Legal Business

Africa rising – Foreign firms strive to cover the booming continent

Joe Andrew, the architect of Dentons’ global strategy, is not known for pulling his punches. As such, his stance on staffing the African practices of international law firms is typical: ‘Why would you look to Europe or the US? It’s parochial, it’s a residue of colonialism, and it borders on racism.’

The firm’s chair warms to his theme. ‘There are 54 countries on the continent, and to different degrees they’re all experiencing an incredible democratisation of information. There’s talent everywhere. We don’t agree with our competitors who believe that the best way to service clients is to hire people from Europe.’

Andrew is talking about legal services in the world’s second-most populous continent: its 1.3 billion people make up some 16% of the world’s population. However, given Africa’s size and seemingly limitless natural resources, a variety of factors have conspired to ensure it is also the poorest continent. But, just as Ethiopia’s new, 40-something prime minister, Abiy Ahmed, has hit the ground running, bringing multi-party democracy to what is Africa’s fastest-growing economy and pursuing change at a staggering pace, the tide is turning for Andrew and others in the legal marketplace. For them, Africa is on the up, and the race is on to find the best way of meeting increasing client demands for legal expertise.

On the up

‘Dozens of emails come in overnight embracing every practice group,’ says Andrew. ‘Infrastructure is still big, though perhaps less so than four or five years ago. There’s growing excitement about private equity investment, including social impact and targeted investment. The agri sector is big, as clients invest and create export markets. Ethiopia now has political stability, Nigeria has a mature travel and tourism market and now, after the global financial crisis, talent is returning to Africa.’

‘Why would you look to Europe or the US for staff? It’s parochial, it’s a residue of colonialism, and it borders on racism.’
Joe Andrew, Dentons

Hugo Coetzee, head of the Africa practice at CMS, agrees. ‘We’ve been in Africa for a long time. There’s always an ebb and flow to the work; things change and develop. But we’re seeing a real increase in infrastructure and energy work, as well as work in consumer products, hotels and leisure. We can also see growth coming in tech and digitalisation. It’s a growth continent. The African Continental Free Trade Agreement, signed in Rwanda in March 2018, will make a huge difference too. It’s groundbreaking, in seeking to establish a single market for goods and services across all 54 countries.’

Both Dentons and CMS have demonstrated their commitment to the continent in recent months. In September, Dentons unveiled proposed combinations with five leading law firms in Angola, Morocco, Mozambique, Uganda and Zambia, while just a month later CMS revealed its hand with the announcement that RM Partners and Daly & Inamdar Advocates, based in South Africa and Kenya respectively, had joined the firm.

For Dentons, the move is part of its ambition to become the first pan-African law firm, owned and controlled by Africans – which explains Andrew’s insistence on building on local talent. ‘We decided a long time ago that we wouldn’t be a law firm replicating the offensive, outdated and discredited belief that African nations need leadership and guidance.’

Coetzee, who says that CMS’s strategy is ‘not to open up everywhere, but rather to develop hubs as ways into regions’, puts it simply: ‘The days when there was a huge firm with a London Africa desk, which would send lawyers to pop in and do a deal, then fly home again – those days are numbered.’

‘Angola is one of the richest countries in Africa. Political reform is underway, corruption is being addressed and the economy is being modernised.’
Nelson Raposo Bernardo, Raposo Bernardo

A cursory glance at some of CMS’s recent work shows the pace of development. The firm advised on the first pan-African network of spot and derivatives exchanges, clearing houses and depository platforms targeted initially at Côte d’Ivoire, Egypt, Ghana, Kenya, Nigeria, South Africa, Tanzania, Uganda and Zambia, while also helping Schlumberger on its $1bn investment in an offshore oil field development in Nigeria under a pseudo-equity model (where returns are linked to the performance of the fields, once developed).

Dentons counts pan-African advice on the emerging – and booming – cannabis industry, but two countries, Angola and Mozambique, have been the focus of many of the operators in the African legal marketplace. No surprise, given recent deals including French oil and gas company Total’s $3.9bn acquisition of a 26.5% stake of Anadarko’s shareholding in the Mozambique LNG project. Also in Mozambique, the board of directors of the Export-Import Bank of the United States voted unanimously to authorise a direct loan of up to $5bn to support the export of US goods and services from multiple states for the development and construction of an integrated LNG project located on the Afungi Peninsula. In Angola, state-owned oil business Sonangol and Total intend to create a joint venture to operate in the distribution and trade of crude oil by-products, as well as in the production of solar energy.

The Lusophone connection

Portuguese firm Raposo Bernardo has been operating in Lusophone Africa (Angola, Cape Verde, Guinea-Bissau, Mozambique and São Tomé e Príncipe) for 20 years. Managing partner Nelson Raposo Bernardo says the firm has a dual model in Africa, dating back to 2005, which means a local presence combined with a desk in the main office in Lisbon. He sees work relating to ‘consumer goods, agriculture and tourism’ growing in the coming years, and is in no doubt about Angola’s importance: ‘Angola is one of the richest countries in Africa. Political reform is underway, corruption is being addressed and the economy is being modernised.’

‘The days when a huge firm with a London Africa desk would send lawyers to pop in and do a deal, then fly home again – those days are numbered.’
Hugo Coetzee, CMS

The multinationals now setting up in Angola need legal support, as will anyone tempted by the government’s recently announced privatisation programme. ‘The programme includes almost 200 state-owned companies, of which 30 will make for interesting projects for global businesses. There will be a considerable upsurge of interest and work in Angola in the next four to five years,’ comments Raposo Bernardo.

For Tiago Marreiros Moreira, head of international operations at Lisbon-based Vieira de Almeida (VdA), Mozambique is no less attractive. ‘Mozambique is a very interesting example of how one of the poorest countries in Africa has been given the opportunity to change into one of the strongest regional economies. The impact of the discovery of gas in Mozambique and the signing of several gas deals in the coming months can be a turning point for the country, with IMF economists expecting investments in and associated with Mozambique’s gas industry to top $100bn, and generating over the coming 30 years about $500bn in extra tax dollars.’

VdA concentrates on sub-Saharan Africa, where there are abundant reserves in several commodities, water resources and large amounts of arable land. Add a burgeoning population – a recent UN Population Division report says sub-Saharan Africa’s population is set to double over the next 30 years, adding an additional one billion people and accounting for more than half of global population growth between now and 2050 – and it is easy to see Moreira’s point when he says: ‘Some of the most interesting world challenges and opportunities will take place in sub-Saharan Africa. VdA wants to be part of this process as a leading legal service provider, able to assist local governments, international and local companies and help them profit from the existing opportunities.’

With Andersen Global, the legal services spin out from the ashes of what was Big Five firm Arthur Andersen, recently entering Cameroon – its 18th African country – via a tie-up with Douala-based firm Muluh & Partners, and Eversheds Sutherland announcing a restructuring of its Africa group in October to pursue growth on the continent (including in third-party litigation funding), it seems that Africa’s star is rising. For Joe Andrew, it is about time: ‘It’s a very positive place to be. Colonial attitudes are still a problem but in ten or 12 years, Africa will have one of the largest legal markets in the world.’ LB

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Out of Africa – and doing well

‘The Occidental/Anadarko merger is the largest M&A deal in Africa this year and the third-largest transaction in the history of the global oil and gas sector.’
Gabriel Mpubani, Freshfields Bruckhaus Deringer

Despite featuring in some of the biggest inbound and outbound corporate deals and projects involving Africa, a number of the largest global players have thus far resisted opening an office on the continent, among them Freshfields Bruckhaus Deringer. The Magic Circle mainstay has an enviable CV of African legal work in what it calls its ‘four pillars’ – M&A/private equity, capital markets, project finance and dispute resolution – with the majority of its revenue generated by client activity in Egypt, Kenya, Morocco, Nigeria and South Africa. But, says one of the co-heads of the Africa practice, Rob Cant: ‘There are a number of other hot spots where client activity has recently increased. We’re very excited by a string of recent mandates in Angola, Algeria, Mozambique and Ethiopia.’

Joint Africa practice head, Gabriel Mpubani, says a highlight in the past 12 months was advising Occidental Petroleum on its merger with Anadarko Petroleum and on the disposal of Anadarko’s upstream oil and gas assets in Algeria, Ghana, Mozambique and South Africa to Total. No wonder: ‘The deal saw Occidental acquire prized shale oil deposits in Texas and recoup a chunk of the costs by selling Anadarko’s African oil and gas assets to Total for $8.8bn. This is the largest M&A deal in Africa this year and the third-largest transaction in the history of the global oil and gas sector, after Exxon/Mobil and Shell/BG.’

Similarly successful in Africa and yet without an office there is US firm Akin Gump Strauss Hauer & Feld. In October it advised Helios Investment Partners, the largest Africa-focused private investment firm, as one of the major selling shareholders in Helios Towers’ $1.45bn initial public offering on the London Stock Exchange. The firm also hired Africa-focused private equity partner Weyinmi Popo from Orrick Herrington & Sutcliffe to its London office in October. This was not the only high-profile lateral hire of an Africa specialist in London during 2019 – Watson Farley & Williams hired Titus Edjua, director of Clifford Chance (CC)’s Africa group, to boost its project finance capabilities.

Sebastian Rice, London managing partner of Akin Gump, says the firm has hired a number of lawyers ‘with solid Africa credentials, all of whom have joined at an exciting time. Africa is increasingly an area of interest and focus for our clients. Together, these partners add real depth to our energy, funds and transactional private equity work, and substantially widen the Africa-focused offerings the firm provides, whether from London or elsewhere’.

‘We have been supporting clients in Africa for more than 30 years on a fly-in, fly-out basis.’ So says Nina Bowyer, joint co-head of Herbert Smith Freehills’ Africa group. But, far from stating a preference for the old-school method of servicing clients’ needs in Africa, Bowyer reveals that ‘a major development for our Africa practice was the opening of our first office in Johannesburg in 2015’.

The team in Johannesburg has grown rapidly: there are now more than 70 people, including seven partners. Bowyer says the team works ‘closely with HSF’s global network, particularly in London and Paris. This year more than 180 partners across our global network are working on some 680 matters in Africa’. She highlights work for Poly-GCL Petroleum Group Holding on all aspects of the development of its $4bn Ethiopia-Djibouti gas-to-LNG mega project, as well as advising EDF, IFC and the government of Cameroon on the development and financing of a 420MW hydroelectric power plant at Nachtigal in Cameroon.

‘Africa continues to be a dynamic and exciting place to do business,’ she adds. ‘Lawyers working in Africa need to be aware of local political, commercial and cultural sensitivities and work closely with local counsel. We are proud that our Africa group includes lawyers of African nationality and lawyers who have lived and worked on the continent. The team has a deep understanding of the continent’s local and regional legal systems, business practices, local cultures and socio-political considerations, and of the issues and realities of doing business in Africa.’