Africa will save millions of dollars by tackling “vulture funds,” says African Legal Support Facility CEO
In this interview with the African Legal Support Facility Chief Executive Officer, Stephen Karangizi, he takes stock of the facility’s 2012 work programme and strategy. He explains the impacts of the facility’s actions in terms of its contributions to economic and social development of Africa, given that the debt owed by African countries under the vulture funds, amounts to hundreds of millions of dollars.
Question : What will be the major orientations of ALSF following the management board evaluation and now the facility is fully operational?
Answer: The management board has directed the ALSF to continue strengthening the capacity of African countries in debt management and better negotiations of complex commercial transactions with a focus on areas like natural resources and extractive industries. This is in the recognition that if African countries have better capacity to negotiate fair agreements, they will be able to maximize and optimize the use of their resources. In addition, better agreements also mean fewer disputes that are usually too expensive for the African countries and in the case of debt the chances of future vulture funds claims are minimized.
Question: What are the short, medium or long term goals of the new management board?
Answer: The board has agreed that in the short term the ALSF should develop a clear medium term ttrategy and increase the provision of information to the African countries on the unique services provided by thre ALSF as well as by mobilizing resources to fulfill the mandate. The board envisages that the ALSF will begin implementing the medium term strategy leading to the provision of services on key projects that will build African countries' capacity in contract negotiations related to areas essential to their economic and social development. In the long term, the board foresees that the facility will expand its mandate and ensure that the services it provides will eventually no longer be necessary as the countries will have developed sustainable legal capacity to address the issues for which the ALSF was established.
Question: The ALSF has provided some USD 500,000 to the Democratic Republic of Congo (DRC) in 2010 to help in the fight against vulture funds. How effective have these funds been utilized? What are the roles of the ALSF's intervention on the areas of vulture funds claims and debt in general?
Answer: The ALSF is still in discussion with the DRC on the support and a law firm to assist the country has already been identified. Along with the assistance provided in vulture funds litigation, the ALSF role is also to inform and sensitize countries not only on this issue but also on creditor litigation and debt management. The facility has also been set up to share and promote knowledge on these questions which are even more important now given the global economic environment. These actions and supports will enable countries to anticipate situation where substantial amounts of resources are used to repay some creditors known as “vulture funds" rather than dedicated such resources to priority sectors for development purposes.
Question: What do you think are the impacts of your actions in terms of their contributions to economic and social development of Africa, given that the debt owed by African countries under the vulture funds, amounts to hundreds of millions of dollars?
Answer: Tackling of the vulture funds by ALSF will lead to the savings of millions of dollars by African governments and thereby enable African countries to use those savings for economic and social development.
Question: On 23 November 2011, the Management Board of the ALSF approved a grant of USD 700,000 to assist Rwanda on key economic sectors. Can you tell us more on this project?
Answer: Yes, the ALSF will assist Rwanda to build its capacity for concession agreement negotiations in the mining and energy sectors. The purpose is to use previous projects as a lesson learned to ensure that future contracts contain provisions that will ensure protection of government interests and facilitate private sector investments in both sectors. The Board has recognized the importance of this project, not only for the country but also for the region and the continent as model agreements in the energy and mining sectors will also be developed through this assistance.