Lawyers Given Better Understanding of AfDB Requirements for Infrastructure Financing

26/01/2012
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Thursday 26 January was the second day of a two-day capacity building seminar organised by the African Legal Support Facility (ALSF) and the Pan-African Lawyers Union (PALU) in Tunis. Its aim was to familiarise North African lawyers with the African Development Bank’s different organs and activities and offer them a better understanding of the institution’s legal requirements in financing infrastructure projects.   

Souley Amadou, legal division manager for private sector operations in the Legal department, briefed participants on the bank’s objectives, structures and activities. He focused on membership subscriptions in North Africa as well as projects financed by the bank in the region since its inception. He also spoke about the bank’s various financial products as well as its response to the Arab Spring and the financial crisis.

In response to a question on “the need to have a government’s non-objection for each project financed by the bank in its territory,” Mr Amadou explained that this requirement should not be perceived as a hindrance but rather as a measure to protect the borrowing country and ensure successful implementation of the project. On the perception that the bank was slow and bureaucratic, he explained that in most cases, delays were caused by borrowers not being able to comply with the provisions of the loan agreements or properly understand AfDB’s policy requirements.

Mr Amadou emphasised that AfDB was committed to assisting regional member countries strengthen good governance, including through the provision of technical assistance for good governance reforms in public operations.

Annemarie Mecca, principal legal counsel in the Legal department, made a presentation on the key aspects of financing infrastructure projects from the AfDB perspective. She focused on borrowers’ eligibility, procurement procedures, environmental and social issues, among others. She underscored the importance of the bank’s privileges and immunities, noting that these were necessary for effective operations in the bank’s regional member countries. Addressing the issue of AfDB’s immunity from legal process in its lending operations, Ms Mecca assured participants that the bank usually provides for arbitration in its financing agreements as a dispute resolution avenue, and agrees to honour the final award of the arbitral tribunal.   

Responding to a concern that AfDB’s environmental and social policy requirements were too onerous for many of the bank’s regional member countries to comply with, Ms Mecca explained that due to heightened risks involved in infrastructure projects, the bank assists countries in complying with these policies – such as through the provision of technical assistance for the preparation of environmental management plans. She urged lawyers to familiarise themselves with the relevant bank’s policies and regulations, which she said were already publicly available on the AfDB website, so as to be more effective as counsel to parties involved in AfDB-financed transactions.

Aboubacar Fall, a member of the ASLF management board, spoke to the issue of stabilisation clauses in investment contracts. He gave a historical background of the stabilisation clause and explained its key principles as well as country risks. Mr Fall urged that African governments should, wherever possible, make wise choices in the implementation of their right to unilaterally change the terms of contracts for oil investment.