In late 2015, African countries finalised the drafting of the Pan-African Investment Code (PAIC). What is the added value of this continental instrument related to the regulation of foreign investment?
The year 2015 was a crucial one for Africa regarding the negotiation of the first continent-wide investment agreement: the Pan-African Investment Code (PAIC). Although this legal instrument – presented in the form of a treaty – is not yet officially adopted, it reflects an African consensus on the shaping of international investment law. It has been drafted from the perspective of African developing and least developed countries focusing on Sustainable Development Goals (SDGs). The PAIC contains a number of Africa-specific and innovative features, making it a truly unique legal instrument.
The main objective of the PAIC is to foster coherence and consistency with respect to the rules and principles that will govern investment protection, promotion and facilitation on the African continent. As such, it has the potential to become a sustainable solution to solve the puzzle of international investment agreements (IIAs) in Africa.
The puzzle of IIAs in Africa
African countries adopted the large bulk of their bilateral investment treaties (BITs) between the mid-90s and the early 2000s. Traditionally, BITs were concluded with capital exporting countries, mainly from Europe. African states hoped that the establishment of international rules to protect investment intended to ensure stability and predictability, would promote and attract foreign capital into their economies. Today, African countries have signed around 870 BITs or IIAs, which corresponds to about a third of all IIAs signed worldwide. However, since 2002, there has been a marked decline in the number of BITs signed by African countries.