A Review of Regulatory Clearance Frameworks For Cross-Border Mergers and Acquisitions in African Financial Markets

d in FCCPC guidance Tiered FCCPC filing fee schedule keyed to transaction value BOFIA 2020: any financial-sector merger requires CBN approval irrespective of size, in place of FCCPC review South Africa Combined and target asset/turnover bands distinguishing small, intermediate, and large mergers Approximately ZAR 165,000 for an intermediate merger; approximately ZAR 550,000 for a large merger Minister of Finance notice can exclude bank and insurer mergers from suspensory competition review where Banks Act, FSR Act, or FMA consent is required Kenya Full notification required where combined turnover or assets exceed KES 1 billion and the target exceeds KES 500 million CAK fee schedule keyed to transaction value, with a separate exclusion- application fee for below- threshold transactions CBK approval required for any bank merger; separate approval required for transfers exceeding five percent of bank shareholding Egypt Combined or target turnover and asset thresholds under the amended Competition Law, assessed against Egyptian and worldwide turnover ECA filing fee calculated as a percentage of transaction value, subject to a prescribed cap Banking sector exempt from ECA review; CBE approval required above a ten percent acquired stake . No. 4 2020 www.iiardpub.org Jurisdiction Competition/Antitrust Notification Threshold Competition Filing Fee (Approximate) Financial-Sector Approval Trigger Ghana Not applicable; no general competition-law notification threshold in force as of 2020 Not applicable Bank of Ghana approval required for any financial-sector merger regardless of size; SEC Code triggers at thirty percent of public- company voting shares 6. Cross-Border Financial-Sector M&A in the 2020 Context 6.1 COVID-19 and the Contraction of Deal Activity Deal-activity reporting for the first half of 2020 shows a marked contraction across the continent. Sub-Saharan African merger and acquisition volume fell by approximately twenty- four percent year on year, from 338 to 254 deals. In South Africa, aggregate deal value fell by roughly sixty percent, from around 8.2 billion United States dollars to approximately 3.3 billion dollars. Kenyan deal volume fell by approximately fifty percent and deal value by approximately fifty-one percent over the same comparison period, although twelve of the fifteen Kenyan transactions recorded in the first half of 2020 were themselves cross-border in nature, underscoring the continued relevance of cross-border clearance questions even amid an overall downturn. Nigeria's dealmaking environment, already constrained by earlier oil-market disruption, faced further pressure from the pandemic together with persistent foreign-exchange access constraints, a theme returned to below. The composition of the transactions that did proceed during 2020 is itself instructive. In South Africa, the largest cross-border transactions recorded in the first half of the year involved outbound rather than inbound investment, illustrated by a South African industrial group's acquisition of equity assets from two separate targets through its own Mongolian subsidiary, a pattern consistent with South African acquirers using the period to pursue diversification abroad even as inbound foreign investment into South Africa itself declined. In Nigeria, South Africa emerged as the leading source of inbound cross-border investment for the year as a whole, with six recorded transactions, the largest of which was a South African media group's acquisition of a Nigerian betting platform, again suggesting that cross-border dealmaking did not so much cease during 2020 as reorient toward specific sectors and specific bilateral investment corridors. Notwithstanding the general contraction, reporting on full-year 2020 activity in Nigeria pointed to a sharp year-on-year increase in inbound financial-sector deal value, suggesting that the pandemic was reshaping the composition of dealmaking activity by sector rather than uniformly suppressing it. Taken together, the aggregate contraction in deal volume and the more granular, sector- and corridor-specific patterns within that contraction form the immediate backdrop against which the regulatory developments discussed in the remainder of this section, and the transaction case studies presented in Section 6.4, should be read. 6.2 Domestic and Regional Bank Consolidation Pressures Industry analysis published during 2020 projected that the pandemic could reduce African banking-sector revenues by between roughly twenty-three and thirty-three percent, and return on equity by between roughly five and fifteen percentage points, over the 2019 to 2021 period, a stress environment widely expected to accelerate bank consolidation. Illustrative transactions from the period include Access Bank's Zambian subsidiary's move, announced in mid-2020, to . No. 4 2020 www.iiardpub.org acquire the domestic lender Cavmont Capital Holdings Zambia, and the earlier collapse, in June 2020, of Equity Bank's proposed acquisition of Atlas Mara's banking subsidiaries in Rwanda, Zambia, Mozambique, and Tanzania. The latter episode is a useful reminder that clearance risk, spanning several national regulators simultaneously in a single cross-border transaction, is itself a material source of deal failure in African cross-border banking consolidation, independent of the underlying commercial rationale for the transaction. 6.3 Nigeria's Regulatory Reforms of 2020 As discussed in Section 4.1, Nigeria's clearance architecture for financial-sector transactions was substantially reconfigured within the review period itself, through the FCCPC's November 2020 Merger Review Regulations and the enactment of the Banks and Other Financial Institutions Act 2020. Taken together, these developments illustrate how 2020 functioned as a genuine inflection point in the regulatory clearance architecture for at least one of Africa's largest financial markets, even as overall deal volumes contracted. 6.4 Illustrative Transaction Case Studies The abstract description of clearance layers offered in Sections 2 through 5 can be made more concrete by examining three transactions from the period immediately surrounding 2020, each of which illustrates a different point on the spectrum of cross-border clearance complexity. Case A: NIC Bank and CBA Group, Kenya (announced 2018, completed 2019). The merger of NIC Bank Group and Commercial Bank of Africa to form NCBA Group PLC was, in jurisdictional terms, the simplest of the three cases: a single-country consolidation between two banks already operating under Kenyan law. Even so, the transaction required parallel clearance from the Competition Authority of Kenya, applying the ordinary market-structure test under the Competition Act, and from the Central Bank of Kenya, applying prudential criteria focused on the capital adequacy and systemic footprint of the merged entity. The transaction completed in October 2019 and created what was, at the time, Kenya's third-largest bank by assets. As a purely domestic transaction, it did not engage the COMESA layer, but it nonetheless illustrates, within a single jurisdiction, the dual competition-and-prudential clearance model examined comparatively in Section 4.3. Case B: Access Bank Zambia and Cavmont Capital Holdings Zambia (announced mid- 2020). Access Bank's Zambian subsidiary's move to acquire the domestic lender Cavmont Capital Holdings Zambia was, unlike Case A, technically a cross-border transaction, in that the ultimate parent, Access Bank Plc, is Nigerian, even though the transaction itself involved two Zambia-domiciled entities. Because Zambia is a COMESA member state, the transaction fell, in principle, within the COMESA Competition Commission's one-stop-shop jurisdiction in addition to requiring prudential approval from the Bank of Zambia, illustrating that even a transaction that is modest in scale and confined, operationally, to a single national banking market can engage a regional competition layer purely by virtue of the parties' membership of a regional economic community. Case C: Equity Bank and Atlas Mara (announced and collapsed, 2020). The most jurisdictionally complex of the three cases was Equity Bank's proposed acquisition of Atlas Mara's banking subsidiaries across Rwanda, Zambia, Mozambique, and Tanzania. Had it proceeded, the transaction would have required prudential clearance from at least four separate central banks, potential COMESA Competition Commission notification given that Rwanda and Zambia are both COMESA members, and separate national competition-law filings in Mozambique and Tanzania, which fall outside COMESA. The transaction collapsed in June . No. 4 2020 www.iiardpub.org 2020, amid the broader market uncertainty created by the COVID-19 pandemic; while the available commentary does not attribute the collapse solely to regulatory-clearance complexity, the sheer number of prudential and competition authorities that would have needed to act in a coordinated fashion illustrates, in concrete terms, the multiplicity problem examined abstractly in Section 7.1. Read together, these three cases suggest a rough gradient: clearance complexity rises sharply with the number of distinct national jurisdictions a single transaction touches, even before any additional regional or continental layer is added, and rises further still where the jurisdictions involved sit within overlapping, only partially harmonised regional economic communities. 7. Key Challenges in the Clearance Architecture 7.1 Multiplicity and Overlap of Regulators In each of the four jurisdictions reviewed, a cross-border acquisition of a bank or insurer conventionally requires clearance from at least three separate authorities operating under distinct statutory tests and timelines, a competition or antitrust regulator (or, in Nigeria, the central bank acting in that capacity), a prudential regulator, and a securities regulator where the target is listed. This multiplicity increases transaction cost, extends timelines, and creates the possibility of inconsistent outcomes across regulators reviewing substantially the same transaction. 7.2 Divergent Thresholds and Standards No continent-wide harmonisation of notification thresholds existed as of 2020. COMESA, Nigeria, South Africa, Kenya, and Egypt each apply their own turnover, asset, or shareholding thresholds, requiring deal teams to conduct a separate jurisdictional analysis for each potentially applicable regime rather than relying on a single continental or even regional test. 7.3 Institutional Capacity Constraints Several of the authorities examined in this paper were, as of 2020, comparatively young institutions. The FCCPC had been operational for barely a year by the start of the review period. Even the COMESA Competition Commission, the continent's most established regional authority, suspended its own internal review-period rules in February 2020 pending consultation with member states, an indication that institutional procedure was still being calibrated at the regional as well as the national level. 7.4 Exchange Control as a De Facto Clearance Layer In jurisdictions that retain capital-account controls, notably South Africa and Nigeria, the central bank's exchange-control or foreign-exchange function operates as a further, often opaque, approval gate for the cross-border payment of consideration, separate from both competition and prudential review. Constrained access to foreign exchange was specifically identified in contemporaneous commentary as a drag on Nigerian dealmaking during 2020. 7.5 Public Interest Conditionality and Predictability South Africa's documented practice of attaching public-interest conditions, such as employment moratoria and local-procurement commitments, even to mergers presenting limited competition concerns, adds a further and less predictable layer of clearance risk. Contemporaneous commentary suggested that other African regulators were beginning to adopt similar practices, raising the prospect that public-interest conditionality could become a more widespread feature of the regional clearance landscape. . No. 4 2020 www.iiardpub.org 7.6 Regional Ambition versus National Retention of Jurisdiction The COMESA Competition Commission's one-stop-shop design was, in principle, intended to displace separate national filings for qualifying transactions. In practice, national authorities such as the CAK continued to assert concurrent jurisdiction, producing duplicative filings and costs. Meanwhile, the ECOWAS equivalent, the ERCA, remained non-operational throughout the review period, and the parallel WAEMU regime, covering overlapping membership, remained voluntary and non-suspensory, an internal inconsistency within a single region that further complicated the picture for cross-border transactions touching West Africa. SADC, examined in Section 3.5, presents the starkest version of this problem: rather than an imperfectly implemented one-stop shop, it offers no regional clearance mechanism at all, leaving cross-border acquirers to rely entirely on whichever national regimes, ranging from South Africa's mature system to member states with no competition law in force, happen to apply to the transaction at hand. 7.7 Institutional Voids and the Cost of Fragmented Clearance Read through the institutional-voids lens introduced in Section 1.3, the absence of a single, reliable continental merger-clearance intermediary is itself a textbook institutional void (Khanna and Palepu, 2010). Just as the absence of credit bureaus or standardised contract- enforcement mechanisms raises the transaction costs of ordinary commercial dealmaking in emerging markets, the absence of a coordinating institution capable of confirming, once, that a transaction has been properly cleared across every jurisdiction it touches raises the transaction costs of cross-border financial-sector M&A specifically. Consistent with the broader institutional-voids literature, firms operating in this environment appear to respond in two predictable ways. First, they rely more heavily on specialist local counsel and repeat-player relationships with particular regulators, effectively privatising, at the level of the individual transaction, the coordination function that a genuine one-stop shop would otherwise provide institutionally. Second, as the case studies in Section 6.4 suggest, acquirers appear to favour transactions confined to a single jurisdiction, or to jurisdictions within the same regional bloc, over transactions spanning unrelated regulatory blocs, a selection effect that this review's qualitative case material illustrates but cannot, on a doctrinal methodology, fully quantify. 7.8 Regulatory Capture Risk in Sector-Specific Carve-Outs The bank and insurance carve-outs documented in Nigeria (BOFIA 2020), South Africa (ministerial exclusion), Egypt (CBE and FRA jurisdiction), and Ghana (the Bank of Ghana's self-allocated approval power) can be read through either of the two competing regulatory theories introduced in Section 1.3. On a public-interest reading, each carve-out is a rational response to the specialised prudential expertise, and the financial-stability stakes, that distinguish a bank or insurance merger from an ordinary commercial transaction, and that a general competition authority may lack the sector-specific expertise to weigh adequately. On a capture-theoretic reading, however, the same pattern raises a genuine open question: does shifting merger jurisdiction away from a general competition authority, and toward a sector regulator whose day-to-day supervisory relationship with the same institutions long predates any particular transaction, systematically soften contestability review at the margin, given that a prudential regulator's core mandate rewards stability and continuity in its relationships with supervised entities rather than maximising competitive intensity between them (Stigler, 1971)? This paper's doctrinal methodology cannot adjudicate between these two readings empirically. It flags the question, however, as a natural direction for future quantitative research, for example, comparing merger approval rates, remedy incidence, and review duration between general competition authorities and sector regulators reviewing comparable financial-sector transactions across the jurisdictions examined in this review. . No. 4 2020 www.iiardpub.org 8. Discussion: Towards a Coherent Regional Clearance Architecture 8.1 Lessons from Comparative Practice Commentators examining the prospects for a continental African competition regime have pointed to the European Union's concept of mergers of Union dimension, reviewed exclusively at the Union level, and its subsidiarity principle, under which matters best handled at a lower level are left to member states, as a possible model for Africa. Applying such a model would require a future continental authority to focus its jurisdiction on transactions with genuinely continental effect, referring smaller matters downward to regional or national bodies, rather than adding a further layer of review on top of the national and regional layers that already existed by 2020. The comparative record assembled in this paper suggests that Africa's regional economic communities have, in practice, pursued at least three distinct models rather than converging on a single one, a plurality that any future harmonisation effort will need to accommodate rather than assume away. COMESA's model is closest to genuine supranational delegation: a dedicated authority with formally exclusive jurisdiction over qualifying transactions, even if national practice has not always respected that exclusivity in full. ECOWAS and the EAC have pursued what might be called a delayed-delegation model, enacting supranational competition law many years before building the institutional capacity to enforce it, producing long intervals, eight years in the EAC's case between enactment and entry into force, and considerably longer still before merger notifications actually commenced, during which the law exists but does not bind. SADC, by contrast, has pursued a pure cooperation model, explicitly declining to create a supranational merger authority and relying instead on voluntary information-sharing among national regulators of markedly uneven capacity. A continental framework built on the AfCFTA's preservation-of-the-acquis principle will need to interoperate with all three models simultaneously, which is a materially harder design problem than harmonising a single, already-converged regional practice. 8.2 The Promise and Limits of a Continental Competition Regime The AfCFTA's Article 5 principle of preservation of the acquis meant that the continental competition layer was designed from the outset to coexist with, rather than replace, the COMESA, ECOWAS, WAEMU, and EAC regimes already in place. This design choice reflects the political reality that African states were not prepared, as of 2020, to cede merger- control sovereignty to a single continental body. It also means, however, that the achievement of a genuinely simplified, single clearance pathway for cross-border African financial-sector transactions was likely to require many further years of institutional coordination beyond the period covered by this review. A further complication, not fully resolved by the preservation- of-the-acquis principle alone, concerns financial-sector transactions specifically. Even a fully harmonised, well-functioning continental competition authority would not, on the architecture examined in this paper, absorb the prudential, securities, and exchange-control layers documented in Sections 2 through 5, since those layers are administered by central banks, securities regulators, and exchange-control authorities whose mandates lie outside any competition protocol's natural scope. A continental competition regime, however successful on its own terms, would therefore address at most one of the three or four layers a cross-border financial-sector acquirer must navigate, leaving the prudential and exchange-control dimensions of fragmentation identified in Sections 7.3 and 7.4 to be addressed, if at all, through separate mechanisms such as central-bank cooperation agreements or a harmonised prudential passporting regime, neither of which existed in any developed form as of 2020. 8.3 Complementary Perspectives from Applied Financial-Compliance Literature The legal and regulatory commentary examined above can usefully be read alongside a parallel, more operationally oriented literature on financial-sector compliance and internal control that . No. 4 2020 www.iiardpub.org predates or coincides with the review period, which, while not African-M&A-specific, illuminates the practical dimensions of the clearance burden described in this paper. An early conceptual model for enhancing internal audit quality through technology-enabled risk assessment frameworks argues that audit functions embedded with real-time analytical tooling detect control weaknesses earlier than periodic manual review, a foundation later extended specifically to the insurance and banking sectors through a conceptual framework for risk- based internal control models, and to a broader emerging-market setting through a companion review of data-driven risk evaluation models for emerging-market financial institutions (Akomolafe and Agu, 2018, 2019a, 2019b). A related conceptual treatment of financial resilience through integrated governance and compliance strategies extends this line of work from the institution-level control question to the sector-level resilience question, arguing that governance and compliance are most effective when designed as a single integrated system rather than as parallel, loosely coordinated functions (Akomolafe and Agu, 2019c). Read together with Section 7 of this review, this literature supports the observation that the institutional capacity of a reviewing authority, not merely the formal existence of a review requirement, materially shapes how effectively a layer of clearance functions in practice. A second strand of this literature addresses the tax, valuation, and transfer-pricing dimensions of cross-border compliance that sit alongside, and sometimes intersect with, the competition and prudential clearances that are this paper's principal focus. A conceptual model for financial- analytics-driven enterprise value creation in technology firms offers a valuation-side perspective on the same cross-border transactions this paper examines from a regulatory- clearance perspective, while a conceptual framework for tax governance and cross-border compliance analytics, together with a companion risk-assessment model for transfer pricing in multinational corporations, describes compliance obligations that a cross-border financial- sector acquirer must typically satisfy in parallel with merger and prudential clearance (Lawal and Oduleye, 2018a, 2018b, 2019a). A further conceptual treatment of data-driven executive decision systems for strategic financial planning situates these compliance obligations within the broader decision-making architecture of the acquiring firm, suggesting that regulatory- clearance planning of the kind examined in this paper's Appendix is, in practice, one input among several into an integrated financial-planning process rather than a standalone legal exercise (Lawal and Oduleye, 2019b). A third strand addresses cross-jurisdictional regulatory comparison methodologically, outside the financial sector but instructive for the comparative approach adopted in this paper. A conceptual framework for legal and ethical risk modeling in enterprise data-protection governance systems, together with a companion review of comparative data-protection regulations and secure implementation strategies across jurisdictions, demonstrates that the challenge of reconciling divergent national regulatory standards within a single multinational compliance programme, the same structural problem examined in Sections 5 and 7 of this review for financial-sector clearance, recurs across other regulated domains as well (Mbonu et al., 2018, 2019). Companion work extending this comparative approach to agile, cross-border digital-transformation governance and to infrastructure-as-code governance for secure enterprise cloud deployments further illustrates that the compliance-coordination problem this paper documents for merger clearance specifically is one instance of a more general multinational-governance challenge (Mbonu et al., 2020a, 2020b). A fourth, smaller set of studies situates these compliance dynamics within the broader emerging-market and African regulatory context. A systematic review of budget compliance and statutory reporting frameworks across Sub-Saharan Africa documents gaps and reform pathways in public-sector financial governance that mirror, at a fiscal level, the institutional- capacity constraints identified among younger competition and prudential regulators in Section 7.3 of this review, while a companion conceptual framework for reconciliation control and . No. 4 2020 www.iiardpub.org financial-workflow redesign in emerging-market organisations addresses the internal-controls dimension of the same underlying capacity problem (Dogbatsey and Ebhojie, 2018; Dogbatsey et al., 2019). Research on governance alignment across multiple stakeholders in joint-venture operations conducted within highly regulated environments further illustrates that the operational and governance challenges of cross-border transactions extend well beyond the formal clearance process into the day-to-day coordination of multi-jurisdictional deal teams, a theme directly relevant to the transaction case studies examined in Section 6.4 of this review (Eyetsemitan et al., 2020). A conceptual study of the determinants of access to agribusiness finance and its influence on enterprise growth in rural communities offers a complementary, if more loosely related, perspective on the general difficulty of accessing formal financial intermediation within African markets, a structural condition against which the more specific merger-clearance burden documented in this paper should be read (Michael and Ogunsola, 2019a). A final, more loosely related cluster addresses enterprise risk management, contract governance, and regulated-market measurement more generally. A security-audit and enterprise-risk-assessment framework for resilient information systems, and a supply-chain risk-management model developed for engineering, procurement, and construction and gas- processing projects, both offer general risk-assessment methodologies structurally analogous to, though not developed for, the merger-clearance risk this paper examines (Dosunmu and Ogundele, 2019; Agbabiaka et al., 2019). A companion conceptual framework for cost reduction through contract negotiation and vendor governance speaks to the deal-structuring and closing-conditions dimension of cross-border transactions touched on in this paper's