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By Chinenye Anuforo
Legal certainty, strong institutions and enforceable contracts are critical to attracting investment and sustaining Africa’s economic growth, Managing Partner of G&A Africa LLP, Eric Gumbo, has said.
Gumbo said Africa’s economic re-emergence would depend not only on capital, infrastructure and favourable economic conditions but also on the strength of its legal systems, which determine how investments are structured, risks managed and commercial agreements enforced.
In an article on Africa’s economic prospects, Gumbo argued that law remained an often-overlooked foundation of economic development, influencing whether investors commit capital, retain their investments and generate sustainable returns.
He said the continent’s next phase of growth would be shaped by the quality of its laws, contracts, regulatory frameworks and dispute resolution mechanisms.
According to him, the International Monetary Fund estimated that sub-Saharan Africa grew by 4.5 per cent in 2025, its fastest pace in more than a decade, but warned that sustaining the momentum would require stronger institutions and predictable policies.
Gumbo noted that Africa’s previous economic growth narrative was largely driven by rising commodity prices and growth rates, which weakened when global prices declined.
He said the continent must now strengthen the institutional foundations of growth to avoid repeating the experience.
The G&A Africa LLP managing partner identified unpredictable policies, fragmented markets and poorly structured projects as major obstacles to investment across the continent.
On the cost of financing infrastructure, he cited modelling by the Clean Air Task Force, which put the average cost of capital for African power projects at 15.6 per cent, compared with 5.1 per cent in the United States, 4.2 per cent in Western Europe, 6.6 per cent in China and 2.4 per cent in Japan.
He attributed part of the disparity to risks associated with uncertain regulations and weak institutional frameworks, which investors factor into the cost of financing projects.
According to him, clear and stable rules, alongside effective implementation, could reduce uncertainty, improve investor confidence and make more projects commercially viable.
Gumbo said several African countries, including Nigeria, Ghana, Egypt, Mauritius and Kenya, were taking steps to improve the business environment, strengthen procurement processes and mobilise domestic funding through infrastructure and sovereign wealth funds.
He also cited developments in African capital markets, including the listing of the Dangote refinery’s initial public offering on the Nigerian Exchange and the issuance of inward Global Depositary Receipts in Kenya for an East African placement, as examples of financial innovation on the continent.
On regional integration, Gumbo said Africa’s 54 national markets remained fragmented, limiting the scale required to attract some of the continent’s largest investments.
He noted that all 54 African countries had signed the African Continental Free Trade Area agreement, while 50 had ratified it following Somalia’s deposit of its instrument on September 4, 2026.
Despite the agreement’s potential to expand trade and investment, he said intra-African trade accounted for only about 16 per cent of the continent’s total trade.
Gumbo argued that harmonising laws and implementing AfCFTA protocols effectively would help businesses operate across borders, reduce regulatory barriers and create a larger market for investors.
He also highlighted the need to mobilise more African capital for productive investments.
According to him, the Africa Finance Corporation estimates that African institutional investors, including pension funds, insurance companies, sovereign wealth funds and public development banks, hold at least $1.17 trillion, much of which remains invested in government securities and other short-term, low-yield assets.
He said the challenge was to establish legal and financial structures that would make it safer and more attractive for these funds to support domestic infrastructure, businesses and other productive sectors.
Gumbo further stressed the importance of sound project structuring, noting that investors and lenders were concerned about currency risks, dispute resolution, the enforcement of contracts and the ability to repatriate funds.
He said uncertainty in these areas could increase financing costs, with the consequences ultimately reflected in higher consumer tariffs and more expensive government borrowing.
According to him, lawyers play a central role in conducting due diligence, preparing disclosures, negotiating contracts and establishing frameworks that protect the interests of investors and other stakeholders.
However, Gumbo challenged African law firms to take a more prominent role in major transactions on the continent, noting that landmark deals had often been handled by international legal advisers.
He said local firms needed to strengthen their technical expertise, cross-border capabilities and understanding of capital markets, digital finance, climate finance, energy and infrastructure.
He also urged lawyers to contribute more actively to developing effective legal and policy frameworks rather than focusing predominantly on challenging legislation in court.
While acknowledging the importance of questioning laws, Gumbo said such interventions should aim to improve legislation and strengthen institutions rather than obstruct development.
He warned that an excessive focus on litigation without constructive engagement could undermine investment, limit job creation and lead to lost economic opportunities.
The legal practitioner also called for stronger capacity among regulators, judges, arbitrators and other professionals responsible for implementing and interpreting laws, saying their decisions influenced how investors assessed risks across African markets.
Gumbo disclosed that his firm, previously known as G&A Advocates LLP, was transitioning to G&A Africa LLP, having commenced operations in Eldoret, Kenya, in 2006.
He said the transition reflected the need for African law firms to position themselves more effectively in the markets where investment decisions were being made and economic institutions developed.
He urged the legal profession to equip current and future lawyers with the skills required to support Africa’s economic transformation.
Gumbo maintained that the continent’s next growth phase must be built on stronger institutions, locally developed legal frameworks and the capacity to structure and resolve commercial disputes within Africa.
He said the work might not attract the visibility associated with major infrastructure projects or corporate listings, but remained essential to ensuring that economic growth translated into lasting opportunities for businesses and citizens.
