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The United Nations Economic Commission for Africa (UNECA) has argued in its report, which offers policy recommendations to member states wishing to take advantage of the economies of scope and scale of the envisioned AfCFTA Investment Protocol, to ensure that the proposal is simplified to attract needed foreign direct investments.
The report, titled “Towards a Common Investment Area in the African Continental Free Trade Area: Levelling the Playing Field for Intra-African Investment “was presented by Stephen Karingi, Director, Regional Integration and Trade Division of the ECA, at the Annual Investment Meeting (AIM) event “AFRICA Unlocked: Innovation & Sustainability as the Drivers of Economic Growth.”
“As Africa faces a steep decline in foreign direct investment (FDI) during and in the aftermath of the COVID-19 pandemic, the opportunities presented by a continental common investment area could hardly have arrived at a better time,” Mr. Karingi said.
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He said amidst a sharp drop in global FDI due to COVID-19, Africa’s FDI inflows fell 18 percent from $46 billion in 2019 to $38 billion in 2020, a level not seen for at least a decade, and deeper than that in developing economies where they declined 12 percent.
To attract new FDI during the post-pandemic recovery and rebuilding stage, he said upcoming AfCFTA negotiations should serve as a platform to harmonize investment rules and create a level playing field for investors.
Mr. Karingi appealed to policymakers to “use the Investment Protocol to simplify current entanglement of investment rules and clarify linkages with other AfCFTA protocols, international law, and domestic legislations.’’
Negotiations on the second and third phases of the AfCFTA agreement focusing on investment, intellectual property, competition, and e-commerce are expected to commence later this year.
The AfCFTA, the world’s largest free trade area, aims to form a single continent-wide market for goods and services, stimulating more trade and investment. The agreement is expected to expand intra-African trade, boost industrialization, increase job opportunities, and enhance the global competitiveness of African industries.
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