Since the turn of the millennium, Africa has been a hotbed for foreign investment activity. As China’s ‘Go Out’ investment policy hit full stride and western investors sought new, potential high-return ventures in which to place their capital, the prominence of Africa as an investment destination has burgeoned.
Over that period, net foreign direct investment (FDI) into Sub-Saharan Africa has increased more than eight-fold – rising from $7 billion USD in 2000 to over $56 billion in 2015, according to the World Bank. But as foreign investment grew exponentially over this period, the role of local players in facilitating those deals was extremely limited – from banking and finance, to legal, these were almost strictly the domain of foreign representatives.
‘A decade ago, it was almost unthinkable to carry out a major transaction or arbitration without a Magic Circle law firm taking the lead,’ explains Olatowun Candide-Johnson, general counsel at Total E&P – Nigeria.
‘At that time, the role of local law firms was more or less limited to completing questionnaires about national laws and regulations. Things have significantly evolved since then and many African lawyers and law firms have come of age.’
But as Africa’s economy has evolved, so too has the sophistication of legal services – with domestic lawyers and locally-domiciled firms taking an ever-increasing role in major transactions and business affairs across the region – a trend which is continuing today in the contemporary climate.
‘This is the most exciting period for thelegal market in Africa, as the African economy continues to grow. Local law firms have taken up the challenge to meet the demand for professional legal services in corporate Africa,’ says Achadu Attah, head of legal and company secretary at global energy and services company, Taleveras.
That sentiment was shared by major Western corporates operating on the other side of transactions too. Amol Prabhu, head of EMEA emerging markets banking legal at Barclays, explains that there was an evident shift in how legal services are procured for major deals in Africa.
‘The needle is shifting. For the types of deals that we do, I would say the local lawyers’ input on average is at least 30% and it can be much more than that, depending on if there are challenging local law issues on these transactions. However, rather than focus on the percentage, we want to have them weighing in with their views on calls – and that speaks to the talent; there is some seriously good talent coming through in Africa with some very smart individuals making a significant contribution on both local, regional and international deals,’ says Prabhu.
Input from local lawyers was previously relegated to the role of managing soft relationships and navigating the inherent complexities in the law of many African countries – whether it was external counsel advising or the in-house counsel staffing African-based subsidiaries of international companies.
One area which was oft-cited as previously being solely the domain of local talent was working through ‘grey areas’ and ‘tolerated practices’ in the law. Local expertise was required to offer advice in these areas where the law could be contradictory, unclear or even irrelevant – with counsel experienced in these areas able to offer the guiding information required to effectively assess risk.
‘It’s not just the law, it is also other relationships, such as with regulators which are becoming increasingly important. So having local lawyers who have that visibility, have that skillset and can facilitate those discussions which are wider than just purely “legal” are really important,’ explains Prabhu.
While these areas still require the advice of locally-trained and domiciled lawyers, the role they are now playing goes well beyond advice being offered within narrow scenarios and sets of circumstances.
‘Increasingly, clients are able to procure a wide array of legal services from local law firms with well-qualified, skilled and experienced lawyers. Regional and international alliances and networks are also on the rise creating a bigger pool of legal resources to draw from and at fairly reasonable cost,’ says Candide-Johnson.
The increasing sophistication at the upper levels of the profession was also having an impact on the development of the next generation of lawyers – both as in-house and external counsel.
‘I’m very positive about how the legal market in Africa is developing, because you are seeing more and more local law graduates coming through from good universities. Subsequently, you’re seeing more and more of those graduates going on to do further study abroad, and/or gaining meaningful work experience abroad and so it is a virtuous circle in that when they return, they enrich the local environment and provide their expertise effectively to the next generations. It is almost becoming a right of passage now to study locally, and then study and work abroad,’ says Prabhu.
The payoffs from the changing paths being taken by young lawyers, as well as the overall evolution of legal talent in the region, is evident not just in the quality of those coming through, but the quantity of top-flight talent, says Zukiswa Sithole, head of legal for private and investment banking at the Development Bank of Southern Africa.
‘I definitely do find that the quality of lawyers coming up is completely phenomenal. This can be informed by a number of things; the enthusiasm in these niche areas which are interesting and progressive, as it were, and the desire to immerse themselves and upskill themselves into such areas. I think the quality is really, really great and I don’t want to use the word improved, because, it’s not that the quality has never been great – it always has been great – but the number of people who fall into that phenomenal level of quality has expanded,’ she says.
An evolving talent pool
But while the legal talent pool across Sub-Saharan Africa is improving exponentially, on the in-house side in particular, finding candidates with the right mix of legal expertise and business nous is still proving a trying task for many.
‘I would say that probably the greatest challenge is finding people who combine the right level of legal know-how with commercial savvy,’ says Candide-Johnson.
‘Finding candidates with the right mix of legal expertise and business nous is still proving a trying task for many.’
‘Our internal clients want lawyers who can understand their business objectives, identify risks and propose legal, commercially orientated, solutions to avoid or mitigate them. The common challenge in recruiting legal talent to fill senior roles in-house therefore is finding a person who is a good fit for the company, and one that is able to combine detailed industry knowledge with a pragmatic approach to solving business challenges.’
But the major difference that in-house departments are now finding is the ability to source a significant quantity of those candidates locally. Finding that person to take on senior roles in-house commonly used to mean looking to Europe or the United States for external expertise – which is much less frequently the case today.
Sithole however adds that while the talent pool as a whole has reached a critical mass, there are still more specialised areas of the law which prove difficult for in-house legal teams to recruit and develop.
‘I think that probably the biggest challenge that we can put it down to in my experience, is that sometimes we are looking for people having experience in niche areas – and I say niche areas at least within the African continent. In these areas, the challenge we do face is that the available talent is much more limited in quantity.’
But that’s a situation she says has been improving over time and should continue to evolve, particularly with the marked efforts being made with transfer of skills between international and domestic lawyers.
‘Because there has been a lot of initiatives to make sure that effective skills transfer is there, people are much more willing to absorb those skills and learn from the people already there. That has been a major driver in the improving availability of talent in these more targeted areas of the law,’ explains Sithole.
As well as the skills transfer between international and local counsel across Africa, one of the biggest positive developments in recent years, says Sithole, is the increasing collegiality between in-house counsel – working together for the development of the market as a whole.
‘There’s been a lot of interaction among the lawyers in the African region happening on that front, and I think it’s helped immensely with the creation and the upskilling of lawyers who are not just boxed into one jurisdiction and become one dimensional; but the creation of lawyers who have knowledge which is widespread and far-reaching.’
Recruitment and retention
While sourcing talent in Africa has become an increasingly achievable task of late, retaining those people once they have been brought onboard is still proving a challenge for many.
‘Retention rates tend to vary from one sector of the economy to another. In the oil and gas industry in Nigeria, we have had very high retention rates. The norm so far is a 20-35 year career. However, in sectors like banking, the churn rate is much higher and it tends to be more difficult to retain talent. There’s a premium on experienced hires and therefore vertical mobility provides a constant incentive for talent to move in those sectors,’ explains Candide-Johnson.
‘A large number of companies in Africa have incorporated processes and systems that conform to international best practice. These companies have a good corporate governance culture that are similar to multinationals in any part of the developed world,’ says Attah.
Those principles proved attractive for foreign talent in the past, but are now being used to increase the attractiveness of domestic companies – both to local hires and returning talent from overseas – as well as expats.
‘These companies have succeeded in providing the right environment for expats to thrive. They have been successful in embracing the right business ethics as well as providing expats with attractive remuneration,’ added Attah.
Still, there are lingering issues with expats around their perception of what moving to Africa might entail and the lifestyle available, as well as a turbulent geopolitical environment in many of the countries.
‘Africa is such a diverse continent which is relatively unexplored compared to other continents. Therefore the lack of positive information on the one hand and the abundance of bad news like terrorism, kidnapping and corruption tends to create apprehension for most foreigners when contemplating a move to the continent,’ says Candide-Johnson.
But while the need for expat talent is declining across the continent, there remains an important role for them to play in terms of skill transfer and continuing development of the local talent pool, even if not nearly to the same extent as in previous years.
‘Although, there are more than sufficient human resources in the area of legal counsels and senior executives available in Africa, collaboration between locals and their western counterparts will provide a veritable avenue for capacity development in Africa,’ says Attah.
‘There were lingering issues with expats around their perception of what moving to Africa would entail.’
‘The world economy is currently experiencing a downturn and Africa appears to be the region where this problem is less severe. It is not wrong to say that the region still provides opportunities for expats who are prepared to partner and work with local professionals in developing the region. Many expats are appreciative of this and they have remained to perform their role in developing this region.’
But stocks of top-end talent are being bolstered outside of the traditional sources offshore, say our interviewees, who report anecdotally that they are seeing increasing numbers of domestic talent returning to Africa after spending time honing their skills and practising internationally.
‘Despite the contraction in the growth of many African economies, the African region remains one of the fastest growing regions in the world. It is therefore not surprising that many Africans are returning to play their part in the development of the region. Returnees used to be the exception some years ago,’ says Candide-Johnson.
Attracting those people back was fast becoming a simpler proposition, as the compensation and lifestyle achievable back in Africa was rising to levels comparable to developed western countries. But, says Prabhu, there’s more than just attractive opportunities from a fiscal perspective drawing people over, but rather, a chance to make a meaningful difference to the prospects and future prosperity of the region which is proving an attractive proposition for many.
‘Because Africa is developing and the countries within it are developing at different rates, there’s really an opportunity to be involved in work that is making a meaningful difference to that country. It is incredibly satisfying to work on deals where you are creating free-zones which create better enterprise for your country, you are working to develop the stock market in that particular country to attract other companies to come and list there and develop the economy further.’