Sitshengisiwe Ndlovu
In 2017 the African Ministers of Economy, Finance and Integration adopted the Pan–African  Investment  Code.

Although it is a non-binding instrument,  it reflected a consensus among sub–Sahara African countries on the significance of Foreign Direct Investment (FDI) in economic growth.

Numerous studies as well concede to the same revelation that FDI is a driver of industrialisation and economic growth that the African continent is so much in need of.

Owing to the importance of protocol on investment within the AfCFTA, negotiations were initially penned down to be conducted  during  Phase I of the AfCFTA negotiations that covered Protocol in Trade on Goods and Services.

The investment protocol was to create a conduit for the single market, movement of capital and heighten co-operation on investment among Member States ahead of negotiations on other protocols.

The strategy was altered and the protocol on investment was slated for Phase II of the AfCFTA negotiations,  so as to incorporate  commercial presence of countries as the starting point of negotiations around investment.

The World Trade Organisation (WTO) defines commercial presence as a particular mode of trade in which services are delivered by a supplier of one member through commercial presence in the territory of any other member, such as establishing a controlled affiliate in a foreign country to serve the local market.

The impact of FDI in countries has not been a straightforward story  making it difficult for policy makers to design policies that will deliver equitably to all the interested stakeholders

Research reveals that FDI is associated with profit repatriation abroad   as opposed to reinvesting it in the domestic countries.

The policy makers are also faced with  a task to strike  a balance between incentives or subsidies and addressing bureaucracy that may stand in the way of implementing  investment policies.

Competition for foreign direct investment by countries has also   yielded a negative  impact as the countries have to forego the much needed revenue in order to attract investment.

It has not been easy for Africa to attract quality FDI.

Many sub-Saharan Africa countries should be applauded for creating solid economic growth that has changed the sad narration of Africa for the past fifty years and creation of  safe investment destinations in Africa.

Despite the alluded setbacks on FDI, literature and empirical evidence suggest that it is the powerhouse that can propel economies and almost every country globally requires the FDI to transform people’s lives for the better.

Africa has a young population whose median has been placed at around 18 years according to latest statistics.

This population demographics represents a huge advantage for AfCFTA but also means Africa needs to create the jobs urgently  to absorb the young generation that will ensure the growth of the middle income class.

It is priority for member states to focus on job creation.

The private sector at national level has to work closely with national governments to create jobs.

Policies must create enabling environments that promote the growth of domestic firms and attract an incoming flow of foreign companies as investors.

Studies reveal that multinational companies invest heavily in Research and Development thereby contributing immensely in technology transfer and knowledge spillover during their overseas operations.

UNCTAD on a study on FDI, reveals that in 2018, global companies invested over US$350 billion in Research and Development   representing 33 percent business funded Research and Development globally.

Furthermore the expanded supply chain that comes with FDI provides backward and forward linkages  including the occasion of value addition for domestic firms.

It is through FDI that increased export diversification and Africa regional integration can be achieved. The result is that more jobs are created within the economy.

AfCFTA has designed a series of strategies to ensure that Africa becomes an attractive investment destination.

Four pillars identified by AfCFTA which underpin the strategies are:

•  Investment promotion and facilitation,
• Investment protection,
• Investor obligation and
• State commitments.

These pillars  reflect sustainability awareness and knowledge around SDGs.

While the AfCFTA will create a single market,  it is important to acknowledge  how heterogeneous Africa is and also how  attendant fragmented investment law regimes obtaining in  different countries may impede FDI  within the AfCFTA. The Pan-African Investment Code will take precedent over the investment laws as they harmonise the fragmentation that may cause conflict within the AfCFTA.

The PAIC has also  been hailed as innovative and progressive as it has demanded due diligence and obligated  investors to observe human rights, practice corporate social responsibility, protect  the natural  environment  and not be involved in land grabs.

Criticism on PAIC has been on its non-binding clause. The critiques have argued that the non-binding clause has reduced the code to be a mere guide without any sanctions arising should the PAIC be contravened.

They have further postulated that the PAIC does not observe the WTO most favoured nation clause consequently limiting it to an investment agreement   that can potentially favour the non–African investors.

Notwithstanding the concerns raised around the investment strategies within the AfCFTA, Africa is rising and the AfCFTA through the Protocol on Investment will take the African Continent forward on its upward trajectory.

The incorporation of the SDGs in the investment strategies reflects a milestone that has defied the odds.

It remains the challenge of the member states that the search of quality FDI goes beyond boardrooms and commerce chambers so as  to ensure urgent economic growth that should be able to achieve job creation.