The Organization for Harmonization of Business Law in Africa (OHADA) was founded in 1993 by several West and Central African countries with the objective of bringing consistency to commercial law among its member states. Prior to the formation of OHADA, the arbitrary nature of commercial law in these African states frustrated many international companies attempting to do business there.

To date, sixteen countries are OHADA members:

Benin	Guinea
Burkina Faso	Guinea Bissau
Cameroon	Ivory Coast
Central African Republic	Mali
Chad	Niger
Comoros	Senegal
Congo	Togo
Equatorial Guinea	Democratic Republic of Congo*
Gabon	*membership pending

Most of the members are Francophone; therefore, the implemented laws and codes are based on French commercial law. However, since OHADA is actively seeking to extend membership to all sub-Saharan African nations, the influence of French law is expected to transform into a blend of other legal systems.

In order to encourage international companies to invest and seek business opportunities in Africa, the OHADA treaty has updated and harmonized the commercial codes and legal systems of member countries. For creditors doing business in OHADA member states, the treaty also provides security for new sales initiatives and for transactions gone wrong.

The OHADA treaty consists of several Uniform Commercial Acts in effect in all member nations. These codes govern commercial and corporate law, debt recovery, bankruptcy and arbitration laws, as well as enforcement of these laws. Acts covering such areas as competition and labor law are expected to be added in the future. The treaty’s scope is solely commercial and does not extend to criminal law.

Uniform Act on General Commercial Law

All businesses registered within OHADA member states are subject to the provisions of this act, which provides a clear and much needed definition of commerce. Prior to this act, “commerce” was defined differently in each country. The Uniform Act on General Commercial Law has defined commerce in all member countries as the sale, purchase, or rental of movable and immovable goods, manufacturing, banking, telecommunications, and stock transactions. This act also provides for regulation of retentions of title.

Uniform Act on Debt Collection Procedures

The Uniform Act on Debt Collection Procedures brings uniformity to legal remedies sought by creditors seeking judgment against a debtor. A creditor may seek an “Injunction to Pay,” similar to a summary judgment in the US and other Common Law systems. The creditor files for the injunction by providing the court with documentation to support their entire claim. Should the documents support the injunction, the court will award judgment and grants a writ of execution enforceable in all of the OHADA member states. The act also provides for recovery of court costs and legally permissible interest, as well as seizure of goods.

Uniform Act on Bankruptcy

The legislation governing bankruptcy places weight on reaching broad settlements between debtors and creditors to prevent liquidation of companies. The restructuring of bankrupt companies is also regulated under this act. Bankruptcy proceedings in most of Africa are the exception and not the norm, as many companies simply close their doors leaving no recourse to creditors.

*****

Subscribe to the Credit-to-Cash Advisor
Monthly e-Newsletter -- It's Free

This information is provided by ABC-Amega Inc. -- providing 1st and 3rd party commercial collection services since 1929, and collecting in more than 200 countries worldwide. For further information, contact info@abc-amega.com.

Riki-Lee Ritz received a B.A. in French language and literature and is a bilingual senior collector and Asst. VP in the international department at ABC-Amega. She manages the international department, as well as handling claims in Europe and francophone countries in Africa and the Caribbean.