Danny Jordaan greeting participants

Over the weekend, Columbia hosted the annual African Economic Forum. Africa enthusiast Aaron Kohn attended and provides an overview of the weekend-long event. Even-handed Bwog correspondent Katheryn Thayer attended one of the panels and writes a detailed account after the jump.

“Africa has come too far to turn back now,” remarked the CEO of the 2010 World Cup South Africa, Danny Jordaan on Saturday. The organizer of the event encouraged those who met for the 8th annual Columbia University African Economics Forum to represent Africa as the “Roaring Giant,” the theme of this year’s forum.

On Friday and Saturday, panelists and speakers demonstrated Africa’s growth and its undaunted strength in the wake of the financial collapse in 2008. World Bank economists, NYT bestsellers, TV executives and even a Nigerian Vice Presidential Candidate allayed the harsh realities of Africa as it is often portrayed with their own encouraging outlooks.

The SIPA Pan African Network, the African Business Club, and the African Law Students Association, all organizers of AEF 2011, made the case that the World Cup has not been the only encouraging event to take place in Africa. Private investment now outnumbers aid money flowing into the continent, Nollywood (Nigerian Movies) is the second largest film industry in the world (Bollywood is first and Hollywood is third), and cellular communications and natural resource industries continue to grow.

People may look at Africa and see the wars taking place, government corruption, and a troubling colonial history. Yet, as hundreds of millions of people who used to be living under $2 a day rise out of poverty, Nigeria expects to have the world’s second-largest city, and citizen-driven reform begins to affect policies across the continent, investment and growth show a positive outlook.

Binyavanga Wainaina, author and Director of the Chinua Achebe Center for African Literature joked that when his colleagues call a publisher and ask, “Is it okay if I email my transcript? Postage is very expensive,” the publisher probably thinks, “Oh, there must be a drought.” It is time to stop thinking of Africa as a sleeping lion. The Giant is awake and its opportunities and talents are still slow to be recognized.

“Fairness in Contracts: Structuring Deals and Agreements in Extractive Industries“

The panel addressed an especially significant question raised by this explosion of growth: how to turn profits from extractive, often exploitative, industries into sustained and equitable growth for Africa? The discussion brought legal issues to the fore as an consideration in the challenges ahead.

Professor Peter Rosenbloom (Professor in Human Rights and Co-Director of the Human Rights Institute at the Law School) moderated the discussion and shared a problem he personally encountered with extractive industries operating in Africa. After extensive negotiations and discussions with Exxon Mobile in Chad, Rosenbloom’s colleague Jeffrey Sachs asked him where the contract was. Rosenbloom, naively trusting in the publicity of the negotiations, realized he had never seen any documents, and when he asked for them, Exxon refused him; the legal system of Chad did little to honor the contract. When the document was finally tracked down, it—like many other similar contracts—was found to contain questionable lawyering, citing nonexistent laws, and reconstructing the legal protocol of the country in which it was made. As more groups became involved and the issue became politicized, the urgent need for accountability in the contract process became apparent.

Patrick Heller, who works with the Revenue Watch in Sierra Leone, Uganda, Liberia, Ghana, Nigeria, Angola, and Guinea, explained that bending the law is a common problem. In the new and still-evolving democracies (or non-democracies) of many African countries, the law is often used more as a backdrop than a meaningful source of authority in governing corporate and governmental relationships, citizens’ rights, and issues of environmental protection. While some government officials enjoy the ability to negotiate with investors on a case-by-case basis, this instability makes some contractors nervous about how their own interests will be protected with specific legislation. Problems arise just as frequently from poorly drafted laws as from planned political flexibility.

Heller identified the question as how to harmonize industries’ preoccupation with “extracting tons and tons of minerals and millions and millions of barrels of oil” with the government’s goals to protect the long-term rights of citizens and interests of the state. He agrees that the push for the “publication and full disclosure of contracts,” would be a significant step in the right direction, blaming current problems on institutional weaknesses, not bad people.

Clement Fondufe, a Cameroonian lawyer based in New York, emphasized that contracts link the different parts of any project bringing development to the continent. Many sectors experiencing rapid growth, especially infrastructure, are just as much in need of formal contract laws. Without stable agreements for supply and construction, financing large-scale projects is impossible. Contracts allocate risks, and when unenforced, investors become nervous and all levels of the project suffer.

The flexibility of most African countries’ legal systems makes them both attractive and risky: negotiations have the potential to promise more, but negotiating parties are less bound to any agreements. While the legal systems of Africa develop, internal leadership, international support, and business ethics will be influential factors in shaping how promises are made and kept. Strengthening laws and formalizing contracts will help guard the rights of citizens, but reform must take small, realistic steps. As the African continent becomes more integrated with the global economy, both will become more comfortable and aware of institutional differences, and adapt and evolve their contractual proceedings. The future of Africa’s economy lies, more than we expect, in the way these decisions are made and upheld.