Investment provides the capital necessary for projects and programmes designed to further the Southern African Development Community (SADC) mandate of Regional Integration and economic development. Whether through Foreign Direct Investment or the sale of securities, investment advances the productive capacity of businesses and enables them to compete on an international scale, directly benefiting the people of the region.
Due to political and security issues in the SADC region, investment has traditionally been low. However, SADC policies promoting stronger cooperation among Member States have lessened such issues in recent years and have, as a result, attracted significant investment. From 2001 to 2010, Foreign Direct Investment steadily increased throughout most Member States of the SADC region. Although this investment substantially decreased in the wake of the 2008 global economic downturn, tax incentives created under the advisement of SADC, still draw funding into the region. In particular, Member States with large resource industries – Angola and South Africa – receive extensive foreign investment. As the global economic climate recovers, further Foreign Direct Investment is expected to capitalise on other industries and Member States whose productive potential remains untapped.
The Protocol on Finance and Investment
In order to foster investment in the region, SADC established the Protocol on Finance and Investment in 2006. The Protocol on Finance and Investment outlines SADC policy on investment, requiring Member States to enact strategies to attract investors and facilitate entrepreneurship among their population. Member States are encouraged to implement legislation that creates a favourable environment for investment, such as tax incentives that ease financial burdens for private firms seeking to invest in the region.
SADC Investment Policy Framework
Guided by the Investment Policy Framework, SADC is implementing a number of intervetions to coordinate efforts by Member States and attract investment into the region.
Factors Affecting Investment
Specifically, SADC has identified the following dominant factors currently concerning investment in the region: