Title
COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA REVISED INVESTMENT AGREEMENT FOR THE COMESA COMMON INVESTMENT AREA (CCIA)
Preamble
INVESTMENT AGREEMENT FOR THE COMESA COMMON INVESTMENT AREA
PREAMBLE
The Governments of Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Kingdom of eSwatini, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe, Member States of the Common Market for Eastern and Southern Africa (COMESA);
REAFFIRMING the importance of having sustainable economic growth and development in all Member States and the region, including through joint efforts in liberalising and promoting intra-COMESA trade and investment flows;
RECALLING the decision of the Third COMESA Summit of the Authority held on 29 June 1998 in Kinshasa, Democratic Republic of Congo, to establish the COMESA Common Investment Area (hereinafter referred to as "CCIA"), in order to enhance COMESA's attractiveness and competitiveness for promoting foreign direct and cross border investments;
RECALLING the establishment of the COMESA Free Trade Area (FTA) on 31st October 2000 and recognising that direct investment is an important source of finance for sustaining the pace of economic, industrial, infrastructure and technology development; hence, the need to attract higher and sustainable level of direct investment flows in COMESA;
RECALLING that the Member States have agreed under paragraph 1 of Article 159 of the Treaty Establishing COMESA to encourage and facilitate private investment flows into COMESA;
RECOGNISING that particular pressures on the balance of payments of a Member State in the process of economic development or economic transition may necessitate the use of restrictions to ensure, inter alia, the maintenance of a level of financial reserves adequate for the implementation of its programme of economic development or economic transition;
UNDERSTANDING that this Agreement is designed to recognise the right of Member States to regulate and to introduce new measures relating to investments in their territories in order to meet national public policy objectives;
DETERMINED to realise the vision of COMESA to establish a competitive COMESA Common Investment Area through a more liberal and transparent investment environment; and
BEARING IN MIND that the measures agreed upon shall contribute towards the realisation of the Common Market and the achievement of sustainable development in the region.
HAVE AGREED AS FOLLOWS:
Body
Part One. PRELIMINARY PROVISIONS
Article 1. Definitions
In this Agreement, unless context otherwise requires:
“Agreement” means the Investment Agreement for the COMESA Common Investment Area;
“CCIA” means the area that covers the whole of the territories of Member States of COMESA as defined by their respective legislation;
“CCIA Committee” means the Committee referred to under Article 7 of this Agreement;
“COMESA” means the Common Market for Eastern and Southern Africa established under Article 1 of the COMESA Treaty;
"COMESA investor" means:
(i) a natural person of a Member State; or
(ii) a juridical person of a Member State,
making an investment in another Member State, in accordance with the laws and regulations of the Member State in which the investment is made.
For purposes of the definition of COMESA investor:
(i) “Natural person” means a person having citizenship of a Member State in accordance with its applicable laws and regulations; and
(ii) "Juridical person" means any legal entity duly constituted or otherwise organised under the applicable laws and regulations of a Member State provided that a juridical person owned or controlled by foreign nationals shall not qualify as a COMESA investor unless it maintains substantial business activity in the Member State in which it is duly constituted or organised;
“COMESA Treaty” means the Treaty establishing the Common Market for Eastern and Southern Africa;
“Council” means the Council of Ministers of COMESA as established under Article 7 of the COMESA Treaty;
“economic activities” means all economic activities of the economy, including services, where investment, as defined in this Article, is taking place;
“enterprise or company” means any entity duly constituted or otherwise incorporated under the applicable laws and regulations of a Member State provided that it maintains substantial business activity in the Member State inwhich it is located;
“freely convertible currency” means a convertible currency as classified by the International Monetary Fund or any currency that is widely traded in regional or international foreign exchange markets;
“home state” means, a State from where the COMESA investor originates;
“host state” means the Member State where the investment is located;
“investment” means an enterprise or a company, which is established, acquired or expanded by an investor, including through the constitution, maintenance or acquisition of shares, debentures or other ownership instruments of such an enterprise, provided that the enterprise or company is established or acquired in accordance with the laws of the Member State. In order to qualify as an investment under this Agreement the investment must have the following characteristics: the substantial business activity, commitment of capital or other resources, the expectation of gain or profit, the assumption of risk, and significance for the host State’s development but does not include;
(a) debt securities issued by a government or loans to a government;
(b) portfolio investments;
(c) claims to money that arise solely from commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Member State to an enterprise in the territory of another Member State, a bank letter of credit or an extension of credit in connection with a commercial transaction, such as trade financing;
(d) investments of a speculative nature, such as futures, swaps, forwards and derivatives;
“LIBOR” means London Interbank Offered Rate ;
"measures" means any legal, administrative, judicial or policy decision that is taken by a Member State, directly relating to and affecting an investment in its territory, after this Agreement has come into effect;
“Member State” means a Member State of COMESA that has ratified or acceded to this Agreement;
“returns” mean the amount yielded by an investment and in particular, though not exclusively, includes dividends, profit, interest, capital gains or other equivalent charges, royalties and other payments deriving from licenses, franchises, concessions and other similar rights; and
“Substantial business activity” requires an overall examination, on a case-by-case basis, of all the circumstances, including, inter alia:
(a) the amount of investment brought into the country;
(b) the number of jobs created;
(c) its effect on the local community; and
(d) the length of time the business has been in operation
Part Two. GENERAL PROVISIONS
Article 2. Objective
The parties to this agreement hereby designate the COMESA region as a common investment area with the following objectives:
(a) promote investments that support sustainable development in Member States;
(b) encourage the gradual elimination of investment restrictions and conditions, which may impede investment flows and the operation of investment projects in COMESA and promote a more transparent investment environment;
(c) provide COMESA investors, in the conduct of their business, with an overall balance of rights and obligations between investors and Member States, in accordance with this Agreement;
(d) strengthen and increase the competitiveness of COMESA?s economic activities; and
(e) promote COMESA as an attractive investment area.
Article 3. Coverage
1. This Agreement shall only apply to investments of COMESA investors that have been registered by relevant authority of the host State as listed in Schedule IV, and in accordance with the relevant procedures of the host state.
2. Subject to paragraph 1 of this Article, this Agreement shall cover investments of COMESA investors made in the territory of Member States in accordance with their laws and regulations prior to or after entry into force of this Agreement.
3. This Agreement shall not be applicable to claims arising out of any measures, which occurred or were taken prior to entry into force of the Agreement.
Article 4. Transparency
1. Each Member State shall make available to the CCIA Committee relevant measures, which pertain to, or affect, the operation of this Agreement. This shall also apply to international agreements pertaining to or affecting investment to which a Member State is also a signatory.
2. Each Member State shall publish relevant measures, which pertain to, or affect, the operation of this Agreement.
3. Each Member State shall, within 30 days of the enactment or the introduction of any new measure or any changes in existing measures, which affect investments or its commitments under this Agreement, inform the CCIA Committee and the general public.
4. Nothing in this Agreement shall require any Member State to provide confidential information, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular enterprises, public or private.
Article 5. General Obligations
To realize the objectives referred to in Article 2, the Member States shall:
(a) undertake appropriate actions to promote transparency and consistency in the application and interpretation of their investment laws, regulations and administrative procedures;
(b) strengthen the process of facilitation, promotion and liberalisation which would contribute continuously and significantly to achieving the objective of a more liberal and transparent investment environment;
(c) take appropriate actions to enhance the attractiveness of their investment environment for direct investment flows;
(d) promote, maintain and encourage competition to enhance economic efficiency in investment and consumer protection;
(e) prohibit any anti-competitive investment conduct that prevents, restricts or distorts competition at the national and regional levels;
(f) not waive or otherwise derogate from or offer to waive or otherwise derogate from measures concerning labour, public health, safety or the environment as an encouragement for the establishment, expansion or retention of investments;
(g) develop national policies to guide investors in developing human capacity of the labour force. Such policy may include incentives to encourage employers to invest in training, capacity building and knowledge transfer;
(h) develop national policies that pay particular attention to special needs of youth, women, persons with disabilities and other vulnerable groups;
(i) take measures to protect the health, safety and economic interests of consumers and their right to information, education and to organize themselves in order to safeguard their interests; and
(j) take such reasonable actions as may be available to them to ensure observance of the provisions of this Agreement by the regional and local government authorities within their territories.
Article 6. International Multilateral Agreements
Member States are encouraged, where appropriate, to endeavour to accede to the following multilateral agreements designed to promote, facilitate and protect investment:
(a) the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards;
(b) the International Convention on Settlement of Investment Disputes between States and Nationals of other States;
(c) the Convention Establishing the Multilateral Investment Guarantee Agency;
(d) the Agreement Establishing the African Trade Insurance Agency; and
(e) any other multilateral agreement designed to promote or protect investment.
Article 7. Institutional Arrangements
1. The following COMESA Organs shall be responsible for administering this Agreement:
(a) Ministers responsible for investment of each Member State, or cabinet representatives,
which for the purposes of this Agreement, shall be known as the COMESA Common Investment Area Committee ("CCIA Committee"); and
(b) the Technical Committee on Investment composed of senior officials from Ministries responsible for investment and Chief Executives of Investment Promotion Agencies as may be designated by each Member State, which for the purposes of this Agreement, shall be known as the Technical Committee on Investment (TCI).
2. The CCIA Committee shall be responsible for:
(a) overall supervision of the implementation of this Agreement;
(b) making decisions or issuing directions that may require to be made under this Agreement;
(c) recommending to the Council any review of this Agreement when necessary;
(d) making recommendations to the Council on any policy issues that need to be made to enhance the objectives of this Agreement. For example the development of common minimum standards relating to investment in areas such as:
(i) environmental impact and social impact assessments;
(ii) labour standards;
(iii) respect for human rights;
(iv) conduct in conflict zones;
(v) corruption; and
(vi) subsidies and incentives; and
(e) conducting a review of the effectiveness of this Agreement and its implementation in the light of its objectives four years after its entry into force and every four years thereafter.
3. The Technical Committee shall be responsible for:
(a) advising on the technical aspects of the Agreement;
(b) submitting its reports and recommendations to the CCIA Committee, either on its own initiative or upon the request of the CCIA Committee, concerning the implementation of the provisions of this Agreement;
(c) preparation and development of action plans for the implementation of this Agreement; and
(d) carrying out such other functions as are assigned to it by or under this Agreement.
4. The COMESA Secretariat shall provide secretarial services to the institutions described in paragraph 1 of this Article.
5. The head of the COMESA Regional Investment Agency or his/her representative shall participate in all the meetings of the organs described under paragraph 1 as an ex-officio member.
6. Subject to this Agreement and any directions given by Council, the CCIA Committee and the TCI shall meet as often as necessary for the proper discharge of their functions and shall determine their own Rules of Procedure.
Article 8. Implementing Programmes and Action Plans
1. Member States shall, for purpose of the implementation of the obligations under this Agreement, undertake the joint development and implementation of the following programmes:
(a) co-operation and facilitation programme as specified in Schedule I annexed hereto;
(b) promotion and awareness programme as specified in Schedule II annexed hereto;
2. Member States shall submit action plans for the implementation of programmes mentioned in paragraph 1 to the CCIA Committee within a year of ratifying or acceding to this Agreement.
3. The Action Plans shall be reviewed by the CCIA Committee every two years to ensure that the objectives of this Agreement are achieved.
Article 9. Liberalisation Programme
1.The parties shall adopt a liberalisation programme, whereby they shall:
(a) unilaterally reduce and eliminate restrictive investment measures and review their investment regimes regularly towards further liberalization. In this context, Member States may undertake actions to liberalise, among others:
(i) rules, regulations and policies relating to investment;
(ii) rules on licensing conditions;
(iii) rules relating to access to domestic finance; and
(iv) rules to facilitate payment, receipts and repatriation of profits by investors;
(b) undertake individual action plans to:
(i) open up all industries for investment to COMESA investors in accordance with the provisions of this Agreement; and
(ii) extend national treatment to all COMESA investors in accordance with the provisions of this Agreement; and
(c) promote free flow of capital, skilled labour, professionals and technology among COMESA Member States.
2. The liberalisation programme under paragraph 1 shall be implemented in a manner to be determined by the parties.
Article 10. Relation to Dispute Settlement
No recourse to dispute settlement shall be initiated for any matter relating to Part Two of this Agreement.
Part Three. STANDARD OF TREATMENT OF INVESTORS AND INVESTMENTS
Article 11. Admission
Each Member State shall promote, encourage and facilitate investments in its territory, and admit such investments in accordance with its laws and regulations.
Article 12. Encouragement and Support of Investments
Member States may introduce incentives in order to attract investments. Such incentives may include:
(a) financial incentives in the forms of investment insurance, grants or loans at concessionary rates;
(b) fiscal incentives such as tax holidays, pioneer status and reduced tax rates;
(c) subsidized infrastructure or services, market preferences;
(d) development-oriented incentives, to encourage preferential markets schemes and specific investors within the region;
(e) incentives for technical assistance or technology transfer requirements; or
(f) investment guarantees.
Article 13. Support to Domestic Investors
Notwithstanding any other provision of this Agreement, Member States may support the development of local and regional industries that provide, inter alia, up-stream and down-stream linkages and have a favourable effect on attracting investments and generating increased employment in Member States. The support covered by this paragraph include:
(a) measures to grant preferential treatment to any qualifying enterprise under the domestic law of a Member State in order to achieve national or regional development goals;
(b) measures to support the development of local entrepreneurs;
(c) measures to enhance productive capacity, increase employment, increase human resource capacity, research and development including, new technology, technology transfer, innovation and other benefits of investment through the use of specified requirements on investors; or
(d) measures to address historically based economic disparities suffered by identifiable ethnic or cultural groups due to discriminatory or oppressive measures against such groups.