5 Mistakes That Sink Africa–U.S. Deals (and How to Avoid Them)

Africa–U.S. deals rarely fail because the opportunity was bad. They fail because of avoidable mistakes made early: a contract written for one legal system and signed under another, a company formed in the wrong place, or money that can go in but cannot come back out.

After years of working on energy, investment and real estate transactions between the United States and Africa, I see the same five mistakes again and again. Here is what they look like, and how to avoid them.

Mistake 1: Using a contract built for the wrong legal system

A U.S.-style template does not travel well. Seventeen African countries, including Gabon, the Republic of the Congo, Senegal and Cameroon, apply the OHADA Uniform Acts, a harmonized civil-law framework for companies, security interests and commercial contracts. Nigeria, Ghana and Kenya follow common-law traditions, each with its own statutes.

The same clause can mean different things depending on which law governs it, and some local rules apply no matter what the contract says.

How to avoid it: decide the governing law deliberately, check which local rules are mandatory, and, for bilingual deals, state which language version controls. In Francophone markets, negotiating and drafting in both French and English avoids costly misunderstandings.

Mistake 2: Setting up in the wrong place, or the wrong way

The structure you choose drives your tax position, your liability and how easily you can exit. Common missteps include forming a U.S. entity in a state that does not fit the business, or starting operations in Africa before local registration is complete. In Nigeria, for example, an enterprise with foreign participation must register with the Nigerian Investment Promotion Commission before it starts business.

U.S. reporting rules also changed recently. U.S.-formed companies are now exempt from federal beneficial ownership reporting, but foreign companies registered to do business in a U.S. state may still have to report their non-U.S. owners.

How to avoid it: map the full structure (who owns what, where profits arise and how you will exit) before you form anything.

Mistake 3: Ignoring how the money gets back out

Getting capital into a market is easy. Getting dividends and sale proceeds out can be hard. In Nigeria, foreign investors rely on a Certificate of Capital Importation (CCI), issued by an authorized bank when foreign capital is brought in and converted to naira. Without a valid CCI, an investor generally cannot use the official foreign exchange market to repatriate dividends or capital.

How to avoid it: bring capital in through proper banking channels, secure the CCI or its local equivalent at the time of investment, and address currency, conversion and repatriation risk in the contract itself.

Mistake 4: Treating compliance as an afterthought

Cross-border deals carry compliance risk on both sides. U.S. parties must consider anti-corruption law (the Foreign Corrupt Practices Act) and U.S. sanctions screening. In the oil and gas sector, many African jurisdictions also impose local content requirements; Nigeria's local content law is a leading example.

How to avoid it: run due diligence on your counterparty, its owners and its licenses early, build compliance representations and audit rights into the contract, and document every payment to intermediaries.

Mistake 5: Leaving disputes to chance

If something goes wrong, can you actually enforce your rights where the assets are? A judgment from a U.S. court may be slow or difficult to enforce in an African country, and the reverse is also true.

International arbitration is often the better route. Nigeria, for example, is a party to the New York Convention on the recognition and enforcement of foreign arbitral awards, and modernized its arbitration law in 2023.

How to avoid it: choose arbitration deliberately: the seat, the rules, the language and the number of arbitrators. Think about where the other side's assets are located before you sign.

The bottom line

Most failed Africa–U.S. deals are not lost at the negotiating table. They are lost in the details nobody checked. A few hours of careful structuring and drafting before you sign costs far less than a dispute after.

Planning a U.S. deal or an Africa–U.S. transaction? I'm happy to talk it through. Reach me at georges.nama@kn-laws.com, on WhatsApp at +1-832-840-7266, or visit www.kn-laws.com.

Georges C. Nama, Esq. is a Texas lawyer and co-founder of Kachikwu & Nama Law Firm in The Woodlands, in the Houston area. This article is for general information only and is not legal advice. Every transaction depends on its own facts.

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