Best practice in preparing project negotiations: Government Negotiators’ Academy

Posted in Infrastructure Blog post

Accra, Ghana – 14 February 2019

On 14 and 15 February 2019 in Accra, Ghana, the African Legal Support Facility (ALSF) and the African Business Law Firms Association (ABLFA) played host to around 80 representatives of government and law firms from around 30 different countries for a government negotiators’ academy.  The academy was aimed at equipping participants with vital skills for the negotiation of complex commercial transactions in the PPP, oil and gas, mining and power sectors, and Norton Rose Fulbright participated by delivering a half-day of training on the structuring and financing of PPPs.

The two day event opened with a senior-level panel, moderated by Kalidou Gadio (Legal Consultant, Former General Counsel of African Development Bank), on “How to prepare project negotiations: best practices”.

During an interesting and lively discussion, some recurring themes were identified:

Establishment of multi-sector teams/co-operation across ministries

Stephen Karangizi (Director/CEO, ALSF) identified one of the key features of a successful negotiation to be the establishment of multi-sector teams from across the government ministries involved in the project.  This was reiterated by all panellists. Souley Amadou (Division Manager-Legal, Private Sector Operations, African Development Bank) stressed the importance of flexibility in the approach, creating teams based on the nature of the transaction, rather than having one team of negotiators, separate from the ministries involved.  If placed at senior level, such as within the Prime Minister’s / President’s office, it may be easier to see where government needs to supplement its resources or skill sets. There may also be a role for the relevant investment promotion agencies to be part of the multi-sector teams.

Need for experienced legal advice and other advisory services

All the panellists agreed that the provision of legal and other advisory services was key to successful negotiations.

Mr Karangizi said that ministries need to recognise when external advisory services are necessary. The ALSF can provide assistance with the provision of legal, technical and financial advisory services, particularly to transitional countries. Most requests to the ALSF come through existing contacts through the AfDB’s in-country teams.

Fui Tsikata (Partner, Reindorf Chambers) repeated the call for legal advice to be obtained by government negotiating teams and those at the highest level, negotiating state to state.

Aïssatou Seck (Counsel, Legal Vice Presidency, Africa Region – World Bank) stressed the importance of preparation.  Coming to the negotiating table with an understanding of the proposed terms of any funding will give the best chance of successful negotiation.

The panellists recognised the challenge of finding funds for government external advisers, but suggested some options – for some countries, a grant may be available from ALSF, or private sector participants could be asked to fund the government’s legal costs. From the perspective of the private sector, this may enable the relevant project to proceed where it otherwise would not. In some cases, the panellists have seen the private sector approaching the ALSF on behalf of government, or suggesting to government that they approach the ALSF, for support.  Mr Amadou opined that government should sometimes insist upon the private sector meeting the government’s advisory costs, whether the project goes ahead or not, as this would generally be proportionate to the level of investment they were proposing to make.

In Botswana, specialist advisers have been used for recent projects, and have contributed to the success of those projects.

The role of local advisers

Ghanaian firm AB & David questioned whether enough was being done to increase the role of local advisory firms when arranging such government mandates. It was noted that there is some evidence that this is happening, for example where local firms are approached first and have the responsibility to select international partners, rather than the other way round. It was however noted by the panel that many government advisory requests came on short notice, and international firms still had the advantage of being able to mobilise quickly.

It’s not always up to the negotiating teams

The panellists recognised that some negotiations happen at the highest levels, state to state, with an outline “deal” then presented to the negotiating teams to finalise. This may involve an element of diplomacy; in the case of a major resource-driven infrastructure project with Chinese parties, there is likely to be more input from the foreign ministry, which changes the dynamics.

The panel members and commenters were agreed that the negotiating teams should not always accept a deal as final – there is always room for re-negotiation, even if it means suspending other discussions for a period.

It was noted that negotiating team members often have a very high workload, so focussing on the details of a specific transaction with complex documents can be hard – this was quoted as another reason why experienced and responsive external advice is necessary to share the load.

Potential conflicts for government

Mr Amadou recognised the impact on negotiations where the government takes on more than one role in a transaction, for example, as regulator, equity participant or environmental protector, but felt that this should not preclude the government investing in a project. Mr Tsikata noted that it may be challenging to forge a coherent approach between the government’s different roles, but by identifying these more clearly it lends legitimacy to the government’s dealings.

In some cases, it might be appropriate for government interests in projects to be held by a separate agency, as is the case in some countries, to ensure that equity interests are managed on a professional level to maximise the investment value, and not for political purposes.

Would binding protocols or standard form documents help? What guidance is available?

Questions from the floor followed, with discussion around the need for binding procedures for negotiations to instil professionalism and team work across ministries. The general consensus was for guidance and protocols rather than binding, inflexible legislation.

Some attendees also thought that having standard form documents, for example, oil production sharing agreements, would lead to more successful outcomes for negotiating teams. Mr Karangizi noted that ALSF were in the process of preparing detailed guidebooks in a number of areas, such as sovereign debt, power, oil and gas and infrastructure projects, and Ms Seck noted that the World Bank also provides training to familiarise people with the use of their products.  One government attendee made a specific request for guidance on sovereign guarantees, as to what frameworks should apply when considering offering such support, so the continued development of such tools is clearly justified.

Conclusions

In summing up, the moderator Mr Gadio identified the following as key for successful negotiations:

  • remembering that you can always negotiate
  • putting in place well-structured multi-sector teams, with the appropriate expertise
  • ensuring that experienced legal and other advisory services were available in good time

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