Benchmarking South Africa’s Foreign Direct Investment Policy

The document analyzes the shift in South Africa's investment policy from bilateral investment treaties (BITs) toward the Promotion and Protection of Investment Bill (PPIB) of 2013. It highlights how the PPIB prioritizes the state's right to regulate in the public interest and replaces international arbitration with domestic dispute resolution. The author argues that this creates regulatory uncertainty and misalignment with the SADC Finance and Investment Protocol (FIP) and the SADC Model BIT, potentially hindering foreign direct investment (FDI) and regional integration.

• The Promotion and Protection of Investment Bill (PPIB) of 2013 introduces five primary departures from the protections offered under South Africa's previous bilateral investment treaties (BITs): it requires material economic investment or physical presence for an 'investment' to be recognized; asserts the state's right to regulate in the public interest to redress inequalities; adopts a compensation model based on constitutional balancing rather than market value; omits certain international protections like the most-favoured nation standard; and removes recourse to international arbitration in favor of domestic resolution.
• The PPIB's exclusion of compensable indirect expropriation—specifically regarding measures for public welfare, environmental protection, or state security—is identified as the most significant risk to South Africa's ability to attract foreign direct investment (FDI).
• South Africa's proposed domestic policy is misaligned with the SADC Finance and Investment Protocol (FIP), which continues to offer BIT-type protections including international arbitration and fair and equitable treatment. This creates a reciprocal imbalance where South African outward investments in SADC countries are more protected than inward investments into South Africa.
• The author recommends that SADC member states terminate the FIP investment annex and instead adopt the SADC Model BIT as a standard domestic policy. The Model BIT is viewed as a more balanced approach that replaces 'fair and equitable treatment' with 'fair administrative treatment,' aligning international agreements with domestic policy space.
• While international arbitration was historically seen as efficient, the document notes a decline in its appeal due to eroding confidentiality and high costs, citing an average of 1,325 days to conclude a case in International Centre for Settlement of Investment Disputes (ICSID) arbitration.
• To successfully attract sustainable FDI under the new regime, South Africa must implement a conflict management system by revising the Arbitration Act and improving the performance of public institutions to ensure policy coherence.

APA

ADeleke, F. (2015). Benchmarking South Africa’s Foreign Direct Investment Policy. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2015/05/Policy-Insights-13.pdf

Chicago

ADeleke, FolA. Benchmarking South Africa’s Foreign Direct Investment Policy. South African Institute of International Affairs, 2015. https://saiia.org.za/wp-content/uploads/2015/05/Policy-Insights-13.pdf.

Wikipedia

{{cite report |last1=ADeleke |first1=FolA |title=Benchmarking South Africa’s Foreign Direct Investment Policy |publisher=South African Institute of International Affairs |date=13 April 2015 |url=https://saiia.org.za/wp-content/uploads/2015/05/Policy-Insights-13.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{adeleke2015benchmarking, author = {ADeleke, FolA}, title = {{Benchmarking South Africa’s Foreign Direct Investment Policy}}, institution = {South African Institute of International Affairs}, year = {2015}, month = apr, url = {https://saiia.org.za/wp-content/uploads/2015/05/Policy-Insights-13.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }