Multi-jurisdiction guide for screening foreign investments

Africa

1. Country: Kenya

2. Indicate five biggest FDI countries of origin (indicate percentage if available)

Official records from the Kenya National Bureau of Statitstics as at 2020 indicate the following countries as the biggest sources of FDI inflows in Kenya:

The UK (13,5%)
Mauritius (11,0%)
US (10,3%)
South Africa (9,8%)
France (5,2%)

3. Legal Framework in Force

Constitution of Kenya, 2010
Foreign Investments Protection Act (Chapter 518 Laws of Kenya)
Investment Promotion Act (No. 6 of 2004)
Kenya Investment Policy, 2019
The Law of Contract Act (Chapter 23 of the Laws of Kenya)

4. Last revision of the Legal Framework

2014

5. Contextualization of the Legal Framework (Historical or other)

Constitution of Kenya, 2010

The Constitution of Kenya, 2010 is the supreme law of Kenya which binds all persons and state organs. Article 40 of the Constitution of Kenya protects the right to property by among others, protecting all persons from arbitrary deprivation of property of any description, or any interest in or right over any property of any description. The Kenyan Constitution (2010) prohibits expropriation without compensation. Private property may be compulsorily acquired by the Government only for reasons pertaining to public safety or public interest, and with “payment of full compensation”. The owner of the property however has a right of direct access to the High Court if they wish to contest the legality of the expropriation or the amount of the compensation, or to enforce prompt payment of the compensation.

Investment Promotion Act (No. 6 of 2004)

The Investment Promotion Act of 2004 establishes the Kenya Investment Authority (KIA) which promotes and facilitates investments by assisting investors to obtain applicable licenses and permits to conduct business in Kenya, in addition to providing incentives for investments. The KIA issues an investment certificate upon application by an investor. The investment certificate will facilitate an investor to acquire necessary licenses and regulatory approvals for their business. A foreign investor is eligible to apply for an investment certificate if they intend to invest at least USD100.000 or the equivalent in any currency, and the investment (and any activity related to the investment) is lawful and beneficial to Kenya.

If in the opinion of KIA, an application for an investment certificate raises environmental, health or security issues, KIA may refer it to the appropriate person or body and shall inform the applicant of that referral. Pursuant to this provision, the Investment Promotion (Investment Registration and Certificates) Regulations, 2005 establishes an investment committee within the KIA which reviews technical applications for investment certificates touching on security, environment and health. This Investment Committee may impose conditions on an investment certificate to address bona fide health, environment and security concerns.

Before its amendment in 2005, the Investment Promotion Act required all foreign investors to apply to the KIA for an investment certificate before investing in Kenya. Application for the investment certificate is now optional and foreign investors can proceed to make investments in the country without an investment certificate.

Foreign Investments Protection Act (Chapter 518 Laws of Kenya)

The Foreign Investments Protection Act (FIPA) was enacted to give protection to certain approved foreign investments. To be eligible for FIPA guarantees, investors should obtain a Certificate of Approved Enterprise. The FIPA provides guarantees on capital repatriation, remittance of dividends and interest. Under the FIPA, foreign investors are free to convert and repatriate profits, including retained profits which have not been capitalised, after payment of the relevant taxes and the principal and interest associated with any debt.

Section 8B of the FIPA goes further to provide a legal basis for the entry by the Government of Kenya into bilateral investment treaties (BITs) with foreign governments for reciprocal promotion and protection of investments. Kenya has BITs with Burundi, Finland, France, Germany, Japan, Kuwait, Netherlands, Republic of Korea, Switzerland, United Arab Emirates and the United Kingdom.

Kenya Investment Policy, 2019

The Government of Kenya developed the Kenya Investment Policy (KIP) to address challenges related to entry, treatment, performance and impact of private investment. The KIP is guided by seven core principles, which emphasise the need for openness and transparency, inclusivity, sustainable development, economic diversification, domestic empowerment, global integration and investors’ needs. As Kenya has a devolved system of government, the KIP addresses private investment at the national and county levels to ensure policy and regulatory coherence.

Some of the policy intervention areas which the KIP addresses include:

Investment entry and establishment of enterprises, i.e., notification, registration and establishment of enterprises, minimum capital requirements and work permits
Investment protection and guarantees, i.e., closure and exit, national treatment, convertibility and repatriation, protection against expropriation, and dispute prevention and resolution
Responsible investment, i.e., legal compliance, common obligations against corruption, minimum standards for human rights and labour, domestic value addition, environmental protection, and corporate social responsibility
Incentives framework i.e., types of incentives, incentive criteria, obtaining incentives, review of incentive efficacy, and authority to issue incentives
Sector restrictions
Regional integration and investment agreements.

Law of Contract (Chapter 23 of the laws of Kenya)

The Kenyan Law of Contract provides the general legal framework for contracts entered into in Kenya including those relating to investments in Kenya. The Law of Contract provides for the application of the principles of English common law on contracts entered into Kenya.

6. Scope - Screening Mechanism – origin of FDI

(review of intra- or extra-EU FDI)

Are there any loopholes?

Subject to compliance with proceeds of crime and anti-money laundering regulations, there is no other restriction on source of foreign capital in Kenya. Cash transactions exceeding USD10.000 or its equivalent in any other currency are to be reported by the remitting bank (or money remittance institution) to the relevant financial services regulator.

In essence, since acquisition of the investment certificate is not mandatory, there is no screening mechanism for FDI in Kenya outside the anti-money laundering mechanisms. For foreign investors that choose to apply for the investment certificate, their application is screened by the investment committee if the proposed business touches on security, environment and health.

Further, there are some sector-specific requirements applicable to both local and foreign investors. In the banking sector, any proposed holder of more than 5% in a bank is required to disclose certain information (including shareholding details) in addition to declaring on oath that the proposed capital injection is not from proceeds of crime. Every bank is also required to disclose the ultimate beneficial owner of any shares held by a company, other body corporate or a nominee to the Central Bank of Kenya. This has been reinforced by the coming into force of the Companies (Beneficial Ownership Information) Regulations 2020, which require every company to maintain a register of beneficial owners containing information on the natural persons who ultimately control the company.

The Insurance Regulatory Authority has the power to carry out an assessment of the suitability of any person managing, controlling or having a significant ownership or significant beneficial interest in a person licensed under the Insurance Act (insurance companies, brokers or agents).

7. Scope - screening thresholds

Please indicate notably whether it covers solely controlling investments or also portfolio investments.

Other than merger control and sector specific regulatory requirements, foreign investments (either controlling or portfolio) are not subjected to regulatory monitoring in Kenya by virtue of being foreign investments. This is because the acquisition of an investment certificate is no longer mandatory. Where a foreign investor applies for the investment certificate, KIA is required to determine whether the investment and the activity related to the investment is lawful and beneficial to Kenya. KIA will consider the following parameters:

creation of employment in Kenya;
acquisition of new skills or technology for Kenyans;
contribution to tax revenues or other government revenues;
a transfer of technology to Kenya;
an increase in foreign exchange, either through exports or imports substitution;
use of domestic raw materials, supplies and services;
adoption of value addition in the process of local, natural and agricultural resources;
use, promotion, development and implementation of information and communication technology; and
any other factors that KIA considers beneficial to Kenya.

Merger control

Any acquisition of shares, business or other assets (whether inside or outside Kenya) resulting in a change of control of a business, part of a business or an asset of a business in Kenya is considered a merger. A minority shareholder can also be considered to have acquired control in a target if it is able to exercise material influence in the target entity including through the exercise of contractual rights.

The Kenyan competition merger regime has the following categories of merger control:

Mergers excluded from notification – small transactions (generally below USD5 million combined turnover or value of assets);
Mergers eligible to apply for exclusion – medium transactions (generally below USD10 million combined turnover or value of assets but above USD5 million); and
Mergers requiring approval – other transactions (generally above USD10 million combined turnover or value of assets).

Sector regulatory requirements

Banking – where only banks, financial institutions licenced in Kenya, the Government of Kenya, foreign governments, state corporations, foreign companies licensed to operate as financial institutions in the relevant country and nonoperating holding companies approved by the Central Bank of Kenya may hold more than 25% of the share capital of a financial institution in Kenya.
Insurance – where at least 33% of shareholding is required for insurance companies and agents to be held by citizens of East Africa and 60% shareholding is required for brokers.
Telecommunications – where at least 30% of Kenyan shareholding must exist within three years of the issuance of business license.
Aviation – where 51% of Kenyan shareholding is required.
Mining – where the holder of a mining license is required to maintain local equity participation amounting to at least 35% of the mineral right.
Retirement benefits scheme administrators – where applicants are required to have at least 60% of the paid-up share capital owned by Kenyan citizens unless the applicant is a bank or an insurance company.
Architectural sector – partnerships between persons registered with the Board of Registration of Architects and Quantity Surveyors and an unregistered person (foreign firms) is permitted as long the registered person owns a minimum of 51% of the shares in such a partnership. Effectively, unregistered firms are restricted to a maximum of 49% ownership in an architectural business.
Land – where foreigners may only hold land on the basis of leasehold tenure. Leases granted to non-citizens may not exceed a period of 99 years. Dealings in agricultural land are controlled in Kenya by the Land Control Act. Consent must be obtained from the Land Control Board for any transaction involving the sale, transfer, lease, mortgage, exchange, partition or other disposal of or dealing with any agricultural land. Consent will not be given to non-Kenyan citizens for any such transactions (save in the case of a mortgage or charge created in favour of a non-Kenyan lender). However, a non-Kenyan citizen may apply for a presidential exemption from the application of the Act, although in practice this method is exercised in the most exceptional of circumstances in which there are significant public interest considerations.

8. Scope - sectors covered

See sectors outlined in answer to question 7 above

9. Design of FDI Screening Mechanism

Please indicate notably the following:

(a) pre-authorisation vs. ex-post screening of FDI? Other?

(b) Covers solely controlling investments or also portfolio investments?

(c) Mandatory or voluntary nature?

The Kenyan merger control process is a mandatory legal process that parties to a proposed merger must adhere to before implementation of a transaction. Further, Kenya’s Competition Authority has the power to unwind a transaction if it has been implemented before approval.

a) Prior notification and review procedure.

b) Merger control applies to controlling investments but owing to the statutory definition of what constitutes a merger, an investor can be deemed to have acquired control in portfolio investments if it has ability to exercise material influence through, among others, minority control rights.

c) Mandatory

10. Design – reciprocity?

The Kenyan FDI structure is based on national treatment and non-discrimination between foreign and national investors except where there is an existing BIT between Kenya and other countries which permit reciprocal special treatment for foreign investments. Kenya has BITs with Burundi, Finland, France, Germany, Japan, Kuwait, Netherlands, Republic of Korea, Switzerland, United Arab Emirates and the United Kingdom.

11. Design – Procedures and Deadlines

If a foreign investor chooses to apply to the KIA for the investment certificate, it is required to attach incorporation documents to the cover letter addressed to the Managing Director of KIA together with proof of investment. KIA is required to provide the applicant with a written notice of its decision within 20 business days of submission of the application. If KIA decides not to issue the investment certificate, it is required to refer the application together with its reasons to the Cabinet Secretary for Trade within five business days of its decision. The parties to a proposed merger are required to file the application either for exclusion of a merger or for merger approval as applicable. There is an online application process.

In relation to merger control, the Competition Authority responds to applications for exclusion and merger approval within 14 days and 60 days of filing respectively, with time extensions if the Competition Authority requests for further information from the parties.

Parties to a merger are prohibited from effecting the transaction before getting approval from the Competition Authority, and the payment of more than 20% of the consideration is considered implementation of the merger.

12. Design – Transparency and Information requirements (Filing Forms?)

Notification to the Competition Authority must be filed in a prescribed form, which is available online. For foreign investors that choose to apply for the investment certificate, there are prescribed forms also available online.

13. Design – Range of decisional outcomes (such as blocking, unwinding, notably), so as to distinguish between the purely screening from the mechanisms aimed at interfering with FDI.

In relation to merger control, the Competition Authority can approve a merger, approve it with conditions or prohibit it altogether.

There are no mechanisms that are purely aimed at interfering with foreign investments in Kenya. Foreign investments will, however, just like investments by local investors, be monitored by the relevant regulatory bodies for compliance with the relevant laws and regulations.

14. Interaction with other legal frameworks (ex: merger control)

With respect to anti-money laundering, the Proceeds of Crime and Anti-Money Laundering Act 2009 provides measures to combat money laundering and financing of terrorism by:

providing for the identification, tracing, freezing, forfeiture and confiscation of proceeds of crime; and
requiring reporting institutions (financial institutions and designated non-financial businesses and professions) to report any suspicious or unusual transaction or activity to the Financial Reporting Centre.

As a result, foreign investors may by law be required to disclose information relating to their identity, nationality, occupation and the sources of their funds to a financial institution or designated non-financial businesses and professions.

15. Design – Grounds for blocking, if applicable (such as “public security”, “vital interests”). Please indicate whether those grounds are based on WTO definitions or not. Also, please indicate what is the degree of discretion of the authority to apply the legal criteria in question.

Under the Prevention of Terrorism Act of 2012, it is an offence to collect or provide property, funds or services for the commission of terrorism acts and deal in property owned or controlled by terrorist groups.

This legislation also establishes the Counter-Terrorism Centre, which has the power to request any person for any information relating to terrorism. Further, financial institutions have a reporting obligation to the Counter-Terrorism Centre where there are reasonable grounds to believe that it holds any property or an account that is owned or controlled by or on behalf of a terrorist group.

16. Judicial Review

Please specify timeline, competent courts and standard of judicial review.

In relation to merger control, any person aggrieved by the decision of the Competition Authority can appeal to Competition Tribunal within 30 days of publication of the decision for review.

A party dissatisfied with the decision of the Competition Tribunal may appeal to the High Court of Kenya (for judicial review orders) against that decision within 30 days after the date on which a notice of that decision has been served on them and the decision of the High Court of Kenya shall be final. In practice, judicial review is an avenue available to a party challenging the process of decision-making as opposed to the substance of the decision and where all administrative review processes have been exhausted.

The orders that a party can seek for in a judicial review application include:

Certiorari – an order where the court quashes the decision that has been made by the decision-making body. Application for this order must be made within a period of six months of the subject decision.
Mandamus – an order by the court compelling a decision-making body to mandatorily perform a certain act.
Prohibition – an order prohibiting a decision-making body to refrain from performing certain acts.

The purpose of judicial review is to check that public bodies do not exceed their jurisdiction and carry out their duties in a manner that is detrimental to the public at large.

17. Publication in Official Gazette or other

In relation to merger control, the Competition Authority is required to publish its decision in relation to a proposed merger in the Kenya Gazette. This includes a decision to permit, conditionally permit or prohibit a proposed merger.

There is no requirement to publish the decision of the investment committee in relation to foreign investors that choose to apply for the investment certificate.

18. Relevant Examples of application

If applicable and publicly available, please indicate the number of vetoes in the overall number of reviews and also the number of successful appeals for the last 5 years.

In relation to merger control, there have been no judicial review applications filed at the High Court of Kenya challenging the decision of the Competition Tribunal, which was formally established in 2017. However, on 4 May 2020, in this first appeal under the Kenyan Competition Act the Kenyan Competition Tribunal overturned conditions imposed by the Competition Authority of Kenya (CAK) on the Telkom Kenya/Airtel Kenya merger.

There is no record of any judicial review application challenging the failure by KIA to issue a foreign investor with an investment certificate.

19. Stakeholders views on the Legal Framework

Since the acquisition of an investment certificate is no longer mandatory and Kenya does not have foreign exchange restrictions, stakeholders have generally not raised concerns with the existing legal framework on FDI in Kenya.

20. Interplay with the future EU Regulation

Please indicate notably whether the existing national legislation will have to be amended so as to comply with the EU one.

Kenya is not a member of the EU but is a member of the East African Community (EAC). The EAC partner states have signed the following protocols:

the Protocol for the establishment of the EAC Customs Union, which was signed on 1 July 2005;
the EAC Common Market Protocol entered into force on 1 July 2010, and is an expansion of the bloc’s existing Customs Union; and
the East African Monetary Union (EAMU) which was signed on 30 November 2013, and set the groundwork for a monetary union within ten years while allowing the EAC Partner States to progressively converge their currencies into a single currency in the EAC.

As a result of the wider economic and political integration objectives of the EAC member states, there are concerted efforts to harmonize laws across the EAC partner states, and this has necessitated amendment of various laws to comply with EAC laws.

Kenya is also a member of the Common Market for Eastern and Southern Africa (COMESA) which is a free trade area with 21 member states. The member states are from time to time required to harmonize their laws in accordance with adopted COMESA regulations, e.g., anti-trust laws.

Further, the African Continental Free Trade Agreement (AfCFTA), which came into force on 29 April 2019, was ratified by Kenya in 2018. The AfCFTA establishes a single continental market for goods and services. It also seeks to increase intra-African trade by cutting tariffs by 90% and harmonizing trading rules at a regional and continental level.

21. Other relevant information

Kenya operates export processing zones (aimed at manufacturers of exports) and special economic zones that offer numerous incentives for investors in the country. These regimes offer an attractive investment opportunity for export-oriented business ventures since there are no foreign shareholding restrictions and there are attractive fiscal incentives in the form of tax exemptions designed to lower operational costs.

Contact: David Lekerai

Last updated June 2023

1. Country: Mauritius

2. Indicate five biggest FDI countries of origin (indicate percentage if available)

France (MUR2.219 million)
South Africa (MUR1.245 million)
United Arab Emirates (MUR724 million)
United Kingdom (MUR509 million)
China (MUR401 million)

3. Legal Framework in Force

The Economic Development Board Act of 2017 which governs investment in Mauritius;
The Companies Act of 2001 which governs incorporation of businesses.
With regards to foreign investors investing in immovable properties in Mauritius, the Non-Citizens (Property Restriction) Act 1975 (NCPRA) provides that approval from the Prime Minister’s Office is required in such instances.

The Economic Development Board (EDB) is the government agency responsible for the promotion of investment in Mauritius and for navigating investors through the regulatory and legal requirements of the country.

The Corporate and Business Registration Department of the Ministry of Finance and Economic Development administers the Companies Act 2001.

In principle, a company incorporated in Mauritius can be wholly owned by foreigners, with no minimum capital requirement, except in some regulated activities such as banking or insurance. Companies must register their activities with the EDB after the Registrar of Companies has issued a certificate of incorporation. The company can then apply for occupation permits (work and residence permits) and incentives offered to investors.

4. Last revision of the Legal Framework

In 2017, whereby the Economic Development Board Act 2017 repealed the Investment Promotion Act 2000.

5. Contextualization of the Legal Framework (Historical or other)

There is a constant search for foreign investment in Mauritius. Statistics and surveys indicate that Mauritius is one of the most “business friendly” countries in Africa.

The World Banks’s last “Doing Business” report of 2020 placed Mauritius, for the 12th consecutive year, at the top of African economies and 13th worldwide, in terms of overall ease of doing business.
Mauritius has also done better than any other African country on the Human Development Index in the 2021-2022 Report where it obtained the favourable ranking of 63rd out of 189 countries.
The Heritage Foundation has, in its Index of Economic Freedom of 2022, placed Mauritius in the “mostly free” category globally at the 30th rank, and first among 47 countries in Sub-Saharan Africa.

The Government of Mauritius, responding to the Covid-19 crisis, has loosened the investment requirements for foreign investors in 2020. As part of this effort, the minimum investment amount for an occupation permit has been reduced by half to USD50.000 (approx. MUR2,224,500). Both the minimum turnover and the minimum investment amount for the innovator occupation permit have been lifted. Professionals with an occupation permit and retired foreigners with a residence permit have been allowed to invest in other ventures without any shareholding limitations. The validity of the permanent residence permit was extended to 20 years. Non-citizens holding a residence permit under the various real estate schemes are no longer required to hold an occupation or work permit in order to invest and work in Mauritius.

The conditions for the purchase of property developed under the Property Development Scheme and the Smart City Scheme have also been relaxed. The minimum price of a property that buyers can use to subsequently apply for a residence permit has been reduced from USD 500.000 to USD 375.000.

On another hand, in February 2020, Mauritius was introduced on the list of jurisdictions under increased monitoring concerning anti-money laundering/combating the financing of terrorism (AML/CFT) by the Financial Action Task Force (“FATF”). The European Union also found Mauritius to have strategic deficiencies in its anti-money laundering and anti-terrorist financing regime under Article 9 of its 4th Anti-Money Laundering Directive and added Mauritius to its list of high-risk countries. The country was subsequently included on the UK's list of high-risk third countries.

However, on 07 January 2022, the European Parliament and the European Council delisted Mauritius from the EU List of High-Risk Third Countries (EU Blacklist) after being satisfied that the country no longer had any strategic deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) framework. This decision was official when the EU published an updated list of High-Risk Third Countries. The country is now cleared from all international sanction lists.

With the collaboration of the relevant financial institutions (such as the Bank of Mauritius, the Financial Services Commission (the FSC) as well as the FATF and the Eastern and Southern Africa Anti-Money Laundering Group) the Government completed its FATF action plan ahead of the timeline provided.

6. Scope - Screening Mechanism – origin of FDI

(review of intra- or extra-EU FDI)

Are there any loopholes?

Foreign investment proposals are evaluated by the Investment Office of the EDB. The EDB assists interested investors with occupation permits, licenses and clearances in collaboration with the relevant local authorities.

Restrictions

The Mauritian government typically does not differentiate between local and foreign investment. However, there are some business fields where restrictions and conditions are imposed on foreign investment:

Television broadcasting:
The Independent Broadcasting Authority Act 2019 limits the shareholding capacity of a foreign company or body corporate in broadcasting licencees in Mauritius to 49,9%;

Sugar industry:
Foreign investors are not allowed to make investments that would result in 15% or more of the voting capital of a Mauritian sugar company being held by a foreign entity or person. (Note that there may be exemptions from this rule subject to authorisation by the FSC);

Newspaper or magazine publishing:
A foreign investor cannot hold 20% or more of the shares of a company owning or controlling any newspaper or magazine, or any printing press publishing such publications in Mauritius;

Certain operations in the tourism sector:
Conditions are imposed on non-citizen investors in the following activities:
1. Guesthouse/tourist accommodation;
2. Pleasure craft;
3. Diving; and
4. Tour operators;

Construction:
Foreign consultants or contractors are required to register with the Construction Industry Development Board; and

Real Estate:
The NCPRA allows foreigners to purchase certain types of properties as long as the amount paid is over MUR6 million (~USD137.000). Under the Invest Hotel Scheme, the amount payable for the acquisition of a stand-alone villa relating to a hotel to be constructed, by a non-citizen, shall not be less than USD375.000. Other residential properties can be acquired by foreigners under the government-regulated Property Development Scheme which provides that they can be eligible for a residence permit upon the purchase of a house if the investment is of more than USD375.000.

Loopholes

N/A

7. Scope - screening thresholds

Please indicate notably whether it covers solely controlling investments or also portfolio investments.

Foreign investment proposals are evaluated by the Investment Office of the EDB on a case-to-case basis.

There is no visibility on the threshold applied by the EDB in the process and nothing suggests that the threshold would be applicable to only controlling investments or portfolio investments.

8. Scope - sectors covered

Almost all sectors seem to be covered.

9. Design of FDI Screening Mechanism

Please indicate notably the following:

(a) pre-authorisation vs. ex-post screening of FDI? Other?

(b) Covers solely controlling investments or also portfolio investments?

(c) Mandatory or voluntary nature?

There is poor visibility on the screenings undergone by the EDB for foreign direct investments.

In general, the different screenings and KYC required by the FATF must be adhered to, and the UN sanctions screening should be completed before investors are welcomed.
On another hand, the different KYC and screenings required per sector of activity for local investments would be applied to foreign investments as well.

10. Design – reciprocity?

Not mentioned.

11. Design – Procedures and Deadlines

These vary from sector to sector and the information required by the regulator would depend on the type of licence/ approval sought.
For example:

The Financial Intelligence and Anti-Money Laundering Act 2002 provides for procedures for screening with respect to suspicious transactions through the Financial Intelligence Unit.

To be eligible for a Global Business Company (“GBC”) Licence, the following conditions must be fulfilled:
- the majority of shares or voting rights, or the legal or beneficial interest, are held and controlled by a person who is not a citizen of Mauritius; and
- that corporation proposes to conduct or conducts business principally outside Mauritius or with a certain category of persons specified in rules issued by the FSC.

To qualify as an authorised company in Mauritius, the following conditions must be fulfilled:
- the majority of shares or voting rights. or the legal or beneficial interest in a company, incorporated or registered under the Companies Act 2001, must be held and controlled by a person who is not a citizen of Mauritius;
- that person proposes to conduct or conducts business principally outside Mauritius or with a category of persons specified in the rules issued by the FSC; and
- the authorised company has its place of effective management outside Mauritius. An authorised company is required to be administered by a registered agent in Mauritius that is a management company licensed by the FSC.

Various factors are taken into consideration before a work permit is issued, such as the type of sector, obtaining health clearance, the curriculum vitae of the employee and so on. With regards to the appliction for an occupation permit, foreign national should satisfy specific requirements to fall within one of the three categories: investor, professional or self-employed. For example: to fall within the category of ‘investor’, the foreign national should make an initial transfer of an equivalent of USD100.000 (approx. MUR4,449,000) to the bank account of the company under which the application will be made. That company should have a turnover of at least MUR2 million per year and generate a cumulative turnover of at least MUR 12 million during three consecutive years.

12. Design – Transparency and Information requirements (Filing Forms?)

There is no proper procedure in place to govern the screening process for FDI in Mauritius.

13. Design – Range of decisional outcomes (such as blocking, unwinding, notably), so as to distinguish between the purely screening from the mechanisms aimed at interfering with FDI.

The decisional outcomes would be at the inherent discretion of the Government of Mauritius.

14. Interaction with other legal frameworks (ex: merger control)

As addressed above, other than merger control and compliance with applicable regulatory requirements for some sectors and with anti-money laundering laws, foreign investments (either controlling or portfolio) are not screened in Mauritius.

The FATF recommendations are to be adhered to with regards to each prospective investor in Mauritius.
The Competition Act 2007 expressly prohibits collusive agreements and other restrictive agreements which adversely affect competition in Mauritius, to the extent of their restrictive clauses. Collusive agreements can be penalised, while other restrictive practices and abuse of monopoly situations can only be remedied. The financial penalty to be imposed may not exceed 10% of the turnover of the enterprise in Mauritius for each year of the breach, up to a maximum of five years.

The Non-Citizens (Property Restriction) Act 1975 provides that approval from the Prime Minister’s Office is required in instances whereby a non-citizen wishes to hold, dispose of, or purchase or otherwise acquire a property. However, under the NCPRA, no certificate from the Minister authorising the purchase, acquisition or holding or disposal of the property shall be required in the following situations:

Holding of immoveable property for industrial or commercial purposes under a non-renewable lease agreement of 20 years or less;
Holding of immoveable property under a deed of concession under the Fisheries and Marine Resources Act;
Holding of immoveable property under a tenancy agreement for a term not exceeding 4 years;
Holding shares in companies that do not own immoveable property;
Holding of immoveable property by inheritance or by the effect of marriage to a citizen under the regime of legal community;
disposing of, purchasing or otherwise acquiring any luxury villa, apartment, penthouse or other similar properties used, or available for use, as residence with or without attending services or amenities from a company holding a certificate under the Invest Hotel Scheme, Property Development Scheme or Smart City Scheme, prescribed under the Economic Development Board Act;
Holding shares in companies listed on the Mauritian Stock Exchange; and
Through a unit trust scheme or any collective investment vehicle as defined in the Securities Act.

The Companies Act imposes certain requirements for private companies limited by shares which is the most common investment vehicle used by foreign investors in Mauritius. The Financial Services Act also provides for the requirements of the various licences provided by the FSC. These two acts, together, constitute the core of the legal framework for the operation of a business in Mauritius and same would have to be strictly followed by investors who operate businesses in Mauritius.

The FDI screenings would need to be mindful of the protection of the data of data subjects under the Data Protection Act. The regulators shall ensure that they comply with Data Protection laws at all times when handling the data of potential investors.

The decisional outcomes would be at the inherent discretion of the Government.

16. Judicial Review

Please specify timeline, competent courts and standard of judicial review.

Mauritian law does not provide a specific procedure for investors to request a judicial review in cases related to FDI, therefore, most disputes would be carried out through the ordinary process of judicial review in the supreme court of Mauritius, through an application that must be lodged promptly.

The purpose of judicial review is to check that public bodies do not exceed their jurisdiction and carry out their duties in a manner that is not detrimental to the public at large.

17. Publication in Official Gazette or other

N/A

18. Relevant Examples of application

If applicable and publicly available, please indicate the number of vetoes in the overall number of reviews and also the number of successful appeals for the last 5 years.

N/A

19. Stakeholders views on the Legal Framework

There is no proper procedure in place to govern the screening process for FDI. The process lacks sufficient transparency and uniformity.

Both the government and the business community have recognised the structural change in Mauritius and that the country needs to embark on its second phase of industrialisation. In order to maximise the benefit from FDI, the institutional framework is essential.

The bureaucratic procedures for attracting FDI to Mauritius have discouraged foreign direct investors. The lack of selection criteria for FDI programs has led to the wearisome ‘watch and wait’ approach for investors.

It is important for Mauritius to continue maintaining a high level of institutional infrastructure. This includes a sound political system, a democratic society and a high protection against expropriation. It should continue to maintain a system where the business community is assured that there will be a sound continuity of policies irrespective of which political party is in power.

20. Interplay with the future EU Regulation

Please indicate notably whether the existing national legislation will have to be amended so as to comply with the EU one.

N/A

21. Other relevant information

N/A

Contact: Emilie Aliphon

Last updated June 2023

1. Country: Nigeria

2. Indicate five biggest FDI countries of origin (indicate percentage if available)

United Kingdom
Singapore
South Africa
United States
China

3. Legal Framework in Force

The Nigerian Investment Promotion Act regulates the investment into or outside Nigeria through the Nigerian Investment Promotion Commission (NIPC). The NIPC provides a framework to promote, coordinate and monitor investments in Nigeria. The NIPC initiates and participates in activities that stimulate investments and incentives; working with the various ministries, departments agencies of the Nigerian Government.

In addition, the Business Facilitation (Miscellaneous Provisions) Act provides a framework for ease of doing business in Nigeria to be adopted by Ministries, Departments and Agencies of Government in relation to services provided including permits, licencing, waivers, filings, tax related services, registrations etc. The Act also seeks to ensure productivity and efficiency in the services and relations with business enterprises and lays out specific requirements for operations and legislative amendments to give effect to the objective of the Act.

4. Last revision of the Legal Framework

Nigerian Investment and Promotion Commission Act – 1995

The Business Facilitation (Miscellaneous Provisions) Act 2022 was introduced and passed into law February 2023

5. Contextualization of the Legal Framework (Historical or other)

In 1972, the Nigerian Government sought to implement an indigenization policy through the establishment of the Nigerian Enterprises Promotion Decree (Decree) which imposed restrictions on Foreign Direct Investments and reserved certain business activities for local investors exclusively. A foreign investor could only have up to 60% ownership/participatory interest in the non-exclusive business activities. Later on in 1977, the Decree was further restricted by a reduction in permitted foreign participation in Nigeria to 40% interest stake and an expanded local investment exclusive list.

Considering the impact of foreign direct investments on the economy, the government began to relax its indigenization policy and by 1995 the Nigerian Investment and Promotion Commission Act was passed into Law. This Law opened most sectors of the economy, except a short Negative List of business activities. The Act also allows for 100% foreign participation in most sectors of the economy.

In a bid to continue to push the legal frontier of the openness of the economy, the Business Facilitation (Miscellaneous Provisions) Act 2022 was passed into Law for the ease of carrying on business operations and administration within the Nigerian economy.

6. Scope - Screening Mechanism – origin of FDI

(review of intra- or extra-EU FDI)

Are there any loopholes?

There are no exclusions to the scope of the NIPC in relation to foreign participation in the operation of any enterprise in Nigeria, whether an individual or corporate body.

However, it is worthy of note that certain foreign entities may qualify for exemptions to a formal registration of a local entity, subject to the qualifications set out in the Nigerian Companies and Allied Matters Act.

7. Scope - screening thresholds

Please indicate notably whether it covers solely controlling investments or also portfolio investments.

The existing legal framework covers both direct investments and portfolio investments in existing local entities. However, there are specific laws and regulations in relation to the acquisition of shares and assets in a Nigerian company; including merger control requirements; specific sector required threshold limits, such as aviation, real estate and petroleum sectors of the economy. The merger control requirements are triggered by a direct or indirect change in the control of a Nigerian company.

8. Scope - sectors covered

Before Nigeria joined the league of oil exporting countries and even for a number of years thereafter, agriculture accounted for the largest fraction of the country’s foreign earnings. However, since Nigeria joined that league of exporters, the entire economic landscape changed with oil exports accounting for about 95% of Nigeria’s foreign trade earnings and approximately 80% of the total revenue of the Government of Nigeria. It is needless to say therefore that one key sector for foreign direct investments in Nigeria is the oil and gas sector with many of the world oil majors having a presence in Nigeria.

Other sectors include telecommunications; electricity; real estate (mostly malls and office complexes and more recently residential developments); petrochemical industries (such as fertilizer plants); manufacturing; agriculture; food and beverages; fast moving consumer goods; insurance; banking; infrastructure; healthcare; and tourism.

9. Design of FDI Screening Mechanism

Please indicate notably the following:

(a) pre-authorisation vs. ex-post screening of FDI? Other?

(b) Covers solely controlling investments or also portfolio investments?

(c) Mandatory or voluntary nature?

Generally, foreign investments are encouraged and open. However, some sectors have specific limitations on the threshold of interest that may be held by foreigners.

10. Design – reciprocity?

The Nigerian FDI structure is based on non-discrimination between foreigners. However, Nigeria has Bilateral Investment treaties/agreements with the following countries-Algeria, Bulgaria, China, Egypt, France, Finland, Germany, Italy, Jamaica, Montenegro, Netherlands, North Korea, Romania, Serbia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Uganda and United Kingdom. In 2000, Nigeria and the United States signed a Trade and Investment Framework Agreement (TIFA). This agreement provides for dialogue on improving and enhancing trade and investment opportunities between the two countries.

11. Design – Procedures and Deadlines

Nigeria occupies a key place in the exponential growth of FDI in Africa. However, a foreigner/foreign companies who intends to invest in Nigeria must comply with certain requirements:

Local Incorporation

A foreign company intending to carry on business in Nigeria is required to incorporate a company in Nigeria before doing so unless the company or the proposed business qualifies for exemption under the Companies and Allied Matters Act. The statutory exemptions are predominantly confined to companies formed to carry on specific government-approved projects and entities controlled by foreign states. A foreign entity may, however, invest in a Nigerian company without getting incorporated if it does not plan to do business itself in Nigeria.

Registrations with the Nigerian Investment Promotion Commission (NIPC)

A Nigerian entity that is set up with foreign participation to carry on business in Nigeria will, before commencing business, need to register with the Nigerian Investment and Promotion Commission (NIPC), a statutory body established to encourage, promote, coordinate and monitor investments in Nigeria. Registration with NIPC is advisable because dealers authorised to deal in foreign exchange are required by the Central Bank of Nigeria (CBN) to ensure that a NIPC registration certificate is provided before funds are repatriated. Additionally, Foreign Companies registered with NIPC would not be nationalised.

Sectoral Permits and Licenses

The entity will then proceed to obtain the operational licences that it requires from the relevant government departments: banking (CBN); telecommunications (Nigerian Communications Commission); insurance (National Insurance Commission); pensions (National Pensions Commission); aviation (Nigerian Civil Aviation Authority).

Business Permits

Foreign Entities intending to carry on business in Nigeria must apply for a Business Permit. A Business Permit is the authorization for the start and operation of a business by a foreigner, either as an individually owned company, a branch or a subsidiary of a foreign company in Nigeria.

A registered company wholly owned by foreigners is required to obtain a business permit from the Ministry of Interiors before it can commence a business operation in Nigeria. Possession of a business permit allows registered companies to conduct business within the government’s geographical jurisdiction but does not exempt the individual employees or owners of the company from the requirement of obtaining a residence permit before moving into Nigeria to work.

Expatriate Quota

Apart from the obtainment of a business permit, every Foreign Company seeking to employ Foreigners as Workers can only do so through the company upon making an application to the Ministry of Interior for an expatriate quota in Nigeria. The Expatriate Quota is the authorization for a company to employ individuals into specifically approved job designations, and also specifying the permissible duration of such employment.

Work Permit (otherwise known as CERPAC)

The requisite work permit, otherwise known as the Combined Expatriate Residential Permit and Alien Card (CERPAC) is issued to every foreigner working in Nigeria after the expatriate quota has been obtained by the company for such an employee.

Capital Importation and Other Foreign Exchange Rules

To fund their investments in Nigeria, foreigners are free, subject to money laundering restrictions, to bring in any recognised foreign currency into Nigeria. Such funds will have to be brought in through an authorised dealer (usually a bank authorised by the CBN). The bank through which the funds were imported will need to issue a certificate of capital importation (CCI) to the investor to evidence the inflow of such funds into Nigeria. Where capital is not imported in the form of funds but is imported in the form of equipment, machinery or raw materials, a CCI will also be required. In the absence of a CCI, foreign exchange cannot be purchased from the official foreign exchange market for easy repatriation of the proceeds of the foreigner’s investment from Nigeria.

12. Design – Transparency and Information requirements (Filing Forms?)

All FDI in Nigeria is to be registered with the NIPC. Registration must be done to the prescribed Form 1, the form is available online.

13. Design – Range of decisional outcomes (such as blocking, unwinding, notably), so as to distinguish between the purely screening from the mechanisms aimed at interfering with FDI.

N/A

14. Interaction with other legal frameworks (ex: merger control)

Asides from the Companies and Allied Matters Act (CAMA) 2020, there are other legal frameworks that regulate FDI in Nigeria. The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act regulates the process and requirements, guidelines and procedures for capital importation, repatriation of capital and dividends. It also prescribes reporting and monitoring requirements for foreign investors.

Under the National Office for Technology Acquisition and Promotion Agency (NOTAP), all agreements involving the transfer of foreign technology into Nigeria must be registered under NOTAP and issued with a Technology Transfer Registration Certificate (TTRC). NOTAP also monitors compliance with the terms of the agreements and issues levies based on the total value of the technology transfer agreement.

FDI in Nigeria is also subject to the Money Laundering (Prevention and Prohibition) Act 2022. The Act provides measures to combat and prevent illegal financial activities. Under the Act, Financial Institutions and Designated Non-Financial Institutions are to notify the Economic and Financial Crimes Commission (EFCC) of over N5 million for individuals, and transactions over N10 million for corporate entities. The Act has also broadened the definition of funds and Designated Non-Financial Business and Profession (DNBP). Funds now include “virtual assets” and DNBPs includes Businesses involved in the hospitality industry, high-value dealers, mortgage brokers, pools betting, trust and company service providers, dealers in mechanized farming equipment, farming equipment, and machinery, dealers in precious metals and precious stones, practitioners of mechanized farming, notaries and dealers in real estate, estate developers, estate agents, and brokers. The Act also obligates every financial institution and DNBP to take reasonable measures to identify and verify agents acting on behalf of a customer to ensure that they are so authorised. In addition, financial institutions and DNBPs are also mandated to take reasonable measures to establish the source of wealth and funds of customers. Financial institutions and DNBPs are also required to conduct pre-launch assessments of any new products, business practices, and potential sources of money laundering and terrorism financing, and to take the necessary steps to control and reduce such risks. In instances where new technologies or delivery methods are used for existing goods or company operations, they must also be evaluated for money laundering and terrorist concerns in compliance with the regulator's requirements.

The NIPC prohibits both local and foreign investment in certain sectors listed under the “Negative List” on the basis of national security. Investments under the NIPC are prohibited for the production of arms, ammunition, the production and dealing of narcotics drugs and psychotropic substances, the production of military and para-military wears and accoutrement including those of the police, customs, immigration and prison services and any other items determined by the Federal Executive Council.

Foreign investments in cyberspace are also subject to review on the basis of national security. The Cybercrimes Act and National Cybersecurity Policy provide that where national cyber infrastructure is used in foreign investment, the infrastructure must be within Nigeria. The concept of national security is explained under the National Security Strategy used by the Office of the National Security Advisor.

16. Judicial Review

Please specify timeline, competent courts and standard of judicial review.

Decisions of administrative and regulatory bodies in Nigeria may be challenged by administrative procedure and judicial process. Foreign investors are at liberty to approach administrative bodies such as the Investment and Securities Tribunal where they believe a decision made by regulatory bodies such as the Securities and Exchange Commission is unlawful or arbitrary. Additionally, they may also apply to Nigerian Courts for a judicial review of such decisions of regulatory bodies.

The Federal High Court is the competent court to bring an application for the judicial review of a regulatory body. By virtue of the Nigerian Constitution, the Federal High Court has exclusive jurisdiction to entertain any action or proceeding to determine the validity of any executive or administrative action or decision by a public authority such as the Nigerian Investment Promotion Commission or other agencies.

The rules of the Federal High Court require that an action for judicial review be brought promptly and no later than 30 days from the date when the grounds for the application first arose.

The standard applied by the Court in judicial review is to assess whether the challenged action or decision was made within the ambits of the law.

17. Publication in Official Gazette or other

There is no such regime requiring the publication of such action in the official gazette.

18. Relevant Examples of application

If applicable and publicly available, please indicate the number of vetoes in the overall number of reviews and also the number of successful appeals for the last 5 years.

There are currently no applications by foreign investors to Nigerian Courts in this regard.

19. Stakeholders views on the Legal Framework

There is no specific legal framework for FDI investment screening mechanism in Nigeria. Although, Nigeria has general regulatory frameworks for the entry of foreign investments and for the regulation of competition. Stakeholders however, have continued to call for a transparent and predictable FDI screening process. Stakeholders need clear guidelines for screening to be established to provide certainty to investors especially foreign investors, to prevent arbitrary decision-making and to boost investors’ confidence.

20. Interplay with the future EU Regulation

Please indicate notably whether the existing national legislation will have to be amended so as to comply with the EU one.

As stated above, there is no specific legal framework for screening FDI in Nigeria. The EU adopted its FDI screening framework in 2019, which allows the EU Member States to have transparent, predictable, and non-discriminatory mechanisms for examining FDIs on the grounds of security or public order. The Federal Competition and Consumer Protection Act has similar provision, it provides that the Commission may not approve a merger on the public interest grounds. However, the primary legislation for coordinating and promoting investments in Nigeria, the Nigeria Investment Promotion Commission Act is silent on this and may need to be amended to include screen mechanisms for FDIs coming into Nigeria.

21. Other relevant information

N/A

Contact: Samuel Salako and Olufunke Fawehinmi

Last updated July 2023

1. Country: South Africa

2. Indicate five biggest FDI countries of origin (indicate percentage if available)

UK
The Netherlands
US
Germany
China

3. Legal Framework in Force

N/A

4. Last revision of the Legal Framework

N/A

5. Contextualization of the Legal Framework (Historical or other)

The Competition Amendment Act 18 of 2018 (Competition Amendment Act) Act introduces FDI screening on national interest grounds. The Competition Amendments Act was assented to on February 13, 2019, but the sections that introduce FDI screening are not yet in force.

6. Scope - Screening Mechanism – origin of FDI

(review of intra- or extra-EU FDI)

Are there any loopholes?

The Competition Amendment Act requires the president of South Africa to constitute committee, consisting of cabinet members and other public officials, (Committee) to decide whether the implementation of a transaction that constitutes a merger in terms of the Competition Act 89 of 1998 (Competition Act) may have an adverse effect on the national security interests of South Africa. A foreign acquiring firm which is required to notify the South African Competition Commission of a merger in terms of the Competition Act must, at the same time must file a notice with the Committee if the merger relates to a list of national security interests, as identified by the President of South Africa. The Committee must consider and decide whether the merger affects the national security interests of South Africa and must prohibit, or conditionally or unconditionally approve the merger.

7. Scope - screening thresholds

Please indicate notably whether it covers solely controlling investments or also portfolio investments.

An investment by a foreign acquiring firm will require approval by the Committee if it constitutes a notifiable merger in terms of the Competition Act and it relates to relates to a list of national security interests as identified by the president of South Africa.

Foreign acquiring firm

A foreign acquiring firm is any of the firms listed in (a) to (c) below that are incorporated, established or formed under the laws of a country other than South Africa; or whose place of effective management is outside South Africa:

a) a firm that will directly or indirectly acquire, or establish direct or indirect control over, the whole or part of the business of another firm;
b) a firm that has direct or indirect control over the whole or part of the business of a firm referred to in (a); or
c) a firm, the whole or part of whose business is directly or indirectly controlled by a firm in (a) or (b).

A firm controls another if it:

beneficially owns of more than half of the issued share capital of the other;
is entitled to vote a majority of the votes that may be cast at a general meeting of the other firm, or has the ability to control the majority of those votes;
is able to appoint or to veto the appointment of a majority of the directors of the other firm;
is a holding company, and the other firm is a subsidiary of that company in terms of the Companies Act;
in the case of a firm that is a trust, has the ability to control the majority of the votes of the trustees, to appoint the majority of the trustees or to appoint or change the majority of the beneficiaries of the trust;
in the case of a close corporation, owns the majority of members’ interest or controls directly or has the right to control the majority of members’ votes in the close corporation; or
has the ability to materially influence the policy of the other firm in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in the preceding paragraphs.

Notifiable merger

An investment that results in a firm acquiring or establishing direct or indirect control over the whole or part of the business of another firm is a notifiable merger if certain prescribed financial thresholds for notifiability are met.

List of national security interests

The president must identify and publish a list of national security interests and in determining what constitutes national security interests, the president must take into account all relevant factors, including the potential impact of a merger transaction:
on South Africa’s defense capabilities and interests;
the use or transfer of sensitive technology or know-how outside of South Africa; • on the security of infrastructure, including processes, systems, facilities, technologies, networks, assets and services essential to the health, safety, security or economic well-being of citizens and the effective functioning of government;
on the supply of critical goods or services to citizens, or the supply of goods or services to government;
to enable foreign surveillance or espionage, or hinder current or future intelligence or law enforcement operations;
on South Africa’s international interests, including foreign relationships;
to enable or facilitate the activities of illicit actors, such as terrorists, terrorist organizations or organized crime; and • on the economic and social stability of South Africa.

8. Scope - sectors covered

The list of national security interests which will set out the sectors or regions considered to be a national security interest has not been published yet.

9. Design of FDI Screening Mechanism

Please indicate notably the following:

(a) pre-authorisation vs. ex-post screening of FDI? Other?

(b) Covers solely controlling investments or also portfolio investments?

(c) Mandatory or voluntary nature?

Prior approval is required. Applies only to controlling investments (see discussion of control under question 7 above). Mandatory.

10. Design – reciprocity?

N/A

11. Design – Procedures and Deadlines

A notice must be filed in a prescribed form with the Committee at the same time that the Competition Commission is notified of the merger. Within 60 days after the notice has been filed (or a longer period agreed by the president), the Committee must decide whether the merger may have an adverse effect on national security interests as identified by the president. Within 30 days of such decision, a decision to permit, permit with conditions or approve the merger must be published.

12. Design – Transparency and Information requirements (Filing Forms?)

Notice must be filed in a prescribed form, which has not been published yet.

13. Design – Range of decisional outcomes (such as blocking, unwinding, notably), so as to distinguish between the purely screening from the mechanisms aimed at interfering with FDI.

If the Committee decides that the merger may have an adverse effect on national security interests as identified by the president, the merger may be permitted, permitted with conditions or prohibited.

14. Interaction with other legal frameworks (ex: merger control)

The Competition Commission may not consider a merger if notice to the Committee is required and has not been made. The competition authorities may also not approve a merger if it has been prohibited following a decision by the Committee that it may have an adverse effect on national security interests.

National security interests. See discussion under question 7 above.

16. Judicial Review

Please specify timeline, competent courts and standard of judicial review.

Not specifically provided for in Competition Amendment Act.

17. Publication in Official Gazette or other

The decision to permit, conditionally permit or prohibit must be published in the Government Gazette.

18. Relevant Examples of application

If applicable and publicly available, please indicate the number of vetoes in the overall number of reviews and also the number of successful appeals for the last 5 years.

None, as the Competition Amendment Act is not yet in force.

19. Stakeholders views on the Legal Framework

N/A

20. Interplay with the future EU Regulation

Please indicate notably whether the existing national legislation will have to be amended so as to comply with the EU one.

N/A

21. Other relevant information

Exchange Control Regulations (1961) were made in terms of the Currency and Exchange Act No. 9 of 1933, which regulates the flow of capital in and out of South Africa. Where foreign persons/entities wish to make FDI in South Africa and/or enter into commercial arrangements with South African persons/entities, prior approval is often required from the South African Reserve Bank (or its delegates). These regulations can have a constraining effect on FDI into South Africa (although not the most obvious barrier to FDI).

Contact: Janine Simpson

Last updated June 2023