Seven nation-building Suggestions For African Governments To Use During Contract Negotiations With Foreign Companies

There is a common notion that African governments do not have much leverage when negotiating contracts for the extraction of special minerals, resources, or development projects, because foreign firms have almost all the technical expertise the African government needs. 

But this notion is not true. So if it was Pinnochio’s nose, it would grow enough inches to poke the moon, just to boomerang back and shake the earth. 

This pervasive notion can only take root when the official or citizen lacks a universal vision of the collective capabilities of African citizens (at home and in the diaspora), and lacks insight on how to strategically harness them during contract negotiations to promote nation-building at home. 

Foreign companies, no matter how it first appears, do not possess all the technical expertise. There is one equalizing factor here: the collective power and experience of the African diaspora. If you look at every industry and sector in the U.S. and Europe, no matter how specialized, you will find 1st and 2nd generation Subsarahan Africans (primarily West Africans) among the most experienced and accomplished in that profession. The mass exodus of Africans called “brain drain” can be viewed differently: Africans abroad have now gained the knowledge, expertise, and technical capabilities of those societies. The only thing missing is organizing, coordinating, and adapting them for indigenous nation-building! Thus, what would happen if a visionary government organized and coordinated these collective capabilities and strategically applied them? 

Here are only a few suggestions (of many others) for African Governments to use during contract negotiations. These suggestions are not exhaustive, and each requires a whole series of essays to be built into a detailed framework for practical application. Hence, the suggestions here are only meant to give a general sense of the idea.

1. Request for Capability (RfC): African governments should establish a continuous Request for Capability (RfC) bidding platform. In the West, governments issue RfP’s (Request for Proposals) that allow private sector companies to bid and service government contracts. RfC’s is a similar concept, but it is a continuous open recruitment for African governments to recruit Africans in the diaspora with technical capabilities to join government contracts with foreign companies, but also to fill the African governments needs to implement a national development strategy. 

2. Fifty percent (50%) of Contract Governance: In the contract negotiations with the foreign company, the African government should require that 50% of all top and mid-level managers must be African for the contracts execution on African soil. The African government will then access highly qualified candidates through the issued RfCs platform, and recruit African technical experts abroad (but also domestically). After a strict meritocratic vetting process, the candidates will be chosen to fill the 50% requirement of top and mid-level African managers. The contracts will be both long-term and short-term. There are many African professionals who take sabbaticals to undertake projects back home because they want to give back. The RfCs would provide an open window of opportunity for the repatriation of Africans.  The 50% requirement will ensure continuous knowledge transfer between the foreign company and African citizens. Also, when the mining of precious minerals and resources is concerned, it means African citizens will have direct access to all records and processes, in order to vet the official quantities of excavated minerals and resources the firm discloses, and also oversee its distribution and shipment.  

3. Irrevocable Payment Escrows (IPEs): Many Africans in the diaspora need guarantees to return home to work. So to make the RfC offer credible and lower the risk for Africans in the diaspora who accept it, African governments need to establish through legislation the use of “Irrevocable Payment Escrows”. IPEs is a term I created, and the concept is similar to “irrevocable trust accounts”. The payment for the recruited African citizen for the contract’s duration would go into the IPEs at the beginning of the contract. The legislation would state that, once monies are deposited into the IPEs for periodic disbursements to service the contractual compensation terms of the African citizens, the African government forever loses all claims and can never recall the funds back, even in a time of national crisis. Thus, the Africans in the diaspora would be paid through the IPEs and not have to deal directly with the government. 

4. African Rating Agency/ Chamber of Commerce: African governments should form an organization (African Chamber of Commerce) responsible for organizing, rating, and ranking an interactive list of the top African owned businesses across all sectors. Ranking metrics can be developed from data gathered through a strict research process according to size, quality, revenues, customer service, culture, value addition etc. The interactive list of “Top 10 African companies” is strategic for nation-building and contract negotiations. How? When negotiating with a foreign firm for a government contract (e.g. the extraction of a mineral), if there are logistical or technical hurdles with using the RfCs, or if the African government prefers an organization instead of individuals, they can choose an African company from the “Top 10” list to join in the performance of the contract and gain rights to 50% of the profit and administration. Naturally, the African business must satisfy all terms of the contract just like the foreign one. The RfCs and conferring 50% of business rights to a Top 10 African company ensures the continuous transfer and reinforcement of technical capabilities. 

5. The 20-80-20 Goal: African governments must move away from being exporters of raw materials, to refining and producing finished goods that bring a multiplicity of economic value addition. Continentally, I propose a strategic goal of 20-80-20. The proposed goal for every African country is that by 20 years, 80% of all raw materials will be refined and produced locally into finished goods, while only 20% will be exported as raw materials.  Thus, in contract negotiations, African governments must advance this goal by requiring the foreign firms to build local factories to refine and produce the raw material in Africa, and thus create jobs for Africans. For the firm, 80% of the excavated raw material would be produced locally in the factory, then 20% may be exported. African governments must be earnest about the term to build local factories. Naturally, some incentives should be given to make this feasible. However, the African government should ensure the product or service is culturally adapted to the needs of the people, and that policies are in place to protect a monopoly of dominance of local markets by a foreign company. 

6. Community Education Programs (CEPs): A term of the contract should require foreign companies to establish “Community Education Programs” (CEPs) through the local factories. CEPs would be a structured and experience-based program where the foreign firm would be required to educate the locals about all technical processes related to their industry. From sourcing the raw material, its various capabilities and application, the process of refining it to a finished good, packaging, distributing, selling, and shipping. Locals can enroll for a small fee that can be subsidized by the government. The purpose is to ensure continuous knowledge transfer through theory and experience to the locals in the community. Also, it is another creative way to educate your citizens through a business contract. If foreign firms wish to extract raw materials, they should also be ready to give value to the locals. African citizens should always have the opportunity to gain knowledge of the treasures in their environment, and thus how to harness it.

7. Reinvestments & the 25-10 Threshold: African governments must never pay a foreign or local firm with foreign currency, but use only local currency. Sometimes, capital flight is a problem in Africa whereby most of the profits a firm generates goes overseas to their original country headquarters, then the African country loses the opportunity for strategic reinvestment into the economy. Here, a leader must counteract this for nation-building. The contract should require the establishment of a local bank account by the foreign firm, and that 25% of annual profits must remain in the African country. Furthermore, that 10% of annual profits remaining in the country must be reinvested annually in a local company or project. 

These are only a few of many other nation-building strategies. African governments now have great leverage when negotiating contracts with foreign companies. The purpose should not be to extort, but to be fair so everyone gains value. As a government with the duty to safeguard the African people’s welfare, officials must start thinking in a far-seeing manner, and must ensure every contract with a foreign firm yields multiplicity of benefits for the Africans citizens (also value to the firm). To achieve this, the government must set aside selfish interests and truly wish to further the development of its people. The government must leverage the collective capabilities of the diaspora to level any imbalances in negotiation, and have the humility to ensure these RfCs and Top 10 list are not corrupted by nepotism and tribalism, but that the most qualified truly wins the opportunity. 

African governments must move away from the attachment to immediate gains by mainly exporting raw materials. A farmer who is proud of getting pennies for his seeds is blind to real opportunity, for he overlooks the hundreds of trees, thousands of fruits, and millions of new seeds his original seed would produce…if only he reinvested it! Such is the case with African governments. The myopicness to capitalize on small gains for exporting raw materials makes them blind to the loss of the greater opportunity of national value addition that comes through the process of locally refining raw materials into finished goods, then exporting them into the world economy. Hence, the suggestion for 20-80-20, and also the Community Education Programs (CEPs). These are just a few of an unlimited number of possibilities! We must open our minds and release our creative capacity through the good volition to help and uplift the people!

These terms might seem onerous, and that firms would not agree. However, remember we now live in a multipolar world where there are many options. When global powers compete against themselves for inroads into Africa, African governments have a strategic position to advance terms that will benefit its people. No country today holds a monopoly on technical expertise on any issue that is needed for national development, so the options are profuse. Additionally, when you take the collective capabilities of the diaspora into account, then you realize African governments are uniquely positioned and have a golden opportunity they are missing through short-sightedness. To harness this opportunity for genuine nation-building requires five things: connection upward, vision, strategy, organization, coordination. 

As we nation-build, we must never forget to look upward and seek guidance from above. If the visions, strategies, and ideas expressed in my works are furthering and galvanizing, then I must acknowledge the Grace of God’s Power that allows these inspirations to flow through me for the service of nation-building that furthers the genuine welfare of the people. The worst thing a servant can do is take credit for the gift His Sovereign delivers through him, for then his conceit will soon disconnect him with the Helping Power from Above. And with this, the continuous inspirations and enthusiastic strength required to serve will harden, and in time be altogether lost. Thus, I look upward thankfully to the Almighty for all inspirations big and small I am permitted to receive, so that the Grace of His Power will continue flowing through me and others to serve His purpose in nation-building. And in this way, become a true helper and guardian of the welfare and further development of my people.

~Dr. Ikenna Ezealah