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