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This independent blog collects news about projects or achievements in regulatory reform / better regulation. It is edited by Charles H. Montin. All opinions expressed are given on a personal basis.
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20 January 2012

Enabling regulatory frameworks (Africa)

A good summary of the question in the Southern part of Africa is provided by a recent online news article (Johannesburg Financial Mail) reporting insights from a legal firm director, with a special emphasis on prospects for the continent's green economy. "Countries such as South Africa have established enabling legislation, including the Integrated Resource Plan to attract investment into the green economy, but politicians also needed to send the right message about the country embracing FDI. (...) Many African countries have implemented regulatory reforms to specifically attract FDI. Out of the 15 SADC member states, for example, 12 have a specific law governing private investment, and/or foreign investment or have established an investment promotion agency. Countries such as South Africa, Lesotho and Botswana have no specific FDI legislation, but have liberal investment regimes. FDI legislation is under review in Namibia, Seychelles and Zimbabwe, while Botswana’s Industrial Development Act, which deals with licensing, is also under review. According to a recent survey by Ernst & Young capital inflows into the continent are expected to reach US$150 billion by 2015, yet Africa still attracts less than 5% of global FDI projects. (...) With each of Africa’s 54 countries having different legal frameworks in place, bi-lateral investment treaties have proved successful in setting the ground rules for attracting FDI. Most of the major African countries, including Botswana, Nigeria, and South Africa, have bi-lateral treaties which set up specific conditions for investors in the host country. For example, some treaties set the rules for how disputes will be arbitrated, while others determine issues regarding tax incentives, double taxation, local procurement and trade." "Enabling" regulation is an approach quite different from deregulation, and entails an effort to inform stakeholders and streamline administrative processes, especially licensing. South Africa for instance announced that "within a year to a year and half a clear, legal regulatory framework will be in place so as to provide foreign and local business a clear picture of how to go about investing in South Africa."

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