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Lawyers for Africa Blog

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Botswana: How to be a prudent creditor

Posted in Africa, Botswana, Insolvency

Has someone owed you money for some time, offering unfathomable excuses? Fear not, this article aims to help.

Rule number one is whenever you loan anyone any amount of money, reduce the agreement to writing. By putting an agreement in writing you eliminate the risk of potential disputes. In your agreement, always ensure that there is the following:


a.Loan amount; and

b.Payment terms;

Failure to include these terms may render your agreement incomplete and thus unenforceable. Where the loan amount is expressed but the payment terms are not expressed, the debtor is given a “reasonable time” within which to repay the debt. If you have not concluded a written agreement, don’t despair, an oral agreement is also binding and enforceable. However, do not be surprised when a debtor raises issues that were never agreed upon let alone discussed.

A written agreement has another advantage relating to that of prescription. Prescription (extinctive) is defined in the Prescriptions Act as the rendering unenforceable of a right by the lapse of time. Simply put, an obligation to pay can expire. The Act states that a debt due under an oral agreement prescribes after three years whereas a debt due under a written agreement prescribes after six years.

Rule number two is do not sit on your agreement. Assuming your debt has not already prescribed, if you keep making demand and payment is not forthcoming the debt is ripe for litigation. Litigation procedures are laid out in the Rules of the High Court and Magistrate’s Court. If the debt is within the jurisdiction of the High Court the following steps are taken;

a. A Writ of Summons is filed demanding payment of the outstanding amount, interest at the agreed rate or at 10% per annum and legal costs. A Writ of Summons is called the originating process because it commences legal action.

b.The debtor is given a specified number of days depending on his location to respond to the Writ. If the debtor has a defence, he will file an Appearance to Defend setting out a summary of the defence.

c.Should the debtor fail to file the Appearance to Defend timeously, the creditor is entitled to apply for Default Judgment. This means that the creditor has been granted judgment as the debtor has defaulted in filing an appearance to defend.

d.In the event that the debtor files an Appearance to Defend, the creditor is given time within which to file a Declaration and Affidavit. These amplify and/or confirm the claims as set out in the Writ. If the creditor is of the opinion that the debtor has filed an Appearance to Defend solely for delay or to avoid judgment, he may also apply for Summary Judgment. This is a proceeding which seeks judgment from the Court even if the debtor has filed an Appearance to Defend on the basis that the debtor does not have a “bona fide” or genuine defence and has entered appearance merely for the purpose of delay. If the Court grants Summary Judgment, then that is the end of the matter.

e.Should the creditor not apply for Summary Judgment, or has applied for Summary Judgment but the Court declined it, after filing the Declaration and Affidavit, the debtor is given time to file a Plea and Affidavit. These set out the grounds of the debtor’s defence.

f.Thereafter, the creditor may file a Replication, which answers the contents of the Plea filed by the debtor. This is the last pleading.

g.After pleadings are closed, the parties embark on Judicial Case Management, a process in which the parties explore possibilities of settlement and prepare for trial.

h.If the parties cannot settle their dispute, the matter is enrolled for trial, a process in which witnesses give oral evidence before a judge who then makes a determination.

i.If judgment is given in favor of the creditor, the debtor is compelled to pay the debt failing which, a Writ of Execution may be obtained to attach and auction the property of the debtor.

The process above doesn’t always go on such a predictable path. So next time you lend someone money, just think about what you may have to go through to recover it.


Article compiled by Outule Keatimilwe of our member firm Armstrongs Attorneys in Botswana

Angola: Sanctions for irregular taxpayers

Posted in Africa, Angola, Tax

The Angolan Tax Administration now has the right to publish a list of irregular taxpayers on a quarterly basis, in accordance with an Executive Decree which has been published in the official gazette dated the 1st of March and which came into force on the same date.

Taxpayers with an irregular situation will be prevented from carrying out operations such as the importing and exporting of goods, payments abroad for capital transactions, current invisible transactions and freight operations, obtaining or renewing work visas for expatriates, until providing proof that they have regularized their tax situation.

To that effect the list shall be distributed to the Central Bank of Angola and to the Ministry of Interior, so that the commercial banks and the consular representations and the immigration services can access the relevant information prior to performing certain tasks.

Botswana: Insolvent Debtor? Consider your options

Posted in Africa, Botswana, Insolvency
Insolvent debtor

Often, when creditors are faced with an insolvent debtor which is a company, there is a misconception that the only option is to place the company under liquidation. There are alternatives which could avert the need for liquidation which, as we know, has disastrous consequences such as retrenchments and very little prospects of recovery, in particular by the trade creditors, who are often not secured.

As an alternative to liquidation, a creditor is entitled to apply for judicial management if it persuades the Court that by reason of mismanagement or any other cause, it is just and equitable that the debtor be placed under judicial management.

This presents a more flexible option for the insolvent company, unlike liquidation, it provides the company with the opportunity to restructure the business and settle its debts without affecting its ability to trade in future.

A judicial manager is appointed to manage the business for a specified period of time reporting to creditors and assisting in determining the most appropriate course of action the company should take to discharge or trade itself out of debt. The advantages for judicial management are as follows:

  • Once an administration order is granted by the Court, all legal actions against the company by its creditors could be stayed. This gives breathing space to formulate and implement a recovery or restructuring strategy.
  • The administrator works for the benefit of the creditors. As such, the solutions proposed and implemented are likely to generate a better return than simply winding up the business.
  • Administration gives the opportunity for restructuring within a company. Non profitable parts of the business can be disposed of, therefore th remaining business is able to continue to trade and sustain employment into the future.

Another alternative in insolvency is in the form of a creditor compromise. A compromise results in cancellation of all or part of the debts of the company or varying the rights of creditors on the terms of debt or alteration of the company’s constitution that affects the likelihood of the company being able to pay a debt.

The Companies Act has a short form compromise which is not dependent on Court sanction, and a long form compromise which is dependent on a Court sanction.

Under the short form procedure, a creditor compiles a list of creditors detailing the amounts owing and the votes they are entitled to cast on the compromise resolution. The proposal is then given to each known creditor, with information as prescribed in the Act which advises the intended creditors’ meeting, to vote on the creditors’ compromise. Thereafter a meeting is held, and if the proposal is passed 50% by number and 75% by value of each class of creditor in favour, the compromise will be given effect.

Under the long form compromise the creditor prepares the proposal and applies to Court for procedural orders. The proposal is voted for at the meeting where the designated majority is obtained, the proponent then applies to Court to sanction the compromise.

The effect of the compromise is that all the debts due against that company once approved by requisite numbers are extinguished, which allows the company to start afresh. This presents another option for a creditor than simply winding up a company.


Consider your options.


Article compiled by Sipho Ziga of our member firm in Botswana- Armstrongs Attorneys

Botswana: Understanding The Electronic Communications and Transactions Act

Posted in Botswana, South Africa

The place where a contract is formed is very important where contracting parties are in different jurisdictions or international contracts in which one party may suffer prejudice owing to conflicting legal rules. Section 16 (3) of the ECTA states the following:

‘The acceptance of an offer by means of an electronic communication becomes effective at the time and place that the electronic communication is received by the offeror’.

The above, however, is not applicable where a party has specifically excluded a form of acceptance that is covered under the ECTA.

In the leading South African case regarding, the import of such a determination becomes clearer. Some of the issues the court had to determine were:

  • Was the content of an e-mail sent an acceptance of an offer of employment?
  • Was the content of an SMS sent an acceptance of offer of employment?
  • Did the offeror receive e-mail? ,and
  • Is an SMS a proper mode of communicating acceptance of an offer?

The Court held, in summary that:

“An SMS is as effective a mode of communication as an e-mail or a written document. In view of these findings, the court concludes that a contract of employment came into existence.”

The court’s finding gave effect to a comparative law approach. The Court considered the ECTA and also gave due cognisance to United Nations Commission for International Trade Law (UNCITRAL) Model Law on Electronic Commerce.

Article 10 of that Convention on the use of Electronic Communications in International Contracts lays down slightly different principles regarding the time and place of sending and receipt. Article 10 of the UNECIC deals with the time and place of communications. It is important for a number of reasons, including the time and formation of the agreement, the lapsing of an offer or other time limits such as performance .

The Convention provides at clause 10:

“(1) The time of dispatch of an electronic communication is the time when it leaves an information system under the control of the originator or of the party who sent it on behalf of the originator or, if the electronic communication has not left an information system under the control of the originator or of the party who sent it on behalf of the originator, the time when the electronic communication is received.”

Section 22 of the ECTA provides, in respect of when electronic communications are deemed to have been received by the addressee,:

“(1) If the addressee has designated an information system for the purpose of receiving electronic communications, the time of receipt of an electronic communication shall be determined as follows –

(a)at the time when the electronic communication enters the designated information system of the addressee; or

(b)when the electronic communication is sent to an information system of the addressee that is not the designated information system, at the time when –

(i)the addressee becomes aware that the electronic communication has been sent to that information system, and;

(ii)the electronic communication is capable of being retrieved by the addressee.

(2) An electronic communication is deemed to be capable of being retrieved by the addressee when it reaches the addressee’s electronic address.
(3) If the addressee has not designated an information system, receipt occurs when the electronic communication is retrieved by the addressee, or should reasonably have been retrieved by the addressee”

At common law, the contract is concluded at the place where the last act necessary to constitute the agreement was performed. The ECTA regarding receipt or delivery of data messages, has deviated from the common law position in that regard.

Article Compiled by M.J Tafa of our member firm Armstrongs Attorneys in Botswana

Criminalisation of Cartels: A potential cure with side effects – South Africa

Posted in Competition, South Africa

Competition authorities particularly in the United Kingdom, the United States and Australia have enacted and entrenched criminal penalties for cartel behaviour. South Africa seems to desire to follow suit although the amendments to our Competition Act, (“Competition Act”) in relation to criminal sanctions have yet to come into operation.


Punishing cartel ring-leaders, the offenders, seems to be an obvious solution for cartel behaviour. But is it? We submit that a closer look reveals side effects, which could bring about the very problems criminalisation is intended to prevent.

Cartel activities in terms of the Competition Act relate to inter alia price-fixing, dividing markets and collusive tendering or otherwise referred to as bid‑rigging. The penalties in place for taking part in cartel activities are different throughout the world although there has been a steady shift from civil sanctions to criminal sanctions by competition authorities.


The highest penalty that can be imposed currently in South Africa for taking part in a cartel is 10% of the company’s annual turnover. However, with the amendment of section 73A, the Competition Act now potentially provides for new criminal sanctions to be imposed on individuals. These criminal sanctions provided for in the Amendment Act, 2009 are yet to become effective and are set to remain ineffective for some time, will allow for a fine not exceeding R500 000 and a prison sentence of up to 10 years for individuals.


The ultimate goal of competition law is to promote consumer welfare through the regulation of anti-competitive practice in the market. In order to achieve this goal of consumer welfare consumers must have quality products and services available to them that are sold to them at reasonable prices. This can only be achieved through vigorous competition in the market, which forces companies to produce a larger quantity and better quality of product and at a price point that will convince consumers to buy the better quality and priced product from the most efficient competitor in the market.

On the other hand a market is manipulated through price-fixing and market sharing and thereby consumers may be forced to pay higher prices for lower-quality goods. This manipulated market situation can have extremely detrimental effects on the poor and vulnerable. An example would be in the “bread cartel” case. The competition authorities concluded that the bread cartel resulted in many people, particularly in rural and poor communities of South Africa where bread is a staple food, being forced to pay much higher prices for bread.

The reason for the introduction of criminal sanctions into cartel practices is to crack down on the individuals involved, to deter future cartel activities. The need for a harsher penalty comes from the fact that the market activities of powerful companies driven by their leaders can have drastic effects on ordinary people who depend on a fair and competitive market for their day-to-day survival.


Although the purpose of imposing criminal sanctions on those participating in cartel practices is to protect the position of the consumer, there are problems in proving the existence of cartel behaviour. The higher standard of proof in criminal cases, “beyond a reasonable doubt”, has been a problem overseas particularly in Australia and criminal proceedings regarding cartels have also been scarce in the United Kingdom. The Australian Competition and Consumer Commission have been reluctant to prosecute criminal cases that might be unsuccessful rather than to pursue civil cases, where the burden of proof is less onerous.

It has also been stated in Australia that the criminalisation of cartels has caused “a chilling effect on pro-competitive behaviour” because so many firms are concerned about being caught up in allegations of cartel behaviour.

New Zealand has adopted a different strategy as a means of promoting pro-competitive behaviour in markets. The Amendments to the Cartels Bill, December 2015, as put forward by Paul Goldsmith, the Minister of Commerce and Consumer Affairs in New Zealand, will remove the criminal sanctions in New Zealand for cartel behaviour and allow for companies to collaborate with one another, if that collaboration promotes competition and enhances efficiency.


Those countries, including South Africa which are considering introducing criminal sanctions for cartel behaviour, regard consumer welfare as the ultimate end. In practice though there have been problems implementing criminal sanctions. The difficulty in proving criminal offences as opposed to civil offences is one such problem. Another issue faced by these countries has been that pro‑competitive behaviour in the market has been diminished by the fear of criminal sanctions. The difficulty then, with regard to stamping out cartel behaviour in the market, is to balance the sanctions imposed against the effects of those sanctions on pro‑competitive behaviour.

Although the point of criminal sanctions is to support the most vulnerable consumers in a society, if the sanctions instil a chilling effect on competition and innovation specifically, the sanctions may bring about the very evil they are designed to prevent.


Article By: Ahmore Burger-Smidt, Director: Werksmans Advisory Services (Pty) Ltd and Wesley Fletcher, Vacation Student

Hiring of Foreign Employees by Private Employment Agencies in Mozambique

Posted in Labour, Mozambique

hiring-small-businessAccording to the Notice no. 484/MITRAB/DTM/GD/211/2014, of 17 September 2014, from the Immigration Labor Directorate, the Provincial Labor Directorates must, with immediate effect, cease to receive work permit applications of foreign citizens submitted by Private Employment Agencies, for transfer purposes to third parties or enterprises.

The order described in the Notice is based on Article 3 of the Regulation of Private Employment Agencies, approved by Decree no. 6/2001 of 20 February, whereby the Private Employment Agencies are only qualified to hire foreign nationals citizens to integrate in their own staff and not for transfer purposes to third parties.

A review of the Regulation of Private Employment Agencies, the Regulation regarding the Mechanisms and Procedures for Hiring Foreign Employees and the Labor Law, allowed us to conclude that the understanding of the Immigration Labor Directorate is problematic. .This leads us to question whether the construction which this Notice presents is in accordance with lawful requirements.

It is correct that article 3 of the Regulation of Private Employment Agencies applies to national employees Likewise it is correct that the no. 3, of article 2 of the Regulation regarding the Mechanisms and Procedures for Hiring Foreign Employees entitles the Private Employment Agencies to hire foreign nationals, therefore it should comply with the quota system/regime or work permit, as applied to any other company.

However, the Regulation regarding the Mechanisms and Procedures for Hiring Foreign Employees was enacted by a Decree, a legal act with the same hierarchy and more recent than the Decree no. 6/2001 of 20 February which enacts the Regulation of Private Employment Agencies, cited by the Notice issued by the Immigration Labor Directorate.

Is the Notice no. 484 / MITRAB / DTM / GD / 211/2014, of 17 September 2014 unlawful and therefore infringing the right to work to foreign nationals in the country?

Article compiled by Abdul Assane, a Lawyer at our member firm Couto, Graca & Associados in Mozambique

The facts of the Zimbabwean Indigenisation law clarification

Posted in Africa, Zimbabwe


Very few will require persuasion in order to accept the importance and significance of empowerment of indigenous Zimbabweans and all historically disadvantaged people of Zimbabwe. Corporate social responsibility and balancing the interests of investors and those of communities where the investment takes place are indeed important emerging human rights issues particularly in the area of extractive industries.

Furthermore, few will require a lecture to appreciate the negative impact on investment inflows into Zimbabwe, of an empowerment programme focused on equity and transfer of control from the investor. Consequently, the Zimbabwian cabinet ministers ought to be congratulated for identifying the nexus between the implementation of our indigenisation laws and the poor inflows of investment into our country. The current law has many philosophical and technical defects which require urgent attention.

That is not, however, the subject matter of this article today. Sternford Moyo confines himself to clarify the recent clarification of the indigenisation law and leave you to determine whether more should have been done.

On January 8, Youth, Indigenisation and Economic Empowerment minister, Patrick Zhuwao, published a government notice executed by him on the January 4 in which he replaced and substituted in its entirety the notice published in the Government Gazette Extraordinary on December 24 2015.

To access this article, please click here

Article written by: Sternford Moyo – Corporate lawyer and a Senior partner at our member firm  Scanlen & Holderness.

How Mozambique Can Realize IMF’s Recent Predictions of Exponential Economic Growth

Posted in Africa, Investment, Mozambique


The International Monetary Fund (IMF) caught the attention of investors when it issued a report predicting that Mozambique’s average economic growth rate between 2021-2025 could reach as high as 24 percent per annum and liquefied natural gas projects (LNG) could reach more than 50 percent of the country’s nominal output by the mid-2020s.  While this growth and these production levels are attainable, they are based on a number of assumptions and what the IMF describes as “various risk factors [which]could significantly change the long-term projections.”

First, gas processing facilities in the Rovuma Basin will need to begin production by 2021.  The Mozambican government already has made a significant step forward by approving the Decree-Law nº 2/2014 of 2 of December, which establishes the legal and contractual regime applicable to the LNG projects in the Areas 1 and 4 of the Rovuma Basin. According to the IMF, the total investment in these two areas could exceed one hundred billion dollars and Mozambique would become the world’s third largest LNG exporter.

Second, peace and security based on inclusive growth must be one of the government’s top priorities in the short term.  The opposition party Renamo is putting an increasing amount of pressure on the governing Frelimo party and threatening to use force to achieve its political objectives.  An unstable political situation, whether real or perceived, could deter foreign investment thereby threatening the development of the country’s gas sector and other economic development goals.

Finally, the government has been engaged in an  economic and social reform process, which will lead to significant poverty reduction in the country, although other development challenges remain such as fighting corruption.

The government will continue to  invest heavily in  public sector reform and capacity development, with the objective of improving efficiency, enhancing transparency and devolving responsibility from the highly centralized ministries to the provinces and districts. The government, according to the IMF, also needs to develop and consolidate a macroeconomic policy focused on three main goals: (i) diversification into an economy that is sustainable and not overly reliant on the mega-LNG projects; (ii) proper management of the expected financial windfalls from the gas sector; and (iii) investment in infrastructure and other critical sectors of the economy. Implementing these policies will be critical to Mozambique achieving its long-term high-growth potential.

Article compiled by Sandro Jorge, a senior lawyer our member firm , Couto, Graça & Associados in Mozambique and was the first LEX Africa recipient for the Covington Fellowship Program.

Setting out the respective rules of entry, residence and exiting of Mozambique

Posted in Africa, Mozambique

MOZ VisaIt was recently published in the Official Gazette No 105, Series I, of 31 December 2014, Decree No. 108/2014 of 31 December 2014, adopting the Regulation of Law No. 5/93, 28 December, which lays down the legal arrangements and rules of foreign citizens with regard to the entry, residence and exiting of Mozambique and also with regard to such citizens’ rights and guarantees.

Introduced in the new arrangements were some important elements that were not in the previous Decree and that, given its importance, is considered hereunder:

Visa for investment activities

The aforementioned Decree introduced a visa for investment activities, which is granted to an investor, his representative or an investing company’s attorney for the implementation of investment projects approved by the Council of Ministers and which is equal to or higher than 50 (fifty) million dollars.

Work Visa

In terms of the Decree No. 108/2014 of 31 December 2014 (as in the previous arrangements) a work visa is granted to foreign citizens by Diplomatic and Consular missions in the Republic of Mozambique and is intended to allow entry throughout the national territory to the holder thereof for the purpose of pursuing a temporary job.

Additional conditions and requirements were set out for the granting of a work visa, these are:

  • the term of use of the visa was increased from 30 to 60 days;
  • granting the holder thereof multiple entries and residency in Mozambique until the expiry of the employment contract;
  • it has also been clarified that the issue of a work permit is to enable the holder to devote himself exclusively to his employer.

The following are additional conditions, which have been added, for the granting of a work permit:

  • there is a need to submit a work permit if the applicant seeks to exercise professional activity;
  • documentary evidence indicating that the individual can perform the profession for which he is authorized to;
  • a medical certificate;
  • evidence indicating accommodation arrangements in Mozambique;
  • a guarantee for possible repatriation of foreign citizens, as well as the household thereof, translated into a cash value corresponding to the price of return ticket to the country of origin and deposited in the name of the Immigration Service. This guarantee is returned at the end of the employment relationship, and such refund should be requested within thirty days prior to leaving the country;
  • the visa at the border is granted only to those citizens from countries that do not have diplomatic or consular representation in Mozambique;
  • the visa at the border does not allow the holder to obtain residence or a work permit;
  • foreign spouses and minor children of the foreign citizen who holds a work visa are granted a temporary stay visa which is valid for one year and which is renewable on the same grounds on which is was granted;
  • the validity of a criminal record certificate to be provided, when required, shall be 1 year, opposed to 6 months as per the previous arrangements.

There is also a specific condition for foreign employees intending to provide activity within the mining industry, namely that before submitting the visa application to the diplomatic missions, an application addressed to the Minister who oversees Immigration must be made, together with the work permit and the opinion of the Minister of Mineral Resources.

Temporary Stay Visa

The Decree No. 108/2014 of 31 December 2014 introduces a temporary stay visa for the  foreign spouse and minor children of the foreign citizen who holds  a work permit.

The above decree sets out that the temporary stay visa shall be issued by diplomatic and consular missions of the Republic of Mozambique and must be used within sixty days following the date on which it is granted.  It allows the holder thereof multiple entries and stay for a maximum period of one year however it can be renewed on the same grounds on which it was granted.

This new arrangement repeals the previous one which provided the need for foreign spouses and minor children of the foreign citizen holding a work visa to obtain a residence permit that allows his/her stay in the country.  With the grant of a temporary stay visa the holder may stay in the Mozambican territory for a period of one year, which period can be renewed on the grounds on which the visa was granted.

Article written by: Dimple Dias – Trainee Lawyer at our Mozambican member firm Couto, Graca & Associados (CGA)

The need to amend the Indigenisation and Economic Empowerment act

Posted in Africa, Zimbabwe

The legislative history of Zimbabwe has few statutes which have generated as much controversy as the indigenisation legislation.  Another significant feature of this legislation is that it has not generated as much litigation as other controversial statutes.  This points to the fact that most right thinking Zimbabweans have remained confident that it is possible to achieve the legitimate aspiration of affirmative action in favour of previously disadvantaged groups whilst at the same time creating an investor friendly environment.

To read more on this topic, please click here


Article written by: Sternford Moyo – Corporate lawyer and a Senior partner at our member firm  Scanlen & Holderness.