Geneva – As the global economy evolves, the African Continental Free Trade Area’s (AfCFTA) Protocol on Investment and the World Trade Organization’s (WTO) Investment Facilitation for Development (IFD) have emerged as key frameworks that promise to redefine international investment in Africa. The AfCFTA’s Protocol on Investment, adopted earlier in 2023, aims to liberalize intra-African trade, improving the business environment in Africa. It emphasizes sustainable investment by promoting, facilitating, and protecting intra-African investments, and integrating obligations on investors towards host economies.
According to World Economic Forum, In July 2023, WTO members in Geneva concluded negotiations on the Investment Facilitation for Development Agreement. This four-year discussion culminated in an agreement designed to streamline investment processes, reduce bureaucratic barriers, and foster transparency, accountability, and good governance in investment procedures. These initiatives are particularly relevant as Africa requires an estimated $194 billion annually to achieve its Sustainable Development Goals by 2030.
Both agreements address the need for sustainable, efficient, and attractive investments, focusing on similar economic spheres. The WTO’s IFD targets developing countries, many of which are in Africa, to help achieve development goals. Currently, 22 African countries are part of the IFD agreement. The AfCFTA’s Investment Protocol goes further than the WTO’s IFD, including elements such as investment promotion and protection.
These instruments present opportunities for synergistic action. Needs assessments are critical in both agreements, serving as a foundation for moving from agreement to practice. Collaborative efforts in these assessments can ensure alignment with both the AfCFTA’s investment protocol and the WTO’s IFD. Joint action is encouraged in implementing these assessments, calling for increased support and resources from international stakeholders.
Capacity building is central to both agreements, offering a chance for sharing expertise and best practices. By synergizing their capacity-building efforts, the AfCFTA and WTO can create an environment conducive to sustainable investment, essential for economic growth and development across Africa.
The scope difference between the two instruments provides another synergy opportunity. While the WTO’s IFD addresses global Foreign Direct Investment (FDI) flows, the AfCFTA focuses on intra-African investment. These complementary scopes can enhance investment facilitation standards across the continent.
Sustainable development is a critical aspect of both instruments, aligning investment flows with the Sustainable Development Goals (SDGs). The AfCFTA’s investment protocol places detailed obligations on investors, providing a framework for other agreements. Mutual learning from the implementation of each instrument can enrich both.
In summary, the potential synergy between the AfCFTA’s Protocol on Investment and the WTO’s IFD presents a promising path for sustainable investment in Africa. A coordinated approach to needs assessments, capacity building, and sustainable investment can amplify the impact of these instruments. A collaborative framework that leverages both agreements’ strengths is essential for a more effective investment facilitation process, paving the way for Africa’s economic prosperity.