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The AfCFTA Investment Protocol: Recommended Perspectives for Country Negotiators By Naa Lamle Orleans-Lindsay*

12 May 2021 1:44 PM | Anonymous

Paper presented at the AfAA 2nd Annual International Arbitration Conference, 15th - 16th April 2021


The  African Continental Free Trade Agreement (AfCFTA) is acknowledged as  one of the flagship projects for Africa’s developmental policies as established by the African Union.  The Agreement establishing the AfCFTA which entered into force on 30th May 2019 has six (6) protocols including the investment protocol which is the subject of this article.


The  Investment Protocol presents  a unique opportunity  for African states to disentangle a complex , often- overlapping and fractured  system of African related international investment agreements (IIAs). This includes the various investment related agreements developed by regional groups such as ECOWAS, COMESA and SADC ,  intra-African Bilateral Investment Treaties (BITs) and BITs between African countries and countries outside the continent. Over the past decade there have been strong efforts at both the national and regional level towards achieving    harmonised investment regulatory framework(s) in relation to foreign direct investment.

The most recent attempt towards the development of a harmonised model document relating to investment was the Pan African Investment Code  (PAIC) .  The object of the  PAIC as stated in the document is to ‘...promote, facilitate and protect investments that foster the sustainable development of each Member State...’[2] .  The PAIC  is  non-binding on African member states [3] however the document acknowledges under Article 3.2 that  the Code may be reviewed at a future date to  become a binding instrument.

The opportunity to ‘escalate’ the PAIC from a non-binding document   into a consolidated investment  instrument  to be  adopted and utilised by African governments in negotiating IIAs is highly significant.  Though there has been loud criticism from many quarters on the PAIC as being overly protectionist or narrowly focused  as  a model investment treaty document, it reflects consensus from African countries that investment on the continent must be focussed on sustainable development.

As negotiations on the Investment Protocol progress it is recommended that the following are taken into consideration by the  countries involved in the negotiations:

There is no time like the present

As mentioned earlier one of the key criticisms of the PAIC was that it was ‘over-protectionist’  and veered towards  promoting the rights of host states against the well established  rights of foreign investors. The global COVID-19 pandemic which started spreading worldwide in  the 1st quarter of 2020  placed into startling relief  the necessity of governments around the world to  take bold and rapid action to mitigate the adverse effects of the pandemic threatening to cripple their respective economies.  UNCTAD[4] lists some of these actions as the  tightening of foreign investment screening mechanisms,  mandatory production and export bans of health related products and services, and  the nationalisation of  certain  companies adversely affected by the pandemic. These actions which often went against the commercial interests of  international investors is slowly emerging as a possible fertile ground for investor state disputes.  The International Institute of Sustainable Development (IISD)[5]  posited  that hundreds of foreign investors could potentially bring claims to challenge the COVID 19 pandemic measures taken by host governments. These claims could conceivably be supported by third party funders looking forward to  huge payouts on  their investment arbitration portfolios. 

The advocacy for reform of the IIA framework to ensure the rights of host states  to regulate in the public interest whilst maintaining appropriate levels of investor protections which has been promoted by institutions such as UNCTAD and IISD has received an unexpected boost due to the effects of the COVID 19 pandemic on the economies of countries . The silver lining as it were of the pandemic  is that there is arguably a greater level of acceptance  and understanding now more than ever before in Africa and around the world,  for the state’s  right to regulate in the event of a crisis to public health, public safety, environment, security, finance etc. 

The negotiators of the AfCFTA Investment Protocol must therefore seize the opportunity presented by the increased awareness and understanding of the state’s right to regulate, to actively promote within the Protocol provisions to preserve the rights of African governments to regulate in the public interest,  the maintenance of  a reasonable balance in the respective rights of investors and host countries as well as the obligation for investment to be driven by the sustainable development goals.  Needless to say it is important that the host states' right to regulate is exercised in a transparent, non-discriminatory and good faith manner. 

Leap-frog over the mire

Over the past decade African countries at a national  and regional levels have taken strenuous efforts to reform the IIA framework[6].  Approaches have included  a partial or complete opt out of ISDS, termination of IIAs and the crafting of new IIA models Though well-intentioned  these efforts have often resulted in a lack of unified purposefulness in the direction of reform across the continent. The AFCFTA Investment Protocol provides an unrivalled opportunity for African states to come to a consensus (as far as practicable) on the core principles of international investment law that should be reflected in the document on matters such as most favoured nation treatment, national treatment, pre-establishment, right to regulate and dispute settlement mechanisms.  It is noted that during the negotiations of the PAIC  a lot of effort was put into defining these concepts and setting out their respective scopes of application.

The following  are recommended for consideration:

  • Clear and as far as practicable unambiguous language  on definitions and scope of concepts utilised in the Investment Protocol. There should be carefully drafted exceptions to the applications of the Protocol to  specific policy areas and measures such as public health and safety,  and sensitive industries & economic sectors.
  • Provision of detailed guidance  on the interpretation of relevant provisions in the Protocol. This would avoid the application of wide discretion by courts, arbitral panels and other dispute resolution bodies in the interpretation and application of the Investment Protocol.
  • Innovative approaches to investor state dispute settlement including the  exhaustion of domestic remedies and resort by parties to reputable regional arbitration or mediation institutions on the continent.
  • Insertion of investor obligations particularly in relation to sustainable development.  

The PAIC it is argued should be the base document  for the negotiators , the key reference document as it were. In an effort not to reinvent the wheel, best practice examples of similar continental investment agreements should be studied particularly those entered into by developing countries.  

Building the blocks of consensus

Negotiators of the AFCFTA Investment Protocol have the herculean but not unsurmountable task ahead of achieving a consensus on all the relevant provisions of the document. African countries  its humbly proposed,  should take the following into consideration:

a.     Inbuilt flexibility

African countries  are economically vastly different from each other, from behemoths in size, population and GDP to small island nations  and least developed countries. Obviously then agreement on  thorny issues such as definitions of key terms, pre-establishment, performance requirements, right to regulate and international arbitration would not be readily obtained.  Instead there should be some level of flexibility in limited circumstances for countries based on factors including their state of economic growth and developmental priorities to have a phased in/out approach to the provisions of the Protocol. Also to be considered would be the use of carefully crafted reservations to be utilised on  a case by case basis by a  contracting party. 

b.     Unratified IIAs

It is a curious fact that a significant number of African IIAs (whether with African/non-African countries) remain unratified. There are by conservative estimates almost a thousand IIAs signed by African countries of which less than two hundred are between African countries.  The Republic of Ghana for instance has executed 25 BITs and ratified 7. A likely rationale is that these African IIAs were entered into as a demonstration of strong bilateral political ties rather than as a driver for international investment.  With  the AFCFTA framework firmly settled , and negotiations for an AFCFTA Investment Protocol ongoing, there is a distinct possibility of increased  pressure on  African countries to ratify these BITs which may date back over a decade and reflect first generation style IIAs. There must be a general understanding to halt the ratification of IIAs executed by African states, particularly those which do not reflect sustainable development and have a poor balance between the rights of states and foreign investors.

c.      Negotiation of IIAs

Though the COVID -19 pandemic put a chill on many IIA negotiations it is a distinct possibility that some non-African countries may be desirous of ‘locking in’ African states into IIAs prior to a possibly less ‘liberal’/ pro-investor IIA document under the Investment Protocol. African countries should proceed with current or prospective IIA negotiations  with much caution. This will prevent challenges from acceding to an AFCFTA  Investment protocol which is inconsistent with recently executed or ratified IIAs. 

d.     Manage expectations

A lot of expectations are riding on the Protocol as the mechanism which would most likely resolve the complicated and often contrary  framework of IIAs on the continent.  This would in turn increase trade and investment. It  is  however  a trite fact that the existence of IIAs does not necessarily  translate into increased FDI. The negotiators of the  Protocol must also take note of the barriers to FDI entry in Africa such as lack of transparency, excessive bureaucracy , corruption, and lack of harmonisation of investment legislation. Investment facilitation provisions in the Protocol may be most helpful to practically guide African governments in attracting investment towards sustainable development. 

e.     Scope of the Investment Protocol 

It is unclear at present whether the Protocol will apply only to intra-African IIAs or also to IIAs between African and non-African states.  As majority of IIAs entered into by African states are with non-African states  as well as a majority of investment disputes arise between African states and non-African foreign investors, it would be imprudent to limit the scope of application of the Protocol to only intra-African IIAs. It would be useful for clarity on this matter to be established as early as practicable on the negotiations. 

f.       Capacity Building 

The over fifty countries on the African continent have very varying experiences in the promotion of foreign direct investment , investment regulation and the management of investment related disputes. Therefore there will be very experienced country negotiators who have been involved in the negotiation of IIAs and investment dispute settlement. Conversely there will be representatives of other countries who will not have the benefit of such experiences. It will therefore be helpful for the AfCFTA Secretariat to provide opportunities for  country representatives/negotiators to increase their knowledge and exposures in issues relevant to the Investment Protocol.


The first meeting of experts on the investment protocol has taken place  within the 1st half of 2021. There is a lot of enthusiasm among African countries on the possibilities that the Protocol presents in increasing investment across the continent. With commitment and good faith of all the relevant parties it is clear that the Protocol once completed and acceded to by African states will be a key instrument in enhancing the framework to increase intra-African investment and set a more uniform playing field for investment agreements  between Africa and the world. 


* Head of Legal Division, Ghana Investment Promotion Centre.  The views expressed in this Article are that of the author and do not represent the position or views of any particular government or  party in the Investment Protocol negotiations

[2] Article 1 of the Draft PAIC

[3] Article 2.1 of the Draft PAIC

[4] UNCTAD Investment Policy Monitor May 2020, Special Issue No. 4,  Investment Policy Responses to the COVID 19 Pandemic

[5]  IISD -Protecting Against Investor–State Claims Amidst COVID-19: A call to action for government. April 2020

[6] UNCTAD June 2017 Issue 2; IIA Note discusses in further detail the approaches taken by various African countries to reform the IIA network.

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