Trade Briefs

Foreign Direct Investment policy and governance in the Southern African Development Community

Foreign Direct Investment policy and governance in the Southern African Development Community

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13 Jul 2017

Author(s): Talkmore Chidede

The Southern African Development Community (SADC) was established to achieve, among other objectives, development and economic growth and poverty alleviation through regional integration, as well as to promote productive employment and utilisation of natural resources in the region. All member states acknowledge that investment (particularly foreign direct investment (FDI)) is a vital tool to advance economic development as well as a vehicle for job creation, poverty alleviation, industrialisation and infrastructure development. Accordingly, they have adopted and encouraged the implementation of policies – at both national and regional levels – aimed at attracting FDI from within and outside the region.

For quite some time, Southern Africa has experienced higher FDI inflows than other subregions in Africa. According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2017, Southern Africa was ranked the largest subregion recipient of FDI in Africa, with $21.2 billion inflows received in 2016, followed by North Africa ($14.5 billion), West Africa ($11.4 billion), East Africa ($7.1 billion) and Central Africa ($5.1 billion). In addition to the attractiveness of its resources, the region attracted FDI by its integration agenda which provides preferential access to a growing market. While investment policies, and specifically the incentives offered by member states, are designed to improve the environment for business, policy uncertainty as well as economic and political instability remain obstacles to FDI in the region.

This trade brief examines the laws, policies and regulations pertaining to (a) promotion and facilitation of investment, (b) entry and establishment, and (c) treatment and protection of FDI in Southern African Development Community (SADC) member states.

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