Trade and Investment

Strategic objective: To influence investment regimes that promote inclusive and sustainable development.

Investments are seen as crucial for promoting development given the role they play in agricultural transformation, boosting industrial sector development and harnessing the growth of services sector which are all important for employment creation, value addition, revenue generation and economic development. The move to increase Foreign Direct Investment (FDI) flows into the region has seen the EAC partner States collectively and individually embark on an aggressive drive to attract FDI through adopting investment regimes and negotiating and signing a number of Bilateral Investment Treaties. There are also ongoing Investment related negotiations and processes at the Multilateral level within the WTO and in the mega regionals like the TTIP, at Bilateral level in the EAC-EU EPA Rendezvous Clause negotiations, and at the continental level in the CFTA. The existing Treaties and policy regimes largely promote Investor rights at the expense of the host country’s rights and peoples ESCRs and the environment. They also limit the host states’ policy space to regulate investment in the public interest. Therefore, despite the increased FDI flows into the region reported at 11 per cent with an estimated worth of $7 billion in 2014, there has been limited job creation, value addition, technology and skills transfer. Thus, increased investments in the region have not translated into sustainable development.

Globally, there has been a move to change the existing investment models in order to ensure that FDIs support national and regional development aspirations. At regional level, the EAC Partner States are in the process of putting in place an EAC Model Investment Treaty to guide their negotiations with third parties, while a number of countries like South Africa are reviewing their national Investment policies. At global level, there has been a strong movement to challenge the existing model especially the Investor State Dispute Settlement (ISDS) provisions. UNCTAD has also provided a model to support this rethink.

For the EAC Partner States to review the existing regimes and to negotiate pro-development investment treaties will require sustained capacity enhancement for both government policy makers and key stakeholders. This Programme Area will therefore enhance stakeholders’ capacity to effectively engage in all investment related policy processes at all levels.