Protecting International Investors in SACU: Towards Harmonisation

The report finds that SACU lacks a unified investment policy, relying instead on a fragmented network of bilateral investment treaties (BITs) and regional agreements. While there is general convergence on minimum international standards for expropriation and dispute settlement, significant disparities exist in the definition of investors and the application of national treatment, particularly regarding South Africa's black economic empowerment policies. The author argues that harmonisation, potentially using the SADC Finance and Investment Protocol as a model, would reduce legal risks for investors and prevent a 'race to the bottom' among member states, though it faces challenges from national sovereignty concerns and a lack of political commitment.

• SACU lacks a unified, codified investment law; only Namibia has a specific Foreign Investment Act (Act 27 of 1990), while other members rely on a 'patchy and structurally unbalanced system' of bilateral investment treaties (BITs), regional trade agreements (RTAs), and multilateral agreements.
• There are disparities in how SACU members define 'investors,' with some BITs allowing protections based on mere incorporation in a home state, which the report notes are 'subject to abuse' by third-country nationals.
• South Africa and Botswana do not fully apply unqualified non-discrimination (national treatment) to foreign companies. South Africa implements affirmative action through 'broad-based black economic empowerment' to redress historical inequalities, while Botswana uses a 'Reservation Policy of 1982' to reserve certain activities for local businesses.
• Monetary transfer rights are inconsistent across the region. Botswana has abolished foreign exchange controls and allows unconditional repatriation, whereas Lesotho, Namibia, Swaziland, and South Africa may delay transfers during economic or balance of payment difficulties.
• While there is general agreement on the right to expropriate for public purpose with just compensation, Namibia and South Africa have faced legal challenges and international suits related to land redistribution and mineral rights expropriation.
• Dispute settlement mechanisms vary, with most SACU members utilizing the International Centre for the Settlement of Investment Disputes (ICSID), except for South Africa, which has not ratified the Convention but uses the ICSID Additional Facility Rules.
• The report argues that harmonising investment policies would eliminate the perception of an 'unpredictable environment' and prevent a 'race to the bottom' where member states compete against each other to attract capital.
• The author suggests that SACU could use the Southern African Development Community (SADC) Finance and Investment Protocol (FIP) and the Trade Protocol’s annex on services as a 'model law' for harmonisation to ensure regional compatibility.
• Harmonisation is hindered by a 'complex tension between national and regional priorities,' specifically the reluctance of member states to surrender sovereignty and a lack of political commitment from regional secretariats.

APA

Kiratu, S. (2008). Protecting International Investors in SACU: Towards Harmonisation. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2013/06/24-dttp_rep_24_kiratu.pdf

Chicago

Kiratu, Sheila. Protecting International Investors in SACU: Towards Harmonisation. South African Institute of International Affairs, 2008. https://saiia.org.za/wp-content/uploads/2013/06/24-dttp_rep_24_kiratu.pdf.

Wikipedia

{{cite report |last1=Kiratu |first1=Sheila |title=Protecting International Investors in SACU: Towards Harmonisation |publisher=South African Institute of International Affairs |date=2008 |url=https://saiia.org.za/wp-content/uploads/2013/06/24-dttp_rep_24_kiratu.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kiratu2008protecting, author = {Kiratu, Sheila}, title = {{Protecting International Investors in SACU: Towards Harmonisation}}, institution = {South African Institute of International Affairs}, year = {2008}, url = {https://saiia.org.za/wp-content/uploads/2013/06/24-dttp_rep_24_kiratu.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }