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RENEW’s Legal Corner: November 2022

By Sintayehu Abebe, Lincoln Ford & Mahder Ambachew | Wed Nov 02 2022
Our take on developments in the investment ecosystems of East Africa
Franco-Valuta Beneficiaries Are Expected To Show The Source Of Their Hard Currency Going Forward 
In April 2021, the Ministry of Finance (MoF) allowed importers to import basic commodities using the Franco-Valuta scheme without any requirement for verification of the source of their hard currency. This decision was made due to the inflation that is impacting the country’s economy. By allowing importers to import basic commodities without complying with the strict banking procedures, it was expected to increase the importation of basic goods into the country. However, in less than a year, the government reversed this decision. Starting from this month, importers are required to show the source of their hard currency to the National Bank of Ethiopia (NBE) to import goods through the Franco-Valuta scheme. The NBE has come up with this decision to control the parallel foreign currency market in the country. According to NBE, beneficiaries of the Franco-Valuta scheme are getting hard currency from the parallel market, and the requirement of verification is expected to alleviate this problem.  
Ministry of Finance Bans the Issuance of Letters of Credit For 38 Import Items
The Ministry of Finance (MoF) has banned the issuance of letters of credit for 38 selected import items. In a circular letter to the National Bank of Ethiopia (NBE), the MoF has ordered the denial of foreign currency issuance for these items, which was made effective on October 17, 2022, and will stay indefinitely. The restriction was imposed on the products as they were not found to be priority items. The prohibition spans a range of items, including processed foods, beverages, artificial jewelry and flowers, bottled water, fruits, carpets, hand and wall watches, human and artificial hair, perfumes, fireworks, bags, umbrellas, seafood, cigarettes, and others. Automobiles imported by private companies are likewise subject to the restriction. This ban will affect the nation both positively and negatively. It will have a detrimental impact on several business communities that are involved in the importation, wholesaling, supermarket business, and retail of the 38 items listed. It also has the potential to increase contraband trade. The prohibition will, however, assist the nation in obtaining foreign currency for imports of high importance, such as medicine and basic commodities, support the expansion of domestic enterprises, and reduce illegal money transfers related to the selected commodities. 
Trade and Investment Divisional Court Inaugurated in Addis 
The Federal Court of First Instance officially launched a divisional court solely focused on trade and investment. The court is composed of 11 hearings that deal only with construction, investment, banking, and insurance cases. Five of the hearings under the classification hearing are assigned to commercial matters, and the other five hearings are assigned to banking and insurance matters. The remaining hearing is assigned to deal with construction-related issues. The court is composed of 14 judges and five assistant judges. Although the court was inaugurated this month, the trial was started in June 2022. The bench is anticipated to improve service delivery in issues relating to business, banking, and insurance. Having a separate division court focused solely on trade and investment has a positive impact on enabling businesses in Ethiopia to operate more efficiently and productively by reducing the amount of time and money businesses are required to devote to dispute resolution. 

At the recent Legal Aid Open Day held in Luweero, the pertinent issues that arose for discussion during the legal clinics concerning women’s land rights included sensitizing women and youth, who are adversely affected the most during land disputes, about land ownership and offering legal support to these vulnerable groups in order for them to obtain unequivocal rights to their parcels. According to an article in the New Vision, a Memorandum of Understanding between the Buganda Land Board (BLB) and the Uganda Association of Women Lawyers (FIDA Uganda) will purposely be driven towards obtaining justice for women and youth over contested plots of land. Furthermore, emphasis will be placed on securing or registering their tenancies and understanding the different rights that come along with the specific type of tenancy held. 
This partnership seeks to address pertinent issues such as the certificates of occupancy that are conclusive evidence of ownership and rights to the land. It is also a beneficial partnership with the land board which is entrusted to manage some of the biggest parcels in the Buganda Kingdom. The two parties have a duty to educate the women and youth on their tenancy rights on land which will contribute to the reduction of perennial land disputes in the country.

Rwandan corporate lawyers to play a role in economic growth
Rwanda is on track to establish itself as a top investment and tourism destination in Africa by providing several incentives and legislative amendments to attract more foreign investments. With that comes a number of transactional agreements and laws that need to be accurately structured in order to ensure compliance with domestic laws and also provide a precedent for other investment agreements. It is essential that the whole entrepreneurial and investment ecosystem realize the role of lawyers in structuring major deals, drawing up laws, amending legislation and facilitating dispute resolution while completing the deal. 
In a New Times article, Felix Manzi, the Director of the CERTA Center for Law and Innovation, a new initiative with the purpose of blending Rwandan legal expertise with innovation and creation, stated that lawyers play a very pivotal role in Rwanda’s economic prowess. He noted that “the entire African continent is trying to attract FDI” and lawyers should equip themselves with the requisite knowledge to understand certain concepts regarding innovation and creation. He also noted that there may be an evident lack of skilled manpower to deal with legal advice and representation in this field which will consequently lead investors to reallocate their funds to a more equipped jurisdiction like Kenya2.
Rwanda needs to train and maintain an efficient and competent legal fraternity that can compete within the East African regional bloc and also handle all the legal related tasks that come along with the rapid rate of growth and development which the country intends to achieve.

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