In a first for Africa, the continent has produced the top office-bearer at the world’s leading insolvency association, Insol International.
Adam Harris, a partner at pan-African law firm Bowmans, is the new president of Insol, whose 10 000 members worldwide are active in the field of restructuring and insolvency.
Harris is the first African president of Insol and only the second from a developing economy, after Sumant Batra from India. He took over as president at Insol’s recent quadrennial congress in Sydney, Australia.
A highly respected South African restructuring and insolvency lawyer, Harris works with a dedicated team at Bowmans that advises on all aspects of restructuring and business deals across Africa.
His appointment as Insol president is a reflection of how seriously countries in Africa – and in other developing regions – are taking insolvency and restructuring.
“In Africa, there are currently fewer modern insolvency legislative regimes than in any other region of the world, but the continent is moving in the right direction in terms of adopting legislative frameworks to deal with insolvency and restructuring,” he says.
Direct impact on economic performance
A sound insolvency system has a direct impact on economic performance, according to Harris.
“Put it this way: capital comes to rest where it feels most comfortable. Countries with adequate protections and sound mechanisms for exit or resolution are therefore more likely to attract investment.”
When countries have effective insolvency law frameworks, they generally offer investors more cents on the dollar in terms of the recovery rate, should investments go wrong, says Harris.
“Despite the movement towards implementing effective insolvency law in Africa, the recovery rate in Sub-Saharan Africa, according to the World Bank Ease of Doing Business Report 2017, is low at 20.1 cents on the dollar, with an average recovery time of three years. The Middle East and Africa also have a low recovery rate at 26 cents to the dollar. Compare this to the OECD countries which have the highest recovery rate, at an average of 73 cents to the dollar.”
“Hopefully as the laws are implemented, the recovery rate in developing countries will increase,” he says.
Numerous countries in Africa, Asia and Eastern Europe have recently reformed or updated their insolvency legislation. The Ease of Doing Business Report lists over 10 African countries that have done so, including Burkina Faso, Cameroon, Chad, Democratic Republic of Congo, Côte d’Ivoire, Guinea-Bissau, Kenya, Mali, Niger, Rwanda, Senegal and Togo.
How Insol is helping
Insol is actively assisting in developing cross-border insolvency policies, international codes and best practice guidelines on insolvency law. It also undertakes research into international and comparative turnaround and insolvency issues, liaises with government advisory groups, and works closely with international bodies such as the World Bank Group and UNCITRAL.
Harris says that while Insol assists in implementing International best practice guidelines on insolvency law frameworks, it recognises that each country is unique and requires its own specific legislation and solutions.
“This cannot be a ‘one-size-fits-all’ approach. For this reason, regular Insol seminars and conferences are planned around the world, in both developed and emerging markets, so that members can share and learn from real-life experiences, solutions and challenges with regards to the implementation of insolvency law frameworks in their own countries.”