The AfCFTA Protocol on Investment sets out a common continental position on investment governance and replaces the patchwork of intra-African bilateral investment treaties with a single framework. It changes how investments are protected, what investors are expected to do, and how disputes are resolved.
What the protocol does
Concluded at ministerial level in October 2022 and submitted to the AU Assembly in February 2023, the protocol defines the protection, promotion and facilitation of intra-African investment. It also provides for continental coordination of investment policy and a mechanism for sharing good practice between state parties.
A unified framework for protection
The protocol provides for the termination of intra-African bilateral investment treaties in favour of a single set of rules and procedures. This removes inconsistent and conflicting provisions and should strengthen investor confidence.
Existing treaties will continue to protect investments for the period set by their sunset clauses. Treaties with non-African countries are unaffected, although state parties are encouraged to renegotiate them for consistency with the protocol.
Rights and obligations
The protocol confirms each state's right to regulate in the public interest. Investors, in turn, must comply with laws protecting human rights, labour rights and the environment, uphold anti-corruption and anti-bribery standards, and respect the rights of indigenous peoples. In effect, the protocol embeds an ESG standard into continental investment law.
Standards of protection include guarantees against unlawful expropriation, most-favoured-nation and national treatment, physical protection and security, and the free transfer of funds, each subject to exceptions.
Dispute settlement
Investor-state disputes may first be addressed through mediation. Where that fails, an investor may give written notice and refer the dispute to arbitration, either at the International Centre for Settlement of Investment Disputes (ICSID) or at an African arbitral institution.
What investors should do now
Map which existing treaties currently protect your investments and when their sunset periods expire.
Review investment structures and ESG compliance against the protocol's obligations.
Factor the protocol's dispute settlement options into contracts and investment agreements.
For governments, the priority is national implementation guidelines, with monitoring indicators to benchmark reform, supported by the regional economic communities.
This brief is adapted from "Investment protocol holds the key to AfCFTA's success", first published in Business Day on 15 March 2023.