LMA publishes multi-jurisdictional African facility agreement to assist investors with cross-border lending on the continent

Mitigating risk and ensuring legal certainty are widely considered the two most important considerations for investors lending into Africa. In a recent LMA survey, respondents rated standardisation of loan market practices and documentation as the second most important factor supporting lending to the continent, after export credit agency or development bank involvement.

One way to achieve this certainty is via the “Mauritian Holdco Structure”, whereby international investment is channelled into a Mauritian parent “Holdco” and “on-lent” to operating subsidiaries in the relevant African countries. Mauritius is popular due to a lack of foreign exchange controls, a strategic location, economic, political and legal stability, a raft of double tax treaties with other African countries and a skilled, bilingual workforce.

In light of this, the LMA and a group of Africa loan market experts have developed a new USD Term SOFR loan agreement, governed by English law while assuming a variety of African borrowers/guarantors including Mauritius, Ghana, Nigeria, Kenya, Tanzania, Uganda and Zambia. The LMA will also produce a new Mauritian law share pledge and all asset security document, using the new security model law for UNCITRAL based security creating a suite of documents to facilitate loan market investment across Africa. 

This package of documents will help LMA members by:

1. assisting with documentation standardisation on the African continent driving efficiency;
2. providing direction and comfort to investors, helping to stimulate liquidity; and
3. helping new market entrants understand the legal frameworks in a broad range of African jurisdictions, increasing transparency.

To hear more about these documents, or how the LMA is facilitating liquidity, efficiency, transparency and sustainability in the African loan market, please contact Amelia Slocombe, Managing Director and Africa lead at the LMA at amelia.slocombe@lma.eu.com.

To access the document, please click here.