REFORM TALKS with Enam Obiosio
Foreign investment can finance infrastructure, expand productive capacity and create jobs, but poorly negotiated contracts can expose governments to costly disputes and long-term financial obligations. I believe African countries must treat legal scrutiny, transparent negotiations and effective contract management as essential parts of investment policy, not as procedures to complete after agreements have been signed.
I believe Africa’s ability to attract foreign investment should be measured not only by the volume of capital entering the continent, but also by the quality of the agreements through which that capital is secured. An investment deal may promise new infrastructure, jobs, technology transfer and economic growth. Yet, if its terms are poorly understood, inadequately negotiated or weakly monitored, the same agreement can expose a government to liabilities that undermine its development objectives.
This concern was central to the second African Attorneys-General Roundtable in Abuja, where the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi , urged African governments to scrutinise foreign investment contracts, treaties and agreements for legal loopholes before signing them. The three-day meeting, supported by the African Legal Support Facility and attended by representatives from about 20 countries, examined investment-state dispute settlement and the institutional challenges facing African governments.
I consider this discussion important because governments negotiate investment agreements from positions that are not always equal. Foreign investors may have access to specialised legal advisers, international arbitration experts and substantial financial resources. Public institutions, by contrast, may face fragmented responsibilities, limited technical capacity and pressure to approve projects quickly. These differences do not make foreign investment undesirable. They make careful preparation indispensable.
Prevention is better than arbitration
Fagbemi said Nigeria had accumulated considerable experience in investment arbitration and could share lessons with other African countries. He cited the P&ID and Sunrise cases as examples of disputes from which governments could learn.
I believe the central lesson is that legal disputes should be prevented wherever possible, rather than treated as unavoidable costs of doing business. Arbitration can provide a legitimate means of resolving disagreements, but it can also consume public resources, divert officials from policy priorities and create uncertainty around government finances.
The responsibility for avoiding these outcomes begins before a contract is signed. Governments must establish whether a proposed investment is commercially viable, whether its financial assumptions are realistic and whether the parties’ obligations are clearly defined. They must also understand the dispute resolution clauses, termination provisions, indemnities and financial consequences that may arise if a project fails or circumstances change.
Fagbemi emphasised early negotiation, coordination, collaboration and political will. I agree with this approach, but I would add that these principles must be supported by practical institutional arrangements. Legal advisers should be involved from the beginning of negotiations, not called in only to approve agreements already shaped by commercial or political considerations.
Relevant ministries, procurement authorities, regulators and financial officials must also examine agreements within their areas of responsibility. A contract that appears legally sound may still expose the government to unacceptable fiscal, operational or regulatory risks.
Strong institutions must outlast political administrations
According to Fagbemi, the federal government has established a committee to review the Nigeria Investment Act, gas supply regulations and the Arbitration Act to ensure alignment with global standards. He also disclosed plans to digitalise federal government agreements, contracts and related information to improve accessibility.
I see these initiatives as opportunities to strengthen institutional memory and accountability. Digital records can help government agencies identify existing obligations, monitor deadlines, retrieve relevant documents and assess the terms of previous agreements before negotiating new ones.
However, digitalisation alone will not resolve weaknesses in contract management. Its value depends on accurate records, appropriate access controls, clear responsibility for updates and effective monitoring. Where agreements contain confidential commercial information, transparency arrangements must also respect applicable legal obligations while allowing authorised officials to examine the government’s commitments.
More importantly, contract oversight should not depend on the interests or expertise of individual officeholders. Governments change, but contractual obligations often extend across several administrations. Institutional systems must therefore preserve records, track performance and alert officials to emerging risks regardless of political transitions.
I also believe that the proposed legal reviews should lead to practical guidance for public institutions. Standard contract clauses, risk-assessment procedures, approval thresholds and clear rules for escalating concerns would help make sound negotiation practices routine rather than exceptional.
Cooperation is essential, but accountability must remain clear
The Abuja roundtable offers African governments an opportunity to exchange experiences and improve cooperation on investment disputes. I support this approach because governments can learn from one another’s successes, failures and approaches to negotiated settlements. Early intervention may resolve disagreements before they develop into costly arbitration proceedings.
Nevertheless, regional cooperation must complement, not replace, domestic responsibility. Each government must maintain the capacity to understand its own agreements, evaluate investment proposals and hold officials accountable for compliance with established procedures.
Fagbemi attributed Nigeria’s ability to resist what he described as predatory claims to President Bola Tinubu’s support and the enabling environment created by his administration. While political backing can help legal institutions defend the public interest, I believe lasting protection must rest on sound evidence, professional competence, independent scrutiny and consistent procedures. No administration can substitute political will for the detailed work required to negotiate and manage complex contracts.
African governments should also avoid treating every disagreement with an investor as evidence of misconduct. Investors require predictable rules and fair dispute resolution mechanisms just as governments require protection from exploitative terms. Credible investment frameworks must preserve the state’s ability to regulate in the public interest while honouring legitimate contractual commitments.
Turning lessons into lasting safeguards
Ultimately, I believe Africa must move from discussing investment disputes to institutionalising the practices that prevent them. Governments should strengthen legal and commercial expertise, coordinate negotiations across agencies, maintain accessible contract records and monitor agreements throughout their implementation.
The success of the African Attorneys-General Roundtable should therefore be judged by what follows the discussions: improved national procedures, stronger cooperation and fewer preventable disputes. Foreign capital remains important to Africa’s development, but attracting it should never mean accepting obligations that public institutions do not fully understand.
The objective is not to discourage investment. It is to secure investment on terms that advance development, distribute risks fairly and protect public resources. African governments will be better positioned to achieve these goals when legal scrutiny begins before signature and continues for as long as contractual obligations remain in force.
