34 The Lawyer | 3 September 2012

Africa

Special reportSpecial report

Joanne Harris

The story of Angola and Mozam-bique is one of colonisation, civil warand recovery – and in the last part ofthat story, lawyers are becoming in-creasingly important.

The two countries were colonisedby the Portuguese in the 16th and17th centuries and, despite their in-dependence, the cultural legacy ofcenturies of colonisation lives on.

Most of Portugal’s corporate lawfirms have developed close associa-tions with local practices in one orboth countries, but the opportunitiesfor growth in Angola and Mozam-bique are now being eyed by a widerrange of countries.

Investors from the US, UK, Braziland China are among those lookingfor projects to put their money into,while the revenues gener ated by bothcountries’ rich natural resources arestarting to flow outwards. Last year,Angolan companies began takingstakes in Portugal’s struggling privatesector, for example.

ResourcefulThe main source of work for lawyers,local and foreign, is in energy andnatural resources. All the major oiland gas companies are already pres-ent and keen to expand. The biggestdeal in both countries in the pastthree years, according to ThomsonReuters data, was the $1.3bn (£820m)purchase of a stake in an offshore oilexploration block by Angolan state-owned company Sonangol, whichcompleted in December 2009.

The revenues from oil are givingrise to more work. In Angola, the rul-ing MPLA party has invested billionsof dollars in infrastructure and,ahead of elections at the end of Au-gust, pledged even more. The coun-try was in ruins at the end of the destructive civil war that ended in2002 and rebuilding has been crucialover the past decade.

“The market in Angola has, to acertain extent, been affected by theworld financial crisis – but only to acertain extent,” explains Rui Amen-doiera, managing partner at Por-

War and peaceAngola and Mozambique, both once riven by civil war, are now growing fast,although they still face challenges. Lawyers are key to their reconstruction

In brief

There is enormous potential for growth and investment inAngola and Mozambique, butmaking a success of practising in these predominantlyPortuguese-speaking African nations is no easy task for lawyers, whetherdomestic or international.

“If you’re notlegallyincorporated, it’s impossible to send profitsoutside Angola”Renata Valenti

Mozambique is 10 years ahead of Angola in terms of post-civil war reconstruction

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tuguese firm Miranda Correia Amen-doeira & Associados, which has along-standing relationship with An-golan firm Fátima Freitas Advoga-dos. “Angola is very much dependenton oil prices and these have beenhigh in recent years.

“There’s a lot of activity going on interms of infrastructure development.There was a big effort on the part ofthe government to rebuild the coun-try. You see projects and buildingwork everywhere, mostly funded bythe government with oil revenues.”

Fernando Faria de Bastos, a part-ner at Angolan firm FBL Advogados,

says the government has been imple-menting a raft of legislation to im-prove the business environment.

“The ‘legislative boom’ goes handin hand with rising private invest-ment – both foreign and national – inthe country, due to the fact that An-gola is one of the few countries thathas been showing a systematic eco-nomic growth,” he adds.

Renata Valenti, a lawyer at Gabi-nete Legale Angola (GLA), says theriches of Angola have been spottedby foreign companies, who are nowlooking for the best way to makemoney from the country.

“Many of our clients are foreigncompanies incorporating or wishingto incorporate in Angola,” she says,explaining that by incorporating inAngola, doing business becomes eas-ier, particularly in ensuring profitscan be shared with the global parent.

“If you’re not legally incorporated,it’s impossible to send profits outsideAngola,” Valenti adds.

Outside inInvestment in infrastructure is alsocoming from foreign sources. ChinaDevelopment Bank recently investedhundreds of millions of dollars in twoinfrastructure projects in Angola, including a $400m (£253m) creditline for the Mocamedes Railway.

This investment, say lawyers, hasmade a visible difference in Angola,increasing the number of schools,hospitals, roads and railways, andmaking getting about its 1,246,700sqkm area much easier.

Similar strides in infrastructurehave been seen in Mozambique. Thecountry is 10 years ahead of Angola interms of post-civil war reconstruc-tion, but Mozambican lawyers alsoreport that natural resources, energyand infrastructure make up the bulkof their practices.

Mining is an area that is seeing par-ticular growth right now.

“In many key areas of interest, withmining, oil and gas in the front row,changes to legislation are being look -ed at and amendments are expectedto be approved in the near future,” ex-plains Fabricia Almeida Henriques, asenior associate at SCAN Advogados& Consultores, which is allied withPortugal’s Morais Leitão Galvão TelesSoares da Silva (MLGTS).

“Recently, the government launch -ed a public tender to award mining licences to companies that are inter-ested in exploring minerals of allsorts in Mozambique,” says JosinaCorreia, a senior associate at Gabi-nete Legal Moçambique (GLM).

The tender is new, but mining hasbeen going on in Mozambique for

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some time. After the Block 32 deal inAngola, the next two largest M&Atransactions of the past three years inthese countries were the $800m dealbetween Australian mining companyRiversdale Mining and Chinese steelgiant Wuhan Iron and Steel Corpor -ation (Wisco) in June 2010, and theJuly 2012 announcement by miningcompany Anglo American that it wasbuying a $555m stake in Mozambicancoal mine Minas de Revuboè.

Riversdale is planning to beginproduction at the Zambeze coalmine in 2014, while Anglo Americanis look ing to recoup its investmentthrough the development of the Revuboè mine, which could produceup to 9 million tonnes of coaleach year.

It is this sort of opportunity that is bringing in investors from all overthe world. José Manuel Caldeira,managing partner of Mozambiquefirm SAL & Caldeira, says the firm’s“mainly foreign” clientele has be-come more international in the pastfew years.

“There has been a shift in the senseof a much broader array of investorsand clients than the traditional threeor four countries that were morelinked to Mozambique,” agrees CoutoGraça & Associados managing part-ner Pedro Couto.

So while Brazilian, Portuguese andSouth African companies continue toinvest, China, the US and UK are nowalso key investment partners for bothAngola and Mozambique.

Cuatrecasas Gonçalves Pereira associate Nuno Furtado Mendonça,who is based in Angola at the firm’s associate office, adds that they also see a significant number of

instructions from Spanish clients.Broadening sources of work have

made building international rela-tionships key for local firms in bothAngola and Mozambique. However,breaking in is tough for foreigners because of restrictions imposed bylocal regulators.

In both countries, foreign firms areunable to set up their own offices andmust work in alliance or associationwith a local practice. It is slightly eas-ier in Angola, where several firms areessentially integrated with their localpartners despite remaining separatefor regulatory reasons.

SNR Denton works in Angola andMozambique through an associationwith MC&A, a Portuguese firm set upto provide a network of officesaround the world. In Angola, saysfounder Vitor Marques da Cruz, MotaVeiga Advogados operates essentiallyas a local office of MC&A.

“After some unsuccessful assoc -iations with local firms, we createdour own firm there and have Angolanlawyers – we realised that assoc -iations in Angola just don’t work,”claims Marques da Cruz.

Limited interestIn Mozambique, the interpretation ofthe bar association’s restrictions onforeign lawyers has given rise toheated debate.

Couto chaired the bar’s board,which determined that the rulesshould restrict the employment offoreign lawyers by local firms. Hesays the official position of the barwas that foreign lawyers should notbe prohibited, but restricted.

“I don’t think it should be an openmarket because what we see with

some international firms is a ‘take -over’ approach, but to deny that weneed people with experience andskills in the areas we’re heavily ex-posed to would be crazy,” he says.

“There should be a limit, thereshould be rules and regulations, butit shouldn’t be prohibited.”

Caldeira is in favour of a moreopen market.

“That’s one of the issues thatshould be resolved,” he says. “We’retrying to influence reform to changethis, but it’s not easy.”

Caldeira blames the situation onthe relative immaturity of theMozambican market.

“The majority of the members ofthe bar are single attorneys and theyfeel this is a type of unfair competi-tion,” he says. “They feel that if thebar opened up, they’d be left with nowork or not enough work.”

He adds that along with other corporate firms, SAL & Caldeira islobbying for the restrictions to belifted, including writing to the attorney general’s office, and hopes it

will become easier for firms to em-ploy foreigners and benefit directlyfrom their skills and experience.

Critical linksIn the meantime, the alliances andassociations with foreign firms inboth countries are crucial for localfirms. Neither country has a largepool of lawyers – estimates for bothcountries put the number of bar association members at around 800– and few have the depth of experi-ence with large cross-border trans -actions that can easily be found in Europe or the US.

“Lawyers tend to be general and doa bit of everything – it’s difficult to bea specialist lawyer, but we’re trying,”notes Catarina Levy Osório, a partnerat Angola Legal Circle Advogados,which has an alliance with MLGTS.

“The local lawyers need to get a bitmore sophisticated because the mar-ket is different now,” adds Valenti.

“Most of them don’t speak anyother language than Portuguese.They’re used to working with thecourts and not with big firms. Part-nerships between foreign firms andlocal law firms can help.”

She says the association betweenGLA and Portuguese firm PLMJ hasbeen “profitable”, both for the firmand clients.

Local practices say the benefits oftheir alliances with internationalfirms are seen on several levels. Per-haps surprisingly, winning clients isnot top of this list.

“Mostly, clients come to us andthen we use them as a back-up resource,” says Caldeira of his firm’salliances with SRS Abogados in Por-tugal and DLA Piper.

36 The Lawyer | 3 September 2012

Africa

Special report

History

Pre-15th century: Angola andMozambique occupied by huntersand gatherers

1482: Portuguese arrive in theKingdom of the Congo

1498: Vasco da Gama lands on thecoast of modern-day Mozambique

1575: Portuguese colony of Angola founded

1600s: Portugal occupiesMozambique

1641: Dutch occupy Luanda,taking control from Portugal

1974: Coup d’etat in Portugaloverthrows regime run by Marcelo

Caetano and previously by Antóniode Oliveira Salazar following yearsof guerilla warfare in the colonies

1975: Colonies including Angolaand Mozambique grantedindependence

1990: After years of conflict,Mozambique adopts constitution

October 1992: Mozambicangovernment and rebels sign RomeGeneral Peace Accords. UNoversees transition to elections

2002: Angolan militarycommanders sign ceasefireagreement after 27 years of civil war

“Recently thegovernmentlaunched a publictender to awardmining licences”Josina Correia

Henriques: expects to see law changes,

especially affecting mining, oil and gas

GDP (2011)

$101bnAnnual inflation (July 2012)

10%Population (2012)

20.6mLife expectancy at birth

51Unemployment rate (2012)

26%Source: World Bank

Angola: key figures

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38 The Lawyer | 3 September 2012

Special report

Referrals go both ways, but localfirms are adamant that they arenot only recipients, but also gener -ators of work.

However, they do recognise thatthey need the support of their inter-national partners, not just in terms ofresource on big deals but also when itcomes to training and developmentfor lawyers.

“The firms that have partnershipswith law firms in other countries,such as ours in Portugal, have thesupport that’s required to provideservices to these mega-projects,”points out Correia.

“As a firm, we learn from largefirms and adopt their structures, sys-tems and ways of working,” saysCouto. “Plus we want to put ourbrand out there and that’s the bestway to do it – piggybacking on thenetworks of these large firms.

“It is quite challenging for Angolanfirms to have the opportunity to workwith experienced lawyers from otherjurisdictions and learn how to con-tinue to improve their performance,to bring Angolan law practice up tointernational standards,” adds Fariade Bastos, whose firm is in an alliancewith Abreu Advogados in Portugal.

“For these firms, such alliancesare attractive because they allowfor a growth of resources and ahigher level of specialisation,” saysAlmeida Henriques.

“From the investor’s standpoint,the possibility of resorting to inter -national firms strengthens confid -ence to invest in an unknown marketin which practice tends to distance itself from theory.”

Language barriersJust like other international ven-tures, African firms are aiming topresent a seamless offering to theirclients, despite the differences andchallenges they face in their domes-tic markets.

“The goal is the same – to giveclients the most cost-efficient servicepossible,” adds Marques da Cruz.

One of the main challenges withthe arrival of a broader range of inter-

national clients is language. Portu -guese is the official language of bothMozambique and Angola and is spoken widely, although not univer-sally. English is much less commonand many lawyers say the lack of pro-fessionals with fluent English skills isan issue. While this is not a problemfor the Portuguese firms or their localpartners, it could be for other inter-national firms looking to break in.

“Language is a big barrier – veryfew people speak English and thelanguage of business is Portuguese,”says Amendoeira.

Marques da Cruz agrees.“Mozambicans are much more

flexible because they’re used to hav-ing close relationships with SouthAfrica, but when it comes to lawyersit’s difficult to find a young one whospeaks English,” he says.

South Africa can generate ten-sions, however, says Miranda’s part-ner in charge of Mozambique, DiogoXavier da Cunha.

“More African firms are trying todo work in Mozambique with mini-mal intervention from local firmsand that really annoys Mozambicanlawyers,” he says. “They have a rightto be mad about it.”

Another issue affecting domesticfirms is the increase in the in-housesector. Companies coming to Angolaand Mozambique to invest initiallybrought their own lawyers from over-seas but, recognising the need forlocal knowledge, are now on the huntfor domestic in-housers. In-house

capacity remains low, but companiesare able to offer better remunerationpackages and so are attractingsome of the best of the new genera-tion of lawyers.

“Companies are competing for ourbest people, there’s no doubt,” Coutoconfirms. “The number of in-houselawyers has doubled – probably tri -pled – in recent years.

“Previously there was a scenariowhereby companies would bring intheir own lawyers from outside. Nowwe’re faced with our clients poachingour best lawyers.”

Couto’s firm has responded by try-ing to work closely with clients todemonstrate the advantages of usingexternal counsel to back up what in-house departments are doing.

The general improvement in qual-ity of work and the growth in thescale and complexity of transactionsmeans law is becoming a more at-tractive career choice for young people in both countries. Althoughthere are still too few lawyers on themarket, the number seeking jobs isreportedly on the increase.

“Law is becoming attractive,” con-cludes Osório.

Also on the up is the number of in-ternational firms trying to get afoothold in Angola and Mozambique.With work in energy, natural re-sources and infrastructure set to continue for the foreseeable future,it seems likely that both countrieswill remain high on the target list ofinternational clients and theirlawyers, despite the challenges in-herent in entering into such fast-moving markets.

GDP (2011)

$12.8bnAnnual inflation (July 2012)

1.5%Population (2011)

24mLife expectancy at birth

52Unemployment rate (2012)

26%Source: World Bank, Bank of Mozambique

Mozambique: key figures

“It’s difficult to be a specialistlawyer, but we’re trying” Catarina LevyOsório

Energy and power

Materials

Industrials

$1.42bn

$1.36bn

$444m

$227m$106mReal

estate

Financials

Top 10 Angola/Mozambique M&A deals since 2009, by target industry

Africa

Source: Thomson Reuters. Infographic: The Lawyer

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The Lawyer | 3 September 2012 39

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