute to:
1.4 Merchant shipping companies • creation of employment for Kenyans;
BowMans • acquisition of new skills or
The Merchant Shipping (Maritime Service technology for Kenyans;
Njau Mukuha | Wathingira Gituro | Providers) Regulations, 2011, issued under • contribution to tax revenues or
Clare Odunga the Merchant Shipping Act, 2011, make the other government revenues;
granting of every maritime service provider • a transfer of technology to Kenya;
licence conditional on the licensee being a • an increase in foreign exchange, either
Kenyan citizen or, in the case of a company, through export or import substitution;
that company being incorporated under the • utilisation of domestic raw materials,
local Companies Act with not less than 51% supplies and services;
of its share capital held by Kenyan citizens.
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BOWMANS Africa Guide – Local Ownership and Empowerment
• adoption of value addition in the processing of 3. Other factors such as skills development,
local, natural and agricultural resources; and enterprise development, employee related,
• utilisation, promotion, development procurement related targets or restrictions
and implementation of information
and communication technology. The holder of a mineral right must, in any dealings
in minerals, give preference to the maximum
The benefits of an investment certificate include extent possible to materials and products made
that the holder of a certificate is entitled to the in Kenya, services offered by Kenyan citizens and
initial issuance of any additional licences required companies or businesses owned by Kenyan citizens.
for his or her venture or operation. The licences
will be mentioned on the certificate and, until 4. Foreign land ownership restrictions
the licences are actually issued by their issuing
authorities and for a maximum period of 12 months 4.1 Land Control Act
after the issuance of the certificate, the licences
are deemed to have been issued by virtue of the A private limited liability company incorporated
investment certificate, subject to the submission in Kenya cannot, in terms of the Land Control
of appropriate applications and fees. The holder Act, 2012, own agricultural land unless all
of an investment certificate is also entitled to of its shareholders are Kenyan citizens.
certain entry visas for management, technical
staff or shareholders for a two-year period. 4.2 The Constitution
2. Local management targets or restrictions The Constitution of Kenya, 2010, introduced a
prohibition on ownership of freehold land by
Generally speaking, there is no minimum foreigners by providing that non-Kenyan citizens
requirement for participation of Kenyan citizens in are not permitted to own an interest in land
management positions. However, there are certain longer than a leasehold term of 99 years.
exceptions; for example, section 27 of the Insurance
Act requires that at least one third of members of 5. Reporting obligations
the board of directors or management board of
insurance companies must be Kenyan citizens. The respective regulators in the various sectors
may conduct inspections which, among
other things, seek to establish the extent of
compliance with the local ownership rules.
Foreign ownership 6. Penalties for non-compliance
restrictions in Kenya
The relevant regulators in the various sectors
apply in respect of listed may refuse to grant a licence or suspend
or withdraw a licence issued under the
companies and the mining,
applicable legislation in the event of non-
merchant shipping, insurance, compliance with the local ownership rules.
telecommunications, pension
Penalties for a general failure to comply with
fund and aviation sectors. the relevant legislation may also be levied.
Foreign land ownership is
7. Proposed or contemplated
generally limited to leaseholds changes to regulations
not exceeding 99 years.
The draft Insurance Bill contains proposals to
remove the local ownership requirements for
insurance companies. It is not clear when this Bill
will be passed into law or whether it will remain
in its current form (or, in fact, whether the local
ownership requirements will be retained).
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BOWMANS Africa Guide – Local Ownership and Empowerment
1. Local ownership targets or restrictions 3.2 Public procurement
Madagascar Local ownership targets or restrictions. There are Law No. 2004-009 of 26 July 2004 creating
no local ownership restrictions and Law No. 2007- a Code of Public Procurement provides that a
036 of 14 January 2008 relating to investments procuring entity can grant a margin of preference
allows foreign investors to own 100% of the shares for the benefit of a bid by a Malagasy company.
of a company through which they operate. However, the margin of preference applies
exclusively to the sectors of the national economy
2. Local management targets or restrictions that are subject to special protection. This
preference must be quantified as a percentage
None. of the amount of the tender and may not exceed
10%. This preference cannot be relied on if it has
3. Other factors such as skills development, not been included in the bidding documents.
enterprise development, employee related,
procurement related targets or restrictions 4. Foreign land ownership restrictions
3.1 The mining sector Law No. 2007-036 (relating to investments)
provides that foreign individuals may not
Law No. 2001-031 of 8 October 2002 relating purchase land although foreigners may
to large investments in the mining sector procure leasehold rights limited to 99 years.
(modified by Law No. 2005-022) provides Companies that are controlled by foreigners
that the holder of a mining right must, in may purchase land if the authorisation from the
respect of employment and training: Economic Development Board of Madagascar
is obtained and the land purchased is used for
• hire Malagasy persons rather commercial, industrial, tourist, agricultural, or
than non-Malagasy persons; fishery purposes or the provision of services.
• put in place training programmes for
Malagasy employees for the same 5. Proposed or contemplated
ability, qualification and skills; and changes to regulations
• promote upward mobility for Malagasy
employees (depending on their ability). The new Petroleum Code, which has not yet
been adopted, may contain provisions relating
to local empowerment or indigenisation.
There are generally no
foreign ownership restrictions JOHN W FFOOKS & CO.
1st Floor, Immeuble Assist, Ivandry
applicable in Madagascar. Antananarivo, 101
There are, however, certain Madagascar
T: +261 20 224 3247
foreign labour restrictions.
Further, foreign land ownership www.jwflegal.com
JOHN W FFOOKS & CO. is generally restricted and is
limited to 99-year leaseholds.
Hantamalala Rabarijaona
A company that is foreign-
owned may, however, obtain
approval to own land for
specific purposes.
16 17
Contents page Contents page
BOWMANS Africa Guide – Local Ownership and Empowerment
Namibia
1. Local-empowerment obligations Commission. The Commission has imposed
local empowerment conditions in the past such
1.1 New Equitable Economic as in the Walmart/ Massmart merger (2011)
Empowerment Framework Bill where, as a condition of the approval of the
merger, Walmart was obliged to include local
In terms of section 23(1) of the New Equitable ownership participation, as well as that of PDNs.
Economic Empowerment Framework Bill, 2016
(NEEF Bill), which has not yet come into effect, 1.5 Marine Resources Act
any private sector enterprise is required to,
within a prescribed period, sell at least 25% In terms of the Marine Resources Act, 2000,
ownership, or a percentage as determined by in applications for a right of exploitation or a
the Minister of Industrialization, Trade and SME quota, whether the applicant is a Namibian
Development, to previously disadvantaged citizen or entity held by Namibian citizens
nationals (PDNs). However, as the NEEF Bill is not may be considered. If the applicant is not a
yet law, it remains subject to further discussion. Namibian citizen or an entity held by Namibian
citizens, then the applicant must show the
1.2 Namibian Investment Promotion Act advancement of persons in Namibia who have
been socially or educationally disadvantaged by
In terms of the Namibian Investment Promotion discriminatory laws or practices prior to Namibian
Act, 2016 (NIPA), which has not yet come independence. The Minister of Fisheries and
into force, investment in the natural resources Marine Resources may, in his or her discretion,
sector, or in any other sector which is above impose conditions on fishing licences or quotas.
a certain threshold (and which is still to be
determined), requires the prior approval 2. Local ownership targets or restrictions
of the relevant line Minister. Any change of
control of such investment, or transfer of 2.1 Telecommunications
any licences, also requires prior approval.
In terms of the Communications Act, 2009, the
NIPA will come into force once the Regulations to Communications Regulatory Authority of Namibia
the Act have been drafted. There is currently no will not issue a licence to any person that is not
indication as to when this will occur, though this is a Namibian citizen or a Namibian company, and
expected during latter part of 2017 or early 2018. no more than 49% of the share capital of any
such company may be owned by persons that
1.3 Electricity Act are not Namibian citizens or Namibian companies
that are not controlled by Namibian citizens.
In terms of the Electricity Act, 2007, the Minister
of Mines and Energy may grant licences subject 2.2 Mining
to terms and conditions recommended by the
Electricity Control Board. Generation licences The Minister of Mines and Energy, in February
often include, as a licence condition, that a 2016, issued new standard licence conditions
ENGLING STRITTER & PARTNERS stipulated percentage of the shareholding of applicable to exclusive prospecting licences and
the relevant project company (which varies mining licences in terms of which a minimum of
Alex Stritter | Namene Shejavali-Lungu | between 23% and 30%) should be held by PDNs. 5% of the share capital of the relevant mining
James Smith company must be held by Namibian citizens or
1.4 Competition Act companies wholly owned by Namibian citizens.
The Competition Act, 2003, empowers The Diamond Act, 1999, provides that the Minister
the Namibian Competition Commission of Mines and Energy may not grant an application
(Commission) to impose certain conditions when for a licence unless the applicant is a Namibian
considering a merger which is regulated by the citizen or is permanently resident in Namibia.
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
The New Equitable Economic The NEEF Bill (which is not yet in effect) Broadly, a person commits an offence if he or she commercial and communal lands. The
Empowerment Framework Bill, contains certain local management knowingly mispresents information or provides President has since postponed the re-
targets. The current management target false information in respect of the compliance of tabling of the Bill until the second national
which is expected to become in terms of the NEEF Bill is set at 50%. a private sector enterprise, or to gain a benefit land conference, which will take place in
law during 2017, will impose associated with a compliance status, or where September 2017, has been concluded.
4. Other impacting factors such as skills he or she engages in ‘fronting practices’ (where • A new mining empowerment law has been
certain local ownership and development, enterprise development, one makes it seem that PDNs are receiving proposed by the Minister of Mines and
indigenisation requirements. employee related, procurement benefits which are not actually flowing to them). Energy in terms of which mining firms
related targets or restrictions will be compelled to have a minimum
The Namibian Investment If such person is convicted of any of the above 20% ownership stake reserved for PDNs.
Promotion Act which, although The NEEF Bill (which is not yet in effect) offences, that person will be liable to a fine A draft of the Bill was to be published
contains mandatory human resources and (determined by the courts) or to imprisonment for public comment in February 2017.
promulgated, has not yet taken skills development requirements in terms of for a period not exceeding 10 years or to
effect, imposes local ownership which businesses will be required to spend an both a fine and such imprisonment or, if the
amount of 0.5% of their gross wages on training convicted person is not a natural person, to a ENGLING STRITTER & PARTNERS
requirements on any investment costs. Training costs are calculated as the total fine not exceeding 10% of its annual turnover. 12 Love Street
in Namibia concerning natural training cost minus the Vocational Education Windhoek
and Training (VET) Levy contribution. 7. Proposed or contemplated Namibia
resources as well investments changes to regulations
that are above a certain The Public Procurement Act, 2015 (which is not www.englinglaw.com.na
yet in effect), includes preferential procurement Further to the NEEF Bill, the NIPA and
threshold. Namibia does not provisions that seek to benefit local products, the Public Procurement Act:
prohibit foreign ownership previously disadvantaged women and youths,
SMMEs and Namibian enterprises in general. • The Regional Councils Amendment Bill, 2015,
of land, although certain It is expected that the Act will become empowers the Minister (responsible for
restrictions apply especially in operational during the course of 2017. regional government affairs) to determine
methods of sale or letting of real property
respect of agricultural land. 5. Foreign land ownership restrictions applied by regional councils in order to
prohibit the acquisition of this property
A foreign person who obtains a legal right to by foreign nationals in ‘settlement areas’
3. Local management targets or restrictions remain in Namibia is generally accorded the and, therefore, obliging the owners of
same treatment as Namibian citizens in respect such property to deal exclusively with
In terms of the Minerals (Prospecting and of land ownership. However, the Agricultural Namibian citizens. (The settlement areas are
Mining) Act, 1992, there must be a minimum Land Reform Act, 1995, prohibits foreign designated by Regional Councils and are
of 20% representation of PDNs in the nationals from entering into any agreement areas outside of existing local authorities.)
management structure of a mining company. regarding the right to occupy or possess • In terms of the Local Authorities Amendment
Generation licences issued by the Electricity agricultural land without the written permission Bill, 2015, certain areas must be designated
Control Board contain similar provisions. and consent of the Minister of Lands. by a local authority as reserved for the
acquisition of property by Namibian citizens.
Further, both the Short-Term Insurance Act, 6. Penalties for non-compliance In terms of this Bill, foreign nationals will
1998, and the Long-Term Insurance Act, 1998, require written consent from the Minister
require that half of the board of directors of an The NEEF Bill (which is not yet in effect) contains (responsible for local government affairs)
insurance or re-insurance company must be penalty provisions for non-compliance with to lease such property and this lease
Namibian citizens resident in Namibia. This is the provisions of the Act which include: cannot exceed 30 years (but must be
also the case for the managing director, although for a period greater than one year).
permission may be sought for this position to • a fine or imprisonment for a period • The Land Bill, 2016, proposes barring
be held by a resident non-Namibian citizen. not exceeding 10 years or both; and foreigners from owning agricultural,
• a fine or imprisonment for a period
not exceeding 12 months
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
Nigeria
1. Local ownership targets or restrictions 1.3 Broadcasting
In terms of the Nigerian Investment Promotion
Commission Act, as contained in Chapter The Nigerian Broadcasting Code, 2012, issued
N117 of the Laws of the Federation of Nigeria, by the Nigerian Broadcasting Corporation
2004 (NIPC Act), foreign ownership of (NBC) requires that a company applying
100% is permitted in all industries. However, for an NBC licence must demonstrate that
certain sector specific regulations and laws it is not representing any foreign interests
either limit or prohibit foreign ownership. and that it is substantially (51% or more)
owned and operated by Nigerians.
1.1 Shipping
1.4 Advertising
The Coastal and Inland (Cabotage) Shipping
Act, 2004, restricts the use of foreign-owned The Advertising Practitioners Council of Nigeria
and/ or manned vessels for coastal trade in introduced the Proclamation on Registration and
Nigeria and promotes the development of Licensing Regime in the Advertising Industry,
indigenous or Nigerian ownership of vessels. 2013 (the Proclamation), which is a new set of
licensing guidelines and requirements that govern
1.2 Oil and gas advertising practices in Nigeria. The Proclamation
stipulates that only a national agency (being
The Nigerian Oil and Gas Industry Content a locally incorporated company with at least
Development Act, 2010 (Local Content Act), 74.9% Nigerian shareholding) may advertise to
prescribes various levels of compliance in the Nigerian market. A foreign agency (whether
relation to different activities that may be or not locally incorporated) cannot practise
conducted in operations and transactions in the advertising that is targeted at the Nigerian market.
industry. In the oil and gas sector, indigenous
companies (ie companies with 51% or more 1.5 Private security
Nigerian shareholding) are given preference
under the Local Content Act in relation to the In terms of the Private Guard Companies Act,
award of contracts in the oil and gas industry. as contained in Chapter P30 of the Laws of
the Federation of Nigeria, 2004, a foreign
investor cannot acquire an interest in a
Nigerian private security guard company.
Various sectors of the
1.6 Engineering
Nigerian economy require
local participation including, In terms of the Engineering (Registration, etc) Act,
UDO UDOMA & BELO-OSAGIE 2004, any company engaging in a service that is
among others, the shipping
considered as the practice of engineering must
Uzoma Azikiwe | Agbolade Adeyemi | and oil and gas sectors. be registered with the Council for the Regulation
Temi Olowu of Engineering (COREN). A company applying
In certain sectors, foreign
for registration with the COREN must show that
participation is not possible, it has Nigerian directors who are registered with
the COREN. These registered directors must
such as in the advertising
hold at least 55% of the shares in the company.
sector. Foreign ownership of
land in Nigeria is prohibited.
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
1.7 Aviation 2.2 Private security knowingly allowed such offence to occur will
also be liable, on conviction, to a fine of not
The Civil Aviation Act, 2006, provides that in order Private security companies must be completely less than NGN 250 and a further fine of NGN
for an aircraft to be used by any person in Nigeria owned and managed by Nigerian citizens. 25 for every day that the default continues.
for any flying undertakings, an aviation licence,
permit, or other authorisation of the Nigerian Civil 3. Other impacting factors such as skills 6.2 Shipping
Aviation Authority (NCAA) must be obtained. In development, enterprise development,
order to qualify for the grant of an aviation licence employee related, procurement Any vessel that does not comply with the
or other related aviation permits, the NCAA related targets or restrictions requirements contained in the Coastal and
must be satisfied that the applicant is a Nigerian Inland (Cabotage) Shipping Act, 2004, is liable,
citizen or in the case of a corporate body, that the In terms of the Local Content Act, on conviction, to a fine of not less than NGN
applicant is a company registered in Nigeria with indigenous service companies are given 10 000 000 and/ or forfeiture of the
a majority of its shares held by Nigerian citizens. exclusive consideration in bids for contracts vessel involved in the offence or such
and services that are to be executed higher sum as a court may deem fit.
1.8 IT consultancy on land or in swamp operating areas of
the Nigerian oil and gas industry. 6.3 Oil and gas
In terms of the National Office for Technology
Acquisition and Promotion Act, Chapter N62, 4. Foreign land ownership restrictions An oil and gas operator, contractor or sub-
Laws of the Federation of Nigeria, 2004 Foreign ownership of land is prohibited in Nigeria contractor who carries out any project contrary
(NOTAP), every agreement or contract in following the Supreme Court of Nigeria’s decision to the provisions of the Local Content Act,
which a foreigner or foreign entity is to provide in the case of Ogunola & Ors v. Eiyekole & Ors. commits an offence and is liable upon conviction
foreign technology, management, consultancy (1990) in which section 1 of the Land Use Act, to a fine of 5% of the project sum for each
or assistance to a Nigerian company, is as contained in Chapter 5 of the Laws of the project in which the offence is committed, or
required to be registered (with the issue of a Federation of Nigeria, 2004, was considered. cancellation of the project by the NCDMB.
registration certificate) by the Nigerian company
with the NOTAP. This registration must take 5. Reporting obligations
place no later than 60 days from the date of UDO UDOMA & BELO-OSAGIE
execution or conclusion of the contract. Under the Local Content Act, each oil and 10th & 13th floors
gas operator must, within 60 days of the St. Nicholas House
1.9 Pharmacy beginning of each year, submit to the Nigerian Catholic Mission Street
Content Development and Monitoring Lagos
The provisions of the Pharmacist Council of Board (NCDMB) its annual Nigerian Content Nigeria
Nigeria Act, 2004, provide for the registration Performance Report covering all its projects
of non-Nigerian citizens only if the applicant’s and activities for the year under review www.uubo.org
country of nationality grants reciprocal by the NCDMB. This report must include
registration facilities to Nigerian citizens and if employment and procurement achievements.
the applicant has been resident in Nigeria for
at least 12 months immediately preceding the 6. Penalties for non-compliance
date of his or her application for registration.
6.1 Incorporation
2. Local management targets or restrictions
A foreign company that fails to comply with the
2.1 Shipping requirement to incorporate a Nigerian entity
and obtain the required foreign investment
All vessels used for cabotage or coastal approvals, will be guilty of an offence and
transportation of goods and services must liable, on conviction, to a fine of not less than
be managed by Nigerian citizens. NGN 2 500, and every officer or agent who
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
South Africa
1. Local empowerment obligations South Africans. Sector-specific codes may vary this
target. The Codes impose sub-minimum thresholds
Broad-based black economic empowerment for ownership by black people and time periods
(BBBEE) regulations incentivise existing and new within which debt associated with the acquisition
companies to promote ownership and management of ownership rights must be paid down (the ’net
participation by black South Africans. This is not value assessment’) in order to avoid a penalty.
aimed at restricting foreign ownership, but rather at
promoting the inclusion of black South Africans in Other than in certain state licensing, permitting
the economy. The BBBEE status required by most and authorisation processes, there is no ‘hard law’
entities doing business in the South African market requiring that any private entity in South Africa
is primarily driven by commercial pressures rather must meet specific BBBEE targets. However,
than by regulatory requirements, although there are BBBEE ‘compliance’ provides commercial
limitations on foreign participation in certain sectors benefits and is considered a business imperative,
in South Africa. There are currently no restrictions especially for companies doing business with
on land ownership by foreigners in South Africa. government bodies and state-owned enterprises.
The Broad Based Black Economic Empowerment 2. Local ownership targets or restrictions
Act, 2003, is the principal legislation through
which BBBEE is measured. The revised Codes of 2.1 Civil aviation
Good Practice (Codes), which set out the details
of the measurement process, came into effect Under South African law, every aviation carrier
on 1 May 2015. Various sector-specific codes, requires a domestic licence (issued in terms of
which must be aligned with the Codes, have the Air Services Licensing Act, 1990) and/ or an
also been published. These detail the manner in international carrier licence (issued in terms of the
which BBBEE must be measured for businesses International Air Services Act, 1993) and in either
operating in particular sectors. Where a sector- instance the licence holder must, if it is a juristic
specific code has been issued, businesses in person, be incorporated in South Africa. Non-
that sector are required to apply the relevant residents may not hold more than 25% of the voting
sector code rather than the general Codes. rights unless approved by the Minister of Transport.
In assessing BBBEE, a ‘scorecard’ approach is 2.2 Broadcasting
generally used for businesses, in terms of which
the scorecards detail the various elements and The Electronic Communication Act,
sub-elements of BBBEE on which enterprises are 2005, provides that a foreigner may
measured and stipulate targets to be achieved not, whether directly or indirectly:
for each element and sub-element. The closer an
enterprise is to reaching a particular target, the more • exercise control over a commercial
points it will achieve for that element of BBBEE. broadcasting licensee; or
bowmans • have a financial interest or an interest either in
The ‘ownership’ element in the Codes relates to voting shares or paid-up capital in a commercial
Ashleigh Hale | Claire Franklyn | the extent to which ownership interests (i.e. voting broadcasting licensee exceeding 20%.
Lerato Thahane | Krissen Pillay rights and economic interest) in a measured
enterprise, are held by black people, and the 2.3 Telecommunications
extent to which such ownership interests are
unencumbered by debt. The Codes provide that It is currently a requirement under the Electronic
the general ownership compliance target is 25% Communications Act, 2005, for an applicant for
plus one vote of the shares in the company held an individual licence to have at least 30% of its
by black South Africans. Additional points are shares (or such higher percentage shareholding
awarded for ownership held by black female as specified in the invitation to apply) held by
historically disadvantaged South Africans (HDSAs).
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
2.4 Mining of black people who participate in management 5. Foreign land ownership restrictions: The BBBEE Commission will investigate alleged
is also measured. Companies above a certain fronting practices and may refer such practices
The Mineral and Petroleum Resources Development size have additional and separate obligations, in There are currently no restrictions on the ownership for prosecution. Fines for fronting may be up
Act, 2002, creates a standalone BBBEE regime, terms of the Employment Equity Act, to prepare of land by foreigners in South Africa. However, the to 10% of a company’s annual turnover.
as set out in the Mining Charter. The Mining employment equity plans and to submit returns Regulation of Land Holdings Bill, 2017 (the Land
Charter applies a different approach to measuring regarding their progress on employment equity to Bill), prohibits the acquisition of agricultural land In terms of certain sector specific legislation, the
‘ownership’ and ‘management control’ of the the Department of Labour. These plans set targets by foreigners. The Land Bill does allow foreigners relevant regulator may refuse to grant a licence,
holder of the mining right and the black ownership which align to regional demographic requirements to enter into long-term leases in respect of or may suspend or withdraw a licence, in the
of a supplier to the holder of a mining right. in respect of the companies’ labour count. agricultural land. Such a lease cannot be less than event of non-compliance with ownership targets.
The Minister of Mineral Resources will generally 30 years or the natural life of the lessee and may Penalties for a failure to comply with the provisions
only grant a mining right to an applicant if there In terms of the Private Security Industry not be subject to renewal periods in excess of 50 of the relevant legislation may also be imposed.
is at least a 26% shareholding by HDSAs. An Regulation Act, 2001, the management and years. Foreigners may acquire agricultural land
amended Mining Charter has been gazetted by executive functionaries of a company providing where black persons hold a controlling interest 8. Proposed or contemplated
the Department of Mineral Resources for public security services, well as the members of in the land. All existing agricultural land held by changes to regulations
comment. The amended Mining Charter is more its board, must be constituted by citizens foreigners would in terms of the Land Bill become
onerous and provides that ownership previously or permanent residents of South Africa. subject to a right of first refusal held by the The sector codes are currently in the process
held by HDSAs that is subsequently disposed of Minister for Rural Development and Land Reform of being aligned with the Codes. The amended
(i.e. ‘lost ownership’) will not contribute towards In terms of the Electronic Communications Act, not and, should this right not be exercised, must be Mining Charter, which applies to the upstream
ownership compliance targets, meaning that more than 20% of the directors of a commercial offered to South African citizens. Land reform is mining and minerals industry, has been published
any existing licence holders in this position will broadcasting licensee may be foreigners. a contentious issue in South Africa and it remains for public comment and it is expected that the final
need to procure new HDSA participation. The to be seen whether the Land Bill will be passed in reviewed Mining Charter will soon be published.
amended Mining Charter has been contentious 4. Other factors such as skills development, substantially the same form as it is currently in.
and the final form may differ materially from the enterprise development, employee related, In the context of the Private Security Industry
amended Mining Charter that has been gazetted. procurement related targets or restrictions 6. Reporting obligations and Regulation Amendment Bill, which is
awaiting the President’s signature, it is proposed
2.5 Private security services In terms of the Codes, companies are When a company presents any information that at least 51% of the ownership of both
also measured in respect of: in relation to its BBBEE score, for example existing and new security service providers
Although there are currently no local ownership in the context of a tender response, this must be held by South African citizens.
restrictions in the private security industry the 4.1 Skills development must be supported by a BBBEE certificate
Private Security Industry Regulation Amendment issued by a verification agency, which The Regulation of Land Holdings Bill has been
Bill (Amendment Bill), which requires the Companies can score points for the amount is valid for a period of 12 months. submitted to Parliament and it remains to
President’s assent in order to come into effect, spent on skills development for black be seen whether any restriction on foreign
provides that at least 51% of the ownership of both employees, the number of learnerships Listed companies are required to report ownership of land will actually be implemented.
existing and new security service providers must facilitated for black people (with additional annually on their BBBBEE compliance to the
be held by South African citizens. The Minister points for black women and disabled people), BBBEE Commission. All BBBEE ownership
of Police will also be empowered to prescribe a money spent on bursary programmes and the transactions above a certain threshold are to
different percentage of ownership and control implementation of mentorship programmes. be reported to the BBBEE Commission.
in respect of different categories of security
business (eg response security, assets in transit, 4.2 Enterprise and supplier development Certain sector specific legislation requires
locksmiths, etc), taking into account the security information relating to compliance
interests of South Africa. The provisions of the This involves preferential procurement with with ownership to be submitted to the
Amendment Bill have been contentious and it is purchasing of goods and services from black relevant regulator for that sector.
not clear when, or if, it will come into effect, or companies (who themselves comply with
whether the Amendment Bill will be subject to requirements in order to be classified as 7. Penalties for non-compliance
further amendments before coming into effect. ‘Empowering Suppliers’), as well as contributions
towards the development of black businesses There are no penalties for ‘non-compliance’
3. Local management targets or restrictions generally and black businesses who are suppliers with BBBEE. However, it is a criminal offence
(which can be monetary or non-monetary). to engage in ‘fronting’ (ie where enterprises
In terms of the measurements under the BBBEE These contributions include, for example, making make representation that they have adopted
regime, a company can increase its score for loans or providing preferential credit terms to BBBEE initiatives in order to score points but, in
‘management control’ if it increases the number of black businesses. Development targets are substance, the initiatives have not been adopted)
black directors on its board and, in particular, the based on a percentage of net profit after tax. or to make deliberate misrepresentations in
number of black women on its board. The number relation to an enterprise’s true BBBEE status.
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
Tanzania
1. Local ownership targets or restrictions licence is held by that person in undivided
participating shares with Tanzanian citizens,
There are certain limited restrictions on foreign whose undivided participating shares
ownership in Tanzania, including in the mining, may not amount to less than 25%.
merchant shipping, capital markets, insurance and
telecommunications sectors. There are also land A primary mining licence for any mineral
ownership restrictions – non-citizens may not be may only be issued to Tanzanian citizens,
allocated or granted land unless it is for investment partnerships which are exclusively composed
purposes and foreign companies need to apply to of Tanzanian citizens, and companies whose
be allowed to own land by way of a derivative right members, which must be Tanzanian citizens,
for investment purposes and their investment must exercise control over the company (both
be greater than the set threshold in order to qualify. direct and indirect) from within Tanzania.
1.1 Companies listed on a securities exchange In terms of the Mining (Minimum Shareholding
and Public Offering) Regulations, 2017, the
The Capital Markets and Securities (Foreign holder of a special mining license must have
Investors) Regulations provide that participation 30% of the total issued and paid up shares
of foreign investors in the Dar es Salaam held by Tanzanians and the local shareholding
Stock Exchange must be subject to the must be obtained through a public offer
conditions or requirements prescribed by the under the Dar es Salaam Stock Exchange.
Bank of Tanzania. Further, the Regulations
require continuous disclosures of acquisitions 1.4 Merchant shipping
of 5% and more by foreign investors.
Under the Surface & Marine Transport Regulatory
1.2 Telecommunications companies Authority (Miscellaneous Port Services) Licensing
Rules, miscellaneous port services licences
The Electronic and Postal Communications Act, may only be issued to a local company. The
2010, read with the Licensing Regulations, provide Licensing Rules define a ‘local company’ to
that any company licensed in the sector is required mean a company registered in Tanzania and
to issue at least 35% of its shares to Tanzanians. which is solely owned by Tanzanian citizens.
1.3 Mining companies 1.5 Insurance
The Mining Act, 2010, provides that licences to mine The Insurance Act, 2009, provides that an entity
for gemstones may only be granted to Tanzanians, may not be registered as an insurer unless it is a
regardless of the size of the operation. The only body corporate incorporated under the Companies
exception is where the Minister of Energy and Act or any other law, is deemed to be resident in
Minerals has determined that the development is Tanzania, and at least one-third of the controlling
Bowmans likely to require specialized skills, technology or a interest, whether in terms of shares, paid up capital
high level of investment, in which case the licence or voting rights, is held by Tanzanian citizens.
Wilbert Kabinga | Aisha Sinda | may be granted to non-Tanzanians provided
Jacqueline Tarimo that their participation does not exceed 50%. Further, the Insurance Act requires that at least
one-third of the controlling interest in an insurance
A special mining licence for mining gemstones broker, whether in terms of shares, paid-up capital
cannot be granted to a non-citizen unless the or voting rights, is held by Tanzanian citizens.
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
1.6 Voluntary requirements 3. Foreign land ownership restrictions
Investors seeking to invest in Tanzania can The Land Act, 1999, provides that non-citizens
opt to obtain a certificate of incentive issued may not be allocated or granted land unless it
under the Tanzania Investment Act, 1997. is for investment purposes under the Tanzania
Whether that certificate will be issued depends Investment Act, 1997. Foreign companies need
on a number of factors, including the extent to make application through the Tanzania
to which the investment will contribute to: Investment Centre to be allowed to own land by
way of a derivative right for investment purposes
• the creation of employment for Tanzanians; and their investment must be greater than
• the acquisition of new skills or USD 300 000 in order to qualify.
technology for Tanzanians;
• a contribution to tax revenues or 4. Reporting obligations
other government revenues;
• a transfer of technology to Tanzania; Regulators may conduct inspections
• an increase in foreign exchange, either which, among other things, will seek
through export or import substitution; to establish the extent of compliance
• utilisation of domestic raw materials, with the local ownership rules.
supplies and services;
• adoption of value addition in the 5. Penalties for non-compliance
processing of local, natural and
agricultural resources; and The relevant regulators may refuse to grant
• utilisation, promotion, development a licence or suspend or withdraw a licence
and implementation of information issued under the applicable regulation
and communication technology. in the event of non-compliance.
2. Local management targets or restrictions Penalties for any general failure to comply with
the relevant legislation may also be levied.
Generally, there are no minimum local
management targets or restrictions.
However, the Insurance Act requires that one-
third of the members of the board of an insurance
company must be Tanzanian citizens. Further,
the director, controller, manager, or principal
officer who handles the day to day management
of the company, must be resident in Tanzania.
In terms of the Mining Act, a primary mining
licence will only be issued to a company whose
directors are exclusively Tanzanian citizens.
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Contents page Contents pageBOWMANS Africa Guide – Local Ownership and Empowerment
Uganda
1. Local ownership targets or restrictions 2.2 Customary tenure
There are generally no restrictions in place Landholders do not have a formal title to the
for foreign ownership in Uganda. There are, land they use, although Article 237(4a) of the
however, restrictions in place in respect of land Constitution provides that all Ugandan citizens
and foreigners are only permitted to acquire owning land under customary tenure may acquire
land through leasehold arrangements. certificates of ownership in a manner prescribed
by Parliament. More than 80% of the land in
A company can be 100% foreign owned in Uganda Uganda is held under unregistered customary
and there is no legal requirement to have a local tenure. Despite the lack of registration, customary
shareholder or director, with the exception of tenure is recognised by the state (Article 237(1) of
certain regulated sectors. In general, restrictions on the Constitution of Uganda). Non-citizens cannot
foreign participation are limited provided that a local own land under the customary tenure system.
Ugandan company is operating within Uganda.
1.1 Oil and gas
State participation is required in the oil and gas
sector and a production sharing agreement must
be entered into between the government and the
relevant oil and gas company. Terms relating to
shareholding are agreed on a case by case basis.
1.2 Mining
The Mining Act, 2003, provides that no
mineral rights shall be granted to or held by
an individual who is not a citizen of Uganda.
However, in practise, foreign owned companies
are permitted to carry out mining activities and
are granted mineral exploration licences.
2. Empowerment-related foreign
land ownership restrictions
2.1 Freehold and leasehold tenure
Shareholding structure has a bearing on issues
Bowmans of ownership of land under the Land Act, 1998.
Companies controlled by foreigners (ie those
William Kasozi | Lynette Akunda persons who are not Ugandan nationals) cannot
acquire freehold tenure of land and can only acquire
leases for a limited period of 99 years, which
are renewable upon application by the lessor.
34 35
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