Sponsored briefing: Africa: The land of milk and honey and business as usual

Sponsored briefing: Africa: The land of milk and honey and business as usual

African countries, even with their less advanced healthcare systems and low vaccination rates, have weathered the pandemic well with a low incidence and mortality rate for Covid-19. The impact, therefore, of the pandemic in Africa remains markedly lower compared to the Americas, Europe and Asia. Scientists say it is a paradox and are exploring the hypothesis that Africans have had more exposure to other coronaviruses, which may act as a defence against Covid-19. Another possibility is that regular exposure to malaria or other infectious diseases could prime the immune system to fight new pathogens, including SARS-CoV-2. If tens of millions of Africans have already been infected, scientists question whether the continent should try for ‘herd immunity’ without a vaccine, shielding only the most vulnerable, which might be preferable over control measures that cripple economies in the long run.

Further, Africa’s youthful population stands out against the global backdrop of ageing populations. Only in Africa is the size of the working-age population as a portion of the total population still increasing. In short, Africa is open for business as usual. Continue reading “Sponsored briefing: Africa: The land of milk and honey and business as usual”

Sponsored briefing: Closing a project finance transaction in Mozambique during a worldwide pandemic

Sponsored briefing: Closing a project finance transaction in Mozambique during a worldwide pandemic

The world shut down in 2020, but the largest project finance in Africa could not stop.

The discovery of vast quantities of natural gas off the coast of northern Mozambique in 2010 was the starting point for the Mozambique LNG Project, which led to a $20bn final investment decision in June 2019. In September of that same year, Total (the second-largest LNG player in the world) announced that it had closed the acquisition of Anadarko’s 26.5% operating interest in the Mozambique LNG Project and that the project was finally ready to move on to the next stage. Continue reading “Sponsored briefing: Closing a project finance transaction in Mozambique during a worldwide pandemic”

Africa focus: Africa first

Africa focus: Africa first

In times of stress and unpredictability, it pays to be conservative. Most sensible investors will plump for safe havens during troubled times. So is Africa a senseless gamble?

Some 20 years after the term ‘Africa rising’ began to enter the world’s consciousness, the continent still delivers a plentiful supply of extreme volatility and complexity, intimidating factors that seep into deals, projects and other legal engagements. It is not a benign environment for law firms. Continue reading “Africa focus: Africa first”

Sponsored briefing: Privatisations in Cabo Verde and Angola – the new El Dorado?

Sponsored briefing: Privatisations in Cabo Verde and Angola – the new El Dorado?

Both Angola and Cabo Verde have recently announced important privatisation programmes involving companies active in key sectors in the two countries’ economies.

In Angola, the programme involves 195 companies and assets and was originally planned to be concluded in 2022. Several tenders have already been launched or implemented and 14 companies/assets have already been privatised. The goal was to privatise 51 companies by the end of 2020 but because of Covid-19 the process was suspended. However, the process is now resuming slowly. Consequently, there will be investment opportunities from now on. Continue reading “Sponsored briefing: Privatisations in Cabo Verde and Angola – the new El Dorado?”

Sponsored briefing: Piloting maritime law in Egypt

Sponsored briefing: Piloting maritime law in Egypt

Hisham Eldib and Nada Eldib of Eldib Advocates on how the firm’s core values and network of offices align with Africa’s ever-growing infrastructure

We would like to take this opportunity to express our firm’s keenness in co-operating with Legal Business magazine and being recognised among other esteemed law firms as well as the maritime and transport society in Africa. Eldib Advocates was established in 1875; we are a full-service law firm operating across Egypt and regionally with four offices nationally, in Alexandria, Cairo, Port Said and Suez, and three regional desks, covering Libya, Sudan and Saudi Arabia. Being a player in the legal field for over 145 years, our experience spans beyond local market industries to those of international markets, rendering legal services to a wide range of national and multinational corporations; in addition, to having an established network of affiliates across Africa, the Middle East and further worldwide. Our mission is to deliver innovative business solutions and result-oriented counsel to our clients existing at all stages. We always aim to effectively articulate our clients’ options and the risks involved in any venture and hope to guide them to making the most appropriate decisions to secure themselves and their businesses. Continue reading “Sponsored briefing: Piloting maritime law in Egypt”

Sponsored briefing: Challenges facing the cement industry in Egypt

Sponsored briefing: Challenges facing the cement industry in Egypt

The cement industry is one of the oldest industries in Egypt, with more than a century of experience, and a total of 18 plants throughout the country. For decades, the cement industry was one of the most profitable business in Egypt, with EBITDA margin above 30%. Following the Arab Spring in early 2011, the cement industry is facing two main challenges, the increase of the production cost and capacity as outlined below.

1. Increase of the Production Cost

a) Egypt’s cement producers used to run their plants on gas as a main source of energy. However, after the Egyptian revolution in 2011, the gas price went significantly high from US$2 per mBtu to US$6 per mBtu, which consequently entailed the increase of the production cost.

As an alternative, the biggest cement companies started to invest in coal and petroleum coal as a source of energy, in order to reduce the production cost. The immediate impact was the heavy investment in coal mill, regardless of the environmental impact.

The coal is mostly imported, with difficulties related to the instability of the international market price, and the freight that can be delayed, as we recently witnessed the Suez Canal blockage crisis. In addition, in late 2016, the Central Bank of Egypt decided to fully float the Egyptian Pound and the latter lost half of its value.

b) In 2014, Law No. 198 of 2014 on the Mining Wealth was issued, as amended (the Mining Law), and has drastically increased the value of the minerals and raw materials, which are essential to the cement industry. The increase reached more than 500 times the prices previously paid by the producers.

The legislator, in application of the principle of non-retroactivity of the law, explicitly stipulated that all existing contracts concluded under previous laws shall remain in force under the provisions of such laws till the expiration of the relevant licence, when the provisions of the Mining Law will prevail. The first paragraph of Article 3 of the Articles of Issuance of the Mining Law states that:

‘The quarries licences that were issued prior to the effective date of the New Mining Law as well as the terms thereof shall remain and continue to be valid and in force. However, upon renewing the said licences; the provisions stated in the New Mining Law, regarding the annual rent, royalties and research and exploitation licence fees, shall be applied.’

Furthermore, the Egyptian State Council’s General Assembly of Advising and Legislating Sections issued an advisory opinion, confirming that the increase in the value of the annual rent and royalty, introduced by the Mining Law, shall not apply on ongoing contracts, unless the parties agreed otherwise or upon renewal of the duration of the contracts.

As a consequence, the cement companies having ongoing valid contracts started to negotiate the raw materials’ cost with the competent authorities, namely the governorates, in order to reach a reasonable price for all parties involved. Unfortunately, most of said companies failed to reach an agreement thereon and some were forced to escalate the issue before the Investment Dispute Resolution Committee at the General Authority for Investment and Free Zones (GAFI).

In addition, Law No. 193 of 2020 has transferred the management and exploitation of the quarries to the Egyptian Company for Mining Management and Exploitation of Quarries and Saline, an Armed Forces related company.

2. Increase of the Production Capacity

In 2014, a new player joined the industry. The Egyptian government started to invest in cement plants, in order to supply the needs of the government for national projects and infrastructures and decrease the cement price.

Today, the state-owned cement companies represent around 25% of the Egyptian production capacity.

These new state-owned cement companies contributed to an over-capacity of the Egyptian cement market and therefore heavily impacted the cement price, which has dropped since then.

Unfortunately, the increase of the production cost of the cement, as explained above, had an impact on the competitiveness of Egypt in the industry and export of cement to nearby countries, essentially because the production cost in other countries is lower, as is the case in Turkey, playing today one of the leaders of the cement market in the region.

Therefore, the option of exporting the over-capacity abroad is not even considered by the Egyptian producers.

Following several meetings between the Minister of Industry and Trade and the Cement Association, the Egyptian government considers the possibility of decreasing the gas price and also decreasing the market production capacity to reach 65% of the current capacity, pro rata to each producer’s share in the market, and increasing the cement price.

However, to date, the Egyptian government did not issue any decree to resolve the said challenges and the cement producers are frustrated for the lack of any concrete decision therefrom. Many are considering decreasing their investment in Egypt and others are considering filing a case before the International Centre for Settlement of Investment Disputes (ICSID) against the Egyptian government.

For more information, please contact:

Frederic Soliman
Managing partner
Soliman, Hashish & Partners

E: f.soliman@shandpartners.com
T: +2 0122 0800 290


Sponsored briefing: Angola – getting back in the game

Sponsored briefing: Angola – getting back in the game

Morais Leitão’s Claudia Santos Cruz on recent legal developments and the future of the Angolan oil industry in the wake of the Covid-19 pandemic

For a brief period in 2009, Angola was Africa’s largest oil producer with production reaching two million barrels per day. Current production is around 1.37 million barrels per day. This reduction is generally attributed to a general reduction in production; low oil prices and more recently Covid-19 pandemic effects. Continue reading “Sponsored briefing: Angola – getting back in the game”

Sponsored briefing: 2019: diversity and new rules for Portuguese corporate issuers in debt capital markets

Sponsored briefing: 2019: diversity and new rules for Portuguese corporate issuers in debt capital markets

Diversity. This is a fair word to describe Portuguese debt capital markets in 2019. We have seen a bit of everything this year: new issuers, including Transportes Aéreos Portugueses, Sociedade Independente de Comunicação and Casais, SGPS, and from the public sector, the Autonomous Region of the Azores, frequent issuers, including Sport Lisboa e Benfica – Futebol SAD, Mota-Engil, José de Mello Saúde and Galp, and from new structures, including the combination of subscription and exchange offers to retail and institutional investors, and the segregation of books by types of investors (retail vs eligible counterparties and professional clients in retail offerings), and even a new prospectus regulation. Lastly, at the top of the list, new investors and alternative funding sources for Portuguese issuers. This is good news in a year that, on the regulatory front, turned a page with the enactment of the new EU Prospectus Regulation and related delegated regulations.

As from 21 July 2019, new rules were required to be followed in the preparation of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. New rules were also adopted in respect of related advertisements.

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (New Prospectus Regulation), although maintaining the essential structure inherited from its predecessor, introduced new requirements aimed at simplifying an issuer’s access to capital markets, notably frequent issuers or issues by small and medium-sized companies, and ensuring that the information contained in a prospectus is as useful as possible for its readers (potential investors).

Critical chapters of the prospectus, such as the summary and the section on risk factors, have also been affected. The summary was reduced and reshaped to be modelled as much as possible on the key information document, with the goal of making it shorter, simpler and easier for investors to understand. To achieve this goal, the language used in the summary should be plain and non-technical, presenting the relevant information in an easily accessible way. Following this route, summaries will become a more useful source of information for investors (notably retail investors), focused on providing key information that helps investors take more accurate investment decisions.

Rules regarding risk factors have also been amended and detailed. The main purpose of disclosing risk factors in a prospectus is to ensure that investors are aware of the major potential risks relating to the issuer and the securities, and that they make investment decisions based on their knowledge of these risks. In order to avoid long generic descriptions of risks that often serve only as disclaimers, the New Prospectus Regulation and related ESMA Guidelines require that the risk factors be limited to those which are material and specific to the issuer and the securities being offered or admitted to trading. The relevant risks are now required to be described adequately, organised by categories, and those considered most critical by the issuer should be presented first. The main reason for organising the description of risk factors according to these new rules is to present the information contained in a prospectus in an easily analysable, concise and comprehensible form. Whereas the above does not appear to constitute a great challenge for issuers, the need to assess (and eventually quantify) the impact of each risk on the issuer seems to be harder to address, notably because the information available may not be sufficiently reliable to be included in a formal document such as a prospectus. The New Prospectus Regulation and related ESMA Guidelines admit the use of a qualitative scale of low, medium or high, and precedents so far have shown that issuers tend to prefer this alternative.

Also of importance are the new rules in respect of advertisements, particularly the relevant required content. The word ‘advertisement’ is now required to be prominently included in any advertisements disseminated to potential retail investors, and legal disclaimers are required to include statements and recommendations to investors highlighting the need to read and consider the prospectus carefully before investing, rather than simply relying on the approval of a prospectus as a sign of endorsement of the securities being offered or admitted to trading. So far, these new rules have proven to be susceptible to being followed, although in some cases, notably television and radio advertisements or advertisements of more limited dimensions, the new rules have had an impact on the advertisement and its purpose.

The available experience shows that the changes introduced by the New Prospectus Regulation have been successfully handled by issuers and that complying with these new rules has neither discouraged the use of capital markets, nor affected timelines for the approval of a prospectus, notably in Portugal, where this responsibility falls on the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários), as was the case in the first new prospectus-compliant public offering targeting the retail market – the combination of subscription and exchange notes issue launched by Mota-Engil in October. Therefore, with the benefits of a renewed legal and regulatory framework and of an environment where low interest rates facilitate access to funding, 2020 is likely to follow in line with the current year, promising continued intense activity and diversity.

For more information, please contact:

Pedro Cassiano Santos (pictured, left)

Partner and head of the banking and finance practice

E: pcs@vda.pt

Hugo Moredo Santos (pictured, centre)

Banking and finance partner

T: +351 21 311 3366

E: hms@vda.pt

Benedita Aires (pictured, right)

Banking and finance partner

E: bla@vda.pt


Rua Dom Luís I, 28

1200-151 Lisbon



Sponsored briefing: Independent power projects in Africa

Sponsored briefing: Independent power projects in Africa

Miranda’s Nuno Cabeçadas (pictured, left) and Renato Almeida (pictured, right) discuss trends and developments in Angola and Mozambique

Throughout the world, one of the main goals of different governments and industry is to enhance the use of renewable energy. Africa, in general, is no exception, particularly Angola and Mozambique. In effect, in these two countries’ governments are working towards the promotion and acceleration of private and public investment in new renewable energy. As spelled out in the Angola Energy 2025 programme, one of the goals is to generate effective conditions of investment in new renewable energy, eliminating or dramatically reducing the distortion introduced by subsidies to fossil fuels, offering a suitable payback to investments, an appropriate mitigation of risks and a regulation that eases implementation and commits investors. Continue reading “Sponsored briefing: Independent power projects in Africa”