(Foreign) Investment Strategies in Africa

Abstract

Considering contemporary context and State practice, a paramount duty of States exists to exercise their Permanent Sovereignty over Natural Resources (PSNR) in the interests of national development and for the well-being of its people. The early transformation of the principles of the PSNR Declaration into national licensing laws in Africa became the main instruments for the institution of systemic corruption and maladministration. Investment strategies towards Africa during the 1990s focussed on multilateral and economic interdependence, with 43 out of 53 African States adopting the World Bank’s ICSID investment dispute settlement mechanism, triggering significant increases in FDI flows to Africa. After the failure of the South African NEPAD concept, China-Africa Cooperation (FOCAC) during the decade of 2000–2010 achieved twice the originally envisaged essential investments in infrastructure. Based on a strict interpretation of the principles of non-interference, China implemented FOCAC projects, aid and FDI flows into African countries within the normal framework of project contracting, using mostly English common law precedents and giving preference to ICC arbitration. However, the all-important differentiation in the FOCAC Master Facility Agreements is China’s integrated approach where Chinese State Owned Enterprises and Banks credit the offtake of raw materials at market value to serve as finance for agreed project implementations so that the contracting, project management, payments and cash flows do not pass through the authorities of the African Resource State. The integration of resource exploration and mining, raw materials trading, project finance and project implementation established a new State practice in respect of the PSNR.