• UNCTAD World Investment Report 2021

    B.M.R. On

    The UNCTAD World Investment Report is out.

    Good news is that global FDI flows are expected to recover a bit from the 2020 battering. UNCTAD is looking at increase of around 10 – 15%.

    Of course, covid-19 is largely to blame for last year’s fall. However, the numbers had been falling for some time before that.

    Even so, the Report retains some hope. It expresses cautious optimism for growth in 2022.

    Looking particularly at Africa, the Report observes a 16% fall in FDI flows to the continent (in 2020). This drop was more keenly felt in the resource-dependent economies.

    The Report highlights further risks re FDI in Africa, mainly due to the slow vaccine rollout, and the emergence of new covid-19 strains. For 2021, the Report projects that Africa will see only a marginal increase in FDI. However, matters could improve in 2022, if certain things come to pass. One such thing could be the finalisation of the Investment Protocol of the the Africa Continental Free Trade Area Agreement.

    Click here to read the full Report.

  • The UNCTAD World Investment Report 2020 – some sobering statistics

    B.M.R. On

    A dose of grimness from the UNCTAD World Investment Report 2020. And, of course, covid-19 is squarely in the frame.

    The report forecasts a ‘dramatic fall’ in FDI, thanks to covid-19. We’re looking at a fall of up to 40% in 2020 (from $1.54 trillion in 2019). We shouldn’t expect to see any recovery before 2022. In fact, 2021 is expected to bring a further decrease of between five to 10 per cent.

    Not that covid-19 is alone to blame. The report tells us that this year’s dismal figures follow years of negative or stagnant growth in FDI flows.

    These are global projections, but developing countries will definitely face the brunt of the decline in FDI. The Report forecasts that, for 2020, FDI flows to Africa will fall by around 25 to 40 per cent, following on from a 10% decline (to $45 billion) in 2019.

    It’s not all doom and gloom, though. The Report contains prescriptions for the investment malady, particularly as concerns achieving the sustainable development goals.

    The Report can be accessed here.

  • The AfCFTA Protocol on Investment – a new jigsaw puzzle

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    AfCFTA Phase II negotiations are currently underway, likely with some delay due to the covid-19 pandemic. This phase of negotiations includes the Protocol on Investment, and an interesting challenge lies ahead.

    Surveying Africa’s existing legal framework for international investment, one sees a complex picture of interlocking chains and grids.

    For one thing, there is the large number of bilateral investment treaties (BITs) signed between African countries.

    And then there are the various Regional Economic Community (REC) instruments governing international investment. These include the ECOWAS Supplementary Act, and the SADC Protocol on Finance and Investment. There is also the COMESA Common Investment Agreement, although not yet in force.

    As the AfCFTA Agreement states (see Article 5(b) thereof), the free trade areas of the RECs are to be treated as building blocks for the AfCFTA itself. It is fully to be expected that much inspiration will be drawn from the stipulations in the legal frameworks of the various RECs.

    Going beyond BITs and REC instruments, there are also non-binding, albeit influential, documents, such as the Pan-African Code on Investment (PAIC), the SADC Model BIT, and the EAC Investment Code.

    So, a varied and complex framework, and one into which the AfCFTA Investment Protocol must fit. A veritable jigsaw puzzle indeed.

    It’s early days yet, as negotiations are ongoing, but it will be a serious challenge to build a coherent and tightly integrated framework for intra-African investment.