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(Foreign) Investment Strategies in Africa

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Permanent Sovereignty over Natural Resources

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Abstract

Considering contemporary context and State practice, a paramount duty of States exists to exercise their Permanent Sovereignty over Natural Resources (PSNR) in the interests of national development and for the well-being of its people. The early transformation of the principles of the PSNR Declaration into national licensing laws in Africa became the main instruments for the institution of systemic corruption and maladministration. Investment strategies towards Africa during the 1990s focussed on multilateral and economic interdependence, with 43 out of 53 African States adopting the World Bank’s ICSID investment dispute settlement mechanism, triggering significant increases in FDI flows to Africa. After the failure of the South African NEPAD concept, China-Africa Cooperation (FOCAC) during the decade of 2000–2010 achieved twice the originally envisaged essential investments in infrastructure. Based on a strict interpretation of the principles of non-interference, China implemented FOCAC projects, aid and FDI flows into African countries within the normal framework of project contracting, using mostly English common law precedents and giving preference to ICC arbitration. However, the all-important differentiation in the FOCAC Master Facility Agreements is China’s integrated approach where Chinese State Owned Enterprises and Banks credit the offtake of raw materials at market value to serve as finance for agreed project implementations so that the contracting, project management, payments and cash flows do not pass through the authorities of the African Resource State. The integration of resource exploration and mining, raw materials trading, project finance and project implementation established a new State practice in respect of the PSNR.

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Notes

  1. 1.

    UNGA Res. 1314 (XIII), Recommendations Concerning International Respect for the Rights of Peoples and Nations to Self-determination, 12 December 1958, 13 UN-GAOR, Supp. No. 18, p. 27, UN Doc.A/4090; Schrijver (2008), p. 59; Broms (1997), p. 521.

  2. 2.

    Louka (2006), p. 34; Perrez (1996), p. 1194; Schrijver (2008), p. 8.

  3. 3.

    ‘The exploration, development and disposition of such resources, as well as the import of the foreign capital required for these purposes, should be in conformity with the rules and conditions which the peoples and nations freely consider to be necessary or desirable with regard to the authorization, restriction or prohibition of such activities.’

  4. 4.

    See for an English translation of the 1966 Code: de Brauw (1979).

  5. 5.

    See Ordinance 71-22 of 12-04-1971 in respect of hydrocarbons.

  6. 6.

    See de Brauw, supra, pp. 23 et seq.

  7. 7.

    For an impressive graphical representation of these dimension see: http://commons.wikimedia.org/wiki/File:Afrika-real-size.png, accessed 21 January 2013.

  8. 8.

    Cockcroft and Riddell (1991), p. 46; see also IMF (1993), p. 44.

  9. 9.

    These and the previous FDI data from Inward FDI flows, annual, 1970–2011, Developing economies Africa and Africa n.e.s. (‘not elsewhere specified’), http://unctadstat.unctad.org/TableViewer/tableView.aspx?ReportId=88, last accessed 21 January 2013. A graphic depicting these trends is the chart: Inward FDI flows, annual, 1970–2011, Developing economies Africa and Africa n.e.s (‘not elsewhere specified’) at: UNCTAD International Trade Statistics: http://unctadstat.unctad.org/TableViewer/chartView.aspx and http://unctadstat.unctad.org/TableViewer/tableView.aspx?ReportId=88

  10. 10.

    UNCTAD (2008); see also summary at: http://en.afrik.com/article14576.html, accessed 21 January 2013.

  11. 11.

    See a good graphical representation at: http://afrographique.tumblr.com/post/4290367888/infographic-of-foreign-investment-on-the-african, last accessed 21 January 2013.

  12. 12.

    http://unctad.org/en/PublicationsLibrary/webdiaeia2012d20_en.pdf, accessed 21 January 2013. See also the comprehensive study by van der Lugt et al. (2011), p. 85.

  13. 13.

    A comprehensive overview and documentation of national foreign investment and related legislation is found on the webpages of the World Bank’s and IFC’s ‘Doing Business’ Initiative: http://www.doingbusiness.org/, accessed 21 January 2013.

  14. 14.

    Legislative Decree Number 93 of 12-10-1993.

  15. 15.

    See for instance: Investment Climate Advisory Services of the World Bank Group (2010); also: http://www.oecd.org/daf/internationalinvestment, both accessed 21 January 2013.

  16. 16.

    https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=ShowDocument&language=English, accessed 21 January 2013.

  17. 17.

    http://www.commissionforafrica.info/, accessed 21 January 2013.

  18. 18.

    http://www.nepad.org/npca, accessed 21 January 2013.

  19. 19.

    http://www.focac.org/eng/, accessed 21 January 2013.

  20. 20.

    For an image of the official seal and emblem of FOCAC see: http://www.focac.org/chn/gylt/ltjj/t155388.htm, last accessed 21 January 2013.

  21. 21.

    See the overview by Cissé (2012), p. 4. A very good evaluation is also found in Kobylinski (2012).

  22. 22.

    For the latest 2012 figures see Hazelhurst (2013).

  23. 23.

    Kobylinski (2012); Brown (2012), p. 17.

  24. 24.

    See for statistical material and analysis in Renard (2011).

  25. 25.

    http://www.info.gov.za/speech/DynamicAction?pageid=461&tid=76792, accessed 21 January 2013. The concern voiced in 2012 by South Africa, as one of China’s main trading and investment partners, is graphically demonstrated here: http://afrographique.tumblr.com/post/5387542552/an-infographic-depicting-the-percentage-breakdowns, last accessed 21 January 2013.

  26. 26.

    Thomashausen (2011), pp. 407–419. A map showing and identifying Chinese Investment Offers in Africa since 2010 can be found here: http://www.stratfor.com/image/chinese-investment-offers-africa, last accessed 21 January 2013.

  27. 27.

    Thomashausen (2012).

  28. 28.

    Schiere (2011).

  29. 29.

    Hubbard (2007), pp. 7 et seq; Brautigam (2010); also: Brautigam (2013).

  30. 30.

    ‘White Paper on China–Africa Economic and Trade Cooperation’, People’s Republic of China (PRC) Information Office of the State Council, 1 December 2010. See for more details: Meibo and Xie (2012), pp. 11–20, 12; also Grimm (2012); also: http://www.chinaafricarealstory.com/2012/01/africas-new-au-building-how-many.html, accessed 21 January 2013.

  31. 31.

    A good account of the Chinese expansions into Angola, Uganda, Nigeria, and Zimbabwe is given in: Chan-Fishel and Lawson (2007), pp. 63–68. See also the detailed reports and evaluations covering Angola, DRC, Mozambique, Tanzania, Uganda, EAC and SADC in: Centre for Chinese Studies (2010). On Sino-Angola relations specifically see: Kabemba (2012).

  32. 32.

    http://www.people.com.cn/GB/paper53/13217/1185583.html, accessed 21 January 2013, as translated in Hubbard (2007), pp. 14–15.

  33. 33.

    Zhang (2011), pp. 500–513.

  34. 34.

    Komesaroff (2012); Taylor (2012), pp. 31–38.

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Authors and Affiliations

  1. Department of Public, Constitutional and International Law, University of South Africa, The Cas van Vuuren Building, Muckleneuk Ridge, Pretoria, South Africa

    André Thomashausen

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  1. André Thomashausen
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Correspondence to André Thomashausen .

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Editors and Affiliations

  1. Europa-Institut, Saarland University, Saarbruecken, Germany

    Marc Bungenberg

  2. Faculty of Law, University of Cologne, Cologne, Germany

    Stephan Hobe

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Thomashausen, A. (2015). (Foreign) Investment Strategies in Africa. In: Bungenberg, M., Hobe, S. (eds) Permanent Sovereignty over Natural Resources. Springer, Cham. https://doi.org/10.1007/978-3-319-15738-2_9

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