The protocol on investment in the agreement establishing the African Continental Free Trade Area was concluded in October 2022 and adopted at ministerial level. The “zero draft” was submitted to the assembly of heads of states for review and adoption in February this year at the AU in Addis Ababa.
The investment protocol will facilitate continental co-ordination and exploit economies of scale in improving investment frameworks and policies across AfCFTA member states. It also includes provisions on dispute resolution, in particular those between investors and states, and between member states. The protocol further establishes a mechanism for knowledge-sharing and policy dialogue around good practices in public- and private-sector investing.
The termination of intra-African bilateral investment treaties does not affect the rights and obligations of investors under existing such agreements with non-African countries. The investment protocol encourages state parties to renegotiate those treaties to ensure compliance with the protocol’s provisions, but investors may continue to rely on those treaties for investment protection.
Another important component is the inclusion of standards of protection, which include guarantees against unlawful expropriation, the most-favoured nation treatment standard, the national treatment standard, physical protection and security and free transfer of funds, all with exceptions. Investments have a considerable amount of protection in the investment infrastructure on the continent.
SMEs are expected to benefit greatly from the protocol as it creates more entrepreneurship opportunities in Africa. By reducing investment barriers and increasing access to financing, SMEs can contribute further to economic growth. Finally, the protocol is expected to reduce the number of African entrepreneurs and investors migrating elsewhere in search of opportunities.