What WTO accord on investment facilitation means for Africa

In a significant development for developing nations aiming to attract more foreign direct investment, members of the World Trade Organisation (WTO) have recently reached a landmark agreement on investment facilitation. The accord, which focuses on transparency and predictability in investment measures, is expected to pave the way for increased economic growth and dynamism in these countries. Keith Rockwell, a Research Fellow at the Wilson Centre, discussed the implications of this deal with CNBC Africa's Julius Bizimungu, shedding light on the key aspects of the agreement and its potential impact on the African continent. The central premise of the agreement revolves around transparency. Governments will be required to provide detailed information to other governments and potential foreign investors about their investment regimes. This information will include the procedures for obtaining a business license or setting up a new venture, along with clear guidelines on fees, regulations, and laws. By centralizing this information through a single portal, the agreement aims to simplify the process for investors and enhance their understanding of the investment landscape. Moreover, by committing to combat corruption and money laundering, governments and corporations alike are expected to uphold principles of corporate social responsibility, thereby fostering a more transparent and ethical investment environment. Rockwell highlighted that the agreement draws parallels with the trade facilitation agreement reached a decade ago, which focused on easing cross-border movement of goods by reducing paperwork and regulatory barriers. However, it is important to note that the investment facilitation pact does not encompass investor protections, market access, or investor-state dispute settlement. Disputes arising from the agreement will be settled through existing government-to-government channels within the WTO framework. One of the notable features of this agreement is its plurilateral nature. Involving 113 out of 164 WTO members, the pact is open for additional countries to join, with benefits extended on a most favored nation basis. This approach streamlines negotiations, making the process more efficient and effective for like-minded nations. The plurilateral structure allows for targeted agreements like this one on investment facilitation, building upon previous initiatives such as services regulation guidelines and e-commerce negotiations launched in Buenos Aires in 2017. The key theme of transparency and predictability in investment measures runs deep in this agreement. By publicly disclosing rules, regulations, and procedures for investing in their respective countries, governments are providing a seal of approval to foreign investors, signaling their commitment to fostering a conducive investment climate. This level of transparency not only instills confidence in investors but also sets clear expectations for corporations, promoting ethical business practices and sustainable growth. Rockwell emphasized the importance of predictability and stability for private sector players, stating that participation in the WTO agreement serves as an endorsement of a country's commitment to attracting foreign investment. With 21 African nations, including 14 least developed countries, signing up for the accord, there is a strong indication of enthusiasm and readiness to tap into the benefits of transparent and regulated investment facilitation. While some prominent members like India and South Africa chose not to participate citing concerns over the plurilateral approach, their companies can still benefit from the transparency and predictability provisions embedded in the agreements made by other nations, even if their governments opt out. Africa's embrace of the WTO investment facilitation accord signifies a new dawn for the continent's economic landscape. By aligning with global standards and fostering a culture of transparency and responsibility, African nations are poised to attract a surge of foreign direct investment, driving economic growth, creating job opportunities, and fostering sustainable development across the region.