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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.

Lesotho signs $15bn water, energy deal


 

Lesotho Location.
Image via Wikipedia

News 24

October 28, 2011

MaseruLesotho has signed a $15bn renewable energy deal with a South African company in the country’s largest-ever private investment, officials said on Thursday.

“The project aims to harness the natural resources of wind and water in Lesotho’s Maluti Mountains to produce power that will be used by both Lesotho and South Africa,” Johannesburg-based Harrison & White Investments said in a statement.

The Lesotho Highlands Power Project (LHPP) will generate 6 000 megawatts of wind power and 4 000 megawatts of hydro-power – equivalent to nearly one-quarter of South Africa’s total current energy supply.

The scheme will create 25 000 jobs over 15 years, Lesotho’s natural resources minister Monyane Moleleki said.

Harrison & White Investments and the government of Lesotho will provide equity finance, while unnamed Chinese firms will provide loans, Harrison & White said.

“The project comes at a time in our history when our traditional income streams have dried up due largely to the global economic meltdown,” Moleleki said at the signing ceremony in the capital Maseru on Wednesday.

The project aims to generate power from the Maluti Mountains’ wind and water resources, mainly for export to South Africa, which completely surrounds the tiny mountainous country.

The first phase of the project is a 150-megawatt wind farm, with construction set to start next year.

The project will be Lesotho’s largest investment since its six billion euro Lesotho Highlands Water Project deal with South Africa undertaken in 1998.

South Africa and Lesotho in August agreed to launch the second phase of that project, with a new dam and a 1 000-megawatt power station expected to cost $993m.

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