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Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI

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Does a Growing Africa Need a Foreign Investment Code?


Published: June 06, 2012 in Knowledge@Wharton Law & Public Policy

As managing director of Goldman SachsSouth African office, Colin Coleman has witnessed, and advised, the execution of countless business contracts across Africa. Each deal — from China’s US$9 billion copper deal with the Congo to Walmart’s US$2.4 billion purchase of South African retailer Massmart — highlights the tenuous balance between domestic interests and foreign investment, and raises a set of key questions.

“How do you create a balance of domestic interests in Africa and the interests of globalization?” Coleman asked. “How do you create a balance of interests between the emerging markets and the developed world? Within emerging markets, how does Africa protect its place in an appropriate way?”

These questions become more pressing as Africa’s economy grows and investors take notice. Africa today has 1.2 billion people, a US$1.8 trillion economy and real GDP growth of about 5.5% in 2011, Coleman pointed out. “When you look at the statistics, the fact is that Africa as a whole … is a significant contributor. It has a GDP that compares with any one of the BRICs.”

Such questions led Coleman to wonder: Should Africa create a code for foreign direct investment (FDI) that would guide non-African investors as they increasingly seek out opportunities in Africa’s growing markets? “Is there a case for an ‘FDI in Africa code of conduct’ that should be thought about, articulated, marketed, popularized, bought into and owned by investors, countries, and communities alike?” Read more.

FDI – Africa needs clear regulatory frameworks


Financial Mail

By Kwanele Sibanda

January 4, 2012

Enabling regulatory frameworks across Africa are vital for the continent to attract more foreign direct investment (FDI) as both developed and emerging economies seek new markets for growth, says Werksmans Attorneys director, Gregory Nott.

There are vast opportunities for the continent to attract investment flows and one area in which Africa can attract more investment is the renewable energy space. While China has established itself as a dominant player in the manufacture of components of solar energy plants, Africa could compete by attracting FDI in this area.

Nott says that backed by lavish government support, tax breaks and incentives, China is now responsible for half of world production of solar energy components.There are vast opportunities for the continent to attract investment flows and one area in which Africa can attract more investment is the renewable energy space. While China has established itself as a dominant player in the manufacture of components of solar energy plants, Africa could compete by attracting FDI in this area.

He says countries such as South Africa have established enabling legislation, including the Integrated Resource Plan to attract investment into the green economy, but politicians also needed to send the right message about the country embracing FDI.

“Pre-conditions, such as BEE and localisation requirements, must be consistently applied. Politicians, labour and business need to send a unified message that they want to attract more FDI. Investors want a clear and consistent framework in which to work,” says Nott.

Many African countries have implemented regulatory reforms to specifically attract FDI. Out of the 15 SADC member states, for example, 12 have a specific law governing private investment, and/or foreign investment or have established an investment promotion agency.

Countries such as South Africa, Lesotho and Botswana have no specific FDI legislation, but have liberal investment regimes. FDI legislation is under review in Namibia, Seychelles and Zimbabwe, while Botswana’s Industrial Development Act, which deals with licensing, is also under review.

“African countries are taking FDI seriously and looking to promote investment where possible. But overcoming negative perceptions about investing on the continent is also vital to attracting more investment in future,” he says…Read more.

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