Jonathan Lang, Head Bowman Gilfillan Africa Group: The challenges of investing in Africa
“It is amazing how many South African and foreign companies are entering the rest of Africa at the moment, some without taking legal advice prior to, or after, their arrival. Some investors invest millions, buying a diamond mine in the DRC for example, but are unfortunately often then hit with unforeseen problems and need to come to us for legal help ,” says Jonathan Lang, head of the Bowman Gilfillan Africa Group (BGAG), one of the leading law firms in South Africa. “You have to be careful when doing business in Africa as it runs on a timeframe, language and way of its own and it makes all the difference to have expert legal advice at the outset, as litigating in the courts of some African countries is very challenging.
Amidst all the excitement about the enormous growth opportunities on the world’s least developing continent, Lang’s tone is cautious. “There really still is a big advantage to being based in South Africa and having this as a base for expansion into Africa. Here we have a combination of a first and third world, which can be great for business. For example, a company like Shoprite has done it brilliantly, with developed world management and a developing world business model which is exportable into Africa.”
On the rest of the continent, or at least in the small economies south of the Sahara, more and more people talk about the rise of Africa with reason. Currently home to seven out of ten of the world’s fastest growing economies, this exciting continent’s outlook is promising and offers great opportunity. But although a healthy optimism is great, it doesn’t make the challenges disappear and to overcome these, it is often imperative that the right partner is in place before venturing further. “There can be more political risk, often on a high level, which lands on the plate of CFOs. Other issues that can be damaging range from possible violence to limited currency convertibility, defaulting on contracts and expropriation,” says Lang. “Getting decent, sound advice can be a challenge and you will need a good local partner.”
Another stumbling block is corruption, Lang explains. “It is a known fact that corruption is prevalent in some African countries and again, having an appropriate partner dramatically reduces risk when it comes to this.” Although the law specialist does believe Africa is slowly moving in the right direction, a number of key African economies still rank low down Transparency International’s corruption index. “But at the same time there is no denying the opportunities and it is also our vision to build a group with offices in eight to twelve African countries in the medium term.”
Founded 100 years ago in the gold fields of Johannesburg, Bowman Gilfillan is a premier South African-based corporate and commercial law firm. The company has offices in Cape Town, Johannesburg, Kenya, Tanzania and Uganda and is indeed rapidly expanding into the rest of Africa. “We’re now also looking to expand into Nigeria, Ghana, Zimbabwe, Zambia, Angola, Mozambique, Democratic Republic of Congo and Ethiopia,” Lang revealed. “We serve both South African and multinational clients with our 120 partners and more than 300 lawyers.”
“Being in Africa puts us in a very strong position,” says Lang. “In African terms we are much bigger than most other firms – having 6 or 8 partners is often regarded as quite big in the rest of the continent.” Over the last 7 or 8 years, Bowman Gilfillan’s expansion into the continent has accelerated, often in the slipstream of major clients like Standard Bank. “South Africa will continue to be the most significant country for us to be present in, with our main offices in Johannesburg and Cape Town.”
One of the ways Lang wants to grow the footprint of his firm is by merging with small, local law firms with good credentials. “They can be good lawyers, but they don’t often know a lot about managing business and growing a market. We give them efficiently run offices on all levels where, for example, the air-conditioning actually works; you can’t imagine how important that sometimes is. A local firm like that also attracts the best local talent if they become part of BGAG, because it provides them with a good career path and a chance of international exposure.” According to Lang, most competitors prefer to work with foreign companies in a network. “We believe we need to be financially integrated, that is a distinction. It also allows those companies to mature. Often you will find 2 lawyers set up an office, hire another lawyer, and then after a few years the third lawyer wants to become a partner. He does not get it so he starts an office for himself and the whole process starts from the beginning. There is constant fragmentation, which means firms don’t develop and therefore can’t specialize.” Just as in finance, the lack of skills is still a problem in many African countries, Lang confesses. “There is greater depth to the skills set in South Africa, which allows people to specialize. The quality of legal service in the rest of Africa can be a challenge. The best lawyers are sometimes very learned – for example part-time academics, with very strong technical knowledge but less appreciation of international commercial agreements.” Nevertheless BGAG’s Kenya office has quickly grown from two partners that came from local firms to a thriving hub of 70 people. “We like to hire local people or from the diaspora overseas. This approach is starting to bear fruit. It is essential to attract top quality people. Luckily, our brand helps.”
Bowman Gilfillan has recently worked on some of the most eye-catching and complex M&A deals in South Africa. “That includes the first successful hostile takeover of a South Africa company, Free World Coatings, by a foreign pursuer, the Japanese firm Kansai,” says Lang. The firm is a member of the global network of commercial and corporate law attorneys Lex Mundi, which gives it access to more than 160 member firms globally. Bowman Gilfillan’s clients include multinational corporations and international finance houses, investment banks, industrial conglomerates, financial institutions, governments and state authorities.
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