With an increasing number of international firms launching offices in South Africa in the last three years, the law firm landscape is changing rapidly. In this article our Director, Sona Walentin discusses the state of play in the South African legal market and discusses the key considerations for a law firm looking to launch in South Africa.
South Africa has enjoyed a rise in prominence as a legal hub in recent years but has long been a strong market for delivering legal services across sub-Saharan Africa through its historic position as the gateway into the continent.
Compared to European countries, South Africa is a vast country, with a land mass equivalent to Germany, France and the UK combined. Similarly to Germany but in contrast to France and the UK, South Africa has a number of business centres. The core of the corporate/M&A, finance and capital markets activity is concentrated in Johannesburg while Cape Town is developing into a hub for private equity, private wealth and funds work. Durban is a further business centre while Stellenbosch and Pretoria (not least due to their close proximity to Cape Town and Johannesburg respectively) are of lesser importance.
What is drawing international law firms to South Africa?
South Africa for the past two decades after the end of apartheid has enjoyed the role as the largest economy in Africa but in the last 24 months had to give up the lead to Nigeria and most recently has slipped to third place behind Egypt. Despite this, it is still viewed as the hub for all business activities in sub-Saharan Africa and as the most advanced economy on the continent.
The influx of investment into South Africa driven by a wealth of natural resources and the rise in wealth in a growing middle class within the country provide a burgeoning market for major energy and infrastructure projects as well as demand for technology and consumer products.
With the growth potential for many international firms slowing in their home markets in the United States or Western Europe, firms see the African continent and more specifically South Africa as a new opportunity for growth. The advantages seem to outweigh the political uncertainties around upcoming elections, the volatility of the exchange rate or the recent commodities’ slump in the natural resources sector.