Kevin Abikoff of Hughes Hubbard Discusses the Benefits and Risks of African Local Content Laws

Foreign investment in a country has historically been a double-edged sword. While investment may allow elites to prosper, often the benefits do not flow to the general population. In response to this pattern, many countries have adopted “local content laws” that require a certain level of reinvestment by foreign companies into the countries where they operate. While these programs can have clear benefits in terms of technology transfer and local ownership, they can also be a source of corruption risk, as Japanese conglomerate Hitachi learned in 2015 when it was fined $19 million for corruption related to its local partner. The Anti-Corruption Report discussed how to navigate these programs when doing business in African countries, where they are prevalent, with Hughes Hubbard partner Kevin Abikoff. He explained why local content laws are beneficial but also how they can lead to corruption, and what companies can do to avoid problems when working with local partners. See “Lack of Training and Due Diligence Leads to $19 Million Penalty for Hitachi” (Oct. 7, 2015).

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