AfCFTA Protocol on Investment: trojan horse for foreign investors?

An article published on Bilaterals (a website that is notoriously critical about free trade, especially among countries with different development levels), argues that the AfCFTA Protocol on Investment could lead to a surge in land grabbing in Africa, especially by foreign investors, if not correctly implemented by State Parties. Land grabbing is the practice by foreign companies, nations, or individuals of purchasing or leasing large portions of land in Africa for agricultural production. Land grabbing is a growing concern in Africa which raises the risk of abuses in the forced expropriation of plots occupied by poor local and indigenous peoples.

Despite the AfCFTA Protocol on investment recognizes the need to protect the land rights of local communities, the problem is that this Protocol is not directly applicable in the territory of AfCFTA State Parties, as its provisions need to be transposed in their national legislation. The risk is that the community “rights” invoked in the Protocol will not be respected if AfCFTA State Parties will fail to adopt laws that expressly recognize these rights. And the reality is that to date, very few States in Africa recognize the customary or traditional tenure rights to land, forests or water of indigenous peoples and local communities.

It will be therefore key to ensure that in domesticating the AfCFTA Protocol on Investment, AfCFTA State Parties will introduce specific legislations to protect the rights of these categories. For instance, it will be essential that provisions are introduced that shield local communities against cases of expropriation justified by the need to carry out investments of “public interest” made not only by African investors, but also foreign ones, as at present, over 90% of foreign investment entering in Africa comes from foreign investors.

Indeed, a closer reading of the text of the Investment Protocol reveals that also non-African investors can access to its benefits. The Protocol establishes that all investors (also foreign ones), that have “substantial business activity” in the territory of a State Party of the AfCFTA can access to the protection mechanisms laid down in its provisions when investing in the territory of another State Party. The determination of the nature of “substantial commercial activity” is entrusted to the States Parties on the basis of the examination of a series of criteria which include the nature, size, scope and sector of the activity, the amount of the investment, and others. The attribution of such responsibilities to African States paves the way to possible cases of favoritism or corruption towards foreign investors, but above all can be a trojan horse for such investors to access to the benefits of an agreement that (let us remember), was conceived to promote the interests of African businesses, but which in light of these provisions, does not appear to strictly pursue this objective.