Some reflections on the harmonisation of business law in Francophone Africa and constitutionalismPosted: 3 February, 2021 Filed under: Balingene Kahombo, Trésor Makunya | Tags: African Union, Benin, Burkina Faso, business law, colonialism, constitutionalism, Democratic Republic of Congo (DRC), economic interests, economy, finance, France, Francophone Africa, Free enterprise, French, Gabon, legal harmonisation, liberal approach, neo-colonialism, OAU, OHADA, private initiative, RECs, regional integration 1 Comment
|Author: Balingene Kahombo
Professor of Public Law and African International Relations, Faculty of Law, University of Goma (Democratic Republic of Congo)
|Author: Trésor M. Makunya
Doctoral Candidate & Academic Associate, Centre for Human Rights, Faculty of Law, University of Pretoria (South Africa)
The Organisation for the Harmonisation of Business Law in Africa (OHADA) is a supranational organisation established by the Treaty of Port-Louis of 17 October 1993 to standardise business legislation and regulation in Africa. It was believed that the creation of OHADA will attract foreign investors because its norms increase legal and judicial security and certainty. The imperfection, disparity and inaccessibility of existing business-related legal rules and judicial institutions were identified as major problems to address. The OHADA sought to combat the ‘backwardness’ of African business law by adopting legislation regulating different aspects of business, such as company law, simplified recovery procedures and enforcement measures, and labour law. These laws are known as uniform acts.
In a contribution we presented at the Seventh Stellenbosch Annual Seminars on Constitutionalism in Africa (September 2019), we challenged the claim that the OHADA legal and institutional arrangements serve economic interests of Francophone African countries and citizens. The analysis was conducted through two lenses; the extent to which the OHADA embodies Pan-African ideals and constitutional issues which it raises within its member states.
This article discusses two basic arguments. First, Pan-Africanism generally viewed as the ideological driver of the African unity and the fight against colonialism and neo-colonialism forms part of the post-1990 Francophone Africa’s constitutionalism. Most Francophone Africa’s constitutions commit, under preambles and substantive provisions, to seek African unity through cooperation, association or by entering into community organisations. OHADA is an economic integration project imposed on its member states, most of them being former French colonies. It promotes a neo-colonial agenda of the former coloniser. This poses serious challenges to African constitutionalism. Second, the coming into being of the OHADA Treaty and the adoption of uniform acts resulted in promoting interests of big businesses and foreign companies at the expense of local entrepreneurs. This is despite the fact that most constitutions in Francophone Africa proclaim that their states are ‘social state or Republic’ and recognise the right to free enterprise or private initiative to either citizens/or everyone, which may entail an obligation to protect local entrepreneur’s rights.
Origin of the OHADA
The decision to create OHADA was made during the meeting of Ministers of Finance of Franc Zone in Paris (France 1991) and approved by Heads of State in 1992 in Libreville (Gabon). The organisation intended to harmonise business laws in former French colonies to reduce and eliminate differences in national business laws. It also intended to attract foreign investments, to further economic integration in Africa and enhance judicial and legal security. OHADA made three transformations within the African business regulation landscape. The adoption of legislation directly enforceable in member states, including by domestic courts. The establishment of a Council of Ministers. The Council is tasked with adopting uniform acts without direct participation of national parliaments. Chief among the transformations is the establishment of an apex Court based in Abidjan, the Common Court of Justice and Arbitration. Some authors have noted that this Court of last instance in business matters is located far from ordinary litigants. While big businesses may have financial resources to litigate cases before it in Abidjan, this might not be the case of those located in remote areas, like in the Democratic Republic of Congo.
OHADA and Pan-Africanism
Under the auspices of the Organisation of African Unity/African Union, the African Economic Community was established through the Abuja Treaty to enhance economic integration in Africa. Regional Economic Communities (RECs) established under Pan-African instruments reinforce the community. Contrary to OHADA, existing RECs operate within the Pan-African/African Union ambits. They were not created under the guises of former colonial powers, their creation is largely not based on a shared colonial legacy and consider the diversity of legal traditions in Africa. OHADA lacks direct links with the African Union (AU) and its organs, for instance the Assembly of Heads of States, Executive Council and the Pan African Parliament. Uniform acts it adopts are generally drafted by French and African experts through the financial support of foreign donors including the French government.
At the substantive level, most of these acts are based on French business laws. The level of participation of national parliaments (to give more legitimacy and ensure that national specific issues are considered) is very low. As Salvatore Mancuso has pointed out, the OHADA regime remains based on western ideas of business and services that may, and have, overlooked indigenous practices. Charles Fombad has argued that the OHADA regime paid ‘more attention to regulating transactions involving big businesses and multinational corporations than it does to regulating transactions involving smaller businesses or even the informal economy, which is the driving force of African economies in the region’. ‘Informal contracts’ as a practice largely widespread had been eschewed in the Uniform Act on General Commercial Law, probably because its drafting was chiefly based on the Convention on Contracts for the International Sale of Goods.
In relation to membership, Article 53 of its founding treaty opens the organisation to the accession of any member state of the OAU/AU and of any non-OAU/AU member state, which may be invited to accede to it, by common agreement of the member states. One may think that the expression ‘any non-OAU member state’ necessarily refers to an African state. This might not be entirely the case. If the intent was to limit the membership of OHADA to African states, the logical wording should have been ‘any other African state’. Yet, the epithet ‘African’ was avoided in this provision, which makes the accession of non-African states possible. This is moreover the most plausible hypothesis because all African states are destined to be members of the OAU/AU. There would be no other African country outside the latter to adhere to OHADA. Such a broad opening of membership does not exist in any other Pan-African international organisations where the status of African state is a peremptory criterion for becoming a member.
Free enterprise and private initiative
Most Francophone Africa constitutions adopt a liberal approach to regional integration and legal harmonisation. Under the Benin, Burkina Faso or DRC constitutions, ‘states may enter into cooperation or association with others provide that principles of equality, mutual respect of sovereignty, reciprocal advantages and national dignity’ are preserved. They do not require prior assessment and identification of national economic interests which may be affected by economic integration. They also do not require legal harmonisation to be preceded by wide domestic consultations. Although constitutions of Benin and Burkina Faso have provisions that may foster popular consultation, their formulation suggests that this is not compulsory. Under Article 58 of the Benin Constitution, the President of the Republic ‘may’ submit a question on sub-regional or regional integration to referendum. The provision is faulty because submitting such a matter to referendum is not mandatory. The President of the Republic can also avoid referendum and merely consults the Speaker of the National Assembly and the President of the Constitutional Court.
We argue that this constitutional weakness could have been resolved by Constitutional Courts which had the duty to control whether the OHADA Treaty was consistent with constitutions before the executive could ratify it. Unfortunately, the analysis of their decisions demonstrated that the control they performed remained formalistic in nature and substantive issues were not dealt with.
As a consequence, the manner in which the new legal regime will positively and negatively affect the rights of local entrepreneurs to free enterprise and private initiative was never assessed. The rights of local entrepreneurs are being undermined by the fact that big businesses are mostly allowed to conduct economic activities in areas which, before the advent of OHADA, were the preserve of small scale businesses. A 2018 French Ministry of Economy and Finances report noted that the Uniform Act on Commercial Companies and Economic Interest Groups positively impacted the creation of private limited liability companies, the bulk of which were foreign companies. This may have rendered local businesses less lucrative, some of which could be forced to close down. Although the new regulations do not specifically preclude any person from undertaking the type of trade they wish to conduct, laws and regulations may indirectly discourage them from doing so. The South African Constitutional Court once ruled that ‘one may also conceive of legislative provisions that, while not explicitly ruling out a group of persons from choosing a particular trade, does so in effect, by making the practice of that trade or profession so undesirable, difficult or unprofitable that the choice to enter into it is in fact limited’.
One way to cure the OHADA sins is to enable national parliaments to participate in the drafting and the adoption of uniform acts. Another way can be to ensure that the OHADA Council of Ministers adopt model laws to be approved/adjusted by parliaments to local realities. Further, the OHADA can be incorporated within the African Union economic architecture. In this instance, the drafting and adoption of uniform acts could be conducted by an African Union organ or specialised agency through an inclusive and participative process.
About the Authors:
Balingene Kahombo is an Associate professor of Public Law and African International Relations at the University of Goma (Democratic Republic of Congo). He is a Member of the Center for Research and Studies on the Rule of Law in Africa (Centre de Recherches et d’Etudes sur l’Etat de Droit en Afrique–CREEDA).
Trésor Makunya is an Advocate of the Court of Appeal of North-Kivu (DRC), a Visiting Lecturer at the Notre Dame University of Tanganyika (DRC). He is a Doctoral Candidate and the Publications Coordinator at the Centre for Human Rights, Faculty of Law, University of Pretoria.