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AFCFTA Investment Protocol Sets the Stage for Economic Growth and Development in Africa

The African Continental Free Trade Area (AfCFTA) Investment Protocol is a comprehensive framework that aims to attract, protect, and promote foreign investment in Africa. The protocol is one of the key pillars of the AfCFTA, which was launched in 2018 and aims to create a single market for goods and services across the continent.

The AfCFTA Investment Protocol provides a legal framework that seeks to promote transparency, predictability, and stability for investors. The protocol sets out rules on the treatment of investors, the protection of investments, and the settlement of investment disputes.

Investor Treatment

Per the protocol, each State shall accord to investors of another state the same treatment it gives its investors except when enhancing legitimate public policy objectives such as public morals, public health, prevention of diseases and pests in animals or plants, climate action, essential security interests, safety and the protection of the environment.

Similarly, any discriminatory measures taken by a State Party to comply with its obligations under other regional or international agreements shall not be construed as a breach of the investment protocol.

In addition, in administrative and judicial matters, investors and investments of another State shall not be denied their fundamental right to justice. The protocol also requires parties to ensure that investors are not expropriated without prompt and adequate compensation.

Moreover, investors shall make money transfers in the host country’s currency or a freely convertible currency recognized by the International Monetary Fund(IMF). The transfers should be made promptly and without delay, provided the Host country’s respective taxes and duties have been paid.

Environment, Labour and Consumer Considerations

In accordance with customary international law and other general principles of international law, each State Party/Country has the right to regulate and to ensure that investment in its territory is consistent with the goals and principles of sustainable development, and with other national environmental, health, climate action, social and economic policy objectives, as well as essential security interests. 

The protocol also contains provisions to ensure that investments are made in a socially and environmentally responsible manner and that investors respect human rights and labor standards.

State Parties shall ensure environmental, labor, and consumer protection, taking into account domestic policies, international best standards, and relevant international agreements to which they are parties, and shall continue to improve their standards within their domestic laws and regulations.

AfCFTA Investment Protocol

State Parties shall not encourage investment by relaxing or waiving domestic standards, or compliance with environment, labor and consumer protection laws and international minimum standards.

AfCFTA Investment Protocol

What’s more, in promoting development, host states are allowed to develop policies guiding investors in engaging the countries’ labor force in mid-level and managerial positions. In this regard, youth, women, persons with disabilities, and vulnerable groups are to be specially considered. Likewise, investors and their investments shall endeavor to achieve the highest possible level of contribution to the sustainable development of the host state and the local community, through the adoption of a high degree of socially responsible practices.

The Pan-African Trade and Investment Agency

Furthermore, a Pan-African Trade and Investment Agency (“the Agency”) is to be established. The agency will assist state parties by mobilizing financial resources, fostering business development, and providing technical and other support for the promotion and facilitation of investment.

The Agency shall also assist State Parties in the formulation and implementation of investment policies to foster the expansion of intra-African investments, especially those that increase exports; as well as facilitating coordination, interaction, and dialogue between and among national focal points, investment promotion agencies and other relevant stakeholders to enable the sharing of information concerning trade, export promotion, investment opportunities, peer learning, and good practices

Overall, The Protocol on Investment is expected to have significant benefits for African countries. It will create a more stable and predictable investment climate, which will attract more foreign investment to the continent. This will, in turn, stimulate economic growth, create jobs, and enhance skills development.

The protocol will also promote intra-African investment, which is currently very low. By creating a conducive environment for investment, the protocol will encourage African investors to invest in other African countries. This will enhance economic integration on the continent, which is crucial for Africa’s development.

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