President of the African Development Bank, Dr. Akinwunmi Adesina, has stated that Africa’s $100 billion shortfall in foreign direct investment would require a legal fix. Dr. Adesina stated this at a legal conference organised by the Kenya Law Society in Kenya over the weekend.
Dr. Adesina blamed weak rule of law, crushing debt burdens, and predatory “vulture funds” which exploit fragile legal systems for the crippling gap in Foreign Direct Investment on the continent.
Africa’s Vulture Funds Problem
The AfDB president described how vulture funds buy discounted national debt, then aggressively sue vulnerable nations for full repayment plus inflated interest and fees through legal loopholes. “When Africa stands for the rule of law, the world will stand with Africa,” Adesina declared
“Evidence suggests foreign direct investments move more to countries that have political stability, stable democracies, transparency, and low levels of corruption,” he stated.
He also identified weak regulatory frameworks, a lack of public accountability, and a lack of respect for intellectual property rights as major issues.
Call For Judicial Reforms
Adesina urged immediate, concrete reforms: strengthen judicial independence and transparency, rewrite natural resource laws to benefit communities, not elites, establish sovereign wealth funds, and build robust African arbitration systems to settle disputes fairly locally as ways to attract better foreign direct investments.
Dr. Adesina pointed out the success of AfDB-backed commercial courts in Rwanda and Côte d’Ivoire, which have slashed dispute resolution times and unlocked over $1 billion in investment as a template for how legal reforms could lead to greater economic prosperity.
He also noted that Seychelles, after Bank-supported constitutional reforms mandating parliamentary approval for sovereign borrowing, saw its debt-to-GDP ratio plummet from over 100% to below 55%.
He therefore called on lawyers across Africa to help bridge Africa’s investment gap by decisively upholding the continent’s laws and justice systems.