Lusophone Africa e-Report 2014 | Page 3

SpECial FoCUS: lUSophonE aFRiCa Open for business Angola, Mozambique and a number of other African nations are attempting to take steps to attract investors as they struggle to realise their full potential. Which African countries do international investors currently have in their sights? There are six Portuguese-speaking nations on the list: Angola, Mozambique, Guinea-Bissau, Equatorial Guinea, Cape Verde, and São Tomé and Príncipe. Any African investment usually needs a key resource to attract business and, it would seem, energy remains the priority for the first four countries. Indeed, Angola and Mozambique have already established themselves as emerging powers in the energy market. Angola is Africa’s second-largest petroleum producer (after Nigeria), which has helped push GDP to $114.1bn, according to the World Bank. Mozambique, with a relatively decent GDP ($1.827bn), has grown considerably thanks to discoveries of natural gas. It is no surprise then that these two countries have been the main choices for international investment. For instance, Sinopec has invested $6bn in Angolan oil discovery, while Anadarko has its flagship $30bn LNG scheme in Mozambique. However, interest is growing in GuineaBissau and Equatorial Guinea. Both boast rich natural resources yet have underdeveloped projects. In Guinea-Bissau, aside from some extracting and small alluvial gold mining operations, mineral and oil resources have not been developed because political instability is rife. Equatorial Guinea is the eighth-largest crude oil reserve holder in Sub-Saharan Africa – oil contributes 99 percent of its export earnings. Despite being substantially less advanced than their larger counterparts, both Angola and Mozambique provide inspiration for how Guinea-Bissau and Equatorial Guinea can develop. “Mozambique’s natural resources have been the main interest of foreign investors in mining, oil, natural gas, renewable energy and hydroelectricity,” observes Paula Duarte Rocha, a Partner with MLC Advogados in Maputo. “The mining and energy sectors – coal, natural gas and possibly oil – are expected to be major economic drivers over the next decade, boosting the economy and investment flows in related and supporting industries.” But Guinea-Bissau and Equatorial Guinea www.iberianlawyer.com have yet to secure the investment or sustained programmes that foster growth. It is the mega-projects that spur on the consequential investments in much-needed infrastructure (so urgently needed in post-independence Portuguese colonies), such as railways, ports, roads, and other necessities for workers, like housing, schools, hospitals and hotels. Natural resources are not in abundance everywhere. The island nations of Cape Verde and São Tomé, for instance, have to find another platform to launch wider economic growth. That platform is tourism. International hotel firms, including Iberostar and Riu, are already in Cape Verde with more on the way, including luxury chain Viceroy Hotel Group. João Miguel Medina, a Senior Associate at NDR in Cape Verde says the islands have huge potential for investment, especially in roads, airports, public transport, energy and agriculture: “In Cape Verde, tourism can be the key area that everything grows from. We are meant to have another four major hotel complexes by 2017, owned mostly by foreign investors. You cannot have five-star hotels without decent infrastructure.” Reckless repatriation Lawyers point out that any platform for investment can only be built on political, economic and regulatory stability. Investors are wary that uncertainty disincentives foreign investors – the perception of a country and its capacity for stable business in the future is the priority. “The assessment of political and regulatory risks, always a factor when considering investments in Africa, also varies widely depending on which particular country you are considering,” claims Rui Mayer from Cuatrecasas Gonçalves Pereira. “For instance, from a political point of view, Cape Verde could be considered a stable democracy of the Western European type, while the same qualification could hardly be assigned to Guinea-Bissau, which over the last few years has proved to be one of the most unstable countries of the region.” Political coups and reckless government repatriation have disastrous effects on investor confidence. The recent problems in jurisdictions like Central African Republic, South Sudan and Somalia underline the need for stability. March / April 2014 • IBERIAN LAWYER • 51