Uganda has ratified the agreement for the establishment of the African Legal Support Facility (ALSF).
The Pearl of Africa becomes the 27th member state of the body, which is an international organization hosted by the African Development Bank Group.
ALSF is dedicated to funding legal advice and technical assistance to African countries in their negotiation of complex commercial transactions, creditor litigation and other related sovereign transactions.
The ALSF also develops and proposes innovative tools for capacity building and knowledge management.
Ugandan Minister of Foreign Affairs Sam Kuteesa, signed the agreement on March 20, 2019, following its approval by the Cabinet.
ALSF support for the Uganda Refinery Project
The East African nation has enjoyed long-standing cooperation with the Facility during which several projects in the country have been launched and successfully concluded.
Today, the ALSF is supporting the government to develop the Uganda Refinery Project and the East Africa Crude Oil Pipeline Project.
The ratification of the ALSF Treaty was driven by Uganda’s recognition of the value added by the ALSF’s interventions and by the growing need to further strengthen and improve the country’s legal capacities.
ALSF delivers its services to African countries and Uganda will continue to benefit from closer collaboration with the Facility and maintain broad access to its capacity-building events, knowledge products and legal expertise.
In February, ALSF completed a two-day workshop for African lawyers and government negotiators.
The workshop, co-organized with the African Business Law Firms Association (ABFLA) under the African Legal Support Facility Academy, was held in Accra, Ghana.
Lawyers’ academic training and legal practice gaps
The continent has reportedly suffered from badly negotiated deals due to the gaping gaps between what lawyers learn and what they practice.
ALSF Director, Stephen Karangizi, says the institution looks to filing identified knowledge gaps between lawyers’ academic training and legal practice.
Was the Chinese SGR deal bad for Kenya
In what seems to be a bad turn out of events, it is feared that Kenya could lose key assets if it failed to repay its loans given by the Chinese to finance the much-touted Standard Gauge Railway (SGR).
Beijing extended a grace period to Kenya in May 2014 before starting repayments for the Standard Gauge Railway (SGR) funds.
With this, the loan repayments to China will more than triple this year as the five-year grace period comes to an end.
Kenya will pay the Chinese State-owned lenders nearly Sh82.85 billion starting July from Sh26.61 billion in the current year ending June, and Sh36.24 billion the following year from July.
The East African economic hub entered into a deal to borrow USD 3.233 billion loan (Kshs 324.01 billion) from China’s Exim Bank in 2014. This comprised of USD 1.633 billion commercial loan and USD 1.6 billion concessional to build a 385km modern railway between Mombasa and Nairobi.
ALSF intends to make negotiating such deals beneficial to African countries rather than what is happening now where transnational deals seem to favour the funding nations more.
Losing sovereign assets to China
In case Kenya fails to repay these loans, the country risks losing the port of Mombasa to China’s Exim bank.
Kenya Railways Corporation owes the bank Kshs 227 billion (USD 2.229 billion) with pundits saying that the SGR’s construction costs were grossly inflated.
The Kenya Ports Authority’s (KPA) revenue was used as collateral for the government’s debt to the Chinese.
A letter sent to the Kenya Ports Authority by the Auditor General Edward Ouko shows that the payment agreement means that the Authority’s revenue would be used to pay the debt if the minimum volumes required for consignment are not met.
Kenya’s fading glory for investors
Global rating agency Moody’s Investor Service downgraded Kenya’s credit scores in 2018 attributing this to the huge government debt which was continually growing.
Kenya was rated B2 from B1 but assigned a stable outlook implying the probability of Kenya defaulting on its loan obligations. This means that new loans would draw a higher risk premium.
High-level corruption and the International Monetary Fund’s withdrawal of a USD 1.5 billion standby facility last year mean that foreign investors’ risk perception of the country has increased.
IMF said Kenya failed to meet some key conditions thus there would be no more reviews for the programme that expired on September 14, 2018.
This leaves the economy exposed to shocks that erode forex reserves.
You can also read of how China goes off the rails in connecting Africa, about Russia’s RZD, Afreximbank eyeing railway construction in Africa and about Macron, a French Consortium and Kenya’s 3B Euros.
