By Zunaid Lundell*
The advent of globalization and the prevalence of international business transactions has led to increased investment flows between developed and less developed countries (LDCs). However, notwithstanding increased business activity in LDCs, the narrative underlying international business agreements between entities from developed countries and LDCs remains skewed in favor of developed countries.
Only recently have developing countries, particularly those in Africa, begun to reconfigure ingrained norms related to the terms and provisions of international business agreements to reflect mutually beneficial terms. How various jurisdictions in Africa and other LDCs develop their negotiation strategies, and the principles which underpin them, will play a pivotal role in the outcome of the negotiations and the broader economic effects.
To this end, developing countries must use all tools at their disposal to maximize the returns of potential foreign direct investment. The theoretical and pseudo-legal concept of long-termism should be leveraged more effectively by African countries in order to obtain provisions which favor Africa’s Millennium Development Goals, and more particularly, which enable African companies to add value to their raw materials and products.
A general and often unavoidable corollary to Foreign Direct Investment (FDI) in Africa is the establishment of joint business activities in various African jurisdictions which are generally managed through a variety of corporate structures. Habitually, developed countries like the United States, Germany, and the United Kingdom place precedence on shareholder value creation, even if the value created for shareholders is at the expense of long-term strategies that could benefit local African markets, communities, service providers, employees, and the broader developing economy.
This elicits a moral paradox which directors of multinational companies are increasingly faced with when investing in developing countries, and African countries in particular: to whom is a duty owed, shareholders of the multinational company or the various stakeholders which affect and are affected by the corporation? A board must review corporate decisions using both these lenses and incorporate long-term principles to guide their judgment and influence their decisions.
Most African countries have codified director duties and espouse corporate social responsibility tenets which promote the need for companies to act as responsible corporate citizens when conducting business in their respective African countries. How African lawyers and negotiation teams interpret and address the broad ethical principles related to FDI in Africa will play a critical role in ensuring companies adopt an approach to corporate governance that ensures multi-stakeholder protection as opposed to narrow Total Shareholder Returns (TSR).
This is especially relevant within the African multinational corporate landscape where there is a proclivity for offshore shareholders to support short-term shareholder financial gains, as opposed to long-term stakeholder-inclusive growth. A major reason for this can be attributed to the relative disinterest off-shore shareholders have in the economic growth and socio-political development of African economies and societies in which their corporate interests operate. Ultimately, the proven value and increasing credibility of long-term approaches to corporate governance cannot be ignored. This creates a favorable platform from which negotiation strategies from a developing country’s perspective can incorporate the emergent narrative of long-termism.
Ultimately, the adoption of long-termism by African deal and contract negotiation teams will lead to the creation of a normative concept: “the company as a corporate citizen”, as a vehicle through which economic and social benefits can be achieved for the company and all its stakeholders. A cumulative reflection of the facts, studies and arguments offered above supports the notion that African countries must ensure that shareholders of multinational companies who operate companies in Africa, and who benefit from the operation of their companies in African territories, are not the only stakeholders whose interests are accommodated.
More importantly, negotiation teams must negotiate agreements which hold multinational companies and their boards to incorporating a multi-stakeholder approach, where the principle of corporate citizenship and long-termism go far beyond pandering to shareholder returns. It would not be far from the truth to state that most natural shareholders of multinational companies, who operate in Africa, have never set foot on the soil where their business interest(s) generate profits to service their lifestyles. Ultimately, we are beginning to see empirical evidence, supported by some of the most established consulting institutions and academics; that the future of the company is a long-term company. African negotiation teams and legal counsel would be foolhardy, imprudent at best, to delay the incorporation of long-termism to their negotiation strategies, after all, it will ultimately lead to a win-win outcome.
 This does not suggest that unequal bargaining power, favorable to developing countries, does not continue to dominate the discourse at the negotiation table between developed and LDCs. See: A. M. Sachdeva, International Investment: A Developing Country Perspective, 8J. World Investment & Trade, 533 (2007).
 Long-termism relates to a company’s corporate governance strategy and the manner in which the board incorporates considerations of all stakeholders of the company.
 J L Bower and L S Paine, “The Error at the Heart of Corporate Leadership” Harvard Business Review, May-June 2017, p. 55.