The cessation of war and abundance of rich natural resources have oiled the wheels of recovery in Angola and Mozambique and are making them attractive to Portuguese law firms.
The Portuguese-speaking nations of the world also happen to be some of the most attractive to investors. And right now none is more attractive than the African nations of Angola and Mozambique, which have both been on an incredible journey over the past 10 years, turning from war-ravaged, desperately poor nations into some of fastest-growing economies in the world.
There is still huge poverty in both countries, but Angola has seen its prosperity rocket from its massive oil production. Such is its output, the country’s ruling party signed a deal with China that saw billions of dollars worth of loans make their way into the country in return for oil and the proviso that 70 per cent of all building projects are awarded to Chinese companies. Angola is now China’s number-one source of oil.
The money that remains after the relevant people have taken a cut (Angola still suffers from widespread corruption) is going towards airports, roads, hospitals and housing as part of one of the world’s largest rebuilding projects.
Most of Portugal’s largest firms have links to the two countries, formal or otherwise, including PLMJ, Abreu Advogados and Vieira De Almeida. Barrocas Sarmento Neves has ties to Mozambique, as does Raposo Bernardo.
“Africa is a very special environment. Angola had war for 40 years up until 1998 and its infrastructure was almost utterly destroyed. If you take a country in that state then add the greatest oil output in the world, you have an explosive mix,” says Jorge de Brito Pereira, a partner at PLMJ and head of the firm’s Angola practice, who believes the country’s capital Luanda has as exciting a market as found anywhere in the world.
De Brito Pereira opened the firm’s Angola office four years ago and oversees PLMJ’s new office in Mozambique, which opened in January this year. PLMJ also has access to around 70 lawyers working in Africa for the firm.
“It’s hard for people to imagine a country that needs everything to be done,” he says. “Roads need to be built, the internet doesn’t work, there are only three hotels in Luanda. These economies are being rebuilt.”
The economic gloom being felt in Europe and the US is not touching Angola. Thousands of people are entering the country to work every week and, even with the fluctuating oil price, there is lots of investment to go around.
“The economy is booming,” says de Brito Pereira. “Last year Angola saw the largest growth in gross domestic product in the world. The state is not investing as much as it was before but foreign investment hasn’t stopped.”
PLMJ’s African offices have been built through partnerships with local firms and De Brito Pereira says he is seeing an increasing number of referrals from European firms that do not have a presence in the region.
He says: “Around 50 per cent of our clients are Portuguese with 40 per cent coming from the rest of the world, including a growing number from Brazil. I expect the country to see double-digit growth for the next five to 10 years – Angola’s becoming more and more important to PLMJ.”
Miranda Correia Amendoeira has offices across most of the Portuguese-speaking former colonies including three in Angola and others in Mozambique, Equatorial Guinea, Guinea Bissau, Cape Verde and São Tomé e Principe.
The firm’s managing partner Rui Amendoeira says that although there are exciting opportunities in the region, the firm has been hit by the economic downturn’s effect on African nations. A quarter of the firm’s lawyers are based in Africa and the continent accounts for roughly 60 per cent of its turnover.
The drop in oil prices has been the biggest drag for Miranda, crashing over six months from $150 (£102) per barrel to just $40 (£27) per barrel and changing the overall prosperity of oil-dependent Angola and Equatorial Guinea.
“If we reach the end of 2009 with exactly the same structure and with no layoffs then that will be a good result,” says Amendoeira. “We’re being more cautious about expanding into new areas and projecting zero per cent growth for 2009.”
The firm’s seven partners in the region look after clients such as Chevron, ExxonMobil, Shell, ENI, Absa/Barclays Bank, De Beers, BHP Billiton, Baker Hughes and Halliburton.
Amendoeira adds: “For Angola and Equatorial Guinea, whether the Dow Jones is down or up is irrelevant. They are linked but these nations are oil-dependent and if the price continues to rise then that will attract new investment into the region.”
Oil may not be its biggest asset, but Mozambique has also prospered as one of the new-look African nations. Financial services, tourism, energy, real estate and IT have attracted European investment and made the country one for Portuguese law firms to focus on.
“We’re very optimistic about Mozambique,” enthuses De Brito Pereira. ”Especially because of the relations between Portugal, Brazil, Angola and Mozambique [where PLMJ has offices]. It’s a quieter economy than Angola but it’s growing and has increasing investment from European countries and South Africa. It’s an interesting market.”
The two countries are also interesting to Raposo Bernardo. The firm has five offices in the continent including in Angola, Mozambique, Cape Verde, Guinea Bissau and São Tomé, staffed by seven partners and 20 lawyers.
Its chief financial officer João Brito Mendes says the troubled economies of the West are a long way from the two emerging markets.
“Since the end of last year, we felt an increase in work, because many companies in Europe, the US and Middle East felt a downturn in their markets, so they looked for an opportunity abroad, especially in Angola and Mozambique and other Anglophone African countries,” Brito Mendes confirms.
The firm’s best-performing African practices are, unsurprisingly, project finance, oil and gas, infrastructures, real estate and construction, with the rest of the instructions coming from banking, insurance, mining, governmental advice, transports and logistics.
Nothing unusual there, but more traditional advice is increasingly required as the burst of money leads to more corporate transactions, often between European investors in the region.
Brito Mendes adds that the emerging practice areas in the last few years have been banking, insurance, project finance and distribution. “The initial investment behind the developments produces more stable and common instructions such as joint ventures, tax planning, international contracts, arbitration, commercial, corporate and finance.
“The instructions are starting to enlarge to countries that, very recently, didn’t have activity in Angola or Mozambique. In Angola, we notice the same investors from the UK, US, Portugal and China. But we’re seeing instructions from companies such as Brazil, Russia, Germany, Middle East, Spain and France of greater dimension and frequency. The strongest sectors are oil and gas, projects, real estate and finance.”
With links dating back 600 years, the Portuguese-speaking nations of the world span the globe and form a unique culture of their own.
Added together, the Portuguese language encompasses four continents and 238 million people.
Such are the ties between the nations that the Community of Portuguese Language Countries (CPLC) was formed in Lisbon in 1996, made up of seven countries: Portugal; former South American colony Brazil; and five former colonies in Africa – Angola, Cape Verde, Guinea-Bissau, Mozambique, and São Tomé and Príncipe. East Timor joined the community in 2002 after gaining independence.
The aims of the CLPC are to foster better cooperation between the nations by improving the health, prosperity and stability in the member states. The involvement of the CPLC has already helped to solve coups in São Tomé and Príncipe and Guinea-Bissau.
Initiatives include many charity HIV and Aids programmes designed to help the African member states, a Centre for the Development of Entrepreneurial Skills being established in Luanda and a Centre for the Development of Public Administration, currently being established in Maputo, Mozambique.
Countries interested in joining include Andorra, Macau, Malacca, Goa, Indonesia, Croatia, Romania, Morocco, Philippines, Galicia and Ukraine.
In 2005, during a meeting in the Angolan city of Luanda (the host city for the next summit) ministers of culture of the eight countries declared the 5 May as the Lusophone Culture Day (Dia da Cultura Lusófona in Portuguese).