Inside Africa blog

Legal developments around Africa

Sanctions and agribusiness – are there exemptions to ensure food security?

Marelise van der Westhuizen

Sanctioning bodies may consider exempting trade in agricultural goods from sanctions. What does this mean for African agribusiness?

The nature and reach of international sanctions are consistently changing as the political and diplomatic landscape evolves. Sanctions lists are frequently updated, sometimes daily, to include or exclude countries, individuals and different goods and services.

When doing business in Africa, the potential impact of sanctions has to be considered on almost every deal as a number of African states, entities or individuals can be found on, amongst others, the UN Security Council, OFAC and EU sanctions lists.

However, with some of the most severe instances of starvation and malnutrition worldwide (five of the top ten recipients of humanitarian assistance are African countries, four of which are listed on all of the sanctions lists above) one has to ask if any leniency is shown towards agribusiness in Africa?

Essentially, the answer is yes. There is a growing international trend towards exempting the trade in agricultural goods from the ambit of sanctions. We highlight some of the approaches by sanctions bodies below:

UN Security Council Sanctions

It is doubtful that the UN Security Council could issue sanctions which prohibit agribusiness – to do so would fly in the face of the right to adequate food and the right to be free from hunger set out in the International Covenant on Economic, Social and Cultural Rights.

In practice, the UN Security Council generally issues sanctions in the form of arms embargoes, asset freezes and travel bans. Arms embargoes and asset freezes are unlikely to affect agribusiness, but the sanctioning of travel to a listed country can have a great impact on the ability of a company to do business there. The UN Sanctions Committee considers humanitarian exemptions on a case by case basis but it is unclear whether travel to conduct business will be exempted on the basis that agribusiness is an inherently humanitarian activity.

US Sanctions

As a general rule sanctions cannot be imposed which will prohibit commercial food and agricultural commodities sales but the US Department of Treasury does require an export licence, issued by OFAC, be in place when trading in agri-products with sanctioned countries.

Agri-products are defined to include food, feed, sea food, alcoholic beverages, soft drinks, reproductive materials and certain fertilisers but not pesticides, insecticides, herbicides or agricultural equipment (whether hand tools or motorised). OFAC also includes vitamins and minerals, food additives or supplements and bottled drinking water within this definition.

One must, however, remember that there are prohibitions preventing private and public US funding of transactions involving sanctioned states, entities or persons, regardless of whether those transactions are exempted or not.

 

The Inside Africa team would like to thank Tammy-Lynne Bekker, Candidate Attorney and co-author.

 

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Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.

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