In the last few years, Zambia has experienced economic success as evidenced by its progression from a low to middle income country. This has in turn resulted in an increase in business activity in various sectors of the economy. There has also been significant growth in the Zambian project finance market, which has largely been focused on the mining sector. However, other sectors such as hydro-power and infrastructure have recently begun to attract project financing, particularly following the enactment of the Public-Private Partnership Act (the 'PPP Act'), which seeks to attract private sector investment for infrastructure development. Project financing has been the most common way through which PPPs have been formed, under the Public-Private Partnership Unit within the Ministry of Finance and National Planning, which has been tasked to implement the policy goals set out under the PPP Act.
It's been an increasingly frenetic two years for Zambia's leading
lawyers: "We've seen a significant amount of private investment suddenly
flowing into the country and this is expected to keep growing, as US
funds start to show an interest in capital markets and begin to invest
in securities."
Lawyers are beginning to find themselves with mandates piling up to
advise potential investors on the regulatory framework of what is still a
little understood legal market....
[more]
It's been an increasingly frenetic two years for Zambia's leading
lawyers: "We've seen a significant amount of private investment suddenly
flowing into the country and this is expected to keep growing, as US
funds start to show an interest in capital markets and begin to invest
in securities."
Lawyers are beginning to find themselves with mandates piling up to
advise potential investors on the regulatory framework of what is still a
little understood legal market. "There is a general feeling over the
last six months that things are really about to boom," one partner says.
"Africa is the new frontier. Zambia has significant growth in terms of a
middle class and investors are seeking to enter the market and get
their foot firmly in the door before others realise its potential."
Another reason for Zambia's seductive draw lies in 58 years of
sustained political stability. "We are considered low risk," says one
partner. "Added to that we've had 6/7% consistent growth in the economy
over the last three years."
Zambia's legal market is heavily regulated with significant barriers
in place to prevent entry. Even the small 'one man band' outfits in
Zambia struggle to penetrate the market in any real sense. As such, only
a handful of firms dominate the legal landscape and compete for the
bulk of work available, which falls into three broad categories; banking
and finance, capital markets and company advisory.
The bigger firms tend to be heavily involved in the mining industry;
advising local and offshore companies on regulatory compliance,
potential acquisitions, financing, listings on the local Stock Exchange
and foreign capital markets.
In project financing, firms are advising single syndicates of lenders
who are seeking to finance borrowers on specific projects and these
fall into three sectors; mining, hydropower and road construction.
On the whole, lenders are international financial institutions such
as Development Bank of Southern Africa (DBSA), The Standard Bank of
South Africa and World Bank ISB (Islamabad). Investment is coming mainly
from Europe, China and India.
Prohibitive court regulations prevent international law firms setting
up an office in Zambia. As one partner explains: "The legal culture
here is pretty much protectionist" adding "a foreign lawyer would have
to attend a legal practice course to get a Zambian role and I don't see
this changing anytime soon because the law society is opposed to opening
up the market. To give you one example we are strictly not allowed to
advertise our legal services".
As a direct result of these restrictions local partners say a cluster
of the major legal players are starting to knock on the door of
Zambia's tier one firms to seek out a special relationship.
"Firms such as Clifford Chance, Norton Rose, Hogan Lovells and most
of the UK magic circle law firms. Everyone is showing interest in
Zambia, even the international law firms are starting to request
associations and exclusive relationships with the big firms here," says
one partner.
The majority of the top tier Zambian firms are members of Lex Africa,
which supplies a spread of African work. Some predict though that this
may start to change with firms linking up with international players.
Indeed that is already the case with Chibesakunda & Company which is
part of DLA Piper Group. Zambian firms are looking southwards to the
'Norton Rose south African model' as they consider their next move.
[Read about law firms' performance in this practice area]
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