African loan documentation standardised

Author: | Published: 27 Sep 2011
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Loan documentation in Africa is about to become far more uniform thanks to the launch on Thursday of the African Loan Market Association (Alma).

The Association, which has the support of the Loan Market Association (LMA) in London, has already formulated standardised loan documents for South Africa, with drafts for Kenyan and Nigerian loan agreements due to enter a working group on Thursday.

The key South African banks (ABSA, Investec, Nedbank, RMB and Standard Bank), together with Norton Rose, are already members of the body.

"We’re keen to get some of the big Nigerian and Kenyan banks onboard too," said Steven Gamble, a director of Norton Rose and a member of the Alma board.

The South African documents are primarily intended for the big domestic South African deals. The English law documents, however, are intended for the cross border deals, the bigger facilities or for inbound deals into Africa.

The new documents are closer to the Asia Pacific Loan Market Association (APLMA) than the LMA. "These are slightly simpler, more bank-friendly documents than the LMA’s," said Gamble, who is the only lawyer on the board.

The need for Alma was clear. Until now, all banks and law firms have their own precedents on loan documents in South Africa, Nigeria and Kenya.

"These may be partly LMA-based, but they’re not always," said Gamble. "Every deal you do in these countries, especially domestic syndications, result in disparate documentation which is often expensive," said Gamble.

"We are trying to get all the lenders in these domestic markets to accept a standard which they can then tell their lawyers or in-house legal to draft."




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