Guest message from Stefano Simontacchi, President of BonelliErede
Africa is consistently proving to be an attractive market and is rapidly becoming one of the major players in the global economy. Indeed, more and more European multinationals are looking for investment opportunities within its borders – and naturally, law firms are following suit.
But what is driving this trend? And most importantly, how can law firms successfully expand in the market?
Africa – the call for European companies
First, we need to understand the main driver of this “rush” to the continent.
The appetite of European companies for Africa is fueled by several factors, the main one being the continent’s growth prospects and its privileged relationship with Europe.
Africa’s growth is clear: International Monetary Fund statistics confirm that the continent has the highest growth rate in the world and the most countries growing at more than 5% per year.
This growth is certainly propelled by its young and growing population and attractive business environment – which includes the continued introduction of reforms by governments to attract and protect international investment, including tax incentives, free zones with expedited licensing and permit regimes, and favorable trade agreements.
The privileged relationship with Europe stems from the geographical proximity and the linguistic and cultural affinities between the two continents.
Moreover, Europe and Africa have deep-rooted governmental ties, which is a crucial factor: the EU is responsible for more than half of all official development assistance to Africa, which makes it the continent’s leading partner in this area.
Given this favorable business environment, many European investors across multiple sectors have opened factories, set up joint ventures, acquired companies and started distributing their products and services in Africa over the past two decades.
European law firms engage with their clients
The growth of commercial ties with Africa has led to sophisticated legal needs for European investors. Understandably, European companies have always been drawn to the opportunity to find work – whether transactional or general assistance – to support existing clients with their growth plans in Africa.
And with the EU continuing to inject abundant funds into African countries – particularly those that commit to introducing institutional reforms and capacities to boost international relations and investment – the legal needs of European investors are changing. constantly.
At the same time, African governments have started to seek high-level legal advisers to support their growth, which has only further encouraged European law firms to invest and engage in the continent.
Law firms have two choices when it comes to meeting the needs of their clients: try to go it alone or team up with a local firm. Historically, French law firms have chosen to follow their clients in French-speaking Africa (the northwest of the continent), and Portuguese firms have focused on Portuguese-speaking Africa (for example Angola and Mozambique in sub-Saharan Africa). -Saharan).
Some have opened offices in these regions by capitalizing on shared cultural affinities; others simply preferred to join forces with a local firm. This last tactic is the most common with Dutch and Italian companies.
A tailor-made strategy is essential for a successful market entry
There is no doubt that various reasons make Africa attractive to European law firms looking to grow. But to successfully seize these opportunities, it is crucial to understand how to best shape your strategy.
The main task when approaching a new country in Africa should be to familiarize yourself with the local regulatory framework to ensure that any step into the new market is fully compliant with local laws.
Beyond that, as a general principle, the approach of any company seeking to develop in Africa should be centered on a desire to bring added value to local communities by becoming a strategic hub capable of helping companies to seize, support and secure the investments there and to maximize the value. for international investors, local businesses and governments.
The aim should be to play a key role in Africa’s future legal landscape, including advising African governments on legal reform in the energy, banking and corporate sectors to further stimulate investment strangers.
For this, it is important to ensure that the operational establishment in a new country is based on genuine cooperation – which may very well lead to a formal rapprochement – with a local partner law firm sharing similar values and vision. . and is truly committed to creating a lasting partnership.
Having lawyers with in-depth knowledge of the European firm on the ground is fundamental to ensuring that international capabilities are fully merged with the local expertise of the region’s top professionals. This is the only way to meet the needs of international and local customers.