854 bilateral investment treaties to bring FDI in Africa
58 African countries are engaged in re-integration to make the region ‘One Continent; One Market’ in a bid to boost the regional economy and attract FDI. The economic integration will connect the region with the world. At the Annual Investment Meeting’s session titled “Invest in Africa”, the United Nations Economic Commission for Africa (UNECA) launched a report titled: Investment Policies and Bilateral Investment Treaties (BITs): Implications for Regional Integration, discussing the key regulatory and policy challenges that affect investment in Africa. The report explored how regional integration could support inclusive investment reforms at national, sub-regional and continental level.
The high level panelists included: Yofi Grant, Chief Executive Officer of Ghana Investment Promotion Centre; Stephen N. Karingi, Director Capacity Development Division, United Nations Economic Commission for Africa (UNECA); H.E. Aisha Abubakar, Minister of Trade and Industry of Nigeria; H.E. Harouna Kabore, Minister of Trade, Industry and Crafts of Burkina Faso; H.E. Seetanah Lutchmeenaraidoo, Minister of Foreign Affairs, Regional Integration and International Trade of Mauritius.
Stephen N. Karingi, Director of Capacity Development Division, UNECA, Ethiopia, said: “Much of Africa’s FDI comes from abroad. Therefore, how governments manage complaints from foreign investors is a vital determinant of the business climate. Among these measures, bilateral agreements being used as tools to encourage and protect investments. State-to-State agreements that establish how governments treat investors from each other’s country, covering fair and equitable treatment, security, and compensation for expropriation.”
Investment has become a leading source of FDI for many African countries. Despite the relative importance investment is playing in the continents, African countries only accounted for 3.2 per cent of global FDI in 2017.
Bilateral Investment Treaties (BITs) has become an integral part of African policymakers’ strategy to counter the perception of risk and promote more inward FDI. According to the study produced by the UN Economic Commission for Africa (UNECA), Africa accounts for 854 BITs.
Africa to pull FDI, certain issues need to be resolved that include: amending existing agreements, negotiating new agreements that narrow the scope of misinterpretation and reduce potential liability, communicating a legal position on the interpretation of the existing agreement. A huge gap in most bilateral treaties is that investors cannot be held to account for the social, human rights or environmental impact of their operations. There should be a binding obligation that government will not relax environmental or labour laws when dealing with foreign investment, need measures against corruption, standards for human rights.
The UAE is the second largest investor in Africa from the Middle East region. According to the Financial Times’ fDi report, UAE is the second top investing country in Africa by the value of capital investment in 2016, accounting for $11bn of capex giving it a 12 percent market share. The report showed that UAE-led FDI rose a substantial 161 percent from 2015 when it pumped $4.2bn of capex into African projects.
Set against overall Middle Eastern investment into Africa, which totalled $15.7 billion of capex in 2016, it is evident that the UAE is taking a large slice of the pie – despite a decline in the total number of individual FDI projects it was involved in that year, from 45 in 2015 to 34 in 2016. This suggests that the country is eyeing fewer, but larger schemes.
The three-day Annual Investment Meeting (AIM) congregation of high-profile officials that include 25 federal ministers, 19 mayors, eight organisation heads, one head of parliament and investors saw the signing of a number of agreements and announcements that will help countries boost the flow of Foreign Direct Investment (FDI).
It makes the AIM the largest such gathering of government leaders and private sector business leaders and investors, organised by Ministry of Economy. This year More than 20,000 investors and business visitors are expected to participate in the eventful three-day-long activities that will address issues related to global follow of Foreign Direct Investment (FDI).
More than 143 countries participated in the eighth session of the Forum and about 20 thousand investors and visitors from around the world. A number of global ministers, inspiring business and thought leaders will lead interesting discussions on investment trends, public-private partnerships, sustainability, investment promotion, cryptocurrencies, and sovereign wealth fund at the forthcoming Annual Investment Meeting (AIM) to be held at the Dubai World Trade Centre from April 9 to 11, 2018.