Abstract

Foreign direct investment (FDI) constitutes an important tool for generating capital inflow and economic growth and development, particularly in developing countries. The prevalent global mechanism for regulating and protecting is the bilateral investment treaty (BIT). After the apartheid era, and the associated economic isolation of South Africa, the country concluded numerous BITs, particularly with capital-exporting European countries. However, following an extensive review of its BITs in 2008, the South African government promulgated the Protection of Investment Act 22 of 2015 (PIA) in December 2015 to replace several of its BITs with national legislation.

This essay will show that the PIA constitutes a highly uncertain and vague legal framework for foreign investment, which is likely to decrease investor confidence. Particularly in regard to international law, the PIA provides a significantly narrower concept of expropriation and lacks sufficient provisions regarding the compulsory payment of compensation in the case of indirect expropriation. This essay concludes that the manner of practical implementation and application not only of the PIA but of all legislation related to foreign investment will be decisive in order to achieve a reasonable balance between the domestic public interest and policy space and foreign investors’ need for predictable and reliable investment protection. The government will have to show its dedication and commitment to the establishment of a balanced investment regime in order to maintain South Africa’s status as a foreign investment-friendly venue.

Abstract

This essay analyses the potential impact of the AfCFTA and in particular the envisaged investment protocol to the African Continental Free Trade Agreement on investment flows. Since the investment protocol has not yet been drafted, the first task of the essay is to determine the potential standards of investment liberalisation and protection, using the regional economic communities (RECs) and the national laws of the two major economies in Africa – Nigeria and South Africa. This is because the investment protocol cannot fall too far away from the position that African countries have adopted in their respective RECs and the national laws of the most influential countries in Africa. The essay finds that the investment protocol will not be anything other than the international standards, as modified to respond to challenges in international investment regulation. It is then argued that the investment protocol will nonetheless improve investment in Africa and South Africa by creating policy certainty and increasing the market size. However, the author cautions that greater benefits can be realised if African countries diversify their economies and participate significantly in global value chains.

Abstract

This essay focuses on the relationship between foreign direct investment (FDI) and the rule of law in the context of legal integration in Africa, outside of the AfCFTA agreement. Specifically, the essay investigates the concept of the rule of law, taking into account its ‘dynamic’ side, that is the power to shape and model the structure of a state using the example of OHADA. The OHADA framework shows that the relationship between foreign direct investment (FDI) and the rule of law is not unilateral but a ‘two-way mutual’ relationship where both actors contribute to the success of the system, adapting to each other in order to achieve their respective goals.

Abstract

In recent years foreign direct investment (FDI) has been identified as an important tool for economic development in Africa. Most countries on the continent have put various measures in place, including legislation, to ensure that they attract FDI. Given the role that FDI plays in development, it is important to understand why some countries attract more FDI than others. While there are several factors that explain this disparity, this essay examines the role played by a country’s investment policies and regulatory environment in attracting FDI, paying particular attention to Nigeria and Guinea-Bissau.

Abstract

The current system of investor state dispute settlement (ISDS) derives largely from bilateral investment treaties (BITs), which many African states have signed as part of a strategy to attract foreign direct investment. Against the backdrop of current criticisms facing the ISDS system and reform proposals under discussion, including the creation of a permanent multilateral investment court or appeal mechanism, we examine approaches to ISDS by three Eastern African states – Rwanda, Kenya and Mauritius. Each of these three countries has adopted investment laws and entered into BITs including ISDS, and has faced investment arbitration proceedings at least twice. However, unlike two other African countries highlighted – Egypt and South Africa – they have neither engaged critically with the ISDS system, nor shown signs of adapting their ISDS policies. This essay suggests that while this approach to ISDS may be effective in the short term, the current evolution of the global system invites deeper engagement. The paper concludes with a call to governments and specialists in these countries to participate in current ISDS reform debates and contribute to shaping the future evolution of the system.

Abstract

Tax incentives are a key feature of the tax policy decisions made in developing countries, notwithstanding the literature expressing doubt as to whether tax incentives are effective in fulfilling their purpose of attracting foreign direct investment (FDI). A concern often raised is that the cost to developing countries of offering tax incentives may be more than the benefits that such tax incentives provide. This essay contributes to this literature by questioning whether developing countries factor in their obligations under the international agreements they have signed when introducing tax incentives. This essay considers several African countries that have signed human rights instruments – such as the International Covenant on Economic, Social and Cultural Rights – and whether the design of the tax incentives these countries offer shows evidence of an awareness of the obligations undertaken under the identified instruments.