The OHADA zone is attracting a growing number of investors, drawn by its harmonized legal framework and growth potential. However, beyond this apparent stability, conducting due diligence in this environment requires a sound understanding of its specificities, limitations, and grey areas.

For acquirers unfamiliar with the region, certain risks may remain under the radar. Below are key areas requiring attention:

Accounting: critical analysis required

The revised SYSCOHADA framework provides a common basis, but the quality of financial statements varies significantly across countries. Manual bookkeeping, outdated software, and undocumented adjustments are frequent. Each balance sheet item should be substantiated.

• Assets are often depreciated over longer periods than in France, reflecting different investment cycles. An analysis of depreciation rates is insufficient without understanding the useful lives applied.
• Given the uncertainty over data reliability, “Completion Accounts” mechanisms are generally preferred to “Locked Box”.

Tax risks: heterogeneity and unpredictability

Tax matters fall outside the OHADA harmonization scope. Each country maintains its own rules, rates, and practices.

• Late tax audits, poorly applied withholding tax regimes, and opaque local exemptions result in a high level of tax exposure.
• A thorough review of historical filings, supporting documentation, and ongoing disputes is necessary.
• Indirect taxation (VAT, registration duties) may also involve interpretative ambiguities requiring investigation.

Cash and fund repatriation: focus on actual liquidity

In some countries (e.g., Cameroon), strict foreign exchange controls limit or delay the repatriation of hard currency. As a result:

• Cash reported on the balance sheet may not be fully available.
• A discount may be required to reflect the actual realizable value of cash.
• Any reporting obligations or regulatory constraints related to fund transfers must be identified.

Trade receivables: vendor credit practices

Vendor financing is commonly used to offset limited banking support.

• This results in significant receivable balances, often inadequately monitored.
• Ageing, client concentration, and collection procedures should be reviewed to assess actual credit risk.
• In certain cases, informal offset practices may distort the receivables position.

Local governance: a key success factor

Cultural and economic differences make the stability of the local management team a critical integration factor.

• The departure of key managers may jeopardize post-acquisition integration.
• A transition period and retention mechanisms are usually necessary to secure the transaction.
• Evaluating local management’s institutional network, supplier relationships, and social environment is often valuable.

Conclusion: combining technical rigor with local insight

Due diligence in the OHADA zone requires:

• proficiency in international standards,

• adaptability to local practices,

• and a cross-functional approach encompassing financial, tax, legal, HR and operational reviews.

Identifying grey areas, documenting risks, and structuring appropriate contractual protections are key to a successful transaction.

Yérima Advisory supports its clients with in-depth insights to secure transactions in OHADA jurisdictions.

📩 Considering an acquisition project in Africa? Let’s connect.