African Legal Support Facility

Establishment of an African Legal Support Facility (ALSF) is timely and driven by demand.  African Finance Ministers, in June 2003, called for the establishment of a legal technical assistance facility to help Highly Indebted Poor Countries (HIPCs) address a growing problem of vulture funds.

The Commission for Africa, in March 2005, also called for a legal technical assistance facility to assist African countries in dealings with these aggressive creditors. Greater than seventy per cent of the nearly one billion United States dollars in judgments awarded plaintiffs in lawsuits instituted by vulture funds have been against RMCs. These lawsuits have claimed the attention of the G-8 as obstacles to the debt relief arrangement agreed at Gleneagles in 2005.

The African Big Table, in February 2007, called for a technical advisory facility to help RMCs negotiate extractive resource contracts and create an appropriate, enabling environment with modern legal and regulatory frameworks for the extractive resource sector.  Complementing this, the recently published African Development Report 2007, which was devoted exclusively to natural resources for sustainable development in Africa, noted the need for sound principles to guide the design of efficient contracts in Africa’s natural resource sector.

This document is submitted in response to those demands. Management hired a respected technical external consultant , to conduct a study on the viability of such a facility. The study confirmed the pressing need for such a facility. It recommended  an autonomous, independent, international organization with a focused approach concentrating on

• combating vulture funds;
• assisting RMCs negotiate complex transactions; and
• building capacity of RMCs in these and related areas for sustained impact. 

These focal areas relate directly to the Bank’s mandate to promote the social progress and economic development of its RMCs. It supports the various debt relief initiatives of the Bank and other international financial institutions. Savings gained from debt relief that are earmarked for developmental purposes in RMCs are being diverted to pay vulture funds. This erodes the effectiveness of the debt relief arrangements. RMCs are also not strengthening their economies by optimizing the benefits from assets such as extractive resources, inter alia, because of inadequate technical advice. 

The proposed Facility seeks to address these challenges. The Facility differs from other existing arrangements to provide advisory services.  It is selective. It focuses on areas not being served by others.  In many respects, the Facility shall provide services similar to legal aid societies that work to remove asymmetric technical capacities and level the field of expertise among parties.

The structure of the Facility includes a Governing Council of representatives of participating members, a Management Board, and a small technical staff headed by a Director.  It is proposed that funding for the Facility will come from contributions from the Bank, member countries of the Bank, non-member countries of the Bank, and other international organizations. An endowment fund is proposed to ensure financial sustainability.  A sunset provision for the expiry of the Facility is also proposed to allow the phase-out of the Facility after a fourteen year period during which period the Facility should have built the requisite capacity in RMCs to address the identified specific challenges that are the focus of the Facility.