What is taking up most of your firm’s time right now? Which markets, which sectors?
As a firm, we have a presence in nearly 50 countries around the world, including South Africa, where we have over 100 lawyers. We have worked in almost every country on the continent. We operate from our South Africa office but also principally from London, Dubai, Washington, Beijing and Paris for Francophone Africa.
We’re seeing a lot of work in West Africa, on the solar side for example, and even on the hydro side in Mali. We’re seeing quite a lot of work in North and West Africa, and East Africa on the transport side. In East Africa we’re looking at more solar and in South
In East Africa we’re looking at more solar and in South Africa the markets are really uncertain, so there’s not a lot of projects going on, but they’re talking about nuclear. So we have a varied offering and different parts of the world are doing different things. I would say one interesting area is Morocco, since the country rejoined the African Union.
Are your clients drawn from the private sector, public sector or a mix of both?
It’s a mix of both. As a global firm, we have a lot of international clients and our clients range from the banks particularly on the funding side; we’ve done a lot of work for international contractors, but increasingly, for a range of reasons, we are working more closely with governments and development finance institutions (DFIs) – Proparco, Afrexim and clients like that.
We operate in Africa with a clear strategy and four key principles, which is that we want to understand Africa, we want to operate in it, invest in it and respect it. In order to respect it we have to listen and show our support through initiatives like capacity building and events in Africa such as the AFC Live.
The delivery of infrastructure is not happening as quickly as we might like. What’s holding it back?
I call them the three Cs. First cash – there’s a lack of dollars, particularly in areas like Nigeria and Angola which are heavily reliant on the oil price. You can’t get the money out of the country, and that is a fundamental barrier.
Then there’s corruption, you can’t get away from it, although the issue is improving across the continent in a number of ways, President Buhari has made it very clear it’s a priority of his to deal with that, which is good. There’s been a peaceful change of government in Ghana, which is seen positively by the markets.
The final C is certainty. Projects go for seven plus years, let’s say, and in that period of time you might have two or more different governments, or the oil price might disappear. The lack of certainty means people are reluctant to put money in on a long-term basis.
What is government’s role in all of this? Is it to step away and let private enterprise just get on with it?
I think no, the answer to that is it’s a partnership, it has to be a partnership, I think government stepping back and just letting everybody get on with it in Africa is not going to work. What government can do is to set up a clear policy structure. Government has to be clear; it has to have workable strategies that it then delivers. Capacity-building issues are understood by a lot of governments and they need to get help from the private sector in training and supporting people – that’s something Hogan Lovells does quite a lot of.
We’ve seen a number of sovereign downgrades of late. How does that affect investment in terms of accessing foreign capital?
There is no doubt that with the problems in the world at the moment, and particularly the political uncertainties, people are more focused on easier markets than a number of emerging markets and Africa is seen to be a difficult market. It takes patience, you need to understand your partners, and as I say, it’s complicated, but the World Bank have said you need $93bn a year for infrastructure development for the next 10 years. Without it, GDP will suffer and the supply chain won’t grow and millions of youth will remain unemployed, creating a volatile environment.
Has your firm been involved with any Chinese investors into Africa?
This is the most interesting and most complicated question, I would say. China is obviously in public perception the big investor, although I believe the US is actually the biggest investor into Africa when you factor in aid and development support, and increasingly you find interest from India as well, but obviously, China is the most prominent and the truth is they do come in, they do deals and they deliver. Transparency can be an issue.
People talk about Africa rising leading to Africa falling or at least standing still at the moment. But when you look at the political situation, you have the China slowdown and a number of other issues arising out of the oil and gas problems. I think this gives Africa an opportunity to stand up for itself and actually reach out and do deals – China is doing a lot, the US won’t want China to be taking over in Africa, and the US has a lot more interest in Africa than one might think.
There are new opportunities; people are interested in Africa, in different parts of Africa, whether it is the mining, industrial, services or the tech sectors and if Africa can get its act together on an individual country basis, and even better if Africa can start doing intra-African trade, that will massively increase its added-value supply chain. The combination of deals to be done with the rest of the world, deals to be done within Africa and those opportunities arising from intra-Africa trade will make a positive difference.
As you mentioned, the World Bank has said that Africa needs $93bn in infrastructure investment every year for the next 10 years. Would you say that’s attainable?
I think it is optimistic. All the DFIs, and all the governments are focused on delivering that but unless they do the things we’ve talked about it’s not going to happen, although you are seeing the mining market improving significantly, particularly the junior mining end. You’re also seeing oil prices picking up, albeit slightly, but currently the big focus in Africa is on diversification. Particularly in agri-business, there is a chance that more money will be available.
There is money in the world markets that is looking for opportunities and returns in Africa can be higher than you can get in the developed world. If governments can create the right frameworks then deals can be done. If Africa doesn’t stand up for itself when it has the opportunity to do so, then it is missing a huge opportunity to change its fortunes. The time for Africa to stand up is now.
Hogan Lovells is a major international law firm with a speciality in global infrastructure projects. Andrew Skipper heads the Africa division within the practice.
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