Title
SADC PROTOCOL ON FINANCE AND INVESTMENT
Preamble
PREAMBLE
WE, the Heads of State or Government of:
The Republic of Angola
The Republic of Botswana
The Democratic Republic of the Congo
The Kingdom of Lesotho
The Republic of Madagascar
The Republic of Malawi
The Republic of Mauritius
The Republic of Mozambique
The Republic of Namibia
The Republic of South Africa
The Kingdom of Swaziland
The United Republic of Tanzania
The Republic of Zambia
The Republic of Zimbabwe
HAVING regard to Article 21 of the Treaty which enjoins Member States to cooperate in all areas necessary to foster regional development and integration;
NOTING Article 22 of the Treaty which calls for the conclusion of protocols as may be necessary in each area of cooperation and which shall spell out the objectives and scope of, and the institutional mechanisms for, cooperation and integration;
FURTHER noting that the RISDP map and targets for enhancing socio-economic development and deeper regional integration;
CONSCIOUS of their collective duty to achieve economic growth and balanced intra regional development, compatibility among national and regional strategies and programmes, to develop policies aimed at the progressive elimination of obstacles to the free movement of capital and labour, goods and services, and of the residents of the Member States, improve economic management and performance through regional co operation, and to create appropriate institutions and mechanisms for the implementation of programmes and operations in the Region;
CONVINCED of the need to accelerate growth, investment and employment in the SADC Region through increased cooperation, coordination and management of macroeconomic, monetary and fiscal policies and to establish and sustain macroeconomic stability as a precondition to sustainable economic growth and for the creation of a monetary union in the Region;
RECOGNISING the increasing importance of the development and strengthening of financial and capital markets, and the role played by investment and the private sector in productive capacity and increased economic growth and sustainable development;
RECOGNISING the importance of the link between investment and trade, and the need for greater regional cooperation to enhance the attractiveness of the Region as an investment destination;
MINDFUL of the different levels of economic development of Member States and of the need to share equitably in the benefits of regional integration;
HEREBY AGREE as follows:
Body
Chapter ONE. Definitions and Objectives
Article 1. Definitions
1. In this Protocol, terms and expressions defined in Article 1 of the Treaty shall bear the same meaning unless the context otherwise requires.
2. In this Protocol, unless the context otherwise requires:
"Annex" means an Annex to this Protocol;
"BIS" means the Bank for International Settlements;
"capital market" means a market where capital funds, debt or equities and any other financial instrument are traded
"CCBG" means the Committee of Central Bank Governors in SADC;
"Central Bank" means, in relation to a State Party, the central bank of that State Party;
"Committee of Ministers responsible for Finance and Investment" means the Committee of Ministers for policy development and policy making for finance and investment matters, or such similar body as the Council may establish;
"Committee of Senior Treasury" means the technical advisory body to the Committee of Ministers for Finance and Investment Officials consisting of Heads of Treasuries;
"DFIs" means, in relation to a State Party, those financial institutions which are designated, or classified, as Development Finance Institutions by that State Party;
"financial markets" means markets for the exchange of capital and credit in the economy;
"Protocol" means this SADC Protocol on Finance and Investment including its annexes;
"State Party" means a Member State that has ratified or acceded to this Protocol; and
"RISDP" means the Regional Indicative Strategic Development Plan.
Article 2. Objectives
1. This Protocol seeks to foster harmonisation of the financial and investment policies of the State Parties in order to make them consistent with objectives of SADC and ensure that any changes to financial and investment policies in one State Party do not necessitate undesirable adjustments in other State Parties.
2. The objective referred to in paragraph 1 shall be achieved through facilitation of regional integration, co-operation and co-ordination within finance and investment sectors with the aim of diversifying and expanding the productive sectors of the economy, and enhancing trade in the Region to achieve sustainable economic development and growth and eradication of poverty by:
(a) creating a favourable investment climate within SADC with the aim of promoting and attracting investment in the Region;
(b) achieving and maintaining macroeconomic stability and convergence within the Region;
(c) co-operating in respect of taxation and related matters within the Region;
(d) co-operating and co-ordinating amongst State Parties in collaboration with Central Banks on exchange control policies;
(e) establishing principles which will facilitate the creation of a coherent and convergent status in the legal and operational frameworks of Central Banks;
(f) establishing a framework for co-operation and co-ordination between (amongst) Central Banks on payment, clearing and settlement systems;
(g) co-operating in the area of information technology and communications technology amongst Central Banks;
(h) co-operating on bank supervision amongst Central Banks;
(i) co-operating in the activities of DFIs in the Region;
(j) co-operating in the area of non-banking financial institutions and services;
(k) facilitating the development of capital markets in the Region;
(l) co-operating in the area of SADC Stock Exchanges;
(m) co-operating with regard to anti-money laundering issues amongst State Parties; and
(n) cooperation in respect of a SADC Project Preparation and Development Fund.
2. The objectives set out in paragraph 1, the implementation thereof and the mechanism for such implementation are fully described in the Annexes to this Protocol.
Chapter TWO. Co-operation on Investment
Article 3. Co-operation on Investment
State Parties shall co-ordinate their investment regimes and cooperate to create a favourable investment climate within the Region as set out in Annex 1.
Chapter THREE. Macroeconomic Convergence
Article 4. Macroeconomic Convergence
State Parties shall converge on stability-orientated economic policies and shall co-operate as set out in Annex 2.
Chapter FOUR. Co-operation In Taxation and Related Matters
Article 5. Co-operation In Taxation and Related Matters
State Parties shall co-operate in taxation matters and co-ordinate their tax regimes within the Region as set out in Annex 3.
Chapter FIVE. Co-operation Among Central Banks
Article 6. Co-operation and Co-ordination on Exchange Controls
State Parties shall co-operate and co-ordinate their exchange control policies as set out in Annex 4.
Article 7. The Legal and Operational Frameworks
State Parties shall harmonize the legal and operational frameworks of their respective Central Banks as set out in Annex 5.
Article 8. Payments, Clearing and Settlement Systems
State Parties shall ensure co-operation amongst their respective Central Banks in relation to payments, clearing and settlement systems as set out in Annex 6.
Article 9. Co-operation In the Area of Information and Communication Technology
State Parties shall ensure co-ordination and co-operation amongst their respective Central Banks in relation to operations in the area of information and communication technology as set out in Annex 7.
Article 10. Co-operation between Banking Supervisors
State Parties shall facilitate co-operation between (amongst) regional banking supervisors and the harmonization of banking supervisory standards and practices as set out in Annex 8.
Chapter SIX. Network of Dfis
Article 11. Facilitation of Activities of Dfis
In order to increase effectively cross border flows of finance for projects, State Parties agree to establish a Development Finance Institutions Network and to facilitate the activities of their respective Development Finance Institutions and to ensure co-operation between these Development Finance Institutions as set out in Annex 9.
Chapter SEVEN. Co-operation In Regional Capital and Financial Markets
Article 12. Regulation and Supervision of Non-banking Financial Services
State Parties shall harmonize the regulation of non-banking financial institutions and shall facilitate co-operation between the respective regulators and supervisors of such institutions as set out in Annex 10.
Article 13. Development of Capital and Financial Markets
State Parties shall co-operate in developing and strengthening national capital and financial markets with the intention of creating a regional capital and financial market as set out in Annexes 10 and 11.
Article 14. Co-operation Among Member Stock Exchanges
State Parties shall facilitate co-operation between their respective stock exchanges as set out in Annex 11.
Chapter EIGHT. Anti-money Laundering
Article 15. Co-operation with Regard to Anti-money Laundering
State Parties shall co-operate with regard to anti-money laundering.
Chapter NINE. Project Preparation and Development Fund
Article 16. Development of a Sadc Project Preparation and Development Fund
State Parties agree to establish a Project Preparation and Development Fund to finance the preparation and development of projects by way of providing technical assistance towards project identification, project selection and feasibility studies and to participate in the financing of selected projects.
Chapter TEN. Institutional and Administrative Arrangements
Article 17. Establishment of Institutions
The following institutions are to be established in accordance with Articles 9, 10 and 11 of the SADC Treaty:
(a) the Committee of Ministers for Finance and Investment;
(b) the Committee of Central Bank Governors in SADC; and
(c) the Peer Review Panel.
Article 18. The Committee of Ministers for Finance and Investment
The Committee of Ministers for Finance and Investment shall consist of the Ministers responsible for finance and for investment of each State Party and it shall meet at least once a year.
Article 19. The Committee of Central Bank Governors In Sadc
1. The CCBG shall consist of the Governor of the Central Bank of each State Party.
2. The CCBG shall meet at least once a year and will report to the Committee of Ministers for Finance and Investment.
Article 20. Peer Review Panel
1. The Peer Review Panel shall consist of:
(a) the Committee of Ministers for Finance and Investment; and
(b) Central Bank Governors from each of the State Parties.
2. The Peer Review Panel shall meet once a year to effect the provisions of macroeconomic monitoring and surveillance as provided for in Article 7 of Annex 2.
Article 21. Institutional Mechanisms
1. The institutional mechanisms for implementation of this Protocol shall comprise the Integrated Committee of Ministers, the Committee of Ministers for Finance and Investment, the CCBG, the Peer Review Panel and the Secretariat.
2. The Committee of Ministers for Finance and Investment shall create such committees, sub-committees or institutions as it deems necessary for purposes of the effective implementation of this Protocol.
Article 22. Functions and Responsibilities
1. The functions and responsibilities of the Integrated Committee of Ministers are as set out in Article 12 of the SADC Treaty.
2. The Committee of Ministers for Finance and Investment shall oversee the implementation of this Protocol.
3. The CCBG shall be responsible for the implementation of those aspects that are specifically allocated to it:
(a) by the Committee of Ministers for Finance and Investment; and
(b) in the various Annexes of this Protocol.
4. The Secretariat shall ensure close collaboration with;
(a) State Parties; and
(b) all relevant institutions on finance, investment and other related matter the Region.
Chapter ELEVEN. Final Provisions
Article 23. Annexes
1. State parties may develop and adopt annexes for the implementation of this Protocol.
2. An Annex shall form an integral part of this Protocol.
3. The adoption of annexes under this Article shall be done in accordance with Article 26.
Article 24. Settlement of Disputes
1. State Parties shall use their best endeavours, through co-operation and consultation, to achieve consensus in the interpretation, application and implementation of this Protocol.
2. Where State Parties are unable to achieve consensus in the interpretation, application and implementation of any Article of this Protocol, as contemplated in paragraph 1, and:
(a) the Annex relating to such Article contains provisions which deal with disputes or differences arising in relation to such Article, such provisions shall be applied in respect of the dispute or difference relating to such Article;
(b) the Annex relating to such Article does not contain provisions which deal with disputes or differences arising in relation to such Article, the State Parties which are parties to the dispute or difference relating to such Article will use their best endeavours to settle such dispute or difference through negotiations in good faith.
3. State Parties agree that if, in relation to a dispute or difference contemplated in paragraph 2 (b) the State Parties which are parties to such dispute or difference are unable to settle such dispute or difference through negotiation within three months from the time the disputes or differences arose, such dispute or difference shall be referred to the Tribunal for adjudication.
Article 25. General Undertaking
1. State Parties shall take such appropriate measures as are necessary to ensure that their respective obligations arising from this Protocol are fulfilled.
2. State Parties shall co-operate with each other in addressing any impediments that may arise as a result of any action, or lack of action, by any State Party on issues having a material bearing on those finance and investment matters which are not covered in this Protocol.
Article 26. Amendments
1. Any State Party may propose amendments to this Protocol.
2. Proposals for amendments to this Protocol shall be made to the Executive Secretary who shall duly notify all Member States of the proposed amendments at least thirty (30) days in advance of
Consideration of the amendments by the States Parties. Such notice may be waived by the Member States.
3. Amendments to this Protocol shall be adopted by a decision of three quarters of all the State Parties and shall become effective thirty (30) days after such adoption.
Article 27. Signature
This Protocol shall be signed by the duly authorised representatives of the Member States.
Article 28. Ratification
This Protocol shall be subject to ratification by the signatory States in accordance with their constitutional procedures.