SADC Investment Climate Scorecard A program supported by: And implemented by: © 2023 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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SADC Investment Climate Scorecard. Washington, DC: World Bank. Cover and layout design Diego Catto / www.diegocatto.com Contents Acknowledgements 5 Acronyms 6 Executive Summary 7 PART 1: Overview and Key Findings 13 I. Introduction 13 II. Methodology 19 III. Results 27 IV. Policy Implications 45 References 61 PART 2: Country Profiles 65 Introduction 67 Angola 68 Botswana 74 Democratic Republic of Congo 82 Eswatini 88 Lesotho 98 Madagascar 106 Malawi 116 Mauritius 122 Mozambique 135 Namibia 144 Seychelles 152 South Africa 160 Tanzania 164 Zambia 172 Zimbabwe 179 ANNEXES 185 Annex 1: Questionnaire, Data Collection Process and Project Timelines 186 Annex 2: General List of Government Bodies and Public Agencies Contributing to the Project 197 Annex 3: Indicative List of Laws and Regulations used for Completing the Questionnaire 199 Annex 4: Revised Scoring Framework: All Measures 200 Annex 5: Services Trade Restrictiveness Index- Sector and Topic Coverage 203 4 SADC | Investment Climate Scorecard Acknowledgements The SADC Investment Climate Scorecard report was prepared The team is grateful for the partnership of Fernando by the World Bank in partnership with the Organization Mistura and Stephen Thomsen of the OECD, whose for Economic Cooperation and Development (OECD) at the FDI Regulatory Restrictiveness Index provided the request of the SADC Secretariat. methodological foundation for the Scorecard. The primary authors of the report were Priyanka Kher and The team deeply appreciates the strategic guidance Peter Kusek with key contributions from Eduardo Antonio and collaboration of the SADC Secretariat, including Jimenez Sandoval and Ramprakash Sethuramasubbu. The Sadwick Mtonakutha, Mario Lironel, Hamilton Thomas, report was prepared under the World Bank project Support and Lisivololona Razanajaholy. The team also appreciates for SADC Scorecard on FDI Regulatory Restrictiveness co-led key contributions from Mike Nyamazana and Thierry by Ganesh Rasagam and Peter Kusek under the guidance Mutombo. The project is indebted to each SADC Member of Douglas Pearce and Asya Akhlaque. State’s focal point and independent short-term expert, who provided core technical input throughout the The project was made possible through financial support implementation of the project. of the European Commission through the African, Caribbean, and Pacific (ACP) Business Friendly and SIBE1 The team also recognizes the contributions of various programs. The ACP Business Friendly Program is an intra- World Bank Group colleagues, including Soujanya ACP action funded by the European Union (EU) and the Chodavarapu, Jakob Engel, Tania Ghossein, Ronald Organisation of ACP States (OACPS) and implemented by Rateiwa, Gracelin Christina Baskaran, Deo Ndikumana, the World Bank, UNIDO and ITC. The team is particularly Guido Rurangwa, Ivan Nimac, Aarushi Sinha, and Rachel grateful to Olivia Riera Lamiroy, Paz Velasco Velazquez, Almeida. The team is also grateful to Madelynne Wager Miguel Campo Llopis, Delphine Aupicon, Escipión Oliveira, and Barbara Balaj for their support on designing and and Anthony Brand. The project was also co-financed by editing the report. the World Bank’s Africa Regional Integration department. 1. Support to Improving the Investment and the Business Environment in the SADC Region. SADC | Investment Climate Scorecard 5 Acronyms ACP Africa, Caribbean and Pacific OECD Organization for Economic Co- AfCFTA African Continental Free Trade Area operation and Development APEC Asia Pacific Economic Cooperation PPP Public-Private Partnership CFIUS Committee on Foreign Investment of R&D Research and Development the United States RAPI Regional Action Program on EAC East African Community Investment EC European Commission RECs Regional Economic Communities EMDEs Emerging Market and Developing RISDP Regional Indicative Strategic Economies Development Plan EU European Union RRI Regulatory Restrictiveness Index FDI Foreign Direct Investment SADC Southern African Development FDI RR Index FDI Regulatory Restrictiveness Index Community FP Focal Point SDG Sustainable Development Goal FSC Financial Services Commission SEZ Special Economic Zone G20 Group of Twenty SME Small and Medium Enterprise GATS General Agreement on Trade in STE Short-term Expert Services STRI Services Trade Restrictiveness Index GDP Gross Domestic Product UAE United Arab Emirates GVC Global Value Chain UNCTAD United Nations Conference on Trade IFA Investment Facilitation for and Development Development Agreement UNIDO United Nations Industrial Development IMF International Monetary Fund Organization ISIC International Standard Industrial US United States Classification VAT Value-added Tax ITC International Trade Center WB World Bank MNE Multinational Enterprise WBG World Bank Group OACPS Organization of African, Caribbean and WEF World Economic Forum Pacific States WTO World Trade Organization 6 SADC | Investment Climate Scorecard Executive Summary The overlapping crises of the past few years have including the World Bank’s recent Global Investment translated into unprecedented volatility and uncertainty Competitiveness Surveys, show that political stability, for foreign direct investment (FDI) and international macroeconomic stability, the legal and regulatory production. Global FDI flows have stagnated since the environment, physical infrastructure, and export global financial crisis in 2008. The pandemic reduced competitiveness are considered crucial determinants global FDI further by 40 percent in 2020. FDI did rebound by foreign investors (World Bank 2018; 2020; and 2022). temporarily in 2021. Nonetheless, the long-term trend of Research shows that improvements in the quality of a stagnation has persisted. The latest data shows that FDI country’s legal and regulatory environment2 are associated declined by 12 percent in 2022 (UNCTAD 2023). The serial with higher FDI inflows (Akame, Ekwelle, and Njei 2016; shocks that have buffeted the global economy and stymied Buchanan, Le, and Rishi 2012; Daude and Stein 2007; growth in developing countries— including the pandemic, Gani 2007; Globerman and Shapiro 2002; Hebous, Kher, Russia-Ukraine war-induced surges in energy, food and and Tran 2020; Shepherd and others 2022; Vogiatzoglou fertilizer prices, and global inflation, have reduced the 2016; Wei 2000; and Wernick, Haar, and Singh 2009). availability of FDI to developing countries. As a result, the Mistura and Roulet (2019) use an augmented gravity relative importance of FDI has steadily declined over the model for 60 advanced and emerging countries and find past decade when measured as a share of developing that liberalizing FDI restrictions by about 10 percent (as countries’ gross domestic product (GDP). Yet, the need for measured by the Organization for Economic Co-operation FDI, especially for developing countries has only grown. and Development (OECD) FDI Regulatory Restrictiveness Indeed, the latest estimates suggest that the investment Index) can increase bilateral FDI in stocks by 2.1 percent gap to achieve the Sustainable Development Goals (SDGs) on average. Equally important is ensuring that investors exceeds US$4 trillion a year, up from the US$2.4 trillion have strong and well-enforced rights to protect them estimate in 2015 (UNCTAD 2023). from political risks, more specifically from any non- transparent or arbitrary and unpredictable regulatory Geography, endowments, macroeconomic stability and actions of governments. Research shows that weak legal policy fundamentals remain primary determinants of a protection against expropriation, transfer restrictions, country’s ability to attract FDI. However, governments and/or arbitrary regulatory actions can cause investors can play a key role in attracting, retaining and benefiting to divest or cancel expansion plans in a country, as well as from FDI by creating a more conducive enabling lead to investor-State disputes (World Bank Group 2018; business environment. Several investor surveys, 2019; and 2020). 2. See Kher and Eltgen (2020) for a literature review. SADC | Investment Climate Scorecard 7 The Southern African Development Community The SADC Investment Climate Scorecard focuses on (SADC) has an interest in better integrating in global identifying legal and regulatory restrictions on the and regional value chains. As such, it has increasingly entry of foreign direct investment in 15 SADC member been emphasizing private sector-led growth, with economies, namely: Angola, Botswana, the Democratic governments of the sub-region continuing to seek ways Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, of establishing an appropriate enabling environment Mauritius, Mozambique, Namibia, Seychelles, South Africa, to support economic growth and poverty alleviation. Tanzania, Zambia and Zimbabwe. Specifically, it examines FDI inflows to the SADC region remain low and volatile. the investment legislation for each country at an economy- FDI inflows declined 89 percent from the peak of US$29.5 wide level, as well as for 22 economic sectors. billion in 2014 to US$3.2 billion in 2018. Despite a minor recovery observed in 2019, with net inflows of US$10.5 The overall results of the SADC Investment Climate billion, the onset of the pandemic in 2020 led to negative Scorecard show that, despite the ongoing liberalization net inflows of US$3.6 billion.3 In 2021, however, the region efforts of SADC member states, specific legal and saw a new record of FDI, with inflows of US$50.1 billion to regulatory measures continue to impede FDI. Some the region. It should be noted though that this was inflated member states boast relatively open and competitive by a single intrafirm financial transaction in South Africa regulatory regimes for FDI. However, others impose in the second half of 2021. Excluding that transaction, restrictions in the four policy categories analyzed in this the increase is still significant, but more in line with other report, namely: (i) limits on foreign equity ownership; (ii) developing regions (UNCTAD 2022). Recent estimations of FDI screening and approval; (iii) limits on the employment FDI until 2024 suggest a potential return to pre-pandemic of foreigners as key personnel and directors; and (iv) levels of FDI inflows (IMF 2023). Furthermore, FDI to the other types of operational restrictions. The distribution SADC region has been primarily resource-seeking, but of restrictions and other types of measures4 across the there are opportunities to diversify. member states is relatively heterogeneous. Overall, there is a relatively high incidence of horizontal, economy-wide The current outlook is overshadowed by the funding measures, both in terms of the number of countries and squeeze that is hitting the sub-Saharan Africa region, in terms of the variety of measures applied. For example, with a confluence of higher global interest rates, preferential treatment of domestically owned companies elevated sovereign debt spreads, and exchange rate in public procurement appears more widespread than depreciations. Thus, economic activity in the region elsewhere in the world (where preferential treatment is is expected to remain subdued in 2022 and 2023 (IMF more commonly focused on imported goods and services). 2023). In this context, and to complement their other In addition, higher minimum capital requirements on FDI, initiatives to boost investment to the region, the SADC as well as limits on access to local finance by foreign- Secretariat requested World Bank support in developing owned companies, are also relatively more prevalent in an Investment Climate Scorecard. Based on consultations SADC member states than elsewhere. with counterparts from the SADC Secretariat and the European Union (EU), it was agreed to focus the scorecard In line with trends in the rest of the world, sector- on the FDI Regulatory Restrictiveness Index, a tool specific FDI measures in the SADC are most common developed by the OECD. It identifies legal and regulatory in transport, media, financial services, and real estate. barriers to FDI in individual countries and allows for However, the measures in other sectors are somewhat country benchmarking. more prevalent in the SADC countries, both in 3. Negative values of FDI flows correspond to reverse investment or disinvestment. FDI financial transactions may be negative for three reasons. First, it can occur if there is disinvestment in assets, that is, the direct investor sells its interest in a direct investment enterprise to a third party or back to the direct investment enterprise. Second, it could occur if the parent borrowed money from its affiliate or if the affiliate paid off a loan from its direct investor. Third, it can occur if reinvested earnings are negative. Reinvested earnings are negative if the affiliate loses money or if the dividends paid out to the direct investor are greater than the income recorded in that period. Negative FDI positions largely result when the loans from the affiliate to its parent exceed the loans and equity capital given by the parent to the affiliate. This is most likely to occur when FDI statistics are presented by the partner country. 4. ‘Measure(s)’ refers to provisions in countries’ laws and regulations that treat foreign investors differently from domestic investors, often less favorably. As for the SADC Investment Climate Scorecard, such measures are identified in the following 4 policy categories: (i) limits on foreign equity ownership, (ii) foreign investment screening and approval, (iii) limits on employment of foreigners as key personnel, and (iv) other measures regarding operations of foreign investors. The identification and mapping of measures follows the OECD’s Methodology on FDI Regulatory Restrictiveness Index. 8 SADC | Investment Climate Scorecard comparison to OECD and global averages5. These sectors equity limits in multiple sectors. On average, countries include mining, manufacturing, construction, distribution, report foreign equity limits in 7 of the 22 sectors covered hotels and food and tourism services. On average, SADC and tend to concentrate one-third of foreign equity limits Member States observe an almost two times higher in only one sector. Two-thirds of all foreign equity limits are level of restrictiveness than the global average6, and four in services. The policy category “other types of measures” times the level of OECD7 economies, thus pointing to a covers various operational restrictions, including land/ high incidence of legal barriers to FDI. Only four SADC real estate ownership, and profit/capital repatriation. countries have OECD FDI Regulatory Restrictiveness index “Other types of measures” is the second most prevalent scores8 below the global average (0.10). They include South policy category in SADC countries. On average, the SADC Africa (with a score of 0.034). It has the most competitive member states have 8 measures — or 31.2 percent of their performance compared to the global average, followed by total number of measures — in this category. “Other types Angola (0.089), Mauritius (0.09) and Zimbabwe (0.098). of measures” are present in 17 of the 22 sectors covered, At the same time, three SADC member states observe but they are concentrated in horizontal policies and in the a score over three times higher than the global average, financial services sector, jointly representing 56.8 percent namely Lesotho, Mozambique, and Tanzania. of all measures under this policy category. “Screening and approval” is the third most prevalent category in The SADC member states and other countries covered SADC; on average, 11.1 percent of all measures fall under by the OECD’s FDI Regulatory Restrictiveness Index this category. Although FDI screening is concentrated (RRI) observe a similar composition of legal barriers to in services, other sectors and horizontally applied FDI, that is, “policy categories”. For the SADC member measures represent an important share of this policy states, the category of measures with the highest relative category as well. The services sectors have about 54.8 share in the overall score is “foreign equity limits”, followed percent of all screening measures, whereas other sectors by “other other types of measures”, “foreign investment represent about 38.1 percent of all screening measures. screening” and “restrictions on foreign key personnel”. The remaining 7.1 percent of all screening measures are In total, 378 measures9 are identified for all SADC horizontal. “Restrictions on foreign key personnel” is the members, that is, 25 per country, on average. South Africa least used policy category, with on average, 10 percent of registers the lowest number of measures, with 9 in total, all identified measures falling under this category. whereas Mozambique observes the highest number of measures, totaling 43. The SADC member states observe Over the past few years, the SADC member countries measures in 11 of the 22 assessed sectors, on average. have implemented policies to improve their investment The SADC countries have, on average, 8.5 percent of their competitiveness. For example, to facilitate investment, measures applied horizontally across the economy, with Botswana established an Investment Facilitation Centre the remaining 91.5 percent of the measures pertaining that houses relevant government agencies to provide to individual sectors. “Foreign equity limit” is the most faster services to investors10. Similarly, in 2022, Mauritius prevalent type of policy category at the country level, with launched the Financial Services Commission (FSC) on average, 47.4 percent of all measures falling under this Single Window. It is a one-stop-shop service to serve category. The SADC member states tend to impose foreign financial institutions, businesses, and potential investors.11 5. The global average covers 38 OECD countries and 26 non-OECD economies. They are included in the OECD FDI- RRI until April 14, 2023. 6. The global average covers 38 OECD countries and 26 non-OECD economies. They are included in the OECD FDI-RRI until April 14, 2023. 7. Until April 14, 2023, this covers the 38 OECD countries, 15 SADC countries, and 26 non-OECD economies, including: Albania, Algeria, Angola, Argentina, Armenia, Brazil, Cambodia, Croatia, Egypt, Georgia, Jordan, Kazakhstan, Lao PDR, Lebanon, Libya, Morocco, Namibia, , Peru, Romania, Singapore, Thailand, Tunisia, Ukraine, Uruguay, Vietnam and the West Bank and Gaza. 8. Index value 1 is most restrictive and 0 is the least restrictive. 9. The term “measure” as used in this report refers to specific restrictions in countries’ laws and regulations that treat foreign investors differently than domestic investors, often less favorably. Regarding the SADC Investment Climate Scorecard, such measures are identified across 4 key policy categories (that is, limits on foreign equity ownership; foreign investment screening and approval; limits on employment of foreigners as key personnel; and other measures regarding operations of foreign investors) within the selected 22 sectors (including sub-sectors). The identification and mapping of measures follows the OECD’s Methodology on FDI Regulatory Restrictiveness Index.” 10. These services include administrative procedures, such as for company and business registration, trade and industrial license applications, entry visas, work and residence permits, work permit exemptions, connection of utilities, income tax and value-added tax (VAT) registration, access to industrial and commercial land, and environmental impact assessments. 11. The Single Window provides relevant information related to licenses, professional permits and business registration. It helps investors in the sector to submit information to fulfill regulatory requirements. It provides access to three institutions, the Financial Services Commission, the Corporate and Business Registration Department and the Economic Development Board. SADC | Investment Climate Scorecard 9 Zimbabwe, Namibia and Madagascar have also recently African Continental Free Trade Area (AfCFTA) Services undertaken reforms to improve their rules regarding FDI and Investment Protocols. The Services Protocol entry and operations. Specifically, Zimbabwe amended requires member states to make trade and investment the Indigenization and Economic Empowerment Act liberalization commitments in 5 priority sectors12. Notably, (2008) to remove the majority indigenization threshold. the sectors with most measures across the SADC member Namibia removed the requirement for companies seeking states include transport, financial services and tourism p mining exploration licenses to be partly owned and — all of which are AfCFTA priority sectors. Regarding managed by black Namibians. Madagascar also removed the Investment Protocol of the AfCFTA, although it does restrictions concerning the transfer of capital in and out not focus on market access or entry frameworks per of the country (foreign exchange), while also requiring a se, member states may also leverage the Scorecard to declaration of transfer to be submitted to the authorities determine the gap between repatriation frameworks in or authorized bank. member states and the Investment Protocol. In addition, the Scorecard can serve as a resource for conducting self- As global competition for FDI intensifies, countries need assessments vis-a-vis the World Trade Organization (WTO) to continuously monitor and adjust their investment Investment Facilitation for Development Agreement, policy frameworks to the changing global realities, as in particular, assessments concerning the aspects well as to their own political economy and development of investment approval and screening, as well as the considerations. In reviewing their performance in the employment of expatriates. SADC Investment Climate Scorecard and in determining their own reform options, the SADC member states should It is also important to highlight the aspects that the take into consideration good practices in the four policy SADC Investment Climate Scorecard does not cover. categories covered in the Scorecard, as well as recent It is not a comprehensive review of the entire legal and global developments in investment policy. Key elements regulatory framework affecting investment. Although the of a competitive FDI policy and institutional framework OECD’s methodology assigns certain weights to each policy include, amongst others: (i) an open FDI entry regime; category covered, it still does not enable prioritization (ii) a streamlined and transparent investment facilitation of reforms by country. Therefore, the prioritization of framework; (iii) targeted investment promotion; and (iv) an reforms will need to be specific to the context, political overall predictable regulatory environment for investment. economy, feasibility and interest in reforms for each SADC Of course, to determine reform priorities, countries need member state. Notably, the Scorecard also does not to also take into consideration their stage of development capture de facto implementation of laws and regulations and broader socioeconomic and sustainable development in the country. Indeed, there are persistent de facto objectives. restrictions in SADC member states that are not captured by the Scorecard.13 The effective implementation of laws Member states may also use the Scorecard as an and regulations remains a key aspect that the member analysis of the baseline to identify areas for further states need to address. reform in moving towards greater alignment with the 12. This includes: Business Services; Communication Services; Financial Services; Transport Services, and Tourism and Travel-related Services. 13. See Hallward-Driemeier, Mary, and Lant Pritchett (2015). The authors find that the estimate of legally required time for firms to complete a certain legal and regulatory process provided by the Doing Business survey does not necessarily reflect the experience of firms as reported by the Enterprise Surveys. When strict de jure regulation and high rates of taxation meet weak governmental capabilities for implementation and enforcement, researchers and policymakers should stop thinking about regulations as creating “rules” to be followed, but rather as creating a space in which “deals” of various kinds are possible. 10 SADC | Investment Climate Scorecard part. 1 part. 1 Overview Part. 1 Overview and Key Findings and Key Findings SADC | Investment Climate Scorecard 11 I. Introduction The global economy is facing uncertainties and availability of FDI to developing countries. As a result, the a slowdown in growth and productivity that are relative importance of FDI has steadily declined over the unprecedented. The broad-based slowdown in growth past decade when measured as a share of developing rates has profound implications for the world’s ability to countries’ GDP. tackle the growing array of challenges, especially poverty and climate action, that are unique to our times. Private Geography, endowments, macroeconomic stability investment, and foreign direct investment in particular, and policy fundamentals remain the primary will have to drive the recovery in Emerging Market and determinants of a country’s ability to attract FDI. Developing Economies (EMDEs). In this regard, FDI is However, governments can play a key role in attracting, also expected to contribute to sustainable investment and retaining and benefiting from FDI by creating a more development goals. conducive enabling business environment. Several investor surveys, including the World Bank’s recent The overlapping crises of the past few years have Global Investment Competitiveness Surveys, show that translated into unprecedented volatility and uncertainty political stability, macroeconomic stability, the legal and for FDI and international production. Global FDI flows regulatory environment, physical infrastructure, and have stagnated since the global financial crisis in 2008. export competitiveness are considered crucial by foreign However, the COVID-19 pandemic reduced global FDI investors (World Bank 2018; 2020; and 2022). Research further by 40 percent in 2020. FDI did rebound temporarily shows that improvements in the quality of a country’s legal in 2021. Nonetheless, the long-term trend of stagnation and regulatory environment14 are associated with higher has persisted. The latest data shows that FDI declined FDI inflows (Akame, Ekwelle, and Njei 2016; Buchanan, by 12 percent in 2022 (UNCTAD 2023). FDI to developing Le, and Rishi 2012; Daude and Stein 2007; Gani 2007; countries stagnated prior to the pandemic, and the current Globerman and Shapiro 2002; Shepherd and others 2022; set of compounding crises has further exacerbated the Vogiatzoglou 2016; Wei 2000; and Wernick, Haar, and longer-term trends. The serial shocks that have buffeted Singh 2009). Mistura and Roulet (2019) use an augmented the global economy and stymied growth in developing gravity model for 60 advanced and emerging countries countries— including the pandemic, the Russia-Ukraine and find that liberalizing FDI restrictions by about 10 war-induced surges in energy and food prices, global percent (as measured by the Organisation for Economic inflation, and a looming recession—have reduced the Co-operation and Development (OECD) FDI Regulatory 14. See Kher and Eltgen 2020 for a literature review. SADC | Investment Climate Scorecard 13 Restrictiveness Index) can increase bilateral FDI in stocks actions, is associated with lower FDI inflows. Estimations by 2.1 percent on average. These effects were largest for FDI from a model of investor location choices suggest that in the services sector. Covering a similar set of elements, regulatory risk can deter the decisions of multinational Borchert, Gootiiz and Mattoo (2012) find that foreign equity enterprises (MNEs) to enter or expand in a host country restrictions, FDI-specific rules in licensing, restrictions on (Hebous, Kher, and Tran 2020). the repatriation of earnings and a lack of legal recourse all have a significant and sizable negative effect, reducing the expected value of sectoral foreign investment by US$ 2.2 Southern African Development billion over a 7-year period as compared with more “open” policy regimes. Equally important is ensuring that investors Community (SADC) have strong and well-enforced rights to protect them from political risks, more specifically non-transparent At the request of the SADC Secretariat, this report or arbitrary and unpredictable regulatory actions of focuses on the SADC member states.15 With an interest in governments. Research shows that weak legal protection better integrating in global and regional value chains, the against expropriation, transfer restrictions, and arbitrary SADC has increasingly been emphasizing private sector-led regulatory actions can cause investors to divest or cancel growth. Governments of the sub-region continue to seek expansion plans in a country, as well as lead to investor- ways to establish an appropriate enabling environment to State disputes (World Bank Group 2018, 2019, 2020). High support economic growth and poverty alleviation. regulatory risk, that is, risks due to arbitrary government B O X 1 Southern African Development Community The Southern African Development Community (SADC), one of the regional economic communities in Africa, was formed in 1980 as the “Southern African Development Co-operation Conference” by nine of the current Member States. On August 17, 1992, in Windhoek, Namibia, the SADC was transformed into The Southern African Development Community with the signing of the SADC Declaration and Treaty. SADC currently comprises sixteen member states, with a combined population of approximately 360 million and a gross domestic product (GDP) of US$ 752 billion (2021) (UNCTAD Stats). The main objectives of the SADC are to: (i) achieve development, peace and security: (ii) attain economic growth; (iii) alleviate poverty; (iv) enhance the standard and quality of life of the peoples of Southern Africa; and (v) support the socially disadvantaged through regional integration, built on democratic principles and equitable and sustainable development. Source: www.sadc.int 15. SADC member states include: Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic Tanzania, Zambia and Zimbabwe. 14 SADC | Investment Climate Scorecard F I G U R E 1 FDI Inflows to Developing Countries, 2011-2021 average (as a percentage of GDP) 4.8 4.6 4.3 4.1 4.0 2.1 1.9 Sub-Saharan Latin Europe and East Asia and South Middle East SADC Africa America and Central Asia Pacific Asia and North Countries Caribbean Africa Source: UNCTADstat. F I G U R E 2 Net FDI Inflows to SADC Member States, 2009-2023 (US$ billions) 50.1 29.5 20.2 19.3 17.7 18.9 12.3 14.6 13.1 12.7 9.5 8.6 10.5 3.0 3.2 -3.6 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023f 2024f Source: IMF, Africa regional outlook database. Note: 2023/2024 values are from IMF forecasts. SADC | Investment Climate Scorecard 15 FDI inflows to the SADC region remain low and volatile. 2023). However, this outlook is overshadowed by the funding As shown in Figure 1, compared to the rest of sub-Saharan squeeze that is hitting the sub-Saharan Africa region, Africa, the SADC region attracts somewhat less FDI relative with a confluence of higher global interest rates, elevated to the size of its economy. SADC’s FDI performance has also sovereign debt spreads, and exchange rate depreciations. been volatile. Indeed, FDI inflows declined 89 percent from Thus, economic activity in the region is expected to remain the peak of US$29.5 billion in 2014 to US$3.2 billion in 2018. subdued in 2022 and 2023 (IMF 2023). Despite, a minor recovery observed in 2019, with net inflows of US$10.5 billion, the onset of the pandemic in 2020 led to FDI to the SADC region has been primarily resource- negative net inflows of US$3.6 billion16. However, in 2021, seeking, but there are opportunities to diversify. Figure the region saw a new record of FDI, with inflows of US$50.1 3 shows that investments to natural resources have billion to the region, as shown in Figure 2. It should be noted accounted for more than 45 percent of FDI inflows into the though, that this was inflated by a single intrafirm financial region, of which 32 percent went to extractive industries, transaction in South Africa in the second half of 2021. including coal, oil, gas and metals. The top destinations Excluding that transaction, the increase is still significant, (for resource seeking FDI) include South Africa (mining/ but more in line with other developing regions (UNCTAD metals) and Angola, the Democratic Republic of Congo, and 2022). Recent estimations of FDI until 2024 suggest a Mozambique (coal, oil and gas). potential return to pre-pandemic levels of FDI inflows (IMF F I G U R E 3 FDI by Sector, 2012-2022 Transportation & Communications, 10% Warehousing, 5% Renewable energy, 12% Coal, oil & gas , 22% Business Food & Beverages, 3% services, 3% Chemicals, 4% Software Building Financial & IT materials - 3% services - services, 2% 1% Wood Hotels & products, tourism, Real estate, 16% Metals, 10% Other, 4% Automotive OEM, 3% 1% 1% Source: FDI markets data. Note: This figure represents the percentage of FDI inflows over total FDI in SADC countries. OEM= Original Equipment Manufacturer 16. Negative values of FDI flows correspond to reverse investment or disinvestment. FDI financial transactions may be negative for three reasons. First, this can occur if there is disinvestment in assets, that is, the direct investor sells its interest in a direct investment enterprise to a third party or back to the direct investment enterprise. Second, it can occur if the parent borrowed money from its affiliate or if the affiliate paid off a loan from its direct investor. Third, it can occur if reinvested earnings are negative. Reinvested earnings are negative if the affiliate loses money or if the dividends paid out to the direct investor are greater than the income recorded in that period. Negative FDI positions largely result when the loans from the affiliate to its parent exceed the loans and equity capital given by the parent to the affiliate. This is most likely to occur when FDI statistics are presented by the partner country. 16 SADC | Investment Climate Scorecard The SADC Secretariat requested World Bank Group regulatory environment affecting FDI, that is, restrictions support in developing an Investment Climate Scorecard. on the entry of FDI in the SADC member states. The SADC Based on consultations with counterparts from the SADC Investment Climate Scorecard focuses on 4 specific Secretariat and the European Union (EU), it was agreed to types of FDI measures17, namely: (1) the limits of foreign focus the scorecard on the FDI Regulatory Restrictiveness equity ownership, (2) FDI screening and approval, (3) Index- a tool developed by the OECD. It identifies legal and employment of foreigners as key personnel and directors, regulatory barriers to FDI in individual countries and allows and (4) other types of measures (for example, operational for country benchmarking. The SADC Secretariat also restrictions, such as on capital repatriation or land expressed a specific interest in the approach since it would ownership). This initiative is particularly timely given the complement other ongoing initiatives, such as the SADC’s recent developments regarding international and regional Regional Action Program on Investment (RAPI), which investment agreements, such as the Africa Continental has three components: (1) developing and harmonizing Free Trade Area Agreement, as well as the World Trade relevant policies for attracting both domestic and foreign Organization’s Investment Facilitation for Development investment, (2) investment promotion initiatives, and (3) Agreement (IFA). developing platforms for sharing information relevant to investors. The African Continental Free Trade Area (AfCFTA) presents an important opportunity for the SADC Despite the ongoing efforts by many SADC member member states to catalyze new investments to diversify states to improve their investment competitiveness, FDI exports, accelerate growth, and attract private inflows to the SADC region have been low and volatile. investment through the creation of a more integrated Compared to the rest of sub-Saharan Africa, the SADC and larger market (Echandi and others 2022; World region attracts somewhat less FDI relative to the size of Bank 2023). To benefit from the AfCFTA, countries will its economy. The SADC Investment Climate Scorecard need to align their domestic frameworks with the AfCFTA focuses on one important element of the overall legal and Agreement — including its Investment and Services 17. ‘Measure(s)’ refers to provisions in countries’ laws and regulations that treat foreign investors differently from domestic investors, often less favorably. As for the SADC Investment Climate Scorecard, such measures are identified in the following 4 policy categories: (i) limits on foreign equity ownership, (ii) foreign investment screening and approval, (iii) limits on employment of foreigners as key personnel, and (iv) other measures regarding operations of foreign investors. The identification and mapping of measures follows the OECD’s Methodology on FDI Regulatory Restrictiveness Index. SADC | Investment Climate Scorecard 17 Protocols — by implementing systematic reforms. The World Trade Organization’s Services Trade Restrictiveness SADC Investment Climate Scorecard will serve as an Index (STRI). At the time of preparation of this report, the analysis of the baseline. As such, it can help identify areas STRI covered 9 sectors20 in comparison to the OECD FDI- for further reforms toward greater integration within the RRI’s 22 sectors (See Annex 5 for the sector coverage). The AfCFTA. It will be especially useful in benchmarking areas, STRI covers these sectors across the 4 modes21 of supply such as capital repatriation, the employment of foreigners of services. By contrast, the OECD FDI-RRI’s focus is on and, critically, market access restrictions in the services mode 3. There are also differences in terms of the topics sectors18. covered and data sources22. At a global level, the negotiation of the WTO’s Agreement It is also important to highlight the aspects not covered on Investment Facilitation for Development, also by the SADC Investment Climate Scorecard. It is not a presents an important opportunity, although with fewer comprehensive review of the entire legal and regulatory SADC member states participating19. The IFA focuses on framework affecting investment. The OECD’s methodology a broader set of facilitation measures, including requiring assigns certain weights to each policy category covered. member states to improve the approval and authorization However, it still does not enable prioritization of reforms by frameworks and work permit and visa processes. The country. Prioritization of reforms will need to be specific to goal is to achieve greater transparency and simplification the context, political economy, feasibility, as well as interest of investment frameworks. By mapping the provisions in reforms for each SADC member state. Notably, it does concerning FDI screening and approval, work permits not capture the de facto implementation of laws and and expatriate employment, the SADC Investment Climate regulations in the country. Indeed, there are persistent Scorecard can allow for the benchmarking of member de facto restrictions in SADC member states that are states on these dimensions of the IFA framework. It can not captured by the Scorecard23. Given these limitations, help identify a baseline for further analysis regarding information presented in the Scorecard should be specific areas of improvement. interpreted and used, while also keeping in view the overall country context and realities. The information captured is The SADC Investment Climate Scorecard fills a in summary form. Thus, it is not intended to be a substitute knowledge gap because FDI regulatory restrictions in for detailed legal research. the SADC member states have not been systematically mapped. The OECD’s FDI Regulatory Restrictiveness Section II of this report provides an overview of the Index (FDI-RRI) systematically maps an important set of methodology, Section III presents the results and regulatory restrictions. Through the SADC Investment Section IV discusses policy implications. Part 2 presents Climate Scorecard, the OECD’s FDI-RRI has expanded the detailed country-specific scorecard information its coverage to include 15 SADC member states. These (that is, the individual Country Profiles). member states are also covered in the World Bank and 18. Notably, the AfCFTA Trade in Services Protocol calls for the progressive liberalization of services based on a “WTO plus” positive lists, plus offer exchanges by member states. 19. At least 4 member states are currently participating, namely – Mauritius, Seychelles, Zambia, Zimbabwe. 20. This includes professional services, computer and related services, communications services, construction and related reengineering services, distribution services, financial services, health services, tourism and travel-related services, and transport services. 21. The General Agreement on Trade in Services (GATS) distinguishes between 4 modes of supplying services. Mode 1 refers to cross-border services. Mode 2 is consumption abroad. Mode 3 is commercial presence or FDI, and Mode 4 is movement of persons. 22. In terms of types of measures covered, the STRI includes the following categories: (i) conditions on market entry; (ii) conditions on operations; (iii) measures affecting competition; (iv) administrative procedures and regulatory transparency; and (v) miscellaneous (See Annex 5 for specific topics included). Although there is a partial overlap in the coverage of OECD FDI-RRI and the STRI categories (i), (iii) and (iv), the scope differs across these categories (in addition to the sectoral coverage). Further, the other categories included in the two indices are distinct. In terms of data sources, the OECD’s RRI is primarily based on the provisions of laws and regulations, whereas the STRI uses laws and regulations, other secondary sources, and data collected through a survey jointly conducted by the World Bank and the World Trade Organization. 23. See Hallward-Driemeier, Mary, and Lant Pritchett (2015). The authors find that the estimate of legally required time for firms to complete a certain legal and regulatory process provided by the Doing Business survey does not necessarily reflect the experience of firms as reported by the Enterprise Surveys. When strict de jure regulation and high rates of taxation meet weak governmental capabilities for implementation and enforcement, researchers and policymakers should stop thinking about regulations as creating “rules” to be followed, but rather as creating a space in which “deals” of various kinds are possible. 18 SADC | Investment Climate Scorecard II. Methodology Countries and Sectors Covered The SADC Investment Climate Scorecard focuses on Mozambique, Namibia, Seychelles, South Africa, Tanzania, identifying legal and regulatory restrictions on the entry of Zambia and Zimbabwe. Specifically, for each country, it foreign direct investment in 15 SADC member economies, examines the investment legislation at the economy level, including: Angola, Botswana, the Democratic Republic of as well as for 22 economic sectors. The 22 sectors are Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, listed in Table 1. TA B L E 1 Sectors Assessed in the Scorecard 1. Agriculture 12. Distribution – Retail 2. Forestry 13. Distribution – Wholesale 3. Fishery 14. Transport (surface, air and water/maritime) 4. Mining and quarrying (including oil extraction) 15. Hotels and Restaurants 5. Manufacturing – Food and Others 16. Media (radio and TV broadcasting, and other media) 6. Manufacturing – Oil Refining and Chemicals 17. Communications (fixed and mobile telecommunications) 7. Manufacturing – Metals, Machinery and Other 18. Financial Services – Banking Minerals 8. Manufacturing – Electrical, Electronics and Other 19. Financial Services – Insurance Instruments 9. Manufacturing – Transport Equipment 20. Financial Services – Other Finance 10. Electricity (generation and distribution) 21. Business Services (legal, accounting and auditing, and architectural and engineering services) 11 Construction 22. Real Estate Investment Source: OECD SADC | Investment Climate Scorecard 19 Topics Covered The Scorecard focuses on 4 specific types of FDI measures,24 namely: (1) limits of foreign equity owner- ship, (2) FDI screening and approval, (3) employment of foreigners as key personnel and directors, and (4) other types of measures (for example, operational re- strictions, such as on capital repatriation or land own- ership). For ease of reference, each of these 4 categories is referred to as a policy category, whereas legal or regula- tory provisions under a category are referred to as mea- sures.25 Country-level data concerning the measures was collected through a questionnaire (Annex 1). Part 2 of this report presents the detailed, country-specific scorecard information (that is, the Country Profiles). The questionnaires, and the listing of measures and scorecard values are based on a methodology devel- oped by the OECD, specifically the FDI Regulatory Re- strictiveness Index. The OECD has applied this meth- odology since the late 1990s in more than 80 countries, including all OECD economies, Group of 20 (G20) coun- tries, as well as a growing number of developing countries across regions. Data Collection The questionnaires for collecting data were completed in late 2021 and throughout 2022 by independent legal experts for each country. Designated government focal points oversaw the project in each of the SADC mem- ber states. The cut-off date for the data was December 31, 2021, unless specific clarifications were made by member state national focal points during the multiple consulta- tions. The information collected through the questionnaire relied on detailed analysis of countries’ legal frameworks. The general list of references that guided the country fo- cal points and independent experts through the process of completing the questionnaires is provided in Annex 3. 24. The term “measure” as used in this report refers to specific restrictions in countries’ laws and regulations that treat foreign investors differently than domestic investors, often less favorably. Regarding the SADC Investment Climate Scorecard, such measures are identified across 4 key policy categories (that is, limits on foreign equity ownership; foreign investment screening and approval; limits on employment of foreigners as key personnel; and other measures regarding operations of foreign investors) within the selected 22 sectors (including sub-sectors). The identification and mapping of measures follows the OECD’s Methodology on FDI Regulatory Restrictiveness Index. 25. The tabulation of the number of measures is based on the OECD’s identification of measures. 20 SADC | Investment Climate Scorecard The data collection process was guided by the following Data Analysis instructions: • Identifying relevant laws and regulations including: The analysis of the data followed the OECD’s latest FDI horizontal, sectoral, implementing regulations and Regulatory Restrictiveness Index methodology. The other secondary instruments. OECD FDI Regulatory Restrictiveness Index covers statu- • Key assumptions for the legal research included: (1) A tory measures26 that treat foreign investors less favorably focus on the legal/regulatory framework applicable to a than domestic firms.27 The Index is a de jure policy indica- foreign investor and not any specialized or preferential tor. As such, it is reflective of market access barriers to regimes, such as those in special economic zones or FDI and exceptions to national treatment. Other important economic processing zones. (2) A foreign investor is a aspects of the investment climate (for example, the imple- private multinational company with no equity interest mentation of regulations and state monopolies, preferen- or management control by the government of its home tial treatment for export-oriented investors, and special country (that is, it is not a state-owned enterprise). (3) economic zones (SEZ) regimes, among others) are not The research should be based on currently applicable considered. Investment-related measures implemented policy and legal instruments. solely for the purpose of safeguarding essential security • All questionnaire responses included: (1) a summary interests are also not reflected. Therefore, the indicator response (2) a relevant legal provision (including a link does not provide a full measure of a country’s investment to the instrument, name, and article/clause number). climate. Nonetheless, the covered FDI rules are a critical • Where there is uncertainty concerning answers, the determinant of a country’s attractiveness to foreign inves- experts were asked to consult with the national focal tors. Thus, the OECD FDI Regulatory Restrictiveness Index, point, as well as private practitioners. used in combination with other indicators measuring vari- • In case of multiple interpretations of the text of the ous aspects of the FDI climate, contributes to assessing laws/regulations, responses should provide details countries’ investment policies (Box 2). of the interpretational challenge and select the conservative option. 26. The identification and mapping of measures follows the OECD’s Methodology on FDI Regulatory Restrictiveness Index. For ease of tabulation and policy discussions, measures are counted at the sector level (including sub-sectors). When a “measure” exists at the horizontal level of the economy, it is considered as one measure applying to the whole of the economy. 27. The index uses non-discrimination as a key principle for identifying barriers. No government applies national treatment (that is, non-discrimination between nationals and foreigners) across the board. This is the case even in OECD member countries, where restrictions on foreign investment have tended to be, on average, lower than in other parts of the world. If other attributes of the investment climate are favorable, investors may still invest even if they face some operational restrictions once established. However, restrictions specific to foreign direct investment have been found to result in less FDI overall. Beyond the impact on FDI, any policy that favors some firms over others involves a cost, notably less competition and hence lower firm-level efficiency. For this reason, exceptions to non-discrimination need to be regularly evaluated with a view to determining whether the original motivation behind an exception (for example, safeguarding essential security-interests, protection based on the infant industry argument) remains valid. This should include an evaluation of the costs and benefits, as well as an assessment of the proportionality of the measure. In this context, the SADC Investment Climate Scorecard provides participating countries with the baseline data on FDI-specific policies that countries may consider for possible reforms in accordance with their priorities and political economy considerations. SADC | Investment Climate Scorecard 21 B O X 2 OECD Scoring Methodology for the Investment-related Measures Four types of measures are covered by the SADC Investment Climate Scorecard: (i) foreign equity restrictions, (ii) screening and prior approval requirements, (iii) rules for foreign key personnel, and (iv) other restrictions con- cerning the operation of foreign enterprises. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). (i) Foreign equity limits Foreign equity limits in specific sectors are widely prevalent, particularly in the service sectors. The scoring in- cludes a difference between full exclusion of foreign participation, restrictions on majority holdings, and limits on full foreign ownership. If no foreign equity is permitted, the score is 1 (the sector is closed). (ii) Screening and prior approval Screening mechanisms applicable only to foreign investors fulfill many functions and vary widely in their scope. At their most restrictive, they may apply economic needs, net economic benefits and/or national interest tests to both greenfield investments and acquisitions. However, in some cases, they are automatic and amount to little more than a pre-notification requirement for investors. (iii) Restrictions on foreign key personnel Measures regarding key personnel (directors, managers, and other key personnel) covered in the scorecard include nationality requirements for members of the board of directors and for persons occupying top executive corporate positions (for example, the Chief Executive Officer [CEO]/President and Executive Directors). Although these measures are typically applied in a non-discriminatory manner across companies, they are considered particularly more burdensome to foreign-owned companies and investors. As such, they are considered a re- striction in the scorecard. (iv) Other restrictions concerning the operation of foreign-controlled entities This includes various restrictions that can affect the potential operations of foreign investors. Some of the mea- sures covered cut across all sectors, which accounts for their significant impact on the overall index for some countries. A partial list of the measures includes: • Restrictions on the establishment of branches. • The acquisition of land for business purposes, including cases where foreigners may not own property, but may sign leases. • Reciprocity clauses in particular sectors. • Restrictions on profit or capital repatriation. Furthermore, the scores are adjusted by a factor ranging from 0.05 to 1, thus taking into consideration the extent to which a measure is applied to activities within a specific sector or sub-sector. A factor of 1 signifies that the measure is fully applied. It is assumed to affect almost the entire universe of activities within the correspond- ing sector or sub-sector breakdown (that is, 90 percent or more). However, a factor of 0.05 indicates that the measure is residually applied, impacting only a few segments within the respective sector or sub-sector break- down (that is, less than 5 percent). This adjustment accounts for the varying degrees of applicability of measures across different sectors or sub-sectors, thereby providing a more nuanced assessment of their impact on FDI. Annex 4 provides comprehensive details regarding the breakdown of the measures within the policy categories and the scoring methodology. Source: OECD. 22 SADC | Investment Climate Scorecard As the OECD index tracks the existence of restrictive Globally, countries with fewer FDI restrictions attract measures, a higher number of measures tends to result more FDI. Figure 5 shows a relationship between the in a relatively higher score. However, this relationship restrictiveness score and FDI attraction. Panel A shows is not strictly linear, as the index also takes into account this relationship for all countries covered under the the relative degree of restrictiveness of measures. OECD’s Regulatory Restrictiveness Index. Panel B shows Some policies are considered more restrictive than the relationship among SADC member states, indicating others; in particular, “foreign equity restrictions” are a steeper relationship for the SADC member states. This given a higher score compared to measures such as observation is in line with previous research using this “land ownership not permitted but leases possible”. Also, Index. For example, Mistura (2019), used edition 2017 of the as the number of policies with a restrictive impact on FDI OECD FDI Regulatory Restrictiveness Index including over accumulates in countries, its restrictiveness score also 60 advanced and emerging countries and found that even increases. The relationship between the score and the partial restrictions can have a strong negative impact on number of measures is presented in figure 4. It confirms investment. The paper estimates that the introduction of the positive relation; however, a country can have a less- reforms liberalizing FDI restrictions by about 10 percent, than-average number of measures and still be considered as measured by the Index, could increase bilateral FDI restrictive (for example, Lesotho has 19 policies in place, inward stock by around 2.1 percent on average. OECD which is below the 25-measure average for SADC states, research has also shown that countries that have reformed and yet it has a score of 0.4). their FDI entry rules in the direction of liberalization have seen greater FDI inflows (see, for instance, the evolution of F I G U R E 4 OECD FDI Regulatory Restrictiveness inward FDI in Brazil, Korea, the Philippines, and Vietnam) Index 2021 (score and number of measures) (Figure 6). (FDI Restrictiveness Score: 0 = no restrictions; 1 = most restricted) Mistura (2019) also found that the effect of reducing LSO foreign equity limitations is the strongest, denoting its .4 relatively greater importance as a statutory barrier for TZA investors. In line with this, evidence from the 2021 edition .3 MWI MOZ of the index and for SADC countries is presented in Panels SYC C and D of Figure 5, further supporting the notion of the Score COD .2 influence of foreign equity limitations on FDI inflows. SWZ ZMB MDG BWA NAM .1 MUS ZWE AGO ZAF 0 10 20 30 40 50 Number of measures Source: SADC Investment Climate Scorecard. Note: AGO=Angola; BWA=Botswana; COD=Democratic Republic of Congo; LSO= Lesotho; MDG=Madagascar; MOZ= Mozambique; MUS=Mauritius; MWI=Malawi; NAM=Namibia; SWZ=Eswatini; SYC=Seychelles; TZA=Tanzania; ZAF=South Africa; ZMB=Zambia; ZWE=Zimbabwe. SADC | Investment Climate Scorecard 23 FIGURE 5 Correlation of OECD FDI Regulatory Restrictiveness Scores and FDI Inflows (FDI Restrictiveness Score: 0 = no restrictions; 1 = most restricted) Panel A: Correlation between the FDI Regulatory Panel B: Correlation between FDI Regulatory Restrictiveness Score and the FDI Inflow Average for Restrictiveness Score and FDI Inflow Average for All Countries, 2016 – 2021 SADC Members, 2016 – 2021 FDI Regulatory Restrictiveness Score FDI Regulatory Restrictiveness Score .5 .5 .4 .4 .3 .3 .2 .2 .1 .1 0 0 0 20000 40000 60000 80000 100000 -5000 0 5000 10000 Panel C: Correlation between Foreign Equity Panel D: Correlation between Foreign Equity Restrictions Scores and FDI Inflow Average for All Restrictions Score and FDI Inflow Average for SADC Countries, 2016 – 2021 Members, 2016 – 2021 .2 .6 Foreign equity restrictions Score Foreign equity restrictions Score MWI TZA LSO .15 MDG MOZ .4 PHL SYC .1 JOR EGY ZMR DZA SWZ COD .2 AGO THA VNM .05 SAU MDG MOZ BWA UZB SYG TUR NAM ZMB ZWE SWZ AGO COD UKR CZE MUS ZAF BWA ARG COLPN ZAF MOS R ILU 0 0 0 20000 40000 60000 80000 100000 -5000 0 5000 10000 Source: UNCTAD Statistics and OECD FDI Regulatory Restrictiveness Index (2021). Note: AGO= Angola; BWA= Botswana; COD= Democratic Republic of Congo; LSO= Lesotho; MDG= Madagascar; MOZ= Mozambique; MUS=Mauritius; MWI= Malawi; NAM= Namibia; SWZ= Eswatini; SYC= Seychelles; TZA=Tanzania; ZAF= South Africa; ZMB= Zambia; ZWE= Zimbabwe. 24 SADC | Investment Climate Scorecard FIGURE 6 Correlation between Entry Barriers and FDI Inflows BRAZIL KOREA FDI Index (open=0; closed=1) % of GDP FDI Index (open=0; closed=1) % of GDP 0.4 45 0.8 18 40 0.7 16 0.3 35 14 0.6 0.3 30 12 0.5 0.2 25 10 0.4 0.2 20 8 15 0.3 6 0.1 10 0.2 4 0.1 5 0.1 2 0.0 0 0.0 0 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 VIET NAM PHILIPPINES FDI Index (open=0; closed=1) % of GDP FDI Index (open=0; closed=1) % of GDP 1.0 70 0.7 35 0.9 60 30 0.6 0.8 0.7 50 0.5 25 0.6 40 0.4 20 0.5 30 0.3 15 0.4 0.3 20 0.2 10 0.2 10 0.1 5 0.1 0.0 0 0.0 0 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 INDIA CHINA FDI Index (open=0; closed=1) % of GDP FDI Index (open=0; closed=1) % of GDP 0.6 20 0.7 18 18 16 0.5 0.6 16 14 14 0.5 0.4 12 12 0.4 10 0.3 10 0.3 8 8 0.2 6 6 0.2 4 4 0.1 0.1 2 2 0.0 0 0.0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 OECD FDI RR Index (left axis) Foreign Direct Investment, inward stocks (% of GDP) Source: OECD’s FDI Regulatory Restrictiveness Index. SADC | Investment Climate Scorecard 25 Stakeholder Validation The information collected through the questionnaires and the subsequent analysis by the World Bank and OECD were reviewed and validated by the SADC Member States through multiple checks. First, all legal experts and govern- ment focal points provided an email-based confirmation that the collected information was complete and accurate and could be used for scorecard preparation and analysis. Second, the final analyzed information was shared with the SADC Member States in December 2022 for their review and validation ahead of the SADC Investment Sub-Committee meet- ing on January 25-27, 2023, which included a multi-day workshop concerning the Scorecard. Third, this Sub-Committee meeting provided the official endorsement of the results by the SADC Member States. The overall implementation process allowed for capacity building to the representatives of member states, as well as to the SADC Secretariat regarding data collection, analysis and FDI frameworks. Peer-to-peer learning and innovation across member states was also an integral part of the process due to the cross-country comparative nature of the project. The next section presents the findings of the analysis undertaken as part of the SADC Investment Climate Scorecard. 26 SADC | Investment Climate Scorecard III. Results Overall Business Environment The overall business environment in most SADC coun- 100, with higher scores indicating more competitiveness tries has been challenging. Two key indicators illustrating as determined by the WEF methodology. To put these num- the broader business and policy environment include the bers into perspective, the best ranked country is Singapore World Economic Forum’s Competitiveness Index and the with a score of 84.8. Mauritius is the best ranked country World Bank Group’s Worldwide Governance Indicators. In among the SADC member states, scoring 64.3 and rank- the most recent World Economic Forum (WEF) Competi- ing in position 51 of the index. It is followed by South Africa, tiveness Index Assessment, only 5 SADC countries ranked ranking 59 with a score of 62.4; Seychelles, ranking 75 with in the top 100 (out of 141 countries surveyed). The index is a score of 59.6; Botswana, ranking 90 with a score of 55.5; represented in a normalized score that ranges from 0 to a and Namibia, ranking 93 with a score of 54.5 (Figure 7). FIGURE 7 WEF Global Competitiveness Index, 2019 100.0 South Africa Global Competitiveness Index Score Mauritius Seychelles 80.0 Botswana Namibia Madagascar Tanzania Mozambique Zambia 60.0 Lesotho Malawi Mali 40.0 20.0 0 Source: World Economic Forum Note: Regarding the scores, 0 = least competitive and 100 = ideal state of competitiveness. The WEF Competitiveness Index is a composite indicator that measures the level of competitiveness of a country’s economy by considering various fac- tors that influence economic growth and productivity. The index is based on a weighted average of twelve pillars, including institutions, macroeconomic stability, the financial system, and business dynamism, among others. For a comprehensive explanation of the methodology and breakdown of its various components, please refer to the following link: Global Competitiveness Report. SADC | Investment Climate Scorecard 27 The Worldwide Governance Indicator for regulatory quality one-third of all SADC countries ranked in the bottom assesses the perceptions on the ability of the government quartile of countries globally, with only Mauritius ranking to formulate and implement sound policies and regulations in the top quartile (4) (Figure 8). that promote private sector development. In 2021, over FIGURE 8 Regulatory Quality Performance in SADC Member States, 2021 (percentiles) 84 72 54 52 51 34 32 30 29 27 26 26 24 12 9 9 Madagascar Mauritius Botswana Seychelles Namibia South Africa Zambia Eswatini Tanzania Angola Lesotho Mozambique Malawi Comoros Zimbabwe Congo, Dem. Rep. Source: World Governance Indicators. Note: Regulatory quality captures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development. For a comprehensive breakdown of its various components, please refer to the following link: Regulatory Quality Index. A higher percentile ranking indicates superior performance on the Regulatory Quality index. 28 SADC | Investment Climate Scorecard Results of SADC Investment Climate Scorecard The overall results of the SADC Investment Climate by foreign-owned companies are also relatively more Scorecard show that despite SADC member states’ prevalent in SADC member states than elsewhere. ongoing liberalization efforts, specific legal and regulatory measures continue to impede FDI. As In line with trends in the rest of the world, sector-specific analyzed in this report, some member states boast FDI measures in SADC are most common in transport, me- relatively open and competitive regulatory regimes for dia, financial services, and real estate. However, measures FDI, whereas others impose restrictions in the 4 policy in other sectors are somewhat more prevalent in SADC, both categories analyzed by this report. These include: limits in comparison to the OECD and global averages28. These sec- on foreign equity ownership, FDI screening and approval, tors include mining, manufacturing, construction, distribu- limits on the employment of foreigners as key personnel tion, hotels, and food and tourism services. and directors, and other types of operational restrictions. The distribution of measures across the member states is On average, SADC member states observe an almost relatively heterogeneous. 2 times higher level of restrictiveness as compared to the global average29, and almost 4 times higher than Overall, there is a relatively high incidence of horizontal, the OECD30, thus indicating a high incidence of legal economy-wide measures, both in terms of the number barriers to FDI (Figure 9). Only four SADC countries have of countries and in the variety of measures applied. OECD FDI Regulatory Restrictiveness index scores31 below For example, preferential treatment of domestically the global average (0.10). South Africa (score of 0.034) has owned companies in public procurement appears the most competitive performance compared to the global more widespread than elsewhere in the world (where average, followed by Angola (0.089), Mauritius (0.09) and preferential treatment is more commonly focused on Zimbabwe (0.098). At the same time, three SADC member imported goods and services). Higher minimum capital states observe a score over 3 times higher than the global requirements on FDI and limits on access to local finance average, namely, Lesotho, Mozambique and Tanzania. FIGURE 9 OECD FDI Regulatory Restrictiveness Index, 2021 0.8 OECD FDI Regulatory Restrictiveness Index Score 0.6 0.4 0.2 0.0 Lao PDR Madagascar Libya Palestinian Authority Philippines Lesotho Algeria Saudi Arabia Tanzania Jordan Mozambique Egypt Indonesia Malawi Thailand Seychelles China India Viet Nam Congo, Dem. Rep. Australia Zambia Uzbekistan Iceland Mexico Lebanon Eswatini Botswana New Zealand Namibia Mongolia Tunisia Canada Switzerland Türkiye Israel Argentina Korea Brazil Cambodia Zimbabwe Bangladesh Mauritius Angola Belarus Italy Ukraine Singapore Poland Serbia Austria Azerbaijan United States Japan North Macedonia Costa Rica Croatia Bulgaria Kazakhstan Slovenia Bosnia and Herzegovina Morocco South Africa Uruguay Colombia Chile Hungary Albania France Romania Greece Georgia Montenegro Armenia Lithuania Slovak Republic Estonia Denmark Norway Moldova Spain Czech Republic Belgium Netherlands Germany Peru Latvia Sweden Ireland Luxembourg Portugal Finland Kosovo United Kingdom SADC Average Global Average OECD Average Source: OECD FDI Regulatory Restrictiveness Index (2021). Note: Scoring: 0 = no restrictions and 1 = most restricted. 28. The global average covers 38 OECD countries and 26 non-OECD economies. These are included in the index until April 14, 2023. 29. The global average covers 38 OECD countries and 26 non-OECD economies. These are included in the OECD FDI-RRI until April 14, 2023. 30. Until April 14, 2023, the project covers the 38 OECD countries, 15 SADC countries, and 26 non-OECD economies including: Albania, Algeria, Angola, Argentina, Armenia, Brazil, Cambodia, Croatia, Egypt, Georgia, Jordan, Kazakhstan, Lao PDR, Lebanon, Libya, Morocco, Namibia, Peru, Romania, Singapore, Thailand, Tunisia, Ukraine, Uruguay, Vietnam, and West Bank and Gaza. 31. The index value 1 is most restrictive and 0 is the least restrictive. SADC | Investment Climate Scorecard 29 SADC member states and other countries covered by the OECD’s FDI-RRI observe a similar composition of legal barriers to FDI, that is, “policy categories”. However, on average, SADC countries have a more significant restrictiveness score in each policy category than other developing economies, as shown in figure 10. For SADC member states, the category of measures with the highest relative share in the overall score is “foreign equity limits”, followed by “others types of measures”, “foreign investment screening” and “restrictions on foreign key personnel”. FIGURE 10 Distribution of OECD FDI Regulatory Restrictiveness Scores by Policy Category and Income Levels 0.20 0.15 0.10 0.05 0.00 SADC Average Global Average OECD Average I. Foreign equity II. Foreign investment III. Restrictions on foreign IV. Other restrictions screening key personal restrictions Source: OECD FDI Regulatory Restrictiveness Index (2021). Note: Score: 0 = no restrictions; 1 = most restricted. In total, 378 measures are identified for all SADC members, that is, 25 per country, on average. Figure 11 presents a comparison of countries and the SADC average. South Africa registers the lowest number of measures, that is, 9 in total, whereas Mozambique observes the highest number of measures, totaling 43. SADC member states observe measures in 11.4 of the 22 assessed sectors, on average. Again, Mozambique has measures across a broader range of sectors (18), whereas South Africa has measures covering the least number of sectors (5). FIGURE 11 Overview of Number of Measures and Sectors with FDI Restrictions Panel A: Total Number of Measures Panel B: Number of Sectors with at Least One Measure (of a total of 22 sectors) 43 18 17 35 34 15 14 29 13 13 12 12 27 25 25 24 24 23 22 22 10 10 9 19 8 8 17 7 5 9 Madagascar Madagascar Mozambique Tanzania Eswatini Botswana Congo, Dem. Rep. Seychelles Namibia Zambia Angola Malawi Zimbabwe Lesotho Mauritius South Africa Mozambique Eswatini Botswana Tanzania Congo, Dem. Rep. Malawi Zimbabwe Namibia Seychelles Zambia Angola Lesotho Mauritius South Africa SADC Average SADC Average Source: SADC Investment Climate Scorecard. 30 SADC | Investment Climate Scorecard SADC countries have, on average, 8.5 percent of their measures applied horizontally across the economy, with the remaining 91.5 percent of the measures pertaining to individual sectors. However, countries exhibit considerable differences, as presented in figure 12, panel A. Four SADC member states observe a higher number of horizontal measures, with Lesotho at the top, including 26.3 percent of all the measures in the country being applied horizontally. Panel B presents the distribution of the horizontal (32 measures) and sector-based measures (346 measures) under the different policy categories. The results show a high concentration of horizontal policies in the “other measures” category, with 87.5 percent of all measures horizontally applied. FIGURE 12 Distribution by Number of Horizontal, Economy-wide Measures Panel A: Share of Horizontal Measures in SADC Panel B: Economy-wide, Horizontal Measures vs. Countries over Total Number of Measures by Country (%) Sector-based Measures in SADC Countries 30% 26% 100% 26% 20% 75% 12% 6% 11% 9% 8% 8% 5% 10% 9% 8% 7% 7% 87% 50% 4% 3% 3% 74% 0% 25% Madagascar Lesotho Congo, Dem. Rep. South Africa Malawi Tanzania Namibia Zambia Seychelles Botswana Mozambique Mauritius Zimbabwe Angola Eswatini 13% 0% Horizontal Sector-based measures measures I. Foreing equity measures IV. Other type of II. Foreign investment screening policy category SADC Average III. Restrictions on foreing key personnel Source: SADC Investment Climate Scorecard Note: Values in total number of measures, and scaled to represent weights in percentage. SADC | Investment Climate Scorecard 31 Results by the Four Types of Policy Categories Policy Category 1: Foreign equity limits Foreign equity limit is the most prevalent type of policy This policy category is further broken down for the category at the country level; on average, 47.4 percent purpose of analysis for the SADC Investment Climate of all measures fall under this category33. Figure 13, panel Scorecard. A distinction is made between full exclusion B shows that in 7 countries, over 50 percent of measures of foreign participation, restrictions on majority holdings, fall within this category. Figure 13, panel A presents the and limits on foreign ownership. In addition, the scorecard number of measures by SADC country under this policy makes a distinction between greenfield investment and category. The findings indicate that Tanzania has the acquisitions. This category has multiple sub-categories.32 most foreign equity limits (22 measures or 63 percent of However, all measures in SADC countries fall within nine of all recorded measures in the country), contrasting with these sub-categories. Zimbabwe (2 policies or 9 percent). FIGURE 13 Distribution of Foreign Equity Limits Panel A: Total Number of Measures Panel B: Share of the Policy Category over the Total Number of Measures by Country (%) 22 84% 21 19 65% 63% 58% 55% 16 15 59% 58% 14 44% 44% 13 44% 12 11 11 41% 38% 7 7 29% 5 17% 4 2 9% Madagascar Tanzania Seychelles Mozambique Botswana Angola Zambia Eswatini Malawi Congo, Dem. Rep. Lesotho Mauritius Namibia South Africa Zimbabwe Madagascar Seychelles Angola Tanzania Botswana Zambia Lesotho Malawi South Africa Mozambique Congo, Dem. Rep. Mauritius Eswatini Namibia Zimbabwe SADC Average SADC Average Source: SADC Investment Climate Scorecard. 32. Greenfield and acquisitions: No foreign equity is allowed; Greenfield and acquisitions: Less than 33 percent; Greenfield and acquisitions: Between 33 and 50 percent; Greenfield and acquisitions: More than 50 percent and up to 67 percent; Greenfield and acquisitions: More than 67 percent, but below 100 percent; Acquisition only: No foreign equity allowed; Acquisition only: Less than 33 percent; Acquisition only: Between 33 and 50 percent; Acquisition only: More than 50s percent up to 67 percent; Acquisition only: More than 67 percent, but below 100 percent; Divestment is required: No foreign equity is allowed; Divestment is required: Less than 33 percent; Divestment is required: Between 33 and 50 percent; Divestment is required: More than 50 percent up to 67 percent; Divestment is required: More than 67 percent, but below 100 percent; Equity restrictions apply as follows, but foreign investments through branches are allowed: No foreign equity allowed; Equity restrictions apply as follows, but foreign investment through branches allowed: Less than 33 percent; Equity restrictions apply as follows, but foreign investment through branches allowed: Between 33 and 50 percent; Equity restrictions apply as follows, but foreign investment through branches allowed: More than 50 percent up to 67 percent; Equity restrictions apply s follows, but foreign investment through branches allowed: More than 67 percent, but below 100 percent; Greenfield only: No foreign equity allowed; Greenfield only: Less than 33 percent; Greenfield only: Between 33 and 50 percent; Greenfield only: More than 50 percent up to 67 percent; Greenfield only: More than 67 percent, but below 100 percent; Listed companies only: No foreign equity allowed; Listed companies only: Less than 33 percent; Listed companies only: Between 33 and 50 percent; Listed companies only: More than 50 percent up to 67 percent; Listed companies only: More than 67 percent, but below 100 percent; Privatized companies/ assets: No foreign equity allowed; Privatized companies/assets: Less than 33 percent; Privatized companies/assets: Between 33 and 50 percent; Privatized companies/ assets: More than 50 percent up to 67 percent; Privatized companies/assets: More than 67 percent, but below 100 percent. 33. All measures fall within 9 of the above-mentioned sub-categories. 32 SADC | Investment Climate Scorecard Ninety-five percent of all measures in foreign equity • More than 67 percent, but below 100 percent: 39 limits cover “greenfield investment and acquisitions”. measures Box 3 offers an illustrative sample of identified measures • Greenfield and acquisitions: More than 50 percent up in this policy category. Greenfield investment and foreign to 67 percent: 1 measure acquisition restrictions can be further broken down • Greenfield and acquisitions: Between 33 and 50 according to the level of foreign equity allowed, ranging percent: 53 measures from the least restrictive bracket to the most restrictive as • Greenfield and acquisitions: Less than 33 percent: 21 follows: measures • Greenfield and acquisitions: No foreign equity allowed: 57 measures B O X 3 Sample SADC Investment Climate Scorecard Measures for Policy Category: “Foreign Equity Limits” • Investment in certain sectors/activities (e.g., domestic haulage sectors, commercial cleaning services, and transportation of heavy and bulk commodities by road) are reserved to citizens. • Foreign shareholding in an insurance brokerage firm is limited to 49 percent. • Foreign shareholding in companies manufacturing some chemical products is prohibited and in other activities is limited to 49 percent. • Foreign shareholding in small accommodation structures (e.g., guest houses) is prohibited. • Foreign shareholding in taxi and inter-city shuttle services companies is limited to 49 percent. • Foreign shareholding in telecommunication firms is limited to 49 percent of the voting capital. • Foreign invested companies cannot hold a permit to exploit industrial minerals. • Foreign shareholding in companies undertaking certain medium/large-scale paper, wood, furniture activities (e.g., packaging, burglar bars, gates and windows, fencing materials, school furniture, and so on) is limited to 49 percent. Source: SADC Investment Climate Scorecard. SADC | Investment Climate Scorecard 33 Figure 14 shows the distribution of foreign equity limits across SADC member states. Tanzania represents 12.2 percent of all the measures under this policy category, followed by Seychelles (11.7 percent). When looking only at the composition of restrictions to “greenfield and acquisitions”, 15 of the 21 measures in Seychelles include “no foreign equity allowed”, followed by 5 measures restricting less than 50 percent. In contrast, Tanzania has less severe restrictions, with 4 of the 21 measures falling under “no foreign equity allowed” category; 9 measures limiting greenfield investment and acquisitions to less than 50 percent; and the remaining 8 measures allowing more than 50 percent foreign equity. FIGURE 14 Typology of Foreign Equity Limits (by number of measures) 4 3 4 2 15 1 9 6 2 1 3 6 11 4 2 1 3 1 5 6 4 5 4 1 1 1 3 10 2 5 7 7 4 5 2 2 4 3 4 5 5 1 1 1 3 2 2 1 1 1 1 Madagascar SADC Average Seychelles Tanzania Mozambique Botswana Angola Zambia Malawi Congo, Dem. Rep. Lesotho Eswatini Mauritius Namibia South Africa Zimbabwe Greenfield and Greenfield and Greenfield and Greenfield and Greenfield and acquisitions: More acquisitions: acquisitions: acquisitions: acquisitions: No than 67%, but below More than Between 33% and Less than 33% foreign equity 100% 50% up to 67% 50% allowed Source: SADC Investment Climate Scorecard. SADC member states tend to impose foreign equity Two-thirds of all foreign equity limits are in services34. limits in multiple sectors. On average, countries report Madagascar is the country with the highest concentration foreign equity limits in 7 of the 22 sectors covered and of foreign equity limits in services, including all its 5 tend to concentrate one-third of foreign equity limits to measures. The next is Angola, with 80 percent of the only one sector (figure 15). The countries with the highest 15 measures applied in services; and Malawi, with 75 concentration by sector are Madagascar, reporting 4 percent. In terms of numbers, Tanzania is the country with of the 5 measures under this policy category applied to the largest number of measures applied in the services “professional services”; Mauritius observes 3 of the 7 sectors, with 15 measures, with the remaining 7 measures measures in “professional services”; followed by Botswana, applied to other sectors, mainly mining and quarrying. registering 6 of the 16 measures in “manufacturing – food and others.” 34. The following sectors are included in ‘Services’: 12. Distribution – Retail, 13. Distribution – Wholesale, 14. Transport, 15. Accommodation, Food Services, Arts, Entertainment and Recreation, 16. Media, 17. Telecommunications, 18. Financial Services – Banking, 19. Financial Services – Insurance, 20. Financial Services – Other Financial Services, 21. Professional Services and 22. Real Estate Investment. 34 SADC | Investment Climate Scorecard FIGURE 15 Distribution of the Number of Foreign Equity Measures by Economic Sector (by number of measures) Panel A: Distribution of Foreign Equity Measures by Top Panel B: Distribution of Number of Foreign Equity Five Economic Sectors with Highest Number of Measures Measures by Services as Compared to Other Sectors 3 7 7 1 6 1 2 3 1 3 2 2 2 5 3 10 4 3 2 1 3 2 1 4 15 14 1 13 2 1 1 1 12 6 3 3 6 1 1 1 2 9 9 9 5 5 8 3 1 1 1 7 4 2 4 2 1 3 6 1 1 1 5 2 4 4 3 1 1 1 1 1 1 1 2 Madagascar Madagascar Tanzania Angola Mozambique Seychelles Zambia Congo, Dem. Rep. Malawi Lesotho Mauritius Namibia Botswana Eswatini South Africa Zimbabwe Tanzania Seychelles Mozambique Botswana Angola Zambia Eswatini Malawi Congo, Dem. Rep. Lesotho Mauritius Namibia South Africa Zimbabwe Transport Media Professional Services Services Other sectors Real Estate Investment Mining & Quarrying Source: SADC Investment Climate Scorecard. Policy Category 2: Foreign investment screening Screening35 and approval is the third most prevalent category in SADC; on average, 11.1 percent of all measures fall under this category. Among the SADC states, two countries comprise 25 of the 42 recorded measures in this category: Mozambique uses this policy category most extensively (13 measures or 30 percent of all the measures in the country), followed by Eswatini (12 measures, representing 35 percent of all measures) (figure 16). Five countries observe a minor participation in this policy category, with only one screening an approval measure. Another 5 countries had no policy measure under this category- these are Angola, Madagascar, Malawi, South Africa, and Zambia. 35. Foreign investment screening can be of two types: a) General screening: This category includes all FDI screening policies. For simplification purposes, this category of screening can be called “General screening” (or “non-national security based FDI screening”); b) National security/interest review: Historically, FDI screening based on national security (or “national security review”) has been frequently applied to foreign investments in defense or armament manufacturing, which were considered sensitive sectors. In recent times, the concept has been expanded in the context of emerging technologies and geo-political tensions. For instance, communications infrastructure, biotechnology, data privacy, food security and, in some instances, even certain types of real estate are now often included within the category of “sensitive” or “strategic”. The use of national security screening or review is becoming more common, and not only in advanced or industrialized economies. SADC | Investment Climate Scorecard 35 FIGURE 16 Distribution of Foreign Investment Screening Panel A: Number of Measures Panel B: Share of the Policy Category over Total Number of Measures by Country (%) 13 35% 12 30% 27% 24% 6 4 2 8% 5% 1 1 1 1 1 4% 4% 4% 3% Madagascar Madagascar Mozambique Eswatini Zimbabwe Mauritius Congo, Dem. Rep. Botswana Lesotho Namibia Seychelles Tanzania Angola Malawi South Africa Zambia Eswatini Mozambique Zimbabwe Mauritius Congo, Dem. Rep. Lesotho Namibia Seychelles Botswana Tanzania Angola Malawi South Africa Zambia SADC Average SADC Average Source: SADC Investment Climate Scorecard. Seventeen of the 22 sectors observe at least one foreign the sector with the highest number of screening measures investment screening measure (see sample measures in (6), followed by distribution/retail, accommodation, and Box 4), and on average there are 2 measures per sector. food services with 5 measures each. As shown in Panel A of Figure 17, real estate investment is 36 SADC | Investment Climate Scorecard B O X 4 Sample SADC Investment Climate Scorecard Measures in Policy Category: “Foreign Investment Screening” • Foreign investment (above 49 percent of share capital) in the retail sector requires the approval of the Minister of Trade and Industry. • A trading license in various commercial activities, including manufacturing, construction, wholesale and retail distribution, accommodations, food services and other touristic activities [listed in Schedule 1 of the referenced Regulation], shall only be granted to a foreign citizen or company not wholly-owned by local citizens where: (i) there are no available local citizens to provide the service; or (ii) where local citizens cannot meet the demand. • The aquaculture policy stipulates that preference is to be given to local citizens and to ventures beneficially controlled by local citizens to benefit from the utilization of the country’s natural resources for aquaculture development. For the purposes of the OECD FDI Regulatory Restrictiveness Index, it is assumed that this takes place during the licensing process by the Minister because differential rules for FDI are explicitly stipulated in the legislation. Source: SADC Investment Climate Scorecard. Although FDI screening is concentrated in services, 7.1 percent of all screening measures are horizontal. other sectors and horizontally applied measures Mozambique and Eswatini have the largest number of represent an important share of this policy category screening measures applied to services, with 6 measures as well. Services sectors have about 54.8 percent of all each. In Mozambique, the remaining 7 measures were screening measures, and other sectors represent about applied to other sectors, and in the case of Eswatini, the 38.1 percent of all screening measures. The remaining remaining 6 measures are mainly in manufacturing. FIGURE 17 Distribution of Foreign Investment Screening across Sectors (by number of measures) Panel A: Distribution of Foreign Investment Screening Panel B: Distribution of Foreign Investment Screening by Sectors with the Highest Number of Measures by Services as Compared to Other Sectors 1 2 1 7 6 2 2 1 1 1 2 2 1 3 1 1 6 2 6 4 1 1 1 3 2 1 1 1 1 1 Mozambique Eswatini Mauritius Zimbabwe Congo, Dem. Rep. Mozambique Eswatini Zimbabwe Mauritius Congo, Dem. Rep. Botswana Lesotho Namibia Seychelles Tanzania Real Estate Investment Distribution – Retail Accommodation, Food Manufacturing – Food Service Horizontal Other sector Services, Arts... and Others Distribution – Wholesale Source: SADC Investment Climate Scorecard. Note: The countries not listed have 0 measures within this policy category. SADC | Investment Climate Scorecard 37 Policy Category 3: Measures on foreign key In SADC countries, three types of sub-categories fall within personnel this policy category: Measures regarding foreign key personnel (directors, • Foreign key personnel (that is, top-level executive managers, and other key personnel) include the positions) not permitted. following: nationality requirements for members of the • Nationality requirements for the board of directors, board of directors and for top executive positions (see that is, a majority must be nationals. sample identified measures in Box 5). • Nationality requirements for the board of directors, that is, at least one must be a national. B O X 5 Sample SADC Investment Climate Scorecard Measures in Policy Category: “Foreign Key Personnel” • Road service licenses (allowing holders to carry out transportation services for goods and passengers) are granted to companies in which not less than 25 percent of membership and all directors are local citizens. • The director of a company/establishment selling alcoholic beverages for on-site consumption (for example, restaurants, bars) or take-away (for example, supermarkets, alcoholic beverage retail distributors) must be a local citizen. • National cabotage, demarcation and inland transport are reserved for vessels flying the local flag. The crew [including the captain] of a local vessel must be of local nationality. • Qualified foreign nationals may register with the Order of Accountants upon meeting requirements and subject to reciprocity. Only foreigners who have resided in the country for over 10 years and that meet qualification requirements are entitled to register and practice as chartered accountants [auditors]. • Foreign investors in certain types of tourism accommodation, notably guesthouses and tourist residences, cannot nominate a foreigner for the position of Managing Director, except for the investor him(her)self and subject to a proven track record in managing similar structures. Source: SADC Investment Climate Scorecard. Foreign key personnel is the least used policy category; on average, 10 percent of all identified measures fall under this category. Only two countries observe a concentration under this policy category of over 25 percent of all their respective measures, including Zimbabwe (10 measures or 45 percent of all measures), followed by Namibia (7 measures or 29 percent). Furthermore, 7 countries register a share (of total measures) below 10 percent, and 4 do not observe any measures under this policy category. On average, the SADC countries observe 2.6 measures each (Figure 18) 38 SADC | Investment Climate Scorecard FIGURE 18 Distribution of Measures on Foreign Key Personnel Panel A: Number of Measures Panel B: Share of the Policy Category over Total Number of Measures by Country (%) 10 45% 7 7 29% 24% 4 3 2 2 11% 9% 9% 8% 8% 1 1 1 1 6% 4% 3% Madagascar Madagascar Zimbabwe Namibia Mozambique Eswatini Angola Zambia Congo, Dem. Rep. Mauritius Tanzania South Africa Botswana Lesotho Malawi Seychelles Zimbabwe Namibia South Africa Mozambique Angola Eswatini Zambia Mauritius Congo, Dem. Rep. Tanzania Botswana Lesotho Malawi Seychelles SADC Average SADC Average Source: SADC Investment Climate Scorecard. The most prevalent sub-category within this policy area nel (figure 19). Although not as prevalent as the previous is “foreign key personnel not permitted,” representing sub-category, “nationality requirements for the board of 66.7 percent of all measures concerning foreign key directors” stands out in two countries, namely: Zimbabwe personnel. Figure 19 shows that 9 SADC countries record and Namibia. Zimbabwe observes 4 measures that can be at least one measure under this sub-category. Notably, classified as “nationality requirements for the board of di- Madagascar has 7 measures under “foreign key personnel rectors – majority must be nationals”, and Namibia regis- not permitted,” followed by Zimbabwe with 6 measures, ters 3 measures of the same type. In contrast, Tanzania re- and Namibia with 4 measures. ports only one measure under “restrictions on foreign key personnel,” However, it is the only country in the sample “Nationality requirements for the board of directors”36 with nationality requirements for the board of directors, are found in 7 SADC member states, representing 33.3 specifically, it notes that at least one must be a national. percent of all measures concerning foreign key person- FIGURE 19 Distribution of Measures on Foreign Key Personnel (by number of measures) 4 3 6 7 2 1 4 1 2 1 2 2 2 1 1 1 1 1 Madagascar SADC Average Zimbabwe Namibia Mozambique Eswatini Angola Zambia Congo, Dem. Rep. Mauritius Tanzania South Africa Nationality requirements for board of Nationality requirements for board of Foreign key personnel directors – Majority must be nationals directors – At least one must be national not permitted Source: SADC Investment Climate Scorecard. Note: The countries not listed have 0 measures within this policy category. 36. For simplicity, the percentage of “Nationality requirements for board of directors” was calculated including the two types observed in SADC countries: “majority must be nationals” and “at least one must be a national”. SADC | Investment Climate Scorecard 39 Ninety-five percent of all the measures under this policy category apply to services (figure 20). Media is the service sector with the highest number of measures under this category, representing 21 percent of the 39 measures recorded. It is observed that all the 10 measures in Zimbabwe are in the service sectors. Namibia, the second country with the most measures for foreign key personnel, also registers all the measures in the service sector. In the case of Madagascar, from the 7 measures in total, 6 are imposed in the service sector, whereas the remaining policy is applied in other sectors. On average, countries place restrictions on foreign key personnel in 1 sector. Notably, none of the five manufacturing sectors observe a measure on foreign key personnel. FIGURE 20 Distribution of Measures concerning Foreign Key Personnel (by number of measures) Panel A: Distribution of Measures concerning Foreign Panel B: Distribution of Measures concerning Key Personnel by Economic Sector(s) with Highest Foreign Key Personnel by Services Compared Number of Measures to Other Sectors 2 1 1 2 4 10 7 2 4 4 6 4 3 1 1 2 2 1 1 1 1 2 2 1 1 1 1 Madagascar Madagascar Zimbabwe Mozambique Namibia Angola Zambia Mauritius Eswatini Tanzania South Africa Zimbabwe Namibia Mozambique Eswatini Angola Zambia Congo, Dem. Rep. Mauritius Tanzania South Africa Distribution – Retail Transport Financial Services – Insurance Accommodation, Food Services Horizontal Other sectors Media Services, Arts,… Source: SADC Investment Climate Scorecard. Note: The countries not listed have 0 measures within this policy category. Policy Category 4: Other types of measures 3. Access to land/real estate is subject to a FDI-specific The SADC Investment Climate Scorecard methodology restriction (for example, prior approval, quantitative/ covers various additional rules concerning FDI size limits, tax, and so on). operations. These are apart from the first 3 policy 4. Restrictions on (post-tax) profit/capital repatriation categories, and are jointly classified as “other types of (for example, prior approval, quantitative or time limits). measures”. Box 6 offers an illustrative sample of identified 5. Access to local finance. measures in this policy category. This policy category has 6. FDI-specific minimum capital requirement. the following 10 sub-categories: 7. FDI-specific local content requirement. 8. Government procurement offers preference to locally 1. Land/real estate ownership not permitted but leases owned firms. possible – medium-term: up to 70 years. 9. Reciprocity requirement. 2. Land/real estate ownership not permitted but leases 10. Establishment of branches not allowed/local possible – long-term: over 70 years. incorporation required (financial services and real estate investment only). 40 SADC | Investment Climate Scorecard B O X 6 Sample SADC Investment Climate Scorecard Measures in Policy Category: “Other Types of Measures” • Public procurement rules on goods, works and services are accorded preferential treatment to enterprises that are majority-owned by local citizens. • Branches of foreign banks/financial institutions are not allowed. Local incorporation is required for undertaking banking activities and various other financial services. • Mining companies, including coal mining, are required to give preference to contractors, suppliers and service agencies located in the country and owned by citizens. • Reciprocity considerations apply for granting road transport permits to foreign-owned transport companies. • Foreign investment in certain types of tourism accommodations, notably guesthouses and tourist residences, are subject to higher minimum capital/investment requirements for foreign companies. • Foreign investors are subject to differential minimum capital requirements stipulated by the Minister from time to time by notice in the Gazette. • Companies in which foreign investors hold 75 percent or more of the capital are subject to local borrowing and other financial assistance limitations, except in relation to working capital finance. Source: SADC Investment Climate Scorecard. “Other types of measures” is the second most prevalent policy category in SADC countries; on average, SADC member states have 8 measures, or 31 percent of their total number of measures, in this category. Figure 21 shows that Madagascar uses this policy category most extensively (17 measures or 59 percent), followed by Democratic Republic of Congo and Tanzania (11 measures each or 44 percent and 31 percent, respectively, of all measures in the corresponding country). FIGURE 21 Distribution of “Other Types of Measures” Panel A: Number of Measures Panel B: Share of the Policy Category over Total Number of Measures by Country (%) 17 59% 44% 45% 44% 37% 33% 11 11 38% 37% 10 10 31% 29% 9 26% 8 7 7 18% 6 6 5 18% 16% 4 4 12% 3 Madagascar Madagascar Congo, Dem. Rep. Tanzania Botswana Malawi Namibia Zambia Lesotho Mozambique Eswatini Angola Mauritius South Africa Zimbabwe Seychelles Malawi South Africa Congo, Dem. Rep. Namibia Botswana Lesotho Zambia Tanzania Mauritius Angola Zimbabwe Eswatini Mozambique Seychelles SADC Average SADC Average Source: SADC Investment Climate Scorecard. SADC | Investment Climate Scorecard 41 Seven of ten measures are concentrated in half of the 10 • “Government procurement granting preference policy sub-categories (figure 22): to locally owned firms” is the third most prevalent • The “establishment of branches not allowed” / “local measure, representing 12 percent of all measures in this incorporation required” is the most prevalent type, category (14 measures). This is the most homogeneously representing 32 percent of all measures in this category distributed policy measure, with 10 countries recording (38 measures). In total, 14 member states record at at least one measure. least one measure; however, four countries represent • The “FDI-specific local content requirement” is the almost half (45 percent) of all the measures under this fourth most prevalent type, representing 10 percent sub-category. They include Malawi, which registers 5 of all measures in this category (12 measures). Seven measures, followed by Botswana, Namibia and Zambia, countries register at least one measure under this which record 4 measures each. sub-category, with Tanzania accounting for one-fourth, • “Reciprocity requirement” is the second most prevalent, including 3 FDI-specific local content requirements. representing 19 percent of all measures in this category • The “Access to land/real estate with conditions” is the (22 measures). Of all the SADC member states, 7 fifth most prevalent type, representing 8 percent of all have at least one measure under this sub-category. measures in this category (9 measures). A total of 6 Two countries comprise more than two-thirds (68 countries have at least one measure, and two comprise percent) of all measures under this sub-category. They over half of all measures recorded. Botswana registers include Madagascar with 9 measures, followed by the 3 measures, followed by Namibia with 2 measures. Democratic Republic of Congo, registering 6 measures. F I G U R E 2 2 “Other Types of Measures” by top five sub-categories (by number of measures) 5 2 1 3 1 2 1 1 2 1 2 1 1 3 1 9 6 1 1 1 1 1 1 1 1 1 2 1 1 5 1 1 1 1 4 4 4 2 3 3 3 3 1 2 1 2 2 2 2 Madagascar SADC Average Congo, Dem. Rep. Botswana Namibia Malawi Tanzania Zambia Angola Lesotho Mozambique Eswatini Mauritius Seychelles South Africa Establishment Reciprocity Government Discriminatory Access to land/real of branches not requirement procurement offers local content estate is subject allowed/… preference… requirement to … Source: SADC Investment Climate Scorecard. 42 SADC | Investment Climate Scorecard The ‘Other types of measures’ are present in 17 of the member states, with all 15 countries observing at least one 22 sectors covered; however, they are concentrated in horizontal measure and at least one measure in financial horizontal policies and in the financial services sector37, services. At the country level, Madagascar has the largest jointly representing 57 percent of all measures under this number of measures in the service sectors, comprising 12 policy category. Horizontally applied policies are the most of the 70 measures across SADC countries under this policy prevalent, comprising 22 percent of all measures under this category. The Democratic Republic of Congo follows with 9 category. Horizontal measures apply across sectors. As measures in service sectors, representing 13 percent of all noted, the sector with the highest share of measures under other measures. In South Africa, one of the countries with this policy category is financial services, with 35 percent of the least number of measures among SADC members, 3 of the measures (figure 23). Measures are spread across the the 4 “other types of measures” are in service sectors. FIGURE 23 Distribution of “Other Types of Measures” (by number of measures) Panel A: Distribution of “Other Types of Measures” by Panel B: Distribution of “Other Types of Measures” Economic Sectors with Highest Number of Measures by Services Compared to Other Sectors 1 4 1 1 1 1 1 1 1 2 2 2 2 3 1 1 1 1 1 2 4 2 2 2 3 2 2 1 1 1 12 2 3 1 1 4 9 2 4 1 1 1 3 3 3 3 3 1 7 1 1 2 2 2 2 2 2 5 6 5 4 3 1 1 1 1 4 3 4 4 3 3 1 2 Madagascar Madagascar Congo, Dem. Rep. Botswana Malawi Tanzania Zambia Angola Namibia Eswatini Mozambique Lesotho Mauritius Seychelles South Africa Zimbabwe Congo, Dem. Rep. Tanzania Botswana Malawi Namibia Zambia Lesotho Mozambique Angola Eswatini Mauritius South Africa Zimbabwe Seychelles Mining & Quarrying Professional Services Financial Services – Insurance Financial Services – Services Horizontal Other sectors Transport Other Financial… Source: SADC Investment Climate Scorecard.  37. Financial Services is represented by three sectors under the OECD methodology: 18. Financial Services – Banking; 19. Financial Services – Insurance; and 20. Financial Services – Other Financial Services. SADC | Investment Climate Scorecard 43 44 SADC | Investment Climate Scorecard IV. Policy Implications FDI can play a critical role in countries’ efforts to to remove the majority indigenization threshold. Namibia stimulate economic development. Next to providing removed the requirement for companies seeking mining capital, FDI can foster economic growth, job creation, exploration licenses to be partly owned and managed by productivity improvements for domestic firms, and black Namibians. Madagascar also removed restrictions knowledge transfer. Further, it can serve as a vehicle for concerning the transfer of capital in and out of the country the transformation of domestic production and better (foreign exchange), while also requiring a declaration of integration with global value chains (Alfaro-Urena, Manelici transfer to be submitted to the authorities or an authorized and Vasquez 2020; Heimberger 2021; Javorcik 2004; Qiang bank. and others 2021; and World Bank Group 2018). There are a number of countries that have successfully leveraged FDI As global competition for FDI intensifies, countries need to upgrade into new global value chains, including China, to continuously monitor and adjust their investment Costa Rica, Malaysia and South Korea (Qiang and others policy frameworks to the changing global realities, as 2021; World Bank Group 2020). Today, most countries in well as their own political economy and development the world seek to attract FDI to complement domestic considerations. In reviewing their performance on investment and modernize and/or upgrade their economy. the SADC Investment Climate Scorecard (the Country Profiles in Part 2 of this report) and determining their own Over the past few years, SADC member countries reform options, SADC member states should take into have implemented policies to improve their investment consideration good practices in the 4 policy categories competitiveness. For example, to facilitate investment, covered in the Scorecard, as well as recent global Botswana established an Investment Facilitation Centre developments in investment policy. Key elements of a that houses relevant government agencies to provide competitive FDI policy and institutional framework include, faster services to investors.38 Similarly, in 2022, Mauritius among others, an open FDI entry regime; a streamlined launched the Financial Services Commission (FSC) and transparent investment facilitation framework; Single Window. It is a one-stop-shop service to serve targeted investment promotion; and overall, a predictable financial institutions, businesses, and potential investors.39 regulatory environment for investment. Of course, to Zimbabwe, Namibia and Madagascar have also recently determine reform priorities countries will also need to undertaken reforms to improve their rules concerning FDI take into consideration their stage of development, as well entry and operations. Specifically, Zimbabwe amended the as broader socioeconomic and sustainable development Indigenization and Economic Empowerment Act (2008) objectives. 38. These services include administrative procedures for company and business registration, trade and industrial license applications, entry visas, work and residence permits, work permit exemptions, the connection of utilities, income tax and value-added tax (VAT) registration, access to industrial and commercial land, and environmental impact assessment(s). 39. The Single Window provides relevant information related to licenses and professional permits and business registration. It helps investors in the sector submit information to fulfill regulatory requirements. It also provides access to three institutions, namely, the Financial Services Commission, the Corporate and Business Registration Department and the Economic Development Board. SADC | Investment Climate Scorecard 45 FDI entry restrictions can vary significantly by country percent). In the context of the pandemic, OECD countries and sector. They can include: (i) equity ceilings; (ii) have recently adopted measures that restrict FDI (in most restrictions on the type of shares foreign investors can cases motivated by national security concerns or desire to purchase; (iii) restrictions on the legal form (iv) quotas, (v) protect sensitive domestic businesses). Only 23 percent minimum investment or paid-up capital requirements; (vi) of these measures are timebound, thus not automatically restrictions on the geographical location of an investment; removed or revisited at the end of the pandemic. (vii) mandatory local hiring requirements; (viii) expatriate restrictions (ix) mandatory research and development However, developing countries, in particular middle- (R&D) requirements; (x) export requirements; (xi) income countries40, have progressively been reforming FDI-specific licenses or approvals, screening or (xii) their FDI policy frameworks, in particular, on the 4 mandatory local sourcing (Kher and Eltgen 2021). The policy categories covered by the SADC Investment COVID-19 pandemic exacerbated a pre-existing trend Climate Scorecard. Recent data shows, that overall toward increasing numbers of restrictive investment investment policy measures (including those beyond policy measures, especially in developed countries entry) in 2022 that were favorable to investment, increased (UNCTAD 2022). Of the 79 new entry restrictions identified to pre-pandemic levels. In 2022, three quarters of the by the World Bank’s FDI Entry and Screening Tracker since measures more favorable to investment were adopted by February 2020, more measures were aimed at restricting developing countries41 (UNCTAD 2023). entry (62 percent) than at liberalizing/facilitating entry (38 40. For further details, see Kher, P., P. Kusek, and M. Eltgen. 2022. Investment Policy and Regulatory Review. Washington, DC: World Bank. Investment Policy and Regulatory Reviews - Brazil, China, India, Indonesia, Malaysia, Mexico, Nigeria, Thailand, Turkey, Vietnam are available at https://openknowledge.worldbank.org/search?spc. page=1&query=2022%20investment%20policy%20and%20regulatory%20review&spc.sf=score&spc.sd=DESC; Kher and Eltgen (2020). 41. The share of such measures in developed countries also grew for the first time since the pandemic. 46 SADC | Investment Climate Scorecard Foreign equity limits Recent reforms implemented by developing countries factors. Countries need to take a strategic sector-specific to create more open FDI frameworks have focused approach, gradually liberalizing sectors where FDI will on foreign equity limits. Countries have progressively have the most positive impact and benefits for the local removed or increased limits (a percentage amount), economy. Box 7 provides an illustrative list of recent taking into consideration the maturity and capacity of their reforms that have eased FDI equity limits. domestic industry, as well as overall political economy B O X 7 Notable Recent Reforms Easing FDI Equity Restrictions India: On October 7, 2021, the Government of India announced that it would allow 100 percent foreign participation in the telecommunications services industry, including all telecommunications services and infrastructure providers, through the Automatic Route. Until this recent announcement, FDI in telecommunications was capped at 49 percent via the automated route. Everything beyond that had to obtain approval on a case-by-case basis through the government channel. Maldives: On June 13, 2021, the Maldives allowed 100 percent foreign-owned companies to: operate and manage airports (including terminal facilities such as an airway terminal); airport and air-traffic control activities; and ground service activities and airfields. Prior to this reform, companies with foreign ownership up to 75 percent were allowed to operate air transport services under a five-year operating period and with an investment of US$5 million. Philippines: On November 15, 2022, the Department of Energy revised the foreign investment negative list to open the renewable energy sector to full foreign ownership (currently subject to a 40 percent cap). The amendment enables foreign citizens or foreign-owned entities to engage in the exploration, development, and utilization of the country’s renewable energy resources, such as solar, wind, biomass, ocean and/or tidal energy. Similarly, On December 15, 2021, the Philippines Senate passed Senate Bill 2094, which amends the Public Service Act by enabling 100 percent foreign ownership of public services, such as telecommunications, airlines, shipping, and railways. United Arab Emirates (UAE): In November 2021, the UAE amended the Commercial Companies Law (coming into effect on January 2, 2022), to allow investors and entrepreneurs to establish 100 percent foreign-owned companies in almost all sectors, except for activities deemed to be “strategic”. Historically, foreign ownership in UAE was capped at only 49 percent, with the remaining 51 percent mandatorily belonging to a UAE national. Vietnam: On June 16, 2022, the Vietnam National Assembly promulgated the new Law on Insurance Business No. 08/2022/QH15, which went into effect on January 1, 2023. According to the new law, foreign investors are allowed to own 100 percent of the shares of an insurance company in Vietnam. Source: UNCTAD Investment Policy Monitor, World Bank Group Investment Policy and Regulatory Reviews (2022). SADC | Investment Climate Scorecard 47 Investment approval or screening The approach regarding the use of investment approval Screening and approval mechanisms may be needed for or screening has evolved, particularly in the context narrow policy objectives, but they must be administered of the COVID-19 pandemic, when countries increased effectively and implemented in a transparent way42. their scrutiny of foreign takeovers of strategic assets Their use should be limited to a small number of sectors and technology companies (UNCTAD 2022). Screening that can genuinely be considered “strategic” or “sensitive”, processes can be a significant deterrent to FDI. This effect or alternatively to specific companies (“entity-specific” is especially strong for service sectors and for efficiency- or “target-specific” screening). The different concepts seeking investment, which is more mobile than other (strategic, sensitive, and so on) should be defined in ways types of FDI. Thus, investors can choose host countries that are clear and differentiated and not too broad or all- with simpler and more favorable business environments encompassing. Further, objective criteria should be used (Mistura and Roulet 2019). Although, in principle, to screen projects, and a recourse mechanism should be governments use screening mechanisms as legitimate available to investors whose applications are denied. In tools for pursuing economic objectives, deficiencies in addition, negative lists and standard operating procedures the design of these mechanisms may impose burdens should be set for agencies conducting the screenings or on investors without advancing the intended objectives. reviews. Governments should focus on risk mitigation Even if the mechanisms are well designed, their poor rather than risk elimination. The complete elimination or discretionary administration may increase costs and of risk in FDI screening is unrealistic, if not impossible. uncertainty for investors. Depending on specific policy Several risk-mitigation measures can be used and objectives, alternatives to screening can be explored, combined, including, but not limited to, targeted screening, for example, through registration or notification clear definitions, and formulation of objective criteria for requirements. decision-making by screening authorities. Box 8 provides examples of screening and approval mechanisms introduced by the EU and the United States (US). BOX 8 Examples of Recently Instituted FDI Screening Frameworks European Union: Implementing screening procedures on the grounds of security or public order only General Characteristics: The EU is committed to maintaining an open investment policy for foreign investments. However, to address threats from certain foreign investment in EU member countries, the EU Parliament drafted a new law for screening foreign investment. On September 13, 2017, the European Commission issued a proposed regulation to create a new framework for screening foreign direct investment into the European Union on the grounds of security or public order. The proposed regulation was adopted by the EU Council on March 5, 2019. Pursuant to Article 3 (1) (e)€ and article 207 (1) of the Treaty on the Functioning of the European Union (TFEU), FDI has become part of the common commercial policy (CPP). 42. See OECD guidelines -https://www.oecd.org/investment/investment-policy/43384486.pdf. Nimac and others. 2022. FDI Screening and National Security Review: International Trends and Lessons of Experience. Forthcoming. 48 SADC | Investment Climate Scorecard Main Principles: The regulation aims at three specific goals: 1. Ensuring “harmonization” by providing first and foremost legal certainty for Member States that maintain a screening mechanism or wish to adopt one. 2. Creating a “cooperation mechanism” between the Member States and the European Commission to inform each other about foreign direct investments that may threaten the “security” or “public order”. 3. Enabling the Commission itself to screen foreign investments on grounds of security and public order in case they “may affect projects or programs of Union interest”. The regulation does not require Member States to adopt or maintain screening mechanisms, but provides minimum requirements for such mechanisms, including judicial review of decisions, non-discrimination, timelines and transparency, as well as setting out a list of factors to be considered when screening investments (for example, the effect on critical infrastructure, technologies, inputs essential for the security or the maintenance of public order, and access to sensitive information). Its early to assess the impact and practical implication of this regulation. However, the regulation has clarified the rationale behind the policy and tried to ensure that mechanisms at country-level are narrow in scope, and screening only applies to investments affecting security or public order. United States: Limiting the scope of security screening of investments for national security considerations General Characteristics: Like most of its OECD peers, the US does not impose a general screening mechanism for foreign investments. The US framework for foreign investments is open, and most industries do not have restrictions. However, there are industry specific restrictions on foreign ownership. They include, for example, defense, civil aviation, shipping, communications, energy/natural resources, banking, advanced electronics, and biotech. Recently, there has been an increase in the scope of review conducted by the Committee on Foreign Investment of the United States (CFIUS) to ensure that certain foreign investments entering or exiting the country do not pose a threat to the national security by gaining access to critical technology or critical infrastructure. Main Principles: The interagency Committee on Foreign Investment of the United States is authorized to review certain transactions involving foreign investment in the United States (covered transactions). This is done in order to determine the effect of the transactions on the national security of the United States under the Defense Production Act of 1950 (Section 721). Parties can file a voluntary notice to the CFIUS, or they are required by law to file if the transaction is covered by the requirements set in the Foreign Investment and National Security Act of 2007 (FINSA) and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). A pilot program, which went into effect in November 2018, requires mandatory declarations for certain transactions involving investments by foreign persons in certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies. Transactions that do not fall within the scope of the pilot program are not required to file declarations at this time. If the CFIUS finds that a covered transaction presents national security risks and that other provisions of law do not provide adequate authority to address the risks, then the CFIUS may enter into an agreement with, or impose conditions on, parties to mitigate such risks or may refer the case to the President for action (such as blocking the investment). Source: https://home.treasury.gov/; https://eur-lex.europa.eu/eli/reg/2019/452/oj SADC | Investment Climate Scorecard 49 Employment of foreigners as key personnel and directors Countries strive to upgrade their human capital regime is conducive to attracting higher FDI (Grossmann in a manner that locals can meet the employment 2021). A very restrictive immigration regime may lead skills needed. However, in the intervening period, to cumbersome and lengthy processing times, thereby employment of skilled expatriates should be facilitated impacting productivity, and leading to a loss of strategic to meet the demands for specialized labor. The ease of advantages. In the case of mandatory quotas, it may even hiring skilled expatriates is one of the factors that is taken impact the viability of foreign affiliates (De Smet 2013). into consideration in the location decision of multinational firms. Skilled expatriates may be necessary to establish Although the benefits of employing skilled expatriates new subsidiaries and train workers. In other cases, a to host countries are well documented, there are also company may need to deploy a skilled expatriate with concerns about the risks of human capital flight, to the specific expertise through an intra-firm transfer. Studies home countries of the expatriates. Table 2 summarizes have consistently found that a high-skilled immigration possible effects on the sending and receiving economies. TA B L E 2 Possible Global and National Effects of High-skilled International Immigration Sending Economies Receiving economies Possible • “Brain drain”: lost productive capacity due to • Decreased incentive of natives to seek higher Negatives at least temporary absence or higher skilled skills workers and students • May crowd out native students from best schools • Less support for public funds for higher • Language and cultural barriers between native education and immigrant high-skilled workers • Technology transfers to possibility hostile economies Possible • Increased incentive for natives to seek higher skills • Increased R&D and economic activity due to Positives • Possibility of exporting skills reduces risk/ availability of additional high-skilled workers raises expected return of personal education • Knowledge flows and collaboration investments • Increased ties to foreign research institutions • May increase domestic economic return to skills • Export opportunities for technology • Knowledge flows and collaboration • Increased enrollment in graduate programs/ • Increased ties to foreign research institutions keeping smaller programs alive • Export opportunities for technology • Return of natives with foreign education and human capital • Remittances and other support from diaspora networks Possible • Better international flow of knowledge global • Better job matches effects • Greater employment options for workers/researchers • Greater ability of employers to find rare/unique skills sets • Formation of international research/technology clusters (Silicon Valley, CERN) • International competition for scarce human capital may have net positive effect on incentives for individual human capital investments Source: Regets 2001 (in De Smet 2013). 50 SADC | Investment Climate Scorecard In evaluating existing employment restrictions on board members, limits to temporary entry of expatriate skilled expatriates, several policy aspects need to be personnel, and other nationality requirements for staff. considered. Approaches will vary by multiple and complex considerations, as well as by the type of restriction put A flexible and effective expatriate regime can facilitate in place. For example, different approaches may be the recruitment of skilled and specialized workers, needed for temporary entry of skilled expatriates who which is crucial for the success of foreign investment intend to seek permanent immigration and temporary projects. A review of skilled expatriate frameworks across entry of skilled expatriates who do not intend to seek countries, indicates at least a few common good practices, permanent immigration. The main types of restrictions namely, targeted and proportional restrictions, online on hiring of expatriates that countries use are stipulations processing, spousal work permit(s),43 and so forth (Box 9). regarding the nationality and citizenship of managers or 43. De Smet (2013) notes the international survey conducted by Permits Foundation in April 2013 with regard to work permits and global mobility of expatriate spouses and partners. The survey examined the views of 3,300 expatriate spouses and partners of 120 nationalities, who were at the time accompanying international employees working in 117 host economies for over 200 employers in both the private and public sectors. The survey found that economies that enable spouses or partners to work are considered as attractive destinations by 96 percent of respondents. Economies with work permit restrictions are less attractive, and 58 percent of spouses or partners indicated that they would be unlikely to relocate to a country where it was difficult to obtain a work permit. Twenty-two percent of spouses or partners reported that the expatriate employee had turned down at least one assignment because of concerns about the accompanying spouse’s or partner’s career or employment, and 7 percent had terminated an assignment early for the same reason. For employers, these assignment refusals and early terminations imply lost potential and financial costs. SADC | Investment Climate Scorecard 51 BOX 9 Good Practices for the Employment of Skilled Expatriates 1. Targeted and proportional Restrictions on expatriate employment should be targeted and proportional to the risks identified. For example, restrictions may be imposed on certain sectors that are deemed sensitive or strategic or where there is abundant access to local skilled resources. This determination requires careful consideration of the risks, benefits and least restrictive policy options. US’s visa policy to attract foreign-born talent in the science, technology, engineering, and mathematics (STEM) fields In 1990, the Congress introduced the H-1B program to address the demands of the rapidly growing fields that demand specialized skills, such as research, engineering, and computer programming. The H-1B program applies to employers seeking to hire non-immigrant aliens as workers in specialty occupations of distinguished merit and ability. The intent of this visa program is to help employers who cannot otherwise obtain the required business skills and abilities from the U.S. workforce by authorizing the temporary employment of qualified individuals who are not otherwise authorized to work in the United States. Research shows that H-1B workers complement U.S. workers, fill employment gaps in many STEM occupations, and expand job opportunities for domestic workers (American Immigration Council 2021). Despite the positive effects, the government uses some targeted restrictions to address adverse effects. They include: • The total duration of the H-1B program is only 6 years (the initial duration classification is three years, which may be extended for a maximum of six years). • Employers must attest, on a labor condition application (LCA) certified by the Department of Labor, that employment of the H-1B worker will not adversely affect the wages and working conditions of similarly employed U.S. workers. • Employers must also provide existing workers with notice of their intention to hire a H-1B worker. 2. Online processing of temporary work permits An effective online process requires that: (1) the application form(s) can be downloaded online; (2) documents can be submitted online; (3) confirmation documentation is received online; and (4) the progress of the application can be monitored online. In addition, when the work permit becomes available, (5) notification is received. Mauritius’s open visa policy Mauritius supports its local business and improves competitiveness in services — from tourism to finance and investment — through its open visa policy. Since the late 1990s, the government’s partnership with the private sector has supported growth in financial services by having a practical and fluid visa regime for investors to easily enter the country. When a financial institution sponsors a business contract, a simple letter facilitates entry. The country’s financial sector is home to many international banks, which are part of a total of 23 banks on the island with combined assets of US$ 38.5 billion in 2014. Mauritius also has an e-work permit portal, available at https://workpermit.mu/eworkpermit_wkp/web/. 3. Fast track Companies that have identified the right candidate for their overseas subsidiary are eager to have their new hires start as soon as possible. As a result, companies may be willing to pay a premium for fast-tracking the work permit processes. 52 SADC | Investment Climate Scorecard Denmark’s Fast Track Scheme Denmark launched a new Fast-Track Scheme to make it easier for companies and universities in Denmark to attract highly qualified labor from countries outside the EU/ European Economic Area (EEA). The Fast-track Scheme enables certified companies to hire highly qualified foreign nationals on short notice without having to wait for an application to be processed by the Danish Agency for International Recruitment and Integration. At the same time, the scheme offers the foreign national the option of working in and outside Denmark. Foreign employees can obtain a temporary work permit and start work immediately while their application for a combined work-and-residence permit is pending. Employees can also apply for the residence permit in advance from their home countries. The certification process takes 30 days, and certification is valid for four years. It can be completed online. 4. Spousal work permit When spouses accompany their partners on an overseas assignment, a majority want to carry on working so that they can continue to develop their skills and facilitate their re-entry to work when they return home. Yet, few of them manage to do so. Many economies require expatriate spouses or partners to have a separate work permit, even though they are legally residents. This is often difficult and time consuming. The figure below shows a big divide between the approach adopted by several developing or emerging economies and their high-income counterparts. Many developing countries tend to restrict access to employment for spouses through their dependent status. Direct employment Spouse or partner can No access to Permits Foundation access for spouse or access employment but employment via 2023 priority partner with some restrictions dependant status countries Advocacy Source: Permits Foundation. SADC | Investment Climate Scorecard 53 5. Investor Visa Programs Since the early 1990s, governments around the world have offered investor visa programs to investors, which provide residence permits or citizenship benefits for a sizeable investment in their economies. The number of countries now offering these types of visa programs has increased dramatically (see figure below). For instance, at least half of European Union member countries offer a dedicated immigrant investor program. Australia, Hong Kong, New Zealand, Singapore, the United Kingdom, and the United States have their own versions of investment visa programs. However, all these countries have common goals for using this program, that is, the goal of attracting higher levels of investment capital from wealthy individuals and creating employment opportunities for the domestic workforce, among many others. Prospective investors obtain temporary permits, or residents are issued permits to stay and work in the country. In return, the government receives a minimum investment that potentially creates jobs and brings new business/technical expertise. According to a 2014 study by the Brookings-Rockefeller Institute, the American EB-5 investor visa program has spurred at least US$5 billion in foreign direct investment (and quite possibly more), while also creating more than 85,000 jobs. Countries Providing Visa Programs to Encourage Entrepreneurs 2013 2008 2015 CANADA UNITED KINGDOM DENMARK The Entrepreneur Tier 1 Entrepreneur Visa Startup Denmark Scheme Startup Visa Program 2015 NETHERLANDS Residence Permit for Startups 2015 FRANCE FrenchTech Ticket 2015 2014 USA ITALY Obama Startup Visa Italia announces a fast-track process for Entrepreneurs. November 2014 2004 SINGAPURE Entrepass Scheme 2012 IRELAND Start-up Entrepreneur Programme 2010 2013 2012 2014 CHILE SPAIN AUSTRALIA NEW ZEALAND Startup Chile Ley de Emprendedores Business Innovation & Entrepeneur Work Visa Investment Programme Visa Announced Visa Available Source: Migreat. Note: This is not an exhaustive list. This list is intended to provide an example of the countries that provide investor visa programs that support entrepreneurs and business experts. 54 SADC | Investment Climate Scorecard Other restrictive measures Being able to access land, either through ownership or the long-term lease of land is critical for investors—especially in certain sectors. Countries need to put in place frameworks to allow for such access, including transparent and coordinated procedures for title registration and transfer. Once an investor gains land access, they need to be confident that their land rights are properly recognized and protected (OECD PFI 2015). Box 10 provides examples of recent reforms in land ownership and leasing regimes. B O X 1 0 Examples of Recent Reforms on Land Ownership or Lease Restrictions Argentina: On June 29, 2016, Argentina enacted Decree 820/2016, easing certain restrictions imposed under existing laws concerning the acquisition and leasing of rural lands by foreign individuals and legal entities (Law No. 26,737 of 2011). The new Decree aims at facilitating and enabling foreign investments in Argentine rural lands by clarifying certain unregulated issues and removing certain problems in real estate practices that arose since the enactment of the Rural Land Law in 2011. The most significant changes relate to determining when the Rural Land Law applies. Further, the Decree defines a “Foreign Legal Entity”, modifies reporting requirements, and details the consequences for failing to comply with such requirements. Maldives: On July 23, 2015, the President of Maldives approved a new law allowing foreign ownership of land in the country for the first time. Foreigners who invest more than US$1 billion may own land in perpetuity, provided 70 percent of it is reclaimed from the sea. Previously, foreign companies were prohibited from ownership, and could only lease islands for a maximum of 99 years to run luxury resorts in the Maldives. United Arab Emirates: On April 17, 2019, Abu Dhabi’s government made changes to real estate laws allowing foreigners to own freehold property in designated zones. This was done to increase foreign direct investment. Before the changes, the ownership of property was only allowed for UAE and Gulf Cooperation Council (GCC) nationals. The legal changes will also help to level the playing field between Abu Dhabi and Dubai, where foreigners are already allowed to buy freehold property in investment zones. Now, residential units in special designated investments zones, such as the one close to the international airport, will be registered under Abu Dhabi’s freehold law, with property ownership deeds issued to investors. Foreign investors in Abu Dhabi property were previously granted leasehold arrangements with a maximum 99-year time period. Source: UNCTAD. The ability to obtain foreign exchange or local currency, be considered when evaluating restrictions on converting and bring in or repatriate capital, are also fundamental and transferring currency. considerations when investing in a country. Investors require foreign currency to bring the initial capital into the At a global level, international capital flows are regulated country, repatriate profits or capital, pay dividends, service by various legal instruments. The key instruments foreign loans, and/or conduct international trade. At the include: the Articles of Agreement of the International same time, public authorities in host countries are entitled Monetary Fund (IMF Articles); the OECD’s Codes on Capital to decide on and implement monetary and financial policy. Movements and on Current Invisible Operations (OECD However, they can also resort to emergency measures Codes); the International Investment Agreements (IIAs); when the country’s balance of payments is threatened. and the General Agreement on Trade in Services (GATS). Governments may have policy goals beyond attracting FDI The SADC member states have commitments under the that justify, in their view, certain restrictions on foreign IMF Articles, the GATS and now with the coming into exchange transactions. Therefore, there is a broader effect, also the Investment Protocol of the AfCFTA. Table 3 macroeconomic context and policy debate that needs to summarizes the position under each of these agreements. SADC | Investment Climate Scorecard 55 TA B L E 3 Member Countries’ Obligations under Various International Legal Instruments IMF OECD AfCFTA Investment Provisions GATS Articles Codes Protocola Not to restrict Yes (to the extent of current account Yes Yes Yes commitments made) transfers Not to restrict capital Yes (to the extent of No Yes Yes transfers commitments made) Exception for balance-of-payment Yes Yes Yes Yes situations No. It can be Allow for the inflow Yes (to the extent of restricted by the Yes Yes of initial equity commitments made) State. No. It can be Allow the transfer of Yes (to the extent of restricted by the Yes Yes proceeds from a sale commitments made) State. No. it can be Allow for the inflow Yes (to the extent of restricted by the Yes Yes of an initial loan commitments made) State. Allow for the transfer No. It can be Yes (to the extent of of a liquidation restricted by the Yes Yes commitments made) amount State. Allow for the transfer Yes (to the extent of Yes Yes Yes of profits commitments made) Allow for the transfer Yes (to the extent of of interest amounts Yes Yes Yes commitments made) on a foreign loan Allow for the transfer of other payments Yes (to the extent of Yes Yes Yes (expenses, fees, commitments made) wages, and salaries) Allow for the transfer of personal Yes (to the extent of Yes Yes Yes payments by commitments made) individuals Allow for the transfer Yes (to the extent of Yes Yes Yes of royalties commitments made) No. It can be Allow for the transfer Yes (to the extent of restricted by the Yes Yes of capital gains commitments made) State. Source: Authors’ analysis. Note: a. All transfers shall be permitted in accordance with national laws and regulations and after payment of the respective taxes and duties. 56 SADC | Investment Climate Scorecard There is a general policy consensus that payments achieve certain intended policy goals, such as to prevent for ‘current transactions’ should be freely allowed current payments from being used to circumvent controls (Anderson 2013). These transactions include payments, on cross-border capital flows. However, liberalization such as for imported goods and services, and interest of the capital account is less straightforward (Anderson or dividend payments abroad. These are differentiated 2013). Following the global financial crisis of 2007, the IMF from capital transactions, such as investment flows. The determined that full capital account liberalization is not an number of governments committing to remove current appropriate goal for all economies at all times (IMF 2012). account restrictions has steadily increased. Research has Thus, it is important to identify circumstances in which shown that some such restrictions, specifically restrictions temporary controls on some short-term capital flows may on holding foreign exchange earned from exports, have be appropriate and desirable (Johnson 2013; and Ostry increasingly served as a deterrent to inward FDI (Asiedu and others). In this context, examples of recent reforms and Lien 2004). Johnson and others 1999 also find that implemented by countries are provided in Box 11. restricting current transactions is an inefficient way to B O X 1 1 Examples of Recent Reforms on Currency Convertibility and the Transfer of Funds Myanmar: On April 20, 2022, the Central Bank of Myanmar (CBM) announced an exemption for certain foreign direct investment projects from their recently announced requirement to convert foreign currency balances to Myanmar kyat to boost international investment (CBM Notification No 12/2022). This measure applies to companies approved by the Myanmar Investment Commission and companies established in special economic zones (SEZs). Uzbekistan: On September 1, 2020, the resolution of the Board of the Central Bank of Uzbekistan concerning foreign exchange transactions entered into force. It facilitates and simplifies transfer procedures and reduces certain obligations. Furthermore, the resolution sets one single procedure for foreign exchange transactions. It combines in one Act the relevant rules, while also abolishing the legal acts that used to govern the matter. The main amendments include: (1) the revocation of excessive documentation submission requirements by banks and customers; (2) the abolition of a requirement to reserve funds on a client’s account for participation in foreign exchange trades; (3) the cancellation of registering and certifying foreign exchange points by the Central Bank; and (4) granting banks independence in determining foreign exchange (FOREX) transaction procedures, security requirements, and monitoring procedures. Source: UNCTAD. SADC | Investment Climate Scorecard 57 Overall, the results of the SADC Investment Climate with the AfCFTA Services and Investment Protocols. Scorecard offer actionable ideas for the SADC’s The Services Protocol requires member states to make reform-minded governments interested in continuing commitments in the 5 priority sectors44, including on Mode their ongoing reform efforts. With the disproportionate 3. In addition, with the recent ratification of the SADC’s prevalence of restrictions and their strong impact on Protocol on Trade in Services, member states will also the service sectors, those SADC member states keen undertake commitments. As member states assess the to diversify their economies can especially benefit from gaps between these sets of commitments and their own the analysis. At the same time, governments need to domestic regulatory frameworks, the SADC Investment determine what types of reforms are appropriate for Climate Scorecard can be a tool to identify reforms to their own development trajectory, political economy, and improve market access and alignment with commitments. socioeconomic realities. For example, countries with Notably, the sectors with the most measures across the limited land sources (including SADC’s island economies), SADC member states include transport, financial services with large pools of local qualified labor, or with weaker and tourism — all of which are AfCFTA priority sectors. With regulatory monitoring frameworks, may need to approach regard to the Investment Protocol of the AfCFTA, although FDI liberalization reforms in a gradual, measured and it does not focus on market access or entry frameworks balanced way. In addition, while the SADC Investment per se, the SADC Investment Scorecard can be leveraged Climate Scorecard offers a transparent, objective, and to determine the gap between repatriation frameworks systematic stocktaking of legal measures limiting FDI, in member states and the Investment Protocol. Lastly, the it does not intend to suggest that all identified measures WTO Investment Facilitation for Development Agreement constitute a reform priority in each member state. The (See Box 12 for details) will require member states to do Scorecard offers member states an opportunity to their self-assessments concerning compliance with the compare their legal regimes with one another, as well as agreement45. The agreement focuses on streamlining with countries around the rest of the world, as policymakers and making transparent business procedures, such as in individual countries consider a calibrated reform path obtaining licenses, work permits, and visas. All of these towards increased investment competitiveness. are linked to the 4 policy categories covered in the SADC Investment Climate Scorecard. Thus, the Scorecard As countries consider reforms to align their domestic can serve as a resource for these self-assessments, frameworks with the AfCFTA, the Scorecard serves as particularly concerning the aspects of investment approval an analysis of the baseline. As such, it can help identify and screening as well as the employment of expatriates. areas for further reforms towards greater alignment 44. These include: Business Services; Communication Services; Financial Services; Transport Services, and Tourism and Travel-related Services. 45. With its focus on helping WTO Members improve transparency, efficiency and the effectiveness of investment-related administrative procedures, the Investment Facilitation Agreement (IFA) promises to be particularly beneficial for low- and middle-income countries (Balistreri and Olekseyuk 2021) that tend to have the lowest levels of adoption of investment facilitation measures (Berger, Dadkhah and Olekseyuk 2021). Low- and middle-income countries (LMICs) have been identified as the main beneficiaries according to a recent study modelling the potential economic impact of the IFA (Balistreri and Olekseyuk 2021). 58 SADC | Investment Climate Scorecard B O X 1 2 WTO Negotiations on an Investment Facilitation for Development Agreement: An Opportunity for Reforms Since its inception in 2017, the initiative on Investment Facilitation for Development at the WTO has made steady progress. At the Eleventh WTO Ministerial Conference held in Buenos Aires, Argentina in December 2017 (MC11), 70 WTO members co-sponsored a Joint Ministerial Statement calling for the start of structured discussions, the aim of which was to develop a multilateral framework on investment facilitation. The purpose of such a framework is to help WTO Members — particularly developing and least-developed country (LDC) Members — to implement investment facilitation measures, promote good governance and boost sustainable investment flows. Since its inception in 2017, the initiative has made steady progress. In September 2020, participants moved formally to negotiations46. On July 6, 2023, the participants concluded the negotiations of the text of the IFA. The main focus of the IFA is on improving transparency, efficiency, and the effectiveness of investment-related administrative procedures. Specifically, the main substantive sections of the text include: transparency of investment measures (Section 2); the streamlining and speeding up of investment-related administrative procedures (Section 3); focal points, domestic regulatory coherence and cross-border cooperation (Section 4); and sustainable investment (Section 5). Topics such as market access, investment protection and Investor-State Dispute Settlement (ISDS), are not included in the scope of the IFA. When the agreement is in effect, countries will be required to notify the speed with which they can implement specific measures, as well as their needs for technical assistance and capacity building. The text provides for special and differential treatment for developing countries and LDCs. To be able to self-designate and notify their commitments, participating WTO Members will have to undertake dedicated needs assessments. This process will require detailed measure-by-measure benchmarking with the agreement obligations, with the aim of determining which obligations a country already complies with and which obligations it does not yet comply with. Source: World Bank Group; www.wto.org Lastly, implementation is key because even with enforcement, including timely problem solving to help good rules, the well-known challenges regarding address investor issues as they enter and establish effective enforcement persist. Thus, legal rights themselves in a country, as well as those resulting during must be complemented with effective mechanisms for operations47. 46. In December 2012, 112 WTO members co-sponsored another Joint Ministerial Statement. In that statement, the WTO members recognize the Consolidated Document by the Coordinator (so-called ‘Easter Text (Revision 5)’) as the basis for their ongoing negotiations and state their objective to conclude the text negotiations by the end of 2022. 47. This will help countries retain investment alongside preventing investor-State disputes (World Bank 2019, Kher, Obadia, Chun 2021, UNCITRAL-World Bank 2023). 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Revisiting the Empirical Link between Investment Treaties and Foreign Direct Investment.” In The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows, Edited by K.P. Sauvant and L.E. Sachs. Oxford: Oxford University Press. 64 SADC | Investment Climate Scorecard part. 2 Part. 2 Country Country Profiles Profiles SADC | Investment Climate Scorecard 65 66 SADC | Investment Climate Scorecard Introduction As discussed in Part 1 of this report, improvements in the The four policy categories covered in this report may quality of a country’s legal and regulatory environment48 have varying impact(s) at a country level. For instance, are associated with higher FDI inflows (Akame, Ekwelle, restrictions on the amount of equity ownership can deter and Njei 2016; Buchanan, Le, and Rishi 2012; Daude and investors in some sectors from entering the market at Stein 2007; Gani 2007; Globerman and Shapiro 2002; all, especially in countries where there is little access to Shepherd and others 2022; Vogiatzoglou 2016; Wei local partners with the requisite experience. However, a 2000; and Wernick, Haar, and Singh 2009). The impact of screening or approval requirement may not discourage specific measures on FDI outcomes will vary by country investors from entering into some sectors (for example, context. However, the literature has generally found that retail or telecommunications), where the process is measures covered under this scorecard impact the ability clearly articulated from the start, and where the market of countries to attract FDI. Mistura and Roulet (2019) find offers sizeable economic opportunities. For some sectors that liberalizing FDI restrictions by about 10 percent (as and activities requiring a particular technical expertise, measured by the OECD FDI Regulatory Restrictiveness access to a skilled expatriate workforce may be critical to Index) can increase bilateral FDI in stocks by 2.1 percent entering and establishing a business in a market. on average. Borchert, Gootiiz and Mattoo (2012) find that foreign equity restrictions, FDI-specific rules in licensing, This part of the report lists the specific measures identified restrictions on the repatriation of earnings and lack of legal in each of the 15 covered member states. The impact of recourse all have a significant and sizable negative effect the measure and whether a reform is needed depends on foreign investment. Research also shows that high on the specific country context and political economy regulatory risk, that is, risk due to arbitrary government considerations. As discussed in Part 1 of this report, some actions, and weak legal protection is associated with lower of the identified measures may not need reform, whereas FDI (World Bank Group 2018; 2019; and 2020; Hebous, others may. If reform is needed, a member state should Kher and Tran 2020). evaluate the measure, weighing the benefits and risks of keeping it, and then determine the process of pursuing that reform. 48. See Kher and Eltgen 2020 for a literature review. SADC | Investment Climate Scorecard 67 Angola Summary Highlights FDI Performance Angola SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)49 -4,099 -1,867 -4,150 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP50 -4.6% -3.0% -5.2% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 2,193 3,406 640 875 882 1,243 6,419 4,384 6,067 Investments51 (in US$ millions) SADC Scorecard Performance, 2021 Angola SADC Average Global Average52 Score under the SADC Scorecard (0-1, with 0 = 0.09 0.19 0.10 no restrictions, and 1= most restrictive)53 Total number of measures 54 23 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 15 11.9 NA. Screening and approval None 2.8 NA. Restrictions on foreign personnel 2 2.6 NA. Other restrictions 6 7.9 NA. Total number of sectors with measures 55 8 11.4 NA. 49. Source: UNCTAD STAT. 50. Id. 51. fDi Markets, from the Financial Times Ltd. (2022). 52. The calculation of a global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 53. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector), and the lowest is 0 (meaning there are no regulatory impediments to FDI in the sector). 54. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Angola, the list of 23 identified measures is found in 25 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders, and official government policy). 55. The following sectors in Angola have covered measures: Transport – Surface (road transport and urban rail transport): passenger transport [domestic / international]; Transport – Water (sea and coastal transport): passenger transport [domestic / international]; Transport – Water (services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities); Media – Radio and TV Programming and Broadcasting (total); Media – Other Media (total); Financial Services – Insurance (life insurance/reinsurance, pension and related auxiliary services); Financial Services – Insurance (non-life insurance/reinsurance and related auxiliary services); Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Financial Services – Other Financial Services (other financial activities: financial leasing, other credit activities, factoring, venture capital); Professional Services – Legal Services (total); Professional Services – Audit and Accounting (total); Professional Services – Architectural Services (total); Real Estate Investment – Land, Fishing and Aquaculture – Fishing, Mining and Quarrying – Energy producing materials (that is, coal, crude petroleum and natural gas); and Mining and Quarrying – Except energy-producing materials and support service activities. 68 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other restric- FDI-specific Inter-company loans used Law No. 10/18 of 26 June Law: https://gazettes. tions minimum capital to finance FDI operations - Private Investment Law africa/archive/ao/2018/ requirement in Angola cannot exceed [Google translation] ao-government- 30 percent of the amount gazette-series-i-dated- of investment made by the 2018-06-26-no-92.pdf company, and they may not be repaid during the first three years from the date of being recorded as a liability in the borrowing company’s accounts. 2 Transport – I. Foreign equity Greenfield and Foreign shareholding in com- Presidential Decree Regulation: https://www. Surface (road limits acquisitions: panies undertaking regular No. 154/10 of 26 July: dtser.pn.gov.ao/ddtser/ transport and Between 33 and passenger transportation is TRANSPORT REGULATION comunicao_e_imagem/ urban rail trans- 50 percent limited to 49 Percent. REGULAR PASSENGER documentos/2020/ port): passen- HIGHWAYS [Google Regulamento%20 ger transport translation] De%20Transporte%20 [domestic / Presidential Decree No. rodovi%C3%A1rio%20 international] 128/10 of 6 July: REGULA- Regulares%20De%20Pas- TION ON OCCASIONAL sageiros.pdf PASSENGER ROAD Regulation: https://www. TRANSPORT [Google dtser.pn.gov.ao/ddtser/ translation] comunicao_e_imagem/ documentos/2020/ Regulamento%20de%20 Transportes%20%20 Rodovi%C3%A1rio%20 Ocasionais%20de%20 Passageiros.pdf 3 Transport – Sur- I. Foreign equity Greenfield and Foreign shareholding in Presidential Decree Regulation: https://www. face (road trans- limits acquisitions: road freight transportation No. 160/10 of 30 July: atroma.org/data/uploads/ port and urban Between 33 and companies is limited to 50 REGULATION FOR ROAD pdfs/Regulamento- rail transport): 50 percent. Percent. TRANSPORT OF GOODS Transporte-Rodoviario- freight transport [Google translation] Mercadorias.pdf [domestic / international] 4 Transport – I. Foreign equity Greenfield and Maritime cabotage is Presidential Decree No. Decree: http://extwpr- Water (sea and limits acquisitions: No reserved for Angolan citizens 54/14: Approves the legs1.fao.org/docs/pdf/ coastal trans- foreign equity and companies wholly owned Regulation on Maritime ang132013.pdf port): passen- allowed. by Angolan citizens. Transport Activity [Google ger transport translation] [domestic / international] 5 Transport – I. Foreign equity Greenfield and Maritime cabotage is Presidential Decree No. Decree: http://extwpr- Water (sea limits acquisitions: No reserved for Angolan citizens 54/14: Approves the legs1.fao.org/docs/pdf/ and coastal foreign equity and companies wholly owned Regulation on Maritime ang132013.pdf transport): allowed. by Angolan citizens. Transport Activity [Google freight transport translation] [domestic / international] SADC | Investment Climate Scorecard 69 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 6 Transport – I. Foreign equity Greenfield and Foreign investment in several Law on Merchant Marine, Act: http://faolex.fao.org/ Water (services limits acquisitions: No services incidental to water Ports and Related Activi- docs/pdf/ang116896.pdf incidental to foreign equity transport, including cargo ties - Law No. 27/12, of 28 water transport, allowed. handling , among others, is August [Google transla- including ports prohibited. tion] and terminal facilities, related cargo handling and other sup- port activities) 7 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in Law No. 1/17 of 23 Janu- Laws: https://minttics.gov. & TV Program- limits acquisitions: radio and TV broadcasting ary: PRESS LAW [Google ao/fotos/frontend_10/gov_ ming and Broad- Less than 33 and programming produc- translation] documentos/pacote_legis- casting (total) percent. tion companies, as well as in Law No. 3/17 of 23 lativo_da_comunicacao_so printed media companies is January: LAW ON THE cial_1__2611596306012dd9 limited to 30 percent. It can- EXERCISE OF TELEVI- a7771d.pdf not, in any circumstance, be SION ACTIVITY [Google a majority. translation] 8 Media – Radio III. Restrictions Foreign key The Chairman of the Board Law No. 1/17 of 23 Janu- Laws: https://minttics.gov. & TV Program- on key foreign personnel (that of Directors and/or General ary: PRESS LAW [Google ao/fotos/frontend_10/gov_ ming and Broad- personnel (that is, top-level Manager of radio and TV and translation] documentos/pacote_legis- casting (total) is, board of executive posi- printed media companies Law No. 3/17 of 23 lativo_da_comunicacao_so directors and tions) are not must be of Angolan national- January: LAW ON THE cial_1__2611596306012dd9 top-level execu- permitted¹ ity. Information and pro- EXERCISE OF TELEVI- a7771d.pdf tives) gramming directors, as well SION ACTIVITY [Google as the editors-in-chief, must translation] also be Angolan nationals. 9 Media – Other I. Foreign equity Greenfield and Foreign shareholding in Law No. 1/17 of 23 Janu- Law: https://minttics.gov. Media (total) limits acquisitions: radio and TV broadcasting ary: PRESS LAW [Google ao/fotos/frontend_10/gov_ Less than 33 and programming produc- translation] documentos/pacote_legis- percent. tion companies, as well as in lativo_da_comunicacao_so printed media companies, cial_1__2611596306012dd9 is limited to 30 percent. It a7771d.pdf cannot, in any circumstance, be a majority. 10 Media – Other III. Restrictions Foreign key The Chairman of the Board Law No. 1/17 of 23 Janu- Laws: https://minttics.gov. Media (total) on key foreign personnel (that of Directors and/or General ary: PRESS LAW [Google ao/fotos/frontend_10/gov_ personnel (that is, top-level Manager of radio and TV and translation] documentos/pacote_legis- is, the board of executive posi- print media companies must Law No. 3/17 of 23 lativo_da_comunicacao_so directors and tions) are not be of Angolan nationality. January: LAW ON THE cial_1__2611596306012dd9 top-level execu- permitted¹ Information and program- EXERCISE OF TELEVI- a7771d.pdf tives). ming directors, as well as the SION ACTIVITY [Google editors-in-chief, must also be translation] Angolan nationals. 11 Financial Servic- I. Foreign equity Greenfield and Foreign investment in insur- Law No. 1/00 ​​of 3 February Law: https://owa.arseg.ao/ es – Insurance limits acquisitions: ance companies is subject – Law on Insurance Activi- api/v1/public/download?f (life insurance/ More than 67 to FDI-specific screening ties [Google translation] =QsGRL8hOi%2bmrHWk reinsurance, percent, but procedures [where foreign EXECUTIVE DECREE No. NXbMq8AA2FyOPPw6m pension and less than 100 shareholding exceeds 50 7/03 OF JANUARY 24 - bnncd1%2bJXogufCqOzw related auxiliary percent. percent, it requires approval Regulation on Insurance sjLEpXVS06g1C%2bUkIkj services) of the Council of Ministers Mediation and Brokerage 3tAC%2bAonq021OcwdA as opposed to the Minister [Google translation] %3d%3d of Finance in the case of Decree: https://owa.arseg. domestic investors]. Foreign ao/api/v1/public/download shareholding is limited to 70 ?f=QsGRL8hOi%2bmrHW percent (the remaining 30 kNXbMq8AA2FyOPPw6m percent must be subscribed bnncd1%2bJXojXDxm0Ek by national natural or legal EIUJg%2f04J%2fvBuyWg persons [majority-owned by 6%2bh2oEYjcsOPtUu2Km Angolan citizens]). YXYD7cy%2fAvIhhGFd3be T4Xw%3d 70 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Financial I. Foreign equity Greenfield and Foreign investment in insur- Law No. 1/00 o​​ f 3 February Law: https://owa.arseg.ao/ Services – Insur- limits acquisitions: ance companies is subject – Law on Insurance Activi- api/v1/public/download?f ance (non-life More than 67 to FDI-specific screening ties [Google translation] =QsGRL8hOi%2bmrHWk insurance/ percent, but be- procedures [where foreign EXECUTIVE DECREE No. NXbMq8AA2FyOPPw6m reinsurance and low 100 percent shareholding exceeds 50 7/03 OF JANUARY 24 - bnncd1%2bJXogufCqOzw related auxiliary percent, it requires approval Regulation on Insurance sjLEpXVS06g1C%2bUkIkj services) of the Council of Ministers Mediation and Brokerage 3tAC%2bAonq021OcwdA as opposed to the Minister [Google translation] %3d%3d of Finance in the case of Decree: https://owa.arseg. domestic investors]. Foreign ao/api/v1/public/download shareholding is limited to 70 ?f=QsGRL8hOi%2bmrHW percent (the remaining 30 kNXbMq8AA2FyOPPw6m percent must be subscribed bnncd1%2bJXojXDxm0Ek by national natural or legal EIUJg%2f04J%2fvBuyWg persons [majority-owned by 6%2bh2oEYjcsOPtUu2Km Angolan citizens]). YXYD7cy%2fAvIhhGFd3be T4Xw%3d 13 Financial IV. Other restric- Establishment Local incorporation is Law No. 14/21 of 19 May Law: https://www.bna. Services – Other tions of branches not required for carrying out 2021 – General Regime ao/#/legislacao-e- Financial Ser- allowed/local the activity of a security for Financial Institutions normas/legislacao-finan- vices (auxiliary incorporation and derivative settlement [Google translation] ceira/lei-regime-geral- to financial mar- required (finan- institution. Law No. 22/15 of 31 August instituicoes-financeiras kets: securities cial services 2015 - Securities Code and commod- and real estate ity exchanges, investment only) securities and commodity bro- kerage, invest- ment advisory services and related activi- ties) 14 Financial IV. Other restric- Establishment Local incorporation is Presidential Legislative Services – tions of branches not required for carrying out Decree No. 2/17 of August Other Financial allowed/local fund management and asset 9 - LEGAL REGIME OF Services (trusts, incorporation management activities. ASSET MANAGEMENT funds and fund required (finan- COMPANIES [Google management cial services translation] activities) and real estate Presidential Legislative investment only) Decree No. 7/13 of October 11, 2013 - LEGAL REGIME OF COLLECTIVE INVEST- MENT BODIES [Google translation] 15 Financial Ser- IV. Other restric- Establishment Local incorporation is Presidential Legislative Decree: https://www.bfa. vices – Other Fi- tions of branches not required for carrying out Decree No. 4/15 of 16 Sep- ao/media/1372/05decreto- nancial Services allowed/local venture capital activities. tember - LEGAL REGIME legislativo-presidencial- (other financial incorporation FOR VENTURE CAPITAL n%C2%BA-4-15-de-16-de- activities: required (finan- INVESTMENT [Google setembro-oic-capital-de- financial leasing, cial services translation] risco.pdf other credit ac- and real estate tivities, factoring, investment only) venture capital) SADC | Investment Climate Scorecard 71 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Professional I. Foreign equity Greenfield and Only Angolan nationals and Law No. 8/17 of March 13 Law: http://www.oaang. Services – Legal limits acquisitions: No foreign law graduates from - Law on the Legal Profes- org/content/lei-advoca- Services (total) foreign equity Angolan universities (subject sion [Google translation] cia-1 allowed to reciprocity) may register Law No. 16/16 of 30 Law: http://www. with the Angolan Bar As- September – Law on Law parlamento.ao/docu- sociation and constitute or Firms and Associations ments/91849/136379/ become partners in law firms [Google translation] LEI+N.%C2%BA+16- or law associations in Angola. 16%2C+LEI+DAS+SOCIED Correspondence and coop- ADES+E+ASSOCIA%C3%8 eration relations between 7%C3%95ES+DE+ADVOG lawyers registered with the ADOS.pdf Angolan Bar Association and foreign lawyers are permit- ted. However, intervention of the foreign correspondent is always secondary, and it may only intervene upon request and to complement the Ango- lan correspondent. Contact and assistance to local clients must necessarily go through lawyers authorized to prac- tice law in Angolan territory, and foreign correspondents cannot establish any type of direct contact with Angolan institutions on Angolan ter- ritory. 17 Professional IV. Other restric- Reciprocity Registration with the Board Law No. 3/01, of 23 March Law: https://www.ocpcan- Services – Audit tions requirement of Accountants and Expert on the Exercise of Ac- gola.org/legislacao.aspx & Accounting Accountants [auditors] is counting and Auditing Decree: https://gazettes. (total) required for practicing the [Google translation] africa/archive/ao/2010/ profession and constitut- Presidential Decree No. ao-government-gazette- ing or becoming partners 232/10 of October 11 - dated-2010-10-11-no-193. in accounting and auditing STATUTE OF THE BOARD pdf companies. Foreigners who OF ACCOUNTANTS AND are resident in Angola may ACCOUNTING EXPERTS register with the Board sub- [Google translation] ject to reciprocity conditions. 18 Professional I. Foreign equity Greenfield and Only Angolan nationals and Decree Law No. 54/04 of Law: https://oarqui- Services – Archi- limits acquisitions: No foreign graduates from 17 August 2004 - Statute of tectos.ao/wp-content/ tectural Services foreign equity Angolan universities (subject the Association of Archi- uploads/2022/03/ (total) allowed. to reciprocity), as well as tects [Google translation] lei_n_54-04_de_17_de_ foreigners residing in the agosto_estatutos_ordem_ country for more than 15 arquitectos_de_Angola_1. years and who have previ- pdf ously been enrolled in the Provincial Governments, may register with the Angolan Order of Architects, and con- stitute or become partners in architecture companies in Angola. 19 Real Estate In- I. Foreign equity Greenfield and Only Angolan citizens can CONSTITUTION OF THE Constitution: https:// vestment – Land limits acquisitions: No hold ownership title to urban REPUBLIC OF ANGOLA, governo.gov.ao/fotos/ foreign equity land; both foreign and An- 2010 [Google translation] frontend_1/editor2/consti- allowed. golan legal persons are not Law No. 9/04 of Novem- tuicao_da_republica_de_ entitled to such right. ber 9 - Land Law [Google angola.pdf translation] Law: http://extwpr- legs1.fao.org/docs/pdf/ ang49570.pdf 72 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 20 Fishing and I. Foreign equity Greenfield and Commercial fishing in Law No. 6-A/04 on Aquatic Law: http://extwpr- Aquaculture – limits acquisitions: Angola’s territorial sea and Biological Resources legs1.fao.org/docs/pdf/ Fishing Between 33 and interior waters is reserved to [Google translation] ang50971.pdf 50 percent Angolan citizens and compa- nies (defined as companies wholly or majority-owned and controlled by Angolan citizens). Commercial fishing licenses for fishing in Ango- la’s Exclusive Economic Zone can be granted to foreign and foreign majority-owned firms in association within Angolan companies. 21 Fishing and I. Foreign equity Greenfield and Commercial fishing in Law No. 6-A/04 on Aquatic Law: http://extwpr- Aquaculture – limits acquisitions: Angola’s territorial sea Biological Resources legs1.fao.org/docs/pdf/ Fishing More than 67 and continental waters is [Google translation] ang50971.pdf percent, but less reserved for Angolan citizens than 100 percent and companies (defined as companies wholly or majority-owned and con- trolled by Angolan citizens). Commercial fishing licenses for fishing in Angola’s Ex- clusive Economic Zone can be granted to foreign and foreign majority-owned firms in association within Angolan companies. 22 Mining & Quar- IV. Other restric- FDI-specific Petroleum licensee holders Law No. 10/04 regulating Law: http://extwpr- rying – Energy tions local content are required to procure cer- Petroleum Activities legs1.fao.org/docs/pdf/ producing ma- requirement tain goods and services, clas- Presidential Decree 271/20 ang81903E.pdf terials (i.e. coal, sified under the exclusivity of 20 Octobre - New Local Decree: https:// crude petroleum regime, from “Angolan Com- Content Rules for the Oil mirempet.gov.ao/fotos/ and natural gas) mercial Companies” (in which Sector frontend_11/gov_docu- 100 percent of the share mentos/dp_271_20-re- capital is held by Angolan citi- gime_juridico_conteudo_ zens or Angolan companies). local_6719699885ff5 It gives preference to goods e777dacbc.pdf and services of “Angolan Commercial Companies” and Other: https://cms.law/en/ companies incorporated in prt/publication/new-local- Angola (“sociedades comer- content-regime-for-the- ciais de direito angolano”), oil-sector-in-angola in that order, over imported goods and services. 23 Mining & Quar- I. Foreign equity Greenfield and Foreign shareholding in Law No. 31/11 approving Law: http://extwpr- rying – Except limits acquisitions: mining companies holding li- the Mining Code [Google legs1.fao.org/docs/pdf/ energy-produc- Less than 33 censes to prospect or exploit translation] ang119489.pdf ing materials percent. minerals for civil construc- and support tion is limited to 1/3. service activities SADC | Investment Climate Scorecard 73 Botswana Summary Highlights FDI Performance Botswana SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)56 94 32 55 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 57 0.5% 0.2% 0.3% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 80 133 340 875 882 1,243 6,419 4,384 6,067 Investments58 (in US$ millions) SADC Scorecard Performance, 2021 Botswana SADC Average Global Average59 Score under the SADC Scorecard (0-1, with 0 = 0.15 0.19 0.10 no restrictions, and 1= most restrictive)60 Total number of measures 61 27 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 16 11.9 NA. Screening and approval 1 2.8 NA. Restrictions on foreign personnel None 2.6 NA. Other restrictions 10 7.9 NA. Total number of sectors with measures 62 15 11.4 NA. 56. Source: UNCTAD STAT. 57. Id. 58. fDi Markets, from the Financial Times Ltd. (2022). 59. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 60. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 61. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Botswana, the list of 27 identified measures is found in 32 legal instruments (legal instrument include laws, regulations, decrees, presidential orders, ministerial orders, and official government policy). . 62. The following sectors in Botswana have covered measures: Agriculture, Distribution – Retail (specialized retail stores); Transport – Surface (road transport and urban rail transport); Hotels and Restaurants – Accommodation; Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (total); Financial Services – Banking, Financial Services – Insurance, Forestry and Logging, Financial Services; Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Professional Services – Legal Services (total); Real Estate Investment – Land, Fishing and Aquaculture – Fishing, Mining and Quarrying – Except energy-producing materials and support service activities; Manufacturing – Food and Others (food products, beverages and tobacco); Manufacturing – Food and Others (textiles, wearing apparel, leather and related products); Manufacturing – Food and Others (paper, wood, printing, furniture and other manufacturing); Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products (chemical and pharmaceutical products); and Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products (rubber and plastics products, and other non-metallic mineral products). 74 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Access to land/ The acquisition or lease Chapter 53:01 Transfer Act: https://botswanala- restrictions real estate of immovable property by Duty Act of 1891. ws.com/alphabetical-list- is subject to a majority foreign-owned of-statutes/transfer-duty FDI-specific company is subject to FDI- restriction specific transfer duty tax. In (for example, 2023, the Botswana’s Unified prior approval, Revenue Service issued the quantitative/size Transfer Duty Amendment limits, tax, and Act 5 of 2023 (“Amendment so on). Act”), which reduced the rate of transfer duty to non- citizens from 30 percent to 10 percent of the purchase price or value of prop- erty up to 2 million pula (“P”) (around US$ 146,000), and 15 percent of the purchase price or value of property in excess of P2 million. 2 Horizontal IV. Other Government Government tenders of Chapter 42:08 Public Act: http://www.ppadb. restrictions procurement goods and services of up Procurement and Asset co.bw/Manuals%20%20 offers prefer- to P10,000,000 (approxi- Disposal of 2001 Acts/PPAD_Act_revised. ence to locally- mately US$ 871,000) are Statutory Instrument pdf owned firms reserved for citizen-owned No 23 of 2020, Public Order: http://www.ppadb. enterprises. Procurement and Asset co.bw/Manuals%20 Disposal (Reservation of %20Acts/Statutory%20 Government Tenders for Instrument%20No.%20 Citizen-Owned Enter- 23%20of%202020%20 prises) Order, 2020. -%20Reservation%20 of%20Government%20 Tenders.pdf 3 Agriculture IV. Other Access to land/ Foreign acquisition or lease Chapter 32:11 Land Act: http:// extwpr- restrictions real estate of agricultural land or of a Control Act of 1975, as legs1.fao.org/docs/pdf/ is subject to company owning agricultur- amended. bot39063.pdf FDI-specific al land is subject to the Min- Act: https://static1. restriction ister’s approval and subject Chapter 53:01 Trans- squarespace.com/ (for example, to FDI-specific transfer duty fer Duty Act of 1891, as static/5f4d03f526 prior approval, tax. In 2023, the Botswana’s amended Tribal Land Act 204108be03058b quantitative/size Unified Revenue Service No. 1 of 2018. /t/604b7f4adbb9 limits, tax, and issued the Transfer Duty 4f7623d9562/161 so on). Amendment Act 5 of 2023 5560524283/ (“Amendment Act”), which Transfer+Duty+ reduced the rate of transfer Act+ch53-01.pdf duty to non-citizens from 30 to 10 percent of the pur- Act: http://faolex.fao.org/ chase price or value of prop- docs/pdf/bot204211.pdf erty up to 2 million pula (“P”) (around US$146,000), and 15 percent of the purchase price or value of property in excess of P2 million. SADC | Investment Climate Scorecard 75 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Distribution – I. Foreign equity Greenfield and Several trading businesses, TRADE ACT No. 25 of 2019 Act: https://botswanala- Retail ( limits acquisitions: No including those requir- TRADE REGULATIONS, ws.com/Botswana2019 foreign equity ing a “fresh produce” and 2020 (S.I. No. 82 Of 2020) Pdf/25of2019.pdf specialized allowed. “general dealer” licenses retail stores) Regulation: https://www. (for example, markets bocra.org.bw/sites/ and grocery shops), are default/files/covid19- reserved for citizens and docs/Extraordinary%20 companies wholly owned by Gazette%2020th%20 citizens. Joint ventures with May% at least 51 percent citizen 202020%20copy.pdf shareholding are possible when involving medium and large enterprises. Foreign shareholding above 49 percent can be (exception- ally) accepted, subject to approval by the Minister. 5 Distribution – I. Foreign equity Greenfield and Several trading businesses, TRADE ACT No. 25 of 2019 Act: https://botswa- Retail ( limits acquisitions: including those requir- TRADE REGULATIONS, nalaws.com/Botswa- Between 33 and ing a “fresh produce” and 2020 (S.I. No. 82 Of 2020) na2019Pdf specialized 50 percent. “general dealer” licenses /25of2019.pdf retail stores) (for example, markets Regulation: https://www. and grocery shops), are bocra.org.bw/sites/de- reserved for citizens and fault/files/covid19-docs/ companies wholly owned by Extraordinary%20Ga- citizens. Joint ventures with zette%2020th%20 at least 51 percent citizen May%202020%20copy. shareholding are possible pdf when involving medium and large enterprises. Foreign shareholding above 49 percent can be exception- ally accepted, subject to approval by the Minister. 6 Transport – IV. Other Reciprocity Reciprocity consider- Chapter 69:03 Road Act: http://www.botswa- Surface (road restrictions requirement ations apply for granting Transport (Permits) Act natradeportal.org.bw/ transport and road transport permits to Road Transport (Permits) kcfinder/upload/files/ urban rail foreign-owned transport Regulations, 1974, As Chapter%2069.03%20 transport) companies. Amended. Road%20Transport%20 Permits.pdf Regulation: https:// botswanalaws.com/ subsidiary-legislation/ road-transport- permits-subsidiary- legislation#Chap.69:03_ RoadTransport(Permits) Regulation 7 Hotels and I. Foreign equity Greenfield and Foreign shareholding in Tourism Act No. 16 of Act: https://botswanalaws. Restaurants limits acquisitions: No small accommodation struc- 2009 com/StatutesActpdf/2009 – Accommoda- foreign equity tures (for example, guest Tourism (Reservation of Actpdf/TOURISM%20 tion allowed. houses) is prohibited. Tourist Enterprises for ACT,%2016%20OF%20 Citizens) Regulations, 2009.pdf 2010 (S.I. No. 87 of 2010). Regulation: https:// botswanalaws.com/ StatutesActpdf /2010Subsidiarypdf/ TOURISM%20 (RESERVATION%20 OF%20TOURIST%20 ENTERPRISES%20 FOR%20CITIZENS)%20 REGULATIONS,%20S.%20 I.%20NO.%2087%20 OF%202010.pdf 76 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Hotels and Res- I. Foreign equity Greenfield and Foreign shareholding in Chapter 43:11 Liquor Act Act: https://www.gov.bw/ taurants – Food limits acquisitions: No bars (holding a bar liquor Liquor Regulations, 2008 sites/default/ and bever- foreign equity license to sell alcohol) and (S.I No. 26 Of 2008) files/2020-03/LI- age service allowed. touristic transfer companies Tourism (Reservation of QUOR%20ACT.pdf activities, other is prohibited. Tourist Enterprises for Regulation: https:// touristic ser- Citizens) Regulations, botswanalaws.com/ vices and arts, 2010 (S.I. No. 87 Of 2010). StatutesActpdf/2008 entertainment Subsidiarypdf/LI- and recreation QUOR%20REGULA- activities TIONS,%20S.%20I.%20 NO.%2026%20OF%20 2008.pdf Regulation: https:// botswanalaws.com/ StatutesActpdf/2010Subs idiarypdf/TOURISM%20 (RESERVATION%20 OF%20TOURIST%20 ENTERPRISES%20 FOR%20CITIZENS)%20 REGULATIONS,%20 S.%20I.%20NO.%20 87%20OF%202010.pdf 9 Media – Radio I. Foreign equity Greenfield and Foreign investment in Communications Regula- Ac: https://www.bocra. and TV Pro- limits acquisitions: broadcasting activities is tory Authority Act No. 19 org.bw/sites/default/files/ gramming and More than 67 subject to joint-venture with of 2012 documents/COMMUNI- Broadcasting percent, but citizens and citizen-owned Broadcasting Licenses CATIONS%20REGULA- (total) less than 100 companies in accordance in Botswana: Application TORY%20ACT%2C%20 percent. with the licensing policy of and Assessment Proce- 2012.pdf the Botswana Communica- dures for Commercial Pol: https://www.bocra. tions Regulatory Authority Broadcasting Services, org.bw/sites/default/files/ (BOCRA). April 2015. documents/Broadcast- ing%20%20Licence%20 Application%20and%20 Assessment%20 Procedures.pdf 10 Financial Ser- II. Screening Screening Botswana’s bank licensing Banking Act No.13 of 1995 Act: https://www. vices – Banking and approval¹ policy mandates policy seeks to promote/ Chapter 46:04 - Banking bankofbotswana.bw/sites/ (excludes consideration encourage local sharehold- Regulations, 1995 default/files/Banking- approvals for of economic ing, but no statutory local The Licensing Policy Act-4.pdf the acquisition interests. shareholding limit has been Under the Banking Act Regulation: https://www. of land/real officially stipulated. (Cap. 46:04). bankofbotswana.bw/sites/ estate for default/files/Banking-Act- business Regulations_0.pdf purposes). Policy: https://www. bankofbotswana.bw/sites/ default/files/licensing- policy.pdf 11 Financial Ser- IV. Other Establishment Foreign bank branches are Banking Act No.13 of 1995 Act: https://www.bankof- vices – Banking restrictions of branches not not allowed. Local incorpo- Chapter 46:04 - Banking botswana.bw/sites/de- allowed/local ration is required for under- Regulations, 1995 fault/files/Banking-Act-4. incorporation taking banking activities in The Licensing Policy pdf required (finan- Botswana. Under the Banking Act Regulation: https://www. cial services (Cap. 46:04). bankofbotswana.bw/ and real estate sites/default/files/Bank- investment ing-Act-Regulations_0.pdf only). Policy: https://www. bankofbotswana.bw/ sites/default/files/licens- ing-policy.pdf SADC | Investment Climate Scorecard 77 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Financial Ser- IV. Other Establishment Branches of foreign insur- Insurance Industry Act Act: https://www.nbfira. vices – Insur- restrictions of branches not ance companies, insurance No. 10 of 2015. org.bw/sites/default/files/ ance allowed/local agents and broker firms are Insurance%20Indus- incorporation not allowed. Local incorpo- try%20Act%202015.pdf required (finan- ration is required. cial services and real estate investment only). 13 Forestry and IV. Other Access to land/ Foreign acquisition or lease Chapter 32:11 Land Act: http://extwprlegs1. Logging restrictions real estate of agricultural land or of a Control Act of 1975, as fao.org/docs/pdf/ is subject to company owning agricultural amended bot39063.pdf FDI-specific land is subject to the Minis- Chapter 53:01 Trans- Act: https://static1. restriction ter’s approval and subject to fer Duty Act of 1891, as squarespace.com/ (for example, a FDI-specific transfer duty amended static/5f4d03f5262 prior approval, tax. In 2023, the Botswana’s Tribal Land Act No. 1 of 04108be03058b/t/ quantitative/size Unified Revenue Service 2019. 604b7f4adbb94f762 limits, tax and issued the Transfer Duty 3d95262/16155605 so on). Amendment Act 5 of 2023 24283/Transfer+Duty (“Amendment Act”), which +Act+ch53-01.pdf reduced the rate of transfer duty to non-citizens from 30 Act: http://faolex.fao.org/ to 10 percent of the purchase docs/pdf/bot204211.pdf price or value of property up to 2 million pula (“P”) (US$ 146,000) , and 15 percent of the purchase price or value of property in excess over P2 million. 14 Financial Ser- IV. Other Establishment Branches are not allowed Securities Act No. 26 Of Act: http://www.nbfira. vices – Other Fi- restrictions of branches not for “securities business” and 2014 org.bw/sites/default/files/ nancial Services allowed/local “securities infrastructure Securities (Institutions SECURITIES%20ACT.pdf (auxiliary to incorporation business” entities. Local Licensing) Regulations, Regulation: http://www. financial mar- required (finan- incorporation is required. 2017 (S. I. No. 31 of 2017) nbfira.org.bw/sites/de- kets: securities cial services Securities (Persons fault/files/Securities%20 and commod- and real estate Operating A Securities Institutions%20Licens- ity exchanges, investment Infrastructure Business) ing%20Regulations%20 securities only). Regulations, 2017 (S. I. No. 2017.pdf and commod- 32 of 2017) ity brokerage, Non-Bank Financial Regulation: http://www. investment ad- Institutions Regulatory nbfira.org.bw/sites/de- visory services Authority (Securities Busi- fault/files/Securities%28 and related ness Corporate Gover- Persons%20O activities) nance) Rules 2012. perating%20A% 20Securities%20 Infrastructure%20 Business%29%20 Regulations%2C% 202017.pdf Rule: http://www.nbfira. org.bw/sites/default/files/ NBFIRA%20%28Securi- ties%20Business%20 Corporate%20Gover- nance%29%20Rules%20 2012.pdf 15 Financial IV. Other Establishment Local incorporation is Chapter 56:09 Collective Act: https://www.finance. Services – restrictions of branches not required for funds and fund Investment Undertakings, gov.bw/images/LawRegu- Other Financial allowed/local management activities. 1999. lations/Collective%20 Services (trusts, incorporation Investment%20Under- funds, and fund required (finan- taking%20Act.pdf management cial services activities) and real estate investment only). 78 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Professional IV. Other Reciprocity A foreigner can register, Chapter 61:01 Legal Prac- Act: http:// Services – Legal restrictions requirement practice and be a partner in titioners Act. static1.1.sqspcdn.com/ Services (total) a law firm subject to recipro- static/f/723732/ cal treatment accorded to 25889608/ Botswana’s citizens by the 1422112488603/ foreigner’s home state. ch61-01+LEGAL+ PRACTITIONERS.pdf ?token=B1RkLAaZ9 oMtk44L8JZTXu5 mdz8%3D 17 Real Estate I. Foreign equity Greenfield and Foreign investors can lease State Land Act (Chap- Act: http://extwprlegs1. Investment – limits acquisitions: No state land for commercial ter 32:01) of 1980, As fao.org/docs/pdf/ Land foreign equity and industrial use for up to Amended bot39081.pdf allowed. 50 years, similarly to citizens Botswana Land Policy, Policy: http://extwpr- and citizen-owned com- Government Paper No. 4 legs1.fao.org/docs/pdf/ panies. However, foreign of 2015. bot196817.pdf investors are not allowed to lease residential state land, whereas citizens can lease them for up to 99 years. 18 Fishing and I. Foreign equity Greenfield and Commercial fishing is Fish Protection Regula- Regulation: http:// Aquaculture – limits acquisitions: No reserved to citizens only. tions, 2016 (S.I. No. 16 of faolex.fao.org/docs/pdf/ Fishing foreign equity There are no restrictions 2016). bot174293.pdf allowed. on foreign investment in aquaculture activities. 19 Mining and I. Foreign equity Greenfield and Foreign investment compa- Mines and Minerals Act, Act: http://extwprlegs1. Quarrying – limits acquisitions: No nies cannot hold a permit to 1999 (Chapter 66:01). fao.org/docs/pdf/ Except energy- foreign equity exploit industrial minerals. bot50854.pdf producing allowed. materials and support service activities 20 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: No companies undertaking Act . 23 Of 2019 fao.org/docs/pdf/ Others (food foreign equity certain small-scale food Industrial Development bot195231.pdf products, allowed. and beverage activities (for Regulations, 2020 (S.I. No Regulation: https:// beverages and example, bread, meat, milk, 81 Of 2020). www.bocra.org.bw/sites/ tobacco) sorghum cereal, drink- default/files/covid19- ing water , and so on) is docs/Extraordinary%20 prohibited. Gazette%2020th%20 May%202020%20copy. pdf 21 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: companies undertaking Act No. 23 of 2019 fao.org/docs/pdf/ Others (food Between 33 and certain medium-/large-scale Industrial Development bot195231.pdf products, 50 percent. food and beverage activities Regulations, 2020 (S.I. No Regulation: https:// beverages and (for example, bread, meat, 81 of 2020). www.bocra.org.bw/sites/ tobacco) milk, sorghum cereal, default/files/covid19- drinking water, and so on) is docs/Extraordinary%20 limited to 49 percent. Gazette%2020th%20 May%202020%20copy. pdf SADC | Investment Climate Scorecard 79 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 22 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: No companies undertaking Act No. 23 of 2019 fao.org/docs/pdf/ Others (textiles, foreign equity certain small-scale textile Industrial Development bot195231.pdf wearing ap- allowed. and leather activities (for Regulations, 2020 (S.I. No Regulation: https:// parel, leather example, protective clothing, 81 of 2020). www.bocra.org.bw/sites/ and related school uniforms, traditional default/files/covid19- products) leather products, and so on) docs/Extraordinary%20 is prohibited. Gazette%2020th%20 May%202020%20copy. pdf 23 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: companies undertaking Act No. 23 of 2019 fao.org/docs/pdf/ Others (textiles, Between 33 and certain medium-/large-scale Industrial Development bot195231.pdf wearing ap- 50 percent textile and leather activities Regulations, 2020 (S.I. No Regulation: https:// parel, leather (for example, protective 81 of 2020). www.bocra.org.bw/sites/ and related clothing, school uniforms, default/files/covid19- products) traditional leather products, docs/Extraordinary%20 and so on) is limited to 49 Gazette%2020th%20 percent. May%202020%20copy. pdf 24 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: No companies undertaking Act No 23 of 2019 fao.org/docs/pdf/ Others (paper, foreign equity certain small-scale paper, Industrial Development bot195231.pdf wood, printing, allowed. wood, furniture activities Regulations, 2020 (S.I. No Regulation: https:// furniture and (for example, packaging, 81 of 2020). www.bocra.org.bw/sites/ other manufac- burglar bars, gates and default/files/covid19- turing) windows, fencing materials, docs/Extraordinary%20 school furniture, and so on) Gazette%2020th%20 is prohibited. May%202020%20copy. pdf 25 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Food and limits acquisitions: companies undertaking Act No 23 of 2019 fao.org/docs/pdf/ Others (paper, Between 33 and certain medium-/large-scale Industrial Development bot195231.pdf wood, printing, 50 percent. paper, wood, furniture activi- Regulations, 2020 (S.I. No Regulation: https:// furniture and ties (for example, packaging, 81 of 2020). www.bocra.org.bw/sites/ other manufac- burglar bars, gates and default/files/covid19- turing) windows, fencing materials, docs/Extraordinary%20 school furniture, and so on) Gazette%2020th%20 is limited to 49 percent. May%202020%20copy. pdf 26 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Chemical, limits acquisitions: No companies manufacturing Act No 23 of 2019 fao.org/docs/pdf/ Rubber, Plastics, foreign equity some chemical products (for Industrial Development bot195231.pdf Fuel Products allowed. example, floor polish) is pro- Regulations, 2020 (S.I. No Regulation: https:// and Other Non- hibited and in other activities 81 of 2020). www.bocra.org.bw/sites/ Metallic Min- is limited to 49 percent. default/files/covid19- eral Products docs/Extraordinary%20 (chemical and Gazette%2020th%20 pharmaceutical May%202020%20copy. products) pdf 80 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 27 Manufactur- I. Foreign equity Greenfield and Foreign shareholding in Industrial Development Act: http://extwprlegs1. ing – Chemical, limits acquisitions: No companies manufacturing Act No 23 of 2019 fao.org/docs/pdf/ Rubber, Plastics, foreign equity some non-metallic min- Industrial Development bot195231.pdf Fuel Products allowed. eral products (for example, Regulations, 2020 (S.I. No Regulation: https:// and Other Non- bricks, burglar bars, gates 81 of 2020). www.bocra.org.bw/sites/ Metallic Mineral and windows, and so on) default/files/covid19- Products (rub- is prohibited and in other docs/Extraordinary%20 ber and plastics activities is limited to 49 Gazette%2020th%20 products, and percent. May%202020%20copy. other non- pdf metallic mineral products) SADC | Investment Climate Scorecard 81 Democratic Republic of Congo Summary Highlights FDI Performance DRC SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)63 1,488 1,647 1,870 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 64 3.1% 3.6% 3.7% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 570 1,135 184 875 882 1,243 6,419 4,384 6,067 Investments65 (in US$ millions) SADC Scorecard Performance, 2021 DRC SADC Average Global Average66 Score under the SADC Scorecard (0-1, with 0 = 0.21 0.19 0.10 no restrictions, and 1= most restrictive)67 Total number of measures 68 25 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 11 11.9 NA. Screening and approval 2 2.8 NA. Restrictions on foreign personnel 1 2.6 NA. Other restrictions 11 7.9 NA. Total number of sectors with measures 69 13 11.4 NA. 63. Source: UNCTAD STAT. 64. Id. 65. fDi Markets, from the Financial Times Ltd. (2022). 66. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 67. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 68. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, and for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In the Democratic Republic of Congo, the list of 25 identified measures is found in 21 legal instruments (legal instruments include laws, regulations, decree, presidential orders, ministerial orders and official government policy). 69. The following sectors in DRC have covered measures: Agriculture – Crops, Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Water (total); Media – Radio and TV Programming and Broadcasting (total); Media – Other Media (publishing of books, periodicals and other publishing activities, and web- based media portals); Telecommunications, Financial Services; Banking, Financial Services – Insurance, Forestry and Logging, Professional Services; Legal Services (total); Professional Services – Audit and Accounting (total); Professional Services – Engineering Services (total); Professional Services – Architectural Services (total); Real Estate Investment; Real Estate Investment – Land, Mining and Quarrying – Except energy-producing materials and support service activities; Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products (chemical and pharmaceutical products). 82 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal III. Restrictions Foreign key Foreigners cannot hold Departmental Ordinance Ord: https://www.ilo.org/ on key foreign personnel (that various top-level corporate 86/001 determining the dyn/natlex/docs/ELEC- personnel (that is, top-level positions across industries. list of jobs prohibited to TRONIC/84839/94663/ is, the board executive foreigners. (JOZ, No. 7, F17934817/Emplois%20 of directors positions) are April 1, 1987, p. 36) [Google interdits%20aux%20 and top-level not permitted.¹ translation]. etrangers.pdf executives). 2 Horizontal IV. Other FDI-specific Foreign investors are LAW No. 17/001 of Law: https://www. restrictions local content required to engage February 08, 2017 fixing leganet.cd/Legis- requirement. Congolese-owned the rules applicable to lation/Droit%20 sub-contractors, unless subcontracting in the civil/Dobligations/ exceptionally when local private sector [Google Loi.17.001.08.02.2017.html expertise is unavailable or translation]. inaccessible. It is subject to government approval. 3 Horizontal IV. Other Government Public procurement Law No. 10/010 of Law: https://www. restrictions procurement legislation provides for a April 27, 2010 on Public leganet.cd/Legislation/ offers preferential treatment for Procurement, Art. 37. JO/2010/JOS.04.10.pdf preference to majority Congolese-owned locally-owned small and medium-sized firms. enterprises. 4 Agriculture – I. Foreign equity Greenfield and Foreign shareholding Law No. 11/022 of Act: http://extwprlegs1. Crops limits acquisitions: in enterprises holding December 24, 2011 on fao.org/docs/pdf/ Between 33 and a concession to exploit fundamental principles cng109785.pdf 50 percent. agricultural land is limited to relating to agriculture 49 percent. [Google translation]. 5 Distribution I. Foreign equity Greenfield and Foreign investment in retail Ministerial Order Order: http://extwpr- – Retail (spe- limits acquisitions: No pharmaceutical products No. 1250/CAB/MIN/ legs1.fao.org/docs/pdf/ cialized retail foreign equity is reserved for Congolese SP/010/CPH/OMP/2015 Cng189566.pdf stores) allowed. pharmacists. of September 28, 2015 amending and supplementing Ministerial Order No. 1250/CAB/MIN/S/ AJ/01 of March 14, 2000 on the conditions for granting authorizations to open and operate pharmaceutical establishments [Google translation]. 6 Distribution II. Screening Screening Foreign investment in Law No. 73/009 of Law: http://www.droit- – Retail (spe- and approval¹ policy mandates retail trade is subject to January 5, 1973 amended afrique.com/upload/ cialized retail (excludes consideration express authorization by the by Law No. 74-014 of July doc/rdc/RDC-Loi-1973- stores) approvals for of economic President of the Republic, 10, 1974 on Trade [Google 09-portant-sur-le-com- the acquisition interests. except for the following translation] merce.pdf of land/real domains, where it has been Decree: https://www. estate for authorized by Decree: gas droitcongolais.info/ business stations; supermarkets, files/90.10.11-Decret-du- purposes). beverages, domestic 11-octobre-2011_petit- appliances; luxury clothing; commerce_mesures- and new vehicle dealerships. conservatoires.pdf SADC | Investment Climate Scorecard 83 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 7 Distribution – I. Foreign equity Greenfield and Foreign investment Ministerial Order Order: http://extwpr- Wholesale limits acquisitions: in wholesale No. 1250/CAB/MIN/ legs1.fao.org/docs/pdf/ More than pharmaceutical products SP/010/CPH/OMP/2015 Cng189566.pdf 67percent, and pharmaceutical of September 28, but below 100 manufacturing laboratories 2015 amending percent. requires an association with and supplementing a Congolese pharmacist. Ministerial Order No. 1250/CAB/MIN/S/ AJ/01 of March 14, 2000 on the conditions for granting authorizations to open and operate pharmaceutical establishments [Google translation] 8 Distribution – II. Screening Screening Foreign investment in Law No. 73/009 of Law: http://www.droit- Wholesale and approval¹ policy wholesale trade is subject to January 5, 1973 amended afrique.com/upload/ (excludes mandates and express authorization of the by Law No. 74-014 of July doc/rdc/RDC-Loi-1973- approvals for consideration President of the Republic. 10, 1974 on Trade [Google 09-portant-sur-le-com- the acquisition of economic translation] merce.pdf of land/real interests. DECREE No. 011/37 laying Decree: https://www. estate for down precautionary droitcongolais.info/ business measures for the exercise files/90.10.11-Decret-du- purposes). of small businesses and 11-octobre-2011_petit- retail businesses [Google commerce_mesures- translation]. conservatoires.pdf 9 Transport – I. Foreign equity Greenfield and Maritime transport, unless Ordinance-Law No. 66-98 Ordinance: https://www. Water (total) limits acquisitions: as provided for under – Maritime Navigation ilo.org/dyn/natlex/docs/ Between 33 and international maritime Code [Google translate]. SERIAL/84877/95322/ 50 percent. agreements, is reserved to F1572507643/COD-84877. vessels flying the national pdf flag, which is granted to vessels in which foreign interests are not greater than 40 percent. 10 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in Act No. 96- 002 of June Act: https://jed-afrique. and TV Pro- limits acquisitions: radio and TV broadcasting 22, 1996, Fixing the terms org/2000/08/10/ gramming and Between 33 and companies is limited to 49 and conditions for the loi-n96-002-du-22-juin- Broadcasting 50 percent. percent. exercise of press freedom 1996-fixant-les-modalites- (total) [Google translation] de-lexercice-de-la-liberte- de-presse/ 11 Media – Radio IV. Other Reciprocity Foreign investment in radio Act No. 96- 002 of June Act: https://jed-afrique. and TV Pro- restrictions requirement and TV broadcasting is 22, 1996, Fixing the terms org/2000/08/10/ gramming and subject to a reciprocity and conditions for the loi-n96-002-du-22-juin- Broadcasting condition. exercise of press freedom 1996-fixant-les-modalites- (total) [Google translation]. de-lexercice-de-la-liberte- de-presse/ 12 Media – Other I. Foreign equity Greenfield and Foreign shareholding in Act No. 96- 002 of June Act: https://jed-afrique. Media (publish- limits acquisitions: printed media companies is 22, 1996, Fixing the terms org/2000/08/10/ ing of books, Between 33 and limited to 49 percent. and conditions for the loi-n96-002-du-22-juin- periodicals and 50 percent. exercise of press freedom 1996-fixant-les-modalites- other publish- [Google translation]. de-lexercice-de-la-liberte- ing activities, de-presse/ and web-based media portals) 84 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 13 Telecommuni- I. Foreign equity Greenfield and Foreign shareholding Law No. 20/017 Law: https://legalrdc. cations limits acquisitions: in telecommunication of November 25, com/wp-content/up- More than 67 companies is limited to 69 2020 relating to loads/2021/11/Loi-20017_ percent, but percent. telecommunications Telecom-et-Tech.pdf less than 100 and information percent. and communication technologies [Google translation]. 14 Financial Ser- IV. Other FDI-specific Statutory auditors of Law No. 003/2002 of Law: https://www. vices – Banking restrictions local content banking institutions in 02/02/2002 relating to leganet.cd/Legis- requirement the DRC must either be the activity and control of lation/Droit%20 Congolese nationals or legal credit institutions [Google economique/Banques/ persons established under translation] loi.003.02.02.2002.pdf the law of the DRC — and with capital held in majority by Congolese nationals. 15 Financial Ser- IV. Other Establishment Local incorporation is Law No. 003/2002 of Law: https://www. vices – Banking restrictions of branches not required for investing in 02/02/2002 relating to leganet.cd/Legis- allowed/local banking. the activity and control of lation/Droit%20 incorporation credit institutions [Google economique/Banques/ required translation]. loi.003.02.02.2002.pdf (financial services and real estate investment only) 16 Financial IV. Other Establishment Local incorporation is Law No. 15/005 Of March Law: https://www. Services – restrictions of branches not required for undertaking 17, 2015 on the insurance leganet.cd/Legislation/ Insurance allowed/local insurance and reinsurance code [Google translation] Droit%20economique/ incorporation activities. Ass/Loi%2015%20 required mars%202015.html (financial services and real estate investment only) 17 Forestry and I. Foreign equity Greenfield and Medium-sized artisanal Ministerial Order 84/ Law: http://extwpr- Logging limits acquisitions: forestry activities (of up CAB/MIN/ECN-DD/ legs1.fao.org/docs/pdf/ Between 33 and to 500 hectares) are CJ/00 /RBM/2016 of cng34383.pdf 50 percent reserved to majority-owned October 29, 2016 on the Ord: http://extwprlegs1. Congolese enterprises. conditions and rules for fao.org/docs/pdf/ the exploitation of timber Cng174125.pdf [Google translation] 18 Professional IV. Other Reciprocity Foreign lawyers may be Ordinance-Law No. Ordinance-Law: https:// Services – Legal restrictions requirement admitted to practice in the 79-028 of September 28, www.leganet.cd/Legisla- Services (total) DRC subject to a reciprocity 1979 on the organization tion/Droit%20Judiciaire/ condition. Only lawyers can of the bar, the body of OL79..28.28.09.79.htm constitute and hold equity judicial defenders and interests in law firms and the body of State agents partnerships established in [Google translation]. the DRC. 19 Professional IV. Other Reciprocity Foreign participation in Law No. 15/002 of Law: https://leganet.cd/ Services – Audit restrictions requirement auditing and accounting February 12, 2015 on the Legislation/Droit%20 and Accounting firms in the DRC is subject to creation and organization economique/Professions/ (total) a reciprocity condition. of the national order of Loi.15.002.12.02.html#CIII experts-compatibles [Google translation]. SADC | Investment Climate Scorecard 85 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 20 Professional IV. Other Reciprocity Foreign engineers can be Law No. 18/033 of Law: https://www. Services – restrictions requirement admitted to the National December 13, 2018 on the droitcongolais.info/ Engineering Order of Engineers subject creation, organization and files/713.12.18.1_loi- Services (total) to a reciprocity requirement. operation of the national n-18_033-portant- order of civil engineers creation-de-lOrdre-des- [Google translation]. ingenieurs-civils.pdf 21 Professional IV. Other Reciprocity Architectural firms can only Law No. 18/034 on the Law: https://www. Services – restrictions requirement be formed by architects who creation, organization droitcongolais.info/ Architectural are members of the National and functioning of files/713.12.18-Loi-n-18_34- Services (total) Order of Architects. Foreign the National Order of portant-creation-de-lor- architects can be admitted Architects [Google dre-des-Architectes.pdf to the Order subject to a translation]. reciprocity condition. 22 Real Estate IV. Other Reciprocity Foreign investment in real Decree No. 13/032 of June Decree: http://extwpr- Investment restrictions requirement estate services (agents 25, 2013 regulating the legs1.fao.org/docs/pdf/ and brokers) is subject to practice of the profession cng140369.pdf reciprocity. of real estate expert [Google translation]. 23 Real Estate I. Foreign equity Greenfield and Only Congolese nationals Law No. 73-021 of July Law: http://www.droit- Investment – limits acquisitions: No are entitled to perpetual 20, 1973 on the general afrique.com/upload/doc/ Land foreign equity land concessions. Legal property regime, land rdc/RDC-Loi-1973-21-re- allowed. entities, both foreign- and and real estate regime gime-foncier-et-suretes- Congolese-owned, are only and securities regime, MAJ-1980.pdf entitled to limited-term as amended and concession modalities, such supplemented by Law No. as land leases up to 25 years 80-008 of July 18, 1980 (and renewable). [Google translation]. 24 Mining and I. Foreign equity Greenfield and Foreign investment in Law No. 007/2002 Of Law: http://extwpr- Quarrying – limits acquisitions: mining and small-scale July 11, 2002 on the legs1.fao.org/docs/pdf/ Except energy- More than 67 mining activities is subject to Mining Code, as amended cng46321.pdf producing percent, but joint-venture requirements [Google translation]. Law: http://extwpr- materials and less than 100 with Congolese investors. Loi n°18/001 du 09 legs1.fao.org/docs/pdf/ support service percent. mars 2018 modifiant cng197058.pdf activities et complétant la Loi n° 007/2002 du 11 juillet 2002 portant Code minier [Google translation]. 86 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 25 Manufactur- I. Foreign equity Greenfield and Foreign investment Ministerial Order Order: http://extwpr- ing – Chemical, limits acquisitions: in wholesale No. 1250/CAB/MIN/ legs1.fao.org/docs/pdf/ Rubber, Plastics, More than 67 pharmaceutical products SP/010/CPH/OMP/2015 Cng189566.pdf Fuel Products percent, but and pharmaceutical of September 28, and Other Non- less than 100 manufacturing laboratories 2015, amending Metallic Min- percent. requires an association with and supplementing eral Products a Congolese pharmacist. Ministerial Order No. (chemical and 1250/CAB/MIN/S/ pharmaceutical AJ/01 of March 14, 2000 products) on the conditions for granting authorizations to open and operate pharmaceutical establishments [Google translation] SADC | Investment Climate Scorecard 87 Eswatini Summary Highlights FDI Performance Eswatini SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)70 130 41 126 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 71 2.9% 1.1% 2.8% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 48 10 115 875 882 1,243 6,419 4,384 6,067 Investments72 (in US$ millions) SADC Scorecard Performance, 2021 Eswatini SADC Average Global Average73 Score under the SADC Scorecard (0-1, with 0 = 0.15 0.19 0.10 no restrictions, and 1= most restrictive)74 Total number of measures 75 34 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 13 11.9 NA. Screening and approval 12 2.8 NA. Restrictions on foreign personnel 3 2.6 NA. Other restrictions 6 7.9 NA. Total number of sectors with measures 76 17 11.4 NA. 70. Source: UNCTAD STAT. 71. Id. 72. fDi Markets, from the Financial Times Ltd. (2022). 73. The calculation of the global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 74. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 75. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Eswatini, the list of 34 identified measures is found in 13 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 76. The following sectors in Eswatini have covered measures: Construction, Construction – Buildings and Other Specialized Activities; Construction – Civil Engineering; Distribution – Retail (non-specialized retail stores, including supermarket and department stores); Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Surface (road transport and urban rail transport); Transport – Air (air transport); Hotels and Restaurants – Accommodations; Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (total); Telecommunications – Fixed (facilities and services-based wired telecommunication service services, including internet service providers); Telecommunications – Mobile (facilities and services-based mobile telecommunication services, including satellite telecommunications services and value-added services); Financial Services – Banking, Financial Services; Insurance, Financial Services – Insurance (life insurance/reinsurance, pensions and related auxiliary services); Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Real Estate Investment; Real Estate Investment – Land, Mining and Quarrying – Except energy-producing materials and support service activities; Mining and Quarrying – Except energy-producing materials and support service activities; Manufacturing – Food and Others; Manufacturing – Food and Others (food products, beverages and tobacco); Manufacturing – Food and Others (textiles, wearing apparel, leather and related products); Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products; Manufacturing – Basic Metals and Fabricated Metal Products, except Machinery and Equipment; Manufacturing – Machinery and Equipment, Manufacturing – Transport Equipment. 88 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Land/real estate Majority foreign-owned Constitution of the Constitution: http://ex- restrictions ownership is companies cannot own land Kingdom of Swaziland twprlegs1.fao.org/docs/ not permitted, in Eswatini even if for busi- Act, 2005 pdf/swa132849.pdf but leases are ness purposes. However, possible for long-term leases (99 years) Concessions Partitions the long-term, are possible according to Act 1907 (No. 28 of 1907). that is, over 70 the authorities. Transfer Duty Act, years. Deed Registry Act. 2 Construction I. Foreign equity Greenfield and Foreign investment (includ- Construction Industry Act: https://gazettes. limits acquisitions: ing by locally-incorporated Council Act, 2013. africa/archive/sz/2013/ More than 67 firms with 60 percent or sz-government-gazette- percent, but more foreign shareholding) supplement-dated- less than 100% in construction activities 2013-08-09-no-103.pdf is subject to a partnership requirement with local com- panies owned 60 percent or more by Eswatini citizens. Foreign investment (includ- ing by locally-incorporated firms with 60 percent or more foreign shareholding) in construction activities is not permitted, where the Construction Industry Council (CIC) determines that the work can be under- taken by Eswatini citizens and/or local companies (owned 60 percent or more by Eswatini citizens). Where local expertise is in short- age, the CIC may authorize foreign investment subject to the investor partnering (establishing a joint venture) with a local company. 3 Construction – II. Screening Screening A trading license in various Trading Licenses Order http://www.osall.org.za/ and approval¹ policy mandates commercial activities, (Order No.20 of 1975) docs/2011/03/Swaziland- (excludes consideration including manufacturing, Trading-Licences-Order- approvals for of economic construction, wholesale and The Reservation of 20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modations, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes) referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or with-tracked-changes. (ii) where Swazi citizens doc cannot meet the demand. In any case, a non-Swazi citizen shall not conduct any business or trade under the Swazi Nation Land. SADC | Investment Climate Scorecard 89 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Distribution – I. Foreign equity Greenfield and Trading license in some Trading Licenses Order Act: http://www.osall.org. Retail (non- limits acquisitions: No commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- foreign equity including manufacturing- land-Trading-Licences- specialized allowed related, wholesale and The Reservation of Order-20-of-1975.pdf retail stores, retail-related and food Certain Trades or Busi- including nesses for Swazi Citizens, Amendment: http:// services-related activities supermarket Regulations, 2017 (Under www.osall.org.za/ among others [listed in and department Section 20). docs/2011/03/Swaziland- Schedule 2 of the referenced stores) Trading-Licences-Amend- Regulation], are reserved to ment-Act-9-of-2011.pdf Swazi citizens and compa- nies wholly-owned by Swazi Regulation: https:// citizens. www.gov.sz/images/ MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 5 Distribution – II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Retail (non- and approval¹ policy commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- (excludes mandates the including manufacturing, land-Trading-Licences- specialized approvals for consideration construction, wholesale and The Reservation of Order-20-of-1975.pdf retail stores, the acquisition of economic retail distribution, accom- Certain Trades or Busi- including nesses for Swazi Citizens, Amendment: http:// of land/real interests. modations, food services supermarket Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities and department Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the stores). Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 6 Distribution – II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Retail ( and approval¹ policy mandates commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- (excludes consideration including manufacturing, land-Trading-Licences- specialized approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf retail stores the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modations, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 90 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 7 Distribution – I. Foreign equity Greenfield and Trading license in some Trading Licenses Order Act: http://www.osall.org. Wholesale limits acquisitions: No commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- foreign equity including manufacturing- land-Trading-Licences- allowed. related, wholesale and The Reservation of Order-20-of-1975.pdf retail-related and food Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// services-related activities Regulations, 2017 (Under www.osall.org.za/ among others [listed in Section 20). docs/2011/03/Swaziland- Schedule 2 of the referenced Trading-Licences-Amend- Regulation], are reserved to ment-Act-9-of-2011.pdf Swazi citizens and compa- nies wholly owned by Swazi Regulation: https:// citizens. www.gov.sz/images/ MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 8 Distribution – II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Wholesale and approval¹ policy mandates commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- (excludes consideration including manufacturing, land-Trading-Licences- approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modation, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 9 Transport – IV. Other FDI-specific Foreign trucking companies THE ROAD TRANSPORTA- Act: https://gazettes. Surface (road restrictions local content or their Swaziland subsidiar- TION ACT No. 5 of 2007. africa/archive/sz/2007/ transport and requirement. ies are obliged to award a sz-government-gazette- urban rail quota of not less than 20 dated-2007-09-20-no-98. transport) percent of their transport pdf requirements to the small local truckers. 10 Transport – Air IV. Other Reciprocity Reciprocity is required for Civil Aviation Authority Act: https://www.eswa- (air transport) restrictions requirement. a foreign airline licensee Act No. 10 of 2009. caa.co.sz/regulationand- to be allowed to establish compliance/documents/ offices in Swaziland for the regulations/CIVIL-AVI- promotion and sale of air ATION-AUTHORITY- transportation services. ACT-2009.pdf SADC | Investment Climate Scorecard 91 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 11 Hotels and II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Restaurants and approval¹ policy mandates commercial activities, (Order No.20 of 1975). za/docs/2011/03/Swazi- – Accommoda- (excludes consideration including manufacturing, land-Trading-Licences- tion approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modations, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. According to the government, despite the screening, “Investment in this sector is open to all investors be it foreign or domestic.” Some foreign investors are present in the country. 12 Hotels and Res- I. Foreign equity Greenfield and Trading license in some Trading Licenses Order Act: http://www.osall.org. taurants – Food limits acquisitions: No commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- and bever- foreign equity including manufacturing- land-Trading-Licences- age service allowed. related, wholesale and The Reservation of Order-20-of-1975.pdf activities, other retail-related and food Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// touristic ser- services-related activities Regulations, 2017 (Under www.osall.org.za/ vices and arts, among others [listed in Section 20). docs/2011/03/Swaziland- entertainment Schedule 2 of the referenced Trading-Licences-Amend- and recreation Regulation], are reserved to ment-Act-9-of-2011.pdf activities Swazi citizens and compa- nies wholly owned by Swazi Regulation: https:// citizens. www.gov.sz/images/ MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 13 Hotels and Res- II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. taurants – Food and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- and bever- (excludes consideration including manufacturing, land-Trading-Licences- age service approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf activities, other the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// touristic ser- of land/real modations, food services Regulations, 2017 (Under www.osall.org.za/ vices and arts, estate for and other touristic activities Section 20). docs/2011/03/Swaziland- entertainment business [listed in Schedule 1 of the Trading-Licences-Amend- and recreation purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf activities only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there re MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 92 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 14 Media – Radio I. Foreign equity Listed Foreign shareholding in any The Electronic Com- Regulation: https://www. and TV Pro- limits companies only: radio and TV broadcasting munications (Licensing) esccom.org.sz/regula- gramming and Less than 33 company listed on the stock Regulations, 2016. tions/The-Electronic- Broadcasting percent. exchange is limited to 30 CommunicationsLicenc- (total) percent. ing-Regulations2016.pdf 15 Telecommuni- I. Foreign equity Listed Foreign shareholding in any The Electronic Com- Regulation: https://www. cations – Fixed limits companies only: radio and TV broadcast- munications (Licensing) esccom.org.sz/regula- (facilities and Less than 33 ing company listed on the Regulations, 2016. tions/The-Electronic- services-based percent. stock exchange is limited CommunicationsLicenc- wired telecom- to 30 percent. However, ing-Regulations2016.pdf munication according to the authorities, service ser- fixed line communication is vices, including only provided by public en- internet service terprises holding a de-facto providers) monopoly of such services in the country. 16 Telecommuni- I. Foreign equity Listed Foreign shareholding in any The Electronic Com- Regulation: https://www. cations – Mobile limits companies only: radio and TV broadcasting munications (Licensing) esccom.org.sz/regula- (facilities and Less than 33 company listed on the stock Regulations, 2016. tions/The-Electronic- services-based percent. exchange is limited to 30 CommunicationsLicenc- mobile telecom- percent. ing-Regulations2016.pdf munication services, includ- ing satellite telecommunica- tions services and value-add- ed services) 17 Financial Ser- III. Restrictions Nationality The majority of the board Financial Institutions Act Act: https://www.central- vices – Banking on key foreign requirements of directors of a banking No. 6 of 2005. bank.org.sz/wp-content/ personnel for the board institution, as well as its uploads/2021/03/FIA- ( board of of directors. Chairman and Principal 2005-optimized.pdf directors The majority Officer, must be citizens of and top-level must be Swazi Eswatini. executives). nationals. 18 Financial Ser- III. Restrictions Key foreign The majority of the board Financial Institutions Act Act: https://www.central- vices – Banking on key foreign personnel ( top- of directors of a banking No. 6 of 2005. bank.org.sz/wp-content/ personnel level executive institution, as well as its uploads/2021/03/FIA- ( board of positions) not Chairman and Principal 2005-optimized.pdf directors permitted.¹ Officer, must be citizens of and top-level Eswatini. executives). 19 Financial I. Foreign equity Greenfield and Foreign shareholding in Insurance Act, 2005. Act: https://www.fsra. Services – limits acquisitions: an insurance company co.sz/legal/legislation/ Insurance More than 67 is restricted. At least 25 TheInsuranceAct2005. percent, but percent of the shares of an pdf less than 100 insurance company shall be percent. held by citizens of Eswa- tini or other legal entities majority-owned (51 percent or more) owned by citizens of Eswatini. 20 Financial I. Foreign equity Greenfield and Insurance brokers shall be Insurance Act, 2005. Act: https://www.fsra. Services – limits acquisitions: No wholly owned by citizens co.sz/legal/legislation/ Insurance foreign equity of Eswatini if it is a private TheInsuranceAct2005. allowed. company. If it is a pub- pdf lic company, it shall be majority-owned by citizens of Eswatini. SADC | Investment Climate Scorecard 93 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 21 Financial III. Restrictions Key foreign The principal officer of a Retirement Funds Act, Act: https://www.fsra. Services – on key foreign personnel (top- retirement fund must be a 2005. co.sz/legal/legislation/ Insurance (life personnel level executive Swazi citizen. The%20Retirement%20 insurance/ ( board of positions) not Funds%20Act%202005. re-insurance, directors permitted.¹ pdf pension and and top-level related auxiliary executives). services) 22 Financial Ser- IV. Other Establishment Local incorporation for Securities Act No. 9 of Act: https://www.fsra. vices – Other Fi- restrictions. of branches not investing in several other 2010. co.sz/legal/legislation/ nancial Services allowed/local financial services. TheSecuritiesAct2010.pdf (auxiliary to incorporation financial mar- required kets: securities (financial and commod- services and ity exchanges, real estate securities investment and commod- only). ity brokerage, investment ad- visory services and related activities) 23 Financial IV. Other Establishment Local incorporation for Securities Act No. 9 of Act: https://www.fsra. Services – restrictions of branches not investing in several other 2010. co.sz/legal/legislation/ Other Financial allowed/local financial services. TheSecuritiesAct2010.pdf Services (trusts, incorporation funds and fund required management (financial activities) services and real estate investment only). 24 Real Estate II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Investment and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- (excludes consideration including manufacturing, land-Trading-Licences- approvals for of economic construction, wholesale and Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Amendment: http:// of land/real modation, food services www.osall.org.za/ estate for and other touristic activities docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 94 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 25 Real Estate I. Foreign equity Greenfield and Majority foreign-owned Constitution of the Constitution: http://ex- Investment – limits acquisitions: companies cannot own land Kingdom of Swaziland twprlegs1.fao.org/docs/ Land Between 33 and in Eswatini, even if for busi- Act, 2005. pdf/swa132849.pdf 50 percent. ness purposes. However, long-term leases (99 years) Concessions Partitions are possible according to Act 1907 (No. 28 of 1907). the authorities. Foreign investors and foreign-owned companies are allowed to acquire condominium units without restrictions accord- ing to the Sectional Titles Act 2003 [according to the authorities]. 26 Mining and I. Foreign equity Greenfield and Small-scale mining, such The Mines and Minerals Act: https://investeswa- Quarrying – limits acquisitions: as quarrying and stone Act of 2011. tini.org.sz/wp-content/ Except energy- Between 33 and aggregates, is reserved for uploads/2019/05/ producing 50 percent. Eswatini nationals. Mines-Minerals-Act-No- materials and 4-of-2011.pdf support service activities 27 Mining and IV. Other FDI-specific Investors are required to The Mines and Minerals Act: https://investeswa- Quarrying – restrictions local content comply with local procure- Act of 2011. tini.org.sz/wp-content/ Except energy- requirement. ment requirements giving uploads/2019/05/ producing preference to citizen-owned Mines-Minerals-Act-No- materials and goods and services sup- 4-of-2011.pdf support service pliers. activities 28 Manufactur- II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. ing – Food and and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- Others (excludes consideration including manufacturing, land-Trading-Licences- approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modation, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes) referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. SADC | Investment Climate Scorecard 95 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 29 Manufactur- I. Foreign equity Greenfield and Trading license in some Trading Licenses Order Act: http://www.osall.org. ing – Food and limits acquisitions: No commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- Others (food foreign equity including manufacturing- land-Trading-Licences- products, allowed. related, wholesale and The Reservation of Order-20-of-1975.pdf beverages and retail-related and food Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// tobacco) services-related activities Regulations, 2017 (Under www.osall.org.za/ among others [listed in Section 20). docs/2011/03/Swaziland- Schedule 2 of the referenced Trading-Licences-Amend- Regulation], are reserved to ment-Act-9-of-2011.pdf Swazi citizens and compa- nies wholly owned by Swazi Regulation: https:// citizens. www.gov.sz/images/ MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 30 Manufactur- I. Foreign equity Greenfield and Trading license in some Trading Licenses Order Act: http://www.osall.org. ing – Food and limits acquisitions: No commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- Others (textiles, foreign equity including manufacturing- land-Trading-Licences- wearing ap- allowed. related, wholesale and The Reservation of Order-20-of-1975.pdf parel, leather retail-related and food Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// and related services-related activities Regulations, 2017 (Under www.osall.org.za/ products) among others [listed in Section 20). docs/2011/03/Swaziland- Schedule 2 of the referenced Trading-Licences-Amend- Regulation], are reserved to ment-Act-9-of-2011.pdf Swazi citizens and compa- nies wholly owned by Swazi Regulation: https:// citizens. www.gov.sz/images/ MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 31 Manufactur- II. Screening Screening A trading license in various Trading Licenses Order Trading Licenses Order ing – Chemical, and approval¹ policy mandates commercial activities, (Order No.20 of 1975) (Order No.20 of 1975) Rubber, Plastics, (excludes consideration including manufacturing, The Reservation of The Reservation of Cer- Fuel Products approvals for of economic construction, wholesale and Certain Trades or Busi- tain Trades or Businesses and Other Non- the acquisition interests. retail distribution, accom- nesses for Swazi Citizens, for Swazi Citizens, Regula- Metallic Mineral of land/real modation, food services Regulations, 2017 (Under tions, 2017 (Under Section Products estate for and other touristic activities Section 20). 20). business [listed in Schedule 1 of the purposes) referenced Regulation], shall Act: http://www.osall.org. only be granted to a non- za/docs/2011/03/Swazi- Swazi citizen or company land-Trading-Licences- not wholly owned by Swazi Order-20-of-1975.pdf citizens where: (i) there are Amendment: http:// no available Swazi citizens www.osall.org.za/ to provide the service; or (ii) docs/2011/03/Swaziland- where Swazi citizens cannot Trading-Licences-Amend- meet the demand. In any ment-Act-9-of-2011.pdf case, a non-Swazi citizen shall not conduct any busi- Regulation: https:// ness or trade under Swazi www.gov.sz/images/ Nation Land MOCIT/%20LegalNotice- ReservationsRegulations- with-tracked-changes. doc 96 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 32 Manufacturing II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. – Basic Metals and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- and Fabricated (excludes consideration including manufacturing, land-Trading-Licences- Metal Prod- approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf ucts, except the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// Machinery and of land/real modation, food services Regulations, 2017 (Under www.osall.org.za/ Equipment estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 33 Manufacturing – II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. Machinery and and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- Equipment (excludes consideration including manufacturing, land-Trading-Licences- approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modation, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. 34 Manufactur- II. Screening Screening A trading license in various Trading Licenses Order Act: http://www.osall.org. ing – Transport and approval¹ policy mandates commercial activities, (Order No. 20 of 1975). za/docs/2011/03/Swazi- Equipment (excludes consideration including manufacturing, land-Trading-Licences- approvals for of economic construction, wholesale and The Reservation of Order-20-of-1975.pdf the acquisition interests. retail distribution, accom- Certain Trades or Busi- nesses for Swazi Citizens, Amendment: http:// of land/real modations, food services Regulations, 2017 (Under www.osall.org.za/ estate for and other touristic activities Section 20). docs/2011/03/Swaziland- business [listed in Schedule 1 of the Trading-Licences-Amend- purposes). referenced Regulation], shall ment-Act-9-of-2011.pdf only be granted to a non- Swazi citizen or company Regulation: https:// not wholly-owned by Swazi www.gov.sz/images/ citizens where: (i) there are MOCIT/%20LegalNotice- no available Swazi citizens ReservationsRegulations- to provide the service; or (ii) with-tracked-changes. where Swazi citizens cannot doc meet the demand. In any case, a non-Swazi citizen shall not conduct any busi- ness or trade under Swazi Nation Land. SADC | Investment Climate Scorecard 97 Lesotho Summary Highlights FDI Performance Lesotho SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)77 36 30 27 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 78 1.5% 1.3% 1.0% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 314 11 183 875 882 1,243 6,419 4,384 6,067 Investments79 (in US$ millions) SADC Scorecard Performance, 2021 Lesotho SADC Average Global Average80 Score under the SADC Scorecard (0-1, with 0 = 0.40 0.20 0.10 no restrictions, and 1= most restrictive)81 Total number of measures 82 19 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 11 11.9 NA. Screening and approval 1 2.8 NA. Restrictions on foreign personnel Nil 2.6 NA. Other restrictions 7 7.9 NA. Total number of sectors with measures 83 8 11.4 NA. 77. Source: UNCTAD STAT. 78. Id. 79. fDi Markets, from the Financial Times Ltd. (2022). 80. The calculation of the global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 81. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 82. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, such as on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Lesotho, the list of 19 identified measures is found in 12 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 83. The following sectors in Lesotho have covered measures: Agriculture – Crops; Agriculture – Animal production, hunting and related service activities; Construction – Buildings and Other Specialized Activities, Distribution; Retail (non-specialized retail stores, including supermarket and department stores); Distribution – Wholesale, Transport – Surface (road transport and urban rail transport): passenger transport [domestic / international]; Transport – Surface (services incidental to rail and road transport, including rail and road infrastructure, stations, cargo handling and other support activities); Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment, and recreation activities; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Financial Services – Other Financial Services (other financial activities: financial leasing, other credit activities, factoring, venture capital); and Real Estate Investment. Lesotho also maintains many horizontal level FDI restrictions. 98 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal II. Screening Screening Foreign-owned companies, Business Licensing and Act: https://lesotho. and approval¹ policy mandates in which foreigners hold Registration Act No. 3 of eregulations.org/media/ (excludes consideration more than 30 percent of 2019. Business%20Licens- approvals for of economic the equity capital in the ing%20and%20Registra- the acquisition interests. case of companies and tion%20Act%20-%20 of land/real 50 percent in the case of copie.pdf estate for partnerships, are subject Regulation: https:// business to screening involving the lesotho.eregulations. purposes). consideration of economic org/media/Business%20 interests (for example, Licensing%20Registra- employment generation tion%20Regulations.pdf of not less than 6 employ- ees who are residents or citizens of Lesotho; strategic nature of the business to the Lesotho economy; transfer of technology and business expertise; and advancement of business undertaking owned by citizens) in order to be granted a business permit and be allowed to engage in a business activity in Lesotho. 2 Horizontal IV. Other Access to land/ Only a foreign-owned Land Act No. 8 of 2010. Act: https://lesotholii.org/ restrictions real estate enterprise in which at least ls/legislation/act/2010/8/ is subject to 20 percent of the capital is land_act_2010_ restriction held by Lesotho citizens are pdf_31029.pdf (for example, allowed to hold title to land. prior approval, Provided land is needed for qualitative size investment purposes and limits, tax, and subject to the screening in- so on). volving economic interests. Otherwise, foreign investors may lease land for business purposes. 3 Horizontal IV. Other Land/real estate Only a foreign-owned Land Act No. 8 of 2010. Act: https://lesotholii.org/ restrictions ownership enterprise in which at least ls/legislation/act/2010/8/ not permitted, 20 percent of the capital is land_act_2010_ but leases are held by Lesotho citizens are pdf_31029.pdf possible for the allowed to hold title to land, medium term and provided the land is (up to 70 years). needed for investment pur- poses and subject to screen- ing involving economic interests. Otherwise, foreign investors may sub-lease land for business purposes. SADC | Investment Climate Scorecard 99 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Horizontal IV. Other Minimum Foreign-owned companies, Business Licensing and Act: https://lesotho. restrictions capital in which foreigners hold Registration Act No. 3 of eregulations.org/media/ requirement. more than 30 percent of the 2019. Business%20Licens- equity capital in the case of ing%20and%20Registra- companies and 50 percent Industrial Licensing Regu- tion%20Act%20-%20 in the case of partnerships, lations, 2014. copie.pdf are subject to a minimum Regulation: http://www. capital requirement of obfc.org.ls/legislation/ M2,000,000 (~US$138,000) Industrial%20Licens- to be granted a business ing%20Regulations,%20 permit and be allowed to %202014%20and%20 engage in a business activity Liquor%20Licensing%20 in Lesotho. (Appointment%20of%20 Foreign-owned companies Members%20of%20 are subject to a minimum the%20Board)%20No- capital requirement of tice,%20%202014.pdf US$250,000 to be granted a business permit and be allowed to engage in industrial business activities in Lesotho. 5 Horizontal IV. Other Government The Government gives pref- Public Procurement Regulation: https:// restrictions procurement erence to Lesotho national- Regulations 2007 (Legal lesotholii.org/legislation/ offers owned businesses over Notice No. 1 of 2007). sl/1-0 preference to foreign investors, including locally-owned foreign-owned investors firms. incorporated in Lesotho while still abiding by trade agreements. However, for- eign companies are allowed to go into joint ventures with Lesotho national-owned businesses. 6 Agriculture – I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. Crops limits acquisitions: business activities related to Registration Act No. 3 of eregulations.org/media/ Less than 33 growing fruits and vegeta- 2019 Business%20Licens- percent. bles is limited to 30 percent ing%20and%20Registra- in the case of a company and Business Licensing and tion%20Act%20-%20 to 49 percent in the case of Registration Regulations, copie.pdf partnerships. 2020. Regulation: https:// lesotho.eregulations. org/media/Business%20 Licensing%20Registra- tion%20Regulations.pdf 7 Agriculture I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. – Animal limits acquisitions: business activities related to Registration Act No. 3 of eregulations.org/media/ production, Less than 33 several animal husbandry 2019 Business%20Licens- hunting and percent. activities (for example, ing%20and%20Registra- related service horses, sheep and goats, Business Licensing and tion%20Act%20-%20 activities swine and pigs, poultry). Registration Regulations, copie.pdf The sale of livestock and 2020. Regulation: https:// livestock products is limited lesotho.eregulations. to 30 percent in the case of a org/media/Business%20 company and to 49 percent Licensing%20Registra- in the case of partnerships. tion%20Regulations.pdf 100 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Construction – I. Foreign equity Greenfield and Foreign shareholding in cer- Business Licensing and Act: https://lesotho. Buildings and limits acquisitions: tain specialized construction Registration Act No. 3 of eregulations.org/media/ Other Less than 33 activities, notably electrical, 2019 Business%20Licens- percent. plumbing, and other con- ing%20and%20Registra- Specialized struction installation activi- Business Licensing and tion%20Act%20-%20 Activities ties, is limited to 30 percent Registration Regulations, copie.pdf in the case of a company and 2020. Regulation: https:// to 49 percent in the case of lesotho.eregulations. partnerships org/media/Business%20 Licensing%20Registra- tion%20Regulations.pdf 9 Distribution I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. – Retail (non- limits acquisitions: many retail business (for Registration Act No. 3 of eregulations.org/media/ specialized Less than 33 example, all retail in non- 2019 Business%20Licens- retail stores, percent. specialized stores, via inter- ing%20and%20Registra- including net or mail orders, as well Business Licensing and tion%20Act%20-%20 supermarket as retail of certain goods in Registration Regulations, copie.pdf and department stalls and markets ( food, 2020. Regulation: https:// stores) beverages, tobacco, textiles, lesotho.eregulations. clothing and footwear in org/media/Business%20 stalls and markets) and in Licensing%20Registra- specialized stores (motor tion%20Regulations.pdf dealerships (including repair and maintenance services); household fuels, bottled gas and coal; cultural and recre- ation goods; business agents and brokers activities in specialized stores, including health-related products; animal feeds, including animal and crops medical goods and chemicals; bread and confectionary products; motor vehicle and motor- cycle parts and accessories, including repair activities; alcoholic beverages; meat and meat products, including poultry; fruits and vegetables; prepared meat and meat dishes; hardware, paints and glass products; pharmaceuticals and medi- cal products, including cos- metics and toilet products; health-related products) is limited to 30 percent in the case of a company and to 49 percent in the case of partnerships. SADC | Investment Climate Scorecard 101 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 10 Distribution I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. – Retail limits acquisitions: many retail business (for Registration Act No. 3 of eregulations.org/media/ (specialized Less than 33 example, all retail in non- 2019 Business%20Licens- retail stores) percent specialized stores, via inter- ing%20and%20Registra- net or mail orders, as well Business Licensing and tion%20Act%20-%20 as retail of certain goods in Registration Regulations, copie.pdf stalls and markets ( food, 2020. Regulation: https:// beverages, tobacco, textiles, lesotho.eregulations. clothing and footwear in org/media/Business%20 stalls and markets) and in Licensing%20Registra- specialized stores (motor tion%20Regulations.pdf dealerships (including repair and maintenance services); household fuels, bottled gas and coal; cultural and recre- ation goods; business agents and brokers activities in specialized stores, including of health-related products; animal feeds, including animal and crops medical goods and chemicals; bread and confectionary products; motor vehicle and motor- cycle parts and accessories, including repair activities; alcoholic beverages; meat and meat products, including poultry; fruits and vegetables; prepared meat and meat dishes; hardware, paints and glass products; pharmaceuticals and medi- cal products, including cos- metics and toilet products; health-related products) is limited to 30 percent in the case of a company and to 49 percent in the case of partnerships. 11 Distribution – I. Foreign equity Greenfield and Foreign shareholding in sev- Business Licensing and Act: https://lesotho. Wholesale limits acquisitions: eral wholesale businesses Registration Act No. 3 of eregulations.org/media/ Less than 33 (for example, motor dealer, 2019 Business%20Licens- percent. health-related products, al- ing%20and%20Registra- coholic beverages, meat and Business Licensing and tion%20Act%20-%20 meat products, including Registration Regulations, copie.pdf poultry, liquified petroleum 2020. Regulation: https:// gas and petroleum products, lesotho.eregulations. pharmaceutical and medical org/media/Business%20 goods, including cosmet- Licensing%20Registra- ics and toilet products) is tion%20Regulations.pdf limited to 30 percent in the case of a company and to 49 percent in the case of partnerships. 102 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Transport – I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. Surface (road limits acquisitions: companies undertaking Registration Act No. 3 of eregulations.org/media/ transport and Less than 33 international road freight 2019 Business%20Licens- urban rail percent. transport and logistics ing%20and%20Registra- transport): (including clearing agents Business Licensing and tion%20Act%20-%20 passenger and warehousing), as well as Registration Regulations, copie.pdf transport road transport and logistics 2020. Regulation: https:// [domestic / [domestic, passenger and lesotho.eregulations. international] freight), is limited to 30 org/media/Business%20 percent in the case of a com- Licensing%20Registra- pany and to 49 percent in tion%20Regulations.pdf the case of partnerships. 13 Transport – I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. Surface (road limits acquisitions: companies undertaking Registration Act No. 3 of eregulations.org/media/ transport and Less than 33 international road freight 2019. Business%20Licens- urban rail percent. transport and logistics ing%20and%20Registra- transport): (including clearing agents Business Licensing and tion%20Act%20-%20 freight and warehousing), as well as Registration Regulations, copie.pdf transport road transport and logistics 2020. Regulation: https:// [domestic / [domestic, passenger and lesotho.eregulations. international] freight), is limited to 30 org/media/Business%20 percent in the case of a com- Licensing%20Registra- pany and to 49 percent in tion%20Regulations.pdf the case of partnerships. 14 Transport I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. – Surface limits acquisitions: companies undertaking Registration Act No. 3 of eregulations.org/media/ (services Less than 33 international road freight 2019. Business%20Licens- incidental to percent. transport and logistics ing%20and%20Registra- rail and road (including clearing agents Business Licensing and tion%20Act%20-%20 transport, and warehousing), as well as Registration Regulations, copie.pdf including road transport and logistics 2020. Regulation: https:// rail and road [domestic, passenger and lesotho.eregulations. infrastructure, freight), is limited to 30 org/media/Business%20 stations, cargo percent in the case of a com- Licensing%20Registra- handling and pany and to 49 percent in tion%20Regulations.pdf other support the case of partnerships. activities) 15 Hotels and I. Foreign equity Greenfield and Foreign shareholding in Business Licensing and Act: https://lesotho. Restaurants limits acquisitions: fast food activities without Registration Act No 3. of eregulations.org/media/ – Food and Less than 33 full restaurant services, 2019. Business%20Licens- beverage percent. tour operators, mobile food ing%20and%20Registra- service services and other food ser- Business Licensing and tion%20Act%20-%20 activities, vices is limited to 30 percent Registration Regulations, copie.pdf other touristic in the case of a company and 2020. Regulation: https:// services to 49 percent in the case of lesotho.eregulations. and arts, partnerships. org/media/Business%20 entertainment, Licensing%20Registra- and recreation tion%20Regulations.pdf activities SADC | Investment Climate Scorecard 103 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Financial IV. Other Establishment Local incorporation re- Central Bank (Capital Regulation: https:// Services – restrictions of branches not quired for investing in stock Markets) Regulations, www.centralbank.org. Other Financial allowed/local exchange, stock brokerage 2014 (Legal Notice No. 107 ls/images/Legislation/ Services incorporation and investment advisory of 2014). Financial_Markets/Cen- (auxiliary required activities. tral_Bank_Capital_Mar- to financial (financial kets_Regulations_2014_ markets: services and Part_I.pdf securities and real estate Regulation: https:// commodity investment only) www.centralbank.org. exchanges, ls/images/Legislation/ securities and Financial_Markets/Cen- commodity tral_Bank_Capital_Mar- brokerage, kets_Regualation_2014_ investment Part_II.pdf advisory services and related activities) 17 Financial IV. Other Establishment Local incorporation required Pension Fund Act, 2019. Act: https://www.cen- Services – restrictions of branches not for investing in several other tralbank.org.ls/images/ Other Financial allowed/ financial services, including Central Bank of Lesotho Legislation/Supervision/ Services (trusts, in relation to fund and fund (Collective Investment Acts/Insurance/Pension_ funds and fund local management activities. Schemes) Regulation, Fund_Act_2019.pdf management incorporation 2018. required Regulation: https:// activities) (financial Insurance (Licensing of www.centralbank. services and Insurance Intermediar- org.ls/images/Legis- real estate ies) Regulations 2016. lation/Supervision/ investment Regulations/Insurance/ only). Financial Institutions CENTRAL_BANK_OF_LE- SOTHO_COLLECTIVE_IN- (Financial Lease) (Amend- VESTMENT_SCHEMES_ ment) Regulations 2018. REGULATIONS_2018.pdf Credit only and deposit Regulation: https:// taking Micro-Finance www.centralbank.org. Institutions Amendment ls/images/Legislation/ Regulations, 2018. Supervision/Regulations/ Insurance/Lesotho%20 Government%20Ga- zette%20No.%2061.pdf Regulation: https:// www.centralbank.org. ls/images/Legislation/ Supervision/Regulations/ Non-Banks/Financial_In- stitutions_Financial_ Lease_Amendment_Reg- ulations_2018.pdf Regulation: https:// www.centralbank. org.ls/images/Legis- lation/Supervision/ Regulations/Non-Banks/ FINANCIAL_INSTITU- TIONS_CREDIT_ONLY- AND_DEPOSIT_TAKING_ MICRO-FINANCEINSTI- TUTIONS_AMENDMENT_ REGULATIONS_2018.pdf 104 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 18 Financial IV. Other Establishment Local incorporation required Payment Systems Act, Act: https://www.central- Services – restrictions of branches not for operating payment sys- 2014. bank.org.ls/images/Leg- Other Financial allowed/ tem services in Lesotho. islation/NPS/Payment- Services Systems-Act-2014.pdf (other financial local activities: incorporation financial required leasing, other (financial credit activities, services and factoring, real estate venture capital) investment only). 19 Real Estate I. Foreign equity Greenfield and Only a foreign-owned Land Act No.. 8 of 2010. Act: https://lesotholii.org/ Investment limits acquisitions: No enterprise in which at least ls/legislation/act/2010/8/ foreign equity 20 percent of the capital is land_act_2010_ allowed. held by Lesotho citizens are pdf_31029.pdf allowed to hold title to land, and provided the land is needed for investment pur- poses and subject to screen- ing involving economic interests. Otherwise, foreign investors may lease land for business purposes. SADC | Investment Climate Scorecard 105 Madagascar Summary Highlights FDI Performance Madagascar SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)84 474 359 300 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 85 3.4% 2.8% 2.1% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 91 330 128 875 882 1,243 6,419 4,384 6,067 Investments86 (in US$ millions) SADC Scorecard Performance, 2021 Madagascar SADC Average Global Average87 Score under the SADC Scorecard (0-1, with 0 = 0.17 0.19 0.10 no restrictions, and 1= most restrictive)88 Total number of measures 89 29 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 5 11.9 NA. Screening and approval Nil 2.8 NA. Restrictions on foreign personnel 7 2.6 NA. Other restrictions 17 7.9 NA. Total number of sectors with measures 90 13 11.4 NA. 84. Source: UNCTAD STAT. 85. Id. 86. fDi Markets, from the Financial Times Ltd. (2022). 87. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 88. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 89. The Scorecard focuses on identifying measures on the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, such as on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Madagascar, the list of 29 identified measures is found in 15 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 90. The following sectors in Madagascar have covered measures: Electricity – Generation (total); Electricity – Distribution (total); Distribution – Retail (non-specialized retail stores, including supermarket and department stores); Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Surface (services incidental to rail and road transport, including rail and road infrastructure, stations, cargo handling and other support activities); Transport – Water (sea and coastal transport); Transport – Water (inland water transport); Transport – Water (services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities); Transport – Air (air transport); Transport – Air (services incidental to air transport, including airports, ground service activities, related cargo handling and other support activities); Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (TV programming and broadcasting activities); Media – Other Media (publishing of books, periodicals and other publishing activities, and web-based media portals); Financial Services – Banking, Financial Services; Insurance, Professional Services – Legal Services (total); Professional Services – Audit and Accounting (audit); Professional Services – Engineering Services (total); Professional Services – Architectural Services (total); Real Estate Investment; Fishing and Aquaculture – Fishing, Mining and Quarrying; Energy producing materials (that is, coal, crude petroleum and natural gas); Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products (chemical and pharmaceutical products). 106 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Land/real estate Foreign companies are Law No. 2007-036 of Law: https://www.assem- restrictions ownership prohibited from owning January 14, 2008, on In- blee-nationale.mg/wp- not permitted, land and other real estate vestments in Madagascar content/uploads/2020/11/ but leases are for business purposes in [Google translation]. Loi-n%C2%B0-2007-036- possible over Madagascar. In practice, sur-les-Inv.%C3%A0- the long-term however, the decree that Mcar.pdf (over 70 years). should implement the real estate acquisition autho- rization by foreign-owned companies incorporated in Madagascar has never been issued, rendering this possi- bility (real estate acquisition) obsolete and non-existent. As such, all foreign investors established in Madagascar (branches and subsidiaries inclusive) rely on leases for accessing land for business purposes. Real estate leases can be contracted freely and without prior authorization for a maximum period of ninety-nine years, renew- able. 2 Electricity – IV. Other Government When awarding a public- Law No. 2015-039 on Pub- Law: http://www.ore. Generation restrictions procurement private partnership (PPP) lic-Private Partnership mg/TextesDoc/Loi-2015- (total) offers contract, the government [Google translation]. 039PPP.pdf preference to accords preference to bid- locally-owned ders committing to entrust firms. part of the execution of the PPP contract to companies that are majority-owned by Malagasy nationals. This contrasts to Madagascar’s public procurement regime which only provides for preferential treatment to Malagasy nationals and companies incorporated in the country, regardless of the nationality of the owners. For the purpose of the OECD FDI RR, PPPs are assumed to affect only energy and transport infra- structure. SADC | Investment Climate Scorecard 107 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 3 Electricity – Dis- IV. Other Government When awarding a PPP Law No. 2015-039 on Pub- Law: http://www.ore. tribution (total) restrictions procurement contract, the government lic-Private Partnership mg/TextesDoc/Loi-2015- offers a accords preference to bid- [Google translation]. 039PPP.pdf preference to ders committing to entrust locally-owned part of the execution of the firms. PPP contract to companies that are majority-owned by Malagasy nationals. This contrasts to Madagascar’s general public procurement regime, which only provides for preferential treatment for Malagasy nationals and companies incorporated in the country, regardless of the nationality of the owners. For the purpose of the OECD FDI RR, PPPs are assumed to affect only energy and transport infra- structure. 4 Distribution – III. Restrictions Key foreign The director of a com- General Tax Code, Code: http://www.impots. Retail (non-spe- on key foreign personnel (top- pany/establishment selling according to the 2021 mg/public/wysiwyg/ cialized retail personnel level executive alcoholic beverages for Finance Law [Google upload/files/CGI%20 stores, including (board of positions) not on-site consumption (for translation]. LFI%202021%20%20 supermarket directors permitted.¹ example, restaurants, bars) -%20%20modif%20 and department and top-level or take-away (for example, en%20rouge%20.pdf stores). executives). supermarkets, alcoholic beverages retail distribu- tors) must be a Malagasy citizen. 5 Distribution III. Restrictions Key foreign The director of a com- General Tax Code, Code: http://www.impots. – Retail (spe- on key foreign personnel (top- pany/establishment selling according to the 2021 mg/public/wysiwyg/ cialized retail personnel level executive alcoholic beverages for Finance Law [Google upload/files/CGI%20 stores) (board of positions) not on-site consumption (for translation]. LFI%202021%20%20 directors permitted.¹ example, restaurants, bars) -%20%20modif%20 and top-level or take-away (for example, en%20rouge%20.pdf executives). supermarkets, alcoholic beverages retail distribu- tors) must be a Malagasy citizen. 108 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 6 Distribution IV. Other Reciprocity Wholesale and retail distri- Law No. 2011-002 of July Law: http://www.sante. – Retail (spe- restrictions requirement. bution of pharmaceutical 15, 2011, on the Health gov.mg/gestechu/textes. cialized retail products can only be carried Code [Google translation]. pdf stores) out by companies owned by pharmacists registered with the National Order of Pharmacists (owned in its entirety by pharmacists in the case of a retail company, and by at least 51 percent in the case of wholesale company). Only Malagasy nationals or nationals of a country with which a reciprocity agreement has been signed (and this, within the limit of a quota defined each year by order of the Minister in charge of Health) are entitled to register and practice the pharmacist profession. In practice, therefore, foreign investment/participation in pharmaceutical manufac- turing is quite restrained by such a requirement, albeit not entirely precluded. 7 Distribution – IV. Other Reciprocity Wholesale and retail distri- Law No. 2011-002 of July Law: http://www.sante. Wholesale restrictions requirement. bution of pharmaceutical 15, 2011, on the Health gov.mg/gestechu/textes. products can only be carried Code [Google translation]. pdf out by companies owned by pharmacists registered with the National Order of Pharmacists (owned in its entirety by pharmacists in the case of a retail company, and by at least 51 percent in the case of wholesale company). Only Malagasy nationals or nationals of a country with which a reciprocity agreement has been signed (and this, within the limit of a quota defined each year by order of the Minister in charge of Health) are entitled to register and practice the pharmacist profession. In practice, therefore, foreign investment/participation in pharmaceutical manufac- turing is quite restrained by such requirement, albeit not entirely precluded. SADC | Investment Climate Scorecard 109 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Transport – Sur- IV. Other Government When awarding a PPP Law No. 2015-039 On Law: http://www.ore. face (services restrictions procurement contract, the government Public-Private Partner- mg/TextesDoc/Loi-2015- incidental to rail offers a accords preference to bid- ship [Google translation]. 039PPP.pdf and road trans- preference to ders committing to entrust port, including locally-owned part of the execution of the rail and road firms. PPP contract to companies infrastructure, that are majority-owned by stations, cargo Malagasy nationals. This handling and contrasts to Madagascar's other support general public procurement activities) regime which only provides for preferential treatment to Malagasy nationals and companies incorporated in the country, regardless of the nationality of the owners. For the purpose of the OECD FDI RR, the PPPs are assumed to affect only energy and transport infrastructure. 9 Transport – III. Restrictions Key foreign National cabotage, demar- Law No. 99-028 of Febru- Law: https://www.apmf. Water (sea on key foreign personnel (top- cation and inland transport ary 3, 2000, revising the mg/sites/default/files/ and coastal personnel level executive are reserved for vessels Maritime Code [Google inline-files/Code%20 transport) (board of positions) not flying the Malagasy flag. The translation]. maritime.pdf directors permitted.¹ crew [including its captain] and top-level of a Malagasy vessel must be executives). of Malagasy nationality. 10 Transport – Wa- III. Restrictions Key foreign National cabotage, demar- Law No. 99-028 of Febru- Law: https://www.apmf. ter (inland wa- on key foreign personnel (top- cation and inland transport ary 3, 2000, revising the mg/sites/default/files/ ter transport) personnel level executive are reserved for vessels Maritime Code [Google inline-files/Code%20 (board of positions) not flying the Malagasy flag. The translation]. maritime.pdf directors permitted.¹ crew [including its captain] and top-level of a Malagasy vessel must be executives). of Malagasy nationality. 11 Transport – IV. Other Government When awarding a PPP Law No 2015-039 On Law: http://www.ore. Water (services restrictions procurement contract, the government Public-Private Partner- mg/TextesDoc/Loi-2015- incidental to wa- offers a accords preference to bid- ship [Google translation]. 039PPP.pdf ter transport, preference to ders committing to entrust including ports locally-owned part of the execution of the and terminal firms. PPP contract to companies facilities, related that are majority-owned by cargo handling Malagasy nationals. This and other sup- contrasts to Madagascar’s port activities) general public procurement regime which only provides for preferential treatment to Malagasy nationals and companies incorporated in the country, regardless of the nationality of the owners. For the purpose of the OECD FDI RR, the PPPs are assumed to affect only energy and transport infrastructure. 110 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Transport – Air IV. Other Reciprocity Reciprocity conditions apply Decree No. 2014-1106 on Decree: https://cnlegis. (air transport) restrictions requirement. for authorizing foreign air the economic regula- gov.mg/page_acces_pdf/ carriers to exploit the traffic tion of the operation of eoVdnWcmX4hrS rights [international routes] air transport [Google negotiated under bilateral translation]. or multilateral agreements between Madagascar and the carrier's home State. 13 Transport – IV. Other Government When awarding a PPP Law No. 2015-039 on Pub- Law: http://www.ore. Air (services restrictions procurement contract, the government lic-Private Partnership mg/TextesDoc/Loi-2015- incidental to air offers accords preference to bid- [Google translation]. 039PPP.pdf transport, in- preference to ders committing to entrust cluding airports, locally-owned part of the execution of the ground service firms. PPP contract to companies activities, that are majority-owned by related cargo Malagasy nationals. This handling and contrasts to Madagascar's other support general public procurement activities) regime which only provides for preferential treatment to Malagasy nationals and companies incorporated in the country, regardless of the nationality of the owners. For the purpose of the OECD FDI RR, the PPPs are assumed to affect only energy and transport infrastructure. 14 Hotels and Res- III. Restrictions Key foreign The director of a company/ General Tax Code, Code: http://www.impots. taurants – Food on key foreign personnel (top- establishment selling alco- according to the 2021 mg/public/wysiwyg/ and bever- personnel level executive holic beverages for on-site Finance Law [Google upload/files/CGI%20 age service (board of positions) not consumption or take-away translation]. LFI%202021%20%20 activities, other directors permitted.¹ must be a Malagasy citizen. -%20%20modif%20 touristic ser- and top-level en%20rouge%20.pdf vices and arts, executives). entertain-ment and recreation activities 15 Media – IV. Other Reciprocity Foreign communication and Law No. 2016-029 of Law: http://www. Radio and TV restrictions requirement. press agencies may estab- 14/07/2016 on the medi- justice.mg/wp-content/ Programm-ing lish themselves in Madagas- ated communication code uploads/2019/02/L2016- and Broad- car subject to reciprocity. [Google translation]. 029.pdf casting (radio broadcasting) 16 Media – IV. Other Reciprocity Foreign communication and Law No. 2016-029 of Law: http://www. Radio and TV restrictions requirement. press agencies may estab- 14/07/2016 on the medi- justice.mg/wp-content/ Programm-ing lish themselves in Madagas- ated communication code uploads/2019/02/L2016- and Broad- car subject to reciprocity. [Google translation]. 029.pdf casting (TV programm-ing and broadcast- ing activities) 17 Media – Other IV. Other Reciprocity Foreign communication and Law No. 2016-029 of Law: http://www. Media (publish- restrictions requirement. press agencies may estab- 14/07/2016 on the medi- justice.mg/wp-content/ ing of books, lish themselves in Madagas- ated communication code uploads/2019/02/L2016- periodicals and car subject to reciprocity. [Google translation]. 029.pdf other publish- ing activities, and web-based media portals) SADC | Investment Climate Scorecard 111 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 18 Financial Ser- IV. Other Establishment Local incorporation is Law No. 2020-011 on Law: https://www. vices – Banking restrictions of branches not required for carrying out the banking law [Google assemblee-nationale. allowed/local banking activities. Foreign translation]. mg/wp-content/ incorporation bank branches are not uploads/2020/09/Loi- required (finan- allowed. n%C2%B02020-011_loi- cial services bancaire.pdf and real estate investments only). 19 19. Financial IV. Other Reciprocity Local incorporation is Law No. 2020-005 of Law: https://www. Services – In- restrictions requirement. required for insurance June 2, 2020, on insur- assemblee-nationale. surance companies and interme- ance [Google translation]. mg/wp-content/ diaries. Only branches of uploads/2020/09/Loi- reinsurance companies are n%C2%B02020-005_as- authorized. surances.pdf 20 Professional I. Foreign equity Greenfield and Only lawyers registered with Law No. 2001-006 orga- Law: https://cnlegis.gov. Services – Legal limits acquisitions: No the Bar Association are en- nizing the profession of mg/page_acces_pdf/dn- Services (total) foreign equity titled to the title of lawyer and lawyer [Google transla- WgqTisR6eoV allowed. are entitled to establish law tion]. societies. Admission to the Bar Association is reserved to Malagasy nationals or nationals from a State grant- ing reciprocity to Malagasy nationals having completed training in Madagascar. For- eign lawyers [registered with a foreign bar association] may be admitted represent- ing the parties and to plead in the courts. This is subject to reciprocity and with the authorization of the Minister of Justice after consulting the President of the Bar and the Attorney General at the Court of Justice. This autho- rization is not required if they are associated with a lawyer registered with the Bar As- sociation of Madagascar. 21 Professional I. Foreign equity Greenfield and Qualified foreign nation- Ordinance No. 92-047 Order: https://jwf-legal2. Services – Audit limits acquisitions: als may register with the of November 5, 1992, fr.gd/Ordonnance-14.htm and Accounting Less than 33 Order of Accountants upon relating to the organiza- (audit) percent. meeting requirements and tion of the professions subject to reciprocity. Only of chartered accountant foreigners who have resided and finance and char- in Madagascar for over 10 tered accountant — and years and who meet the the restructuring of the qualification requirements Order, bringing together are entitled to register and the members of these practice as chartered ac- professions (JO No. of countants [auditors]. Only 14.12.92 p. 2790), supple- registered accountants and mented by law No. 96-019 chartered accountants can of 4 September 1996 (JO be nominated for the posi- No. of 23.09.96 p. 2060 tions of chairman, managing [Google translation]. director and manager of ac- counting and auditing firms, as well as 3/4 of accounting and auditing firms, assum- ing a limited liability form. They must be owned by registered accountants and chartered accountants. 112 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 22 Professional III. Restrictions Key foreign Qualified foreign nation- Ordinance No. 92-047 Order: https://jwf-legal2. Services – Audit on key foreign personnel (top- als may register with the of November 5, 1992, fr.gd/Ordonnance-14.htm and Accounting personnel level executive Order of Accountants upon relating to the organiza- (audit) (board of positions) not meeting requirements tion of the professions directors permitted.¹ and subject to reciprocity. of chartered accountant and top-level Only foreigners who have and finance and char- executives). resided in Madagascar for tered accountant and over 10 years and who meet the restructuring of the qualification requirements Order, bringing together are entitled to register and the members of these practice as chartered ac- professions (JO No. of countants [auditors]. Only 14.12.92 p. 2790) supple- registered accountants and mented by law No. 96-019 chartered accountants can of 4 September 1996 (JO be nominated for the posi- No. of 23.09.96 p. 2060 tions of chairman, managing [Google translation]. director and manager of accounting and auditing firms, and 3/4 of accounting and auditing firms assuming a limited liability form must be owned by registered accountants and chartered accountants. 23 Professional IV. Other Reciprocity Qualified foreign nation- Ordinance No. 92-047 Order: https://jwf-legal2. Services – Audit restrictions requirement. als may register with the of November 5, 1992, fr.gd/Ordonnance-14.htm and Accounting Order of Accountants upon relating to the organiza- (accounting and meeting requirements tion of the professions tax consultancy) and subject to reciprocity. of chartered accountant Only foreigners who have and finance and char- resided in Madagascar for tered accountant and over 10 years and who meet the restructuring of the qualification requirements Order bringing together are entitled to register and the members of these practice as chartered ac- professions (JO No. of countants [auditors]. Only 14.12.92 p. 2790). supple- registered accountants and mented by law No. 96-019 chartered accountants can of 4 September 1996 (JO be nominated for the posi- No. of 23.09.96 p. 2060 tions of chairman, managing [Google translation]. director and manager of accounting and auditing firms, and 3/4 of accounting and auditing firms assuming a limited liability form must be owned by registered accountants and chartered accountants. SADC | Investment Climate Scorecard 113 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 24 Professional I. Foreign equity Greenfield and Engineers may set up Law No. 95-024 of August Law: http://www.ing- Services – limits acquisitions: engineering firms among 22, 1995, organizing the enieurmadagascar.org/ Engineering More than 67 themselves or with other engineering profession oim/?page_id=18 Services (total) percent, but natural persons. Qualified and creating the Order less than 100 foreign engineers can of Malagasy Engineers percent. register with the Order [Google translation]. of Engineers, subject to reciprocity and residency in Madagascar for more than 2 years. Upon registration, foreign engineers can set up engineering companies at par conditions with Mala- gasy engineers. Foreign, non-registered engineers or non-engineers must associ- ate with a person registered with the order whose limits of shares are not defined by law. Hence, in principle, foreigners not registered with the Order are entitled to hold up to 99 percent of the shares of an engineering company. 25 Professional I. Foreign equity Greenfield and Architects may set up Ordinance No. 93018 of Order: http://www.oam- Services – limits acquisitions: architecture firms among April 26, 1993, establish- madagascar.com/ Architectural Between 33 and themselves or with other ing the Order of Malagasy Services (total) 50 percent natural persons, but the ma- Architects and the regula- jority of shares must be held tion of the profession by registered architects. [Google translation]. Qualified foreign architects can register with the Order of Architects, subject to reciprocity and residency in Madagascar for more than 5 years. Upon registration, foreign architects can set up architecture firms at par conditions with Malagasy architects. Foreign, non- registered architects or non-architects can, there- fore, associate themselves with registered architects, and are entitled to hold up to 49 percent of the shares of the company. 26 Real Estate I. Foreign equity Greenfield and Foreign investment in land Law No. 2007-036 of Law: https://www.assem- Investment limits acquisitions: No and other real estate assets January 14, 2008, on In- blee-nationale.mg/wp- foreign equity is is only permitted in tandem vestments in Madagascar content/uploads/2020/11/ allowed. with the carrying out of an- [Google translation]. Loi-n%C2%B0-2007-036- other commercial/economic sur-les-Inv.%C3%A0- activity. Foreign investors, Mcar.pdf including foreign-owned companies incorporated in Madagascar, cannot undertake “pure” financial real estate investments. 114 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 27 Fishing and III. Restrictions Foreign key The exercise of commercial Law No. 2015 – 053 on the Law: http://extwpr- Aquaculture – on key foreign personnel (top- fishing in Malagasy territo- Fisheries and Aqua- legs1.fao.org/docs/pdf/ Fishing personnel level executive rial waters is reserved for culture Code [Google Mad162704.pdf (board of positions) not natural persons of Malagasy translation]. Madagascar Code: https://www.apmf. directors permitted.¹ nationality or legal entities - Law No. 99-028 of 3 Feb- mg/sites/default/files/ and top-level incorporated in Madagas- ruary 2000 revising the inline-files/Code%20 executives) car, using boats and vessels Maritime Code” [Google maritime.pdf flying the Malagasy flag. The translation]. crew [including its captain] of a Malagasy vessel must be of Malagasy nationality. 28 Mining and IV. Other Access to local Upstream oil and gas activi- Law No. 96-018 of Sep- Law: https://www.omnis. Quarrying – En- restrictions finance. ties are reserved for the Na- tember 23, 1996, bearing mg/images/documents/ ergy-producing tional Oil Company. Private the Petroleum Code CodPetFr.pdf materials (that participation is possible [Google translation] is, coal, crude only through a joint venture petroleum and or production-sharing ar- natural gas) rangement with the national oil company. However, for- eign-owned companies, face restrictions in accessing local financing from banks, and so on, for financing their local operational needs. Since 2019, however, the Government has decided to suspend all oil promotion. To date, there has not been any official statement regarding new contracts or contract renewals. 29 Manufactur- IV. Other Reciprocity Any pharmaceutical Law No. 2011-002 of July Law: http://www.sante. ing – Chemical, restrictions requirement. manufacturing or produc- 15, 2011, on the Health gov.mg/gestechu/textes. Rubber, Plastics, tion establishment must Code [Google translation]. pdf Fuel Products be entirely or partly owned and Other Non- by a certified pharmacist. Metallic Min- In the case of a public eral Products limited company, half of the (chemical and members of the board of pharmaceutical directors must be certified products) pharmacists. Only Malagasy nationals or nationals of a country with which a reciprocity agreement has been signed (and this, within the limit of a quota defined each year by order of the Minister in charge of Health) are entitled to register and practice the pharmacist profession. In practice, therefore, foreign investment/participation in pharmaceutical manufac- turing is quite restrained by such requirement, albeit not entirely precluded. SADC | Investment Climate Scorecard 115 Malawi Summary Highlights FDI Performance Malawi SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)91 55 45 50 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 92 0.5% 0.4% 0.4% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 359 43 41 875 882 1,243 6,419 4,384 6,067 Investments93 (in US$ millions) SADC Scorecard Performance, 2021 Malawi SADC Average Global Average94 Score under the SADC Scorecard (0-1, with 0 = 0.25 0.19 0.10 no restrictions, and 1= most restrictive)95 Total number of measures 96 22 25 Not applicable (NA.) Total number of measures by policy category Foreign equity limits 12 11.9 NA. Screening and approval Nil 2.8 NA. Restrictions on foreign personnel Nil 2.6 NA. Other restrictions 10 7.9 NA. Total number of sectors with measures 97 12 11.4 NA. 91. Source: UNCTAD STAT. 92. Id. 93. fDi Markets, from the Financial Times Ltd. (2022). 94. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 95. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 96. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Malawi, the list of 22 identified measures is found in 27 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 97. The following sectors in Malawi have covered measures: Construction, Distribution – Retail; Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Water (inland water transport); Media – Radio and TV Programming and Broadcasting (total); Telecommunications; Financial Services – Banking; Financial Services – Insurance; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Financial Services – Other Financial Services (other financial activities: financial leasing, other credit activities, factoring, venture capital); Professional Services – Legal Services (total); Professional Services – Audit and Accounting (audit); Real Estate Investment; Fishing and Aquaculture – Fishing, Mining and Quarrying – except energy-producing materials and support service activities. 116 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Land/real estate Foreign investors, Land Act No. 16 of 2016. Act: http://extwprlegs1. restrictions ownership not including majority fao.org/docs/pdf/ permitted, but foreign-owned compa- mlw170885.pdf leases possible for nies in Malawi, are only the medium term allowed to lease land for (up to 70 years) business purposes for a period up to 50 years (exceptional extensions are possible), whereas citizens can hold land to up 99 years according to the Government. 2 Horizontal IV. Other Government Locally-owned enterpris- Public Procurement Act: https://www.mra. restrictions procurement es are given preference and commencement mw/assets/upload/ offers preference in public procurement. Disposal of Public Assets downloads/Public_Pro- to locally-owned Act No. 27 of 2016. curement_and_Dispos- firms. al_of_Assets_Act_2017. pdf 3 Construction I. Foreign equity Greenfield and “Foreign firms", includ- National Construction Act: https://mala- limits acquisitions: More ing locally established Industry Act (Chapter wilii.org/akn/mw/ than 67 percent, firms whose control 53:05), 1997, as amended act/1996/19/eng@2014- but less than 100 is held by a foreign 12-31#part_VI National Construction percent. investor, are required to Industry Council of Guide: https://ncic. enter into joint-venture Malawi (NCIC) (2015), mw/wp- content/ agreements with local/ Registration Procedures, uploads/2019/09/Reg- Malawian construction Criteria and Schedules istration-Procedures- firms for the purpose of for Contractors, Con- Criteria-and-Schedules- carrying out con- sultants, Construction for-Contractors-Con- struction activities in Material Manufacturers sultants-Construction- Malawi. According to the and Suppliers. Material-Manufactures- authorities — and in ac- and-Suppliers-1.pdf cordance with the Sub- contracting and Joint Ventures by Foreign and Malawian Construction Firms Order 2014 [not available online] and the Practice of Construction Consultancy Services by Foreign Consulting Firms Regulations 2004 [not available online] — any foreign firm intend- ing to provide services in the construction in- dustry in Malawi should provide those services though joint ventures or sub-contracting agree- ments with one or more Malawian firms, where the Malawian firms shall be responsible for 30 percent of the works by volume and value in the case of contractors and a minimum of 51 percent of the services assignment in the case of consultants. SADC | Investment Climate Scorecard 117 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Distribution – I. Foreign equity Greenfield and The Business Licens- Business Licensing Regulation: https:// Retail limits acquisitions: No ing Regulations (G.N. Regulations, 2014 (G.N. www.businessmalawi. foreign equity 45/2014) issued under 45 of 2014). com/files/Malawi-Busi- allowed. the Business Licensing ness-Licensing-Regula- Act restricts the carry- tions.pdf ing on of retail business by non-Malawians to only the six urban areas (central business districts) of Blantyre, Kasungu, Lilongwe, Luchenza (Thyolo), Mzuzu and Zomba. The conducting of retail busi- ness by non-Malawians in the rural areas of Blantyre, Kasungu, Lilongwe, Thyolo, Mzuzu and Zomba as well as in the other 22 districts of Malawi, is prohibited. 5 Distribution – IV. Other FDI-specific Foreign investors are Businesses Licensing Act: https://mala- Retail restrictions minimum capital subject to a FDI-spe- Act [Chapter 46:01] of wilii.org/akn/mw/ requirement. cific minimum capital 2013. act/2012/27/eng@2014- requirement (US$ 12-31 250,000). 6 Distribution – I. Foreign equity Greenfield and Foreign shareholding Pharmacy and Medi- Act: https://pmra. Retail (specialized limits acquisitions: in a wholesale or retail cines Regulatory Author- mw/wp-content/ retail stores) Between 33 and pharmacy business is ity Act, 2019. uploads/2021/01/ 50 percent. limited to 49 percent. Phamacy-and-Med- icines-Regulatory- Authority-Act-No- 9-of-2019.pdf 7 Distribution – I. Foreign equity Greenfield and Foreign ownership of Liquid Fuels and Gas Act: https://ma- Retail (specialized limits acquisitions: No fuel and gas retail outlets (Production and Supply) lawilii.org/akn/ retail stores) foreign equity is prohibited for more Act (Chapter 50:03), mw/act/2004/23/ allowed. than two retail outlets. 2007, as amended. eng@2014-12-31 Additional outlets must be franchised out to Malawians. Wholesal- ers of liquid fuels and gas — regardless if foreign- or domestically- owned — may own and run a maximum of two retail outlets as well; any additional retail outlet(s) must be franchised to Malawians. 8 Distribution – I. Foreign equity Greenfield and Foreign shareholding Pharmacy and Medi- Act: https://pmra. Wholesale limits acquisitions: in a wholesale or retail cines Regulatory Author- mw/wp-content/ Between 33 and pharmacy business is ity Act, 2019. uploads/2021/01/ 50 percent. limited to 49 percent. Phamacy-and-Med- icines-Regulatory- Authority-Act-No- 9-of-2019.pdf 9 Distribution – IV. Other FDI-specific Foreign investors are Businesses Licensing Act: https://mala- Wholesale restrictions minimum capital subject to a FDI-spe- Act [Chapter 46:01] of wilii.org/akn/mw/ requirement. cific minimum capital 2013. act/2012/27/eng@2014- requirement (US$ 12-31 250,000). 118 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 10 Transport – Water I. Foreign equity Greenfield and Inland water transpor- Inland Waters Shipping Act: https://mala- (inland water limits acquisitions: tation is reserved to Act [Chapter 71:01] of wilii.org/akn/mw/ transport) Between 33 and locally registered vessels 1996, as amended. act/1995/12/eng@2014- 50 percent. owned by: (i) a citizen 12-31#part_IV of Malawi or (ii) a body corporate incorporated in Malawi, which is under the effective control of citizens of Malawi. 11 Telecommunica- I. Foreign equity Greenfield and Foreign shareholding Communications Act, Act: https://ma- tions limits acquisitions: More is limited to up to 80 2016. cra.mw/wp-content/ than 67 percent, percent in telecommuni- uploads/2021/04/ but less than 100 cations companies. COMMUNICATIONS- percent. ACT-2016.pdf 12 Financial Services IV. Other Establishment Local incorporation Financial Services Regulation: https:// – Banking restrictions of branches not required for conduct- (Licensing of Banks) www.rbm.mw/Finan- allowed/local ing banking activities in Directive, 2018 (G.N. No cialSectorRegulation/ incorporation Malawi. 22 of 2018). GetContentFile/?Conte required (financial ntID=27527 services and real estate investment only). 13 Financial Services IV. Other Establishment Local incorporation is Insurance Act (Chapter Act: https://www.rbm. – Insurance restrictions. of branches not required for undertaking 47:01), 2010, as amended mw/Home/GetContent allowed/local of insurance/reinsur- File/?ContentID=3744 Financial Services incorporation ance and pension fund (Licensing and Registra- Dir: https://www.rbm. required (financial businesses. tion of Pension Entities) mw/FinancialSector- services and real Directive, 2014. Regulation/GetContent estate investment File/?ContentID=4523 only). 14 Financial Services IV. Other Establishment Local incorporation is Financial Services Dir: https://www.rbm. – Other Financial restrictions of branches not required for operating (Licensing Requirements mw/FinancialSector- Services (auxiliary allowed/local stock exchanges and for a Stock Exchange) Regulation/GetContent to financial incorporation brokerage/dealer busi- Directive 2015. File/?ContentID=29789 markets: securities required (financial nesses Financial Services (Estab- Dir: https://www.rbm. and commodity services and real lishment and Operations mw/FinancialSector- exchanges, estate investment of Brokers and Dealers) Regulation/GetContent securities and only). Directive, 2015. File/?ContentID=29784 commodity brokerage, Financial Services (Li- Dir: https://www.rbm. investment censing and Registration mw/FinancialSector- advisory services of Pension Entities) Direc- Regulation/GetContent- and related tive, 2014. File/? activities) ContentID=4523 Financial Services (Estab- lishment and Operations Dir: https://www.rbm. of Portfolio Managers) mw/FinancialSector- Directive, 2015. Regulation/GetContent File/?ContentID=29786 15 Financial Services IV. Other Establishment Local incorporation Financial Services (Estab- Dir: https://www.rbm. – Other Financial restrictions of branches not required to conduct lishment and Operations mw/FinancialSector- Services (trusts, allowed/local portfolio management of Portfolio Managers) Regulation/GetContent funds and fund incorporation and the operation of Directive, 2015. File/?ContentID=29786 management required (financial collective investment Financial Services Dir: https://www.rbm. activities) services and real schemes in Malawi. (Establishment and mw/FinancialSector- estate investment Operations of Collective Regulation/GetContent only). Investment Schemes) File/?ContentID=29785 Directive 2015. SADC | Investment Climate Scorecard 119 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Financial Services IV. Other Establishment Local incorporation is Microfinance Act Act: https://www.rbm. – Other Financial restrictions of branches not required for conducting (Chapter 46:08), 2010, mw/Home/GetContent Services (other allowed/local microfinance activities in as amended. File/?ContentID=3747 financial activities: incorporation Malawi. Credit Reference Bureau Act: https://www.rbm. financial leasing, required (financial Act (Chapter 46:09), mw/Home/GetContent other credit ac- services and real 2010, as amended. File/?ContentID=3757 tivities, factoring, estate investment venture capital) only). 17 Professional I. Foreign equity Greenfield and Only qualified citizens Legal Education and Act: http://www. Services – Legal limits acquisitions: No or permanent resi- Legal Practitioners Act reforms.gov.mw/psrmu/ Services (total) foreign equity dents of Malawi may be 2017. sites/default/files/ allowed. admitted to practice as Legal%20Education%20 Department of Immigra- a legal practitioner and and%20Legal%20Prac- tion and Citizenship establish a legal firm in titioners%20Act%20 Services, Republic of Malawi. Only foreigners 2017.pdf Malawi, website. who have lived for at Other: https://www. least 5 years in Malawi immigration.gov.mw/ may apply for a perma- permits/permanent- nent residence permit. residence-permit/ 18 Professional I. Foreign equity Greenfield and A foreign auditing com- Public Accountants and Act: https://www. Services – Audit & limits acquisitions: More pany wishing to establish Auditors Act, 2014, as malawilii.org/akn/ Accounting (audit) than 67 percent, in Malawi is required to amended mw/act/2013/5/ but less than 100 partner with a local firm eng%402014-12-31 Practicing Accountant percent. in order to be allowed to and Audit Firms (Amend- Regulation: https:// register in Malawi. ment) Regulations, 2021 www.icam.mw/wp-con- (G.N. No 45 of 2021). tent/uploads/2021/11/ Document-31-1.pdf 19 Real Estate I. Foreign equity Greenfield and Foreign investors, Land Act No. 16 of 2016. Act: http://extwprlegs1. Investment limits acquisitions: including majority fao.org/docs/pdf/ Between 33 and foreign-owned compa- mlw170885.pdf 50 percent. nies in Malawi, are only allowed to lease land for business purposes for a period of up to 50 years (exceptional extensions are possible), whereas citizens can hold land to up to 99 years according to the Government. 120 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 20 Fishing and Aqua- I. Foreign equity Greenfield and Commercial fishing is Fisheries Conserva- Act: https://mala- culture – Fishing limits acquisitions: Less reserved to local fishing tion and Management wilii.org/akn/mw/ than 33 percent. vessels: (a) wholly owned Regulations, 2000 (Cap. act/1997/25/eng@2014- by one or more persons 66:05). 12-31#part_IV ordinarily resident in Ma- Fisheries Conservation Regulation: http://ext- lawi; or (b) wholly owned and Management Act wprlegs1.fao.org/docs/ by a company society or [Chapter 66:05] of 1998, pdf/mlw44463.pdf association of persons as amended. incorporated in or estab- lished under the laws of Malawi and controlled by one or more persons ordinarily resident in Malawi. In accordance with the implementing regulation, a person is said to have control of a company if the person holds not less than 75 percent of its voting capi- tal. Hence, non-resident foreign direct investors cannot hold more than 25 percent of the capital of a locally-established commercial fishing company. Foreign fishing vessels can exceptionally be granted a license for undertaking commercial fishing in Malawi’s fishing waters in accordance with bilateral or mul- tilateral international agreements. 21 Mining and Quar- I. Foreign equity Greenfield and Foreign shareholding is Mines and Minerals Act Act: http://extwprlegs1. rying – Except limits acquisitions: No not permitted in mining (No. 8 of 2019). fao.org/docs/pdf/ energy-producing foreign equity companies holding the mlw199882.pdf materials and allowed. following licenses: non- support service exclusive prospecting activities license; a small-scale mining license; and an artisanal mining permit. 22 Mining and Quar- IV. Other FDI-specific Investors in medium- and Mines and Minerals Act Act: http://extwprlegs1. rying – Except restrictions local content large-scale mining opera- (No. 8 of 2019). fao.org/docs/pdf/ energy-producing requirement. tions are required to give mlw199882.pdf materials and preference to Malawian- support service owned suppliers and activities contractors, as well as to Malawian citizens in their employment plans. However, they shall not be hindered from procur- ing goods and services outside of Malawi or from other foreign-owned firms, nor from employing foreigners, whenever procured goods, services and skills are deemed available only from specialized suppliers and contractors or profes- sionals with specialized training or long experi- ence, and which cannot be adequately sourced from Malawian providers SADC | Investment Climate Scorecard 121 and professionals. Mauritius Summary Highlights FDI Performance Mauritius SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)98 444 225 253 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 99 3.2% 2.1% 2.3% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 283 69 74 875 882 1,243 6,419 4,384 6,067 Investments100 (in US$ millions) SADC Scorecard Performance, 2021 Mauritius SADC Average Global Average101 Score under the SADC Scorecard (0-1, with 0 = 0.09 0.19 0.10 no restrictions, and 1= most restrictive)102 Total number of measures 103 17 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 7 11.9 NA. Screening and approval 4 2.8 NA. Restrictions on foreign personnel 1 2.6 NA. Other restrictions 5 7.9 NA. Total number of sectors with measures 104 7 11.4 NA. 98. Source: UNCTAD STAT. 99. Id. 100. fDi Markets, from the Financial Times Ltd. (2022). 101. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 102. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 103. The Scorecard focuses on identifying measures on the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Mauritius, the list of 17 identified measures is found in 8 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 104. The following sectors in Mauritius have covered measures: Agriculture, Construction – Buildings and Other Specialized Activities; Construction – Civil Engineering; Hotels and Restaurants – Accommodation; Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (total); Forestry and Logging; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Professional Services – Legal Services (domestic law counselling and court representation); Professional Services – Engineering Services (total); Professional Services – Architectural Services (total); Real Estate Investment – Commercial Buildings and Units; Real Estate Investment – Residential buildings and units; Real Estate Investment – Land; Manufacturing – Food and Others (food products, beverages and tobacco). 122 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Access to land/ A non-citizen who wishes to Non-Citizens (Property Act: https://www. restrictions real estate hold, purchase or otherwise Restriction) Act No. 22 edbmauritius.org/sites/ is subject to acquire immovable property of 12 July 1975 Amended default/files/2021-05/ FDI-specific in Mauritius, whether 38/11; 26/12 (cio 22/12/12); Non%20-%20Citizen%20 restriction freehold or leasehold land, 27/13 (cio 21/12/13); 9/15 %28Property%20Restric- (for example, needs prior authorization (cio 14/5/15); 33/16 (cio tion%29%20Act%20 prior approval, either from the Prime 22/12/16); 10/17 (cio -%205.5.21.pdf quantitative/ Minister’s Office or the 24/7/17); 11/17 (P53/17 – cio PDS Regulation: Economic Development 15/1/18); 11/18 (cio 9/8/18); https://www.edb- Board —unless in certain 13/19 (cio 25/7/19); 7/2020 mauritius.org/sites/ specified cases, for example: (cio 7/8/2020); 2/2021 (cio default/files/inline-files/ (i) Holding of immovable 29/4/2021). economic-development- property for commercial board-property-devel- purposes under a lease opment-scheme-regula- agreement not exceeding 20 tions-2015-rev-2019_0. years; (ii) Holding of shares pdf in companies which do not own immoveable property; IHS Regulation: https:// (iii) Holding of immovable www.edbmauritius.org/ property by inheritance sites/default/files/inline- or effect of marriage to a files/investment-promo- citizen under a legal regime tion-invest-hotel-scheme- of community (‘régime regulations-2015-v17.pdf legal de communauté’); IRS/RES/PDS Guide- (iv) Holding of shares lines: https://www. in companies listed on edbmauritius.org/sites/ the Stock Exchange of default/files/inline-files/ Mauritius; and (v) Holding guidelines-for-irs-res- through a unit trust scheme pds-jul-20_3.pdf or any collective investment vehicle as defined in the Guidelines: https://www. Securities Act. edbmauritius.org/sites/ default/files/2021-11/ There are also exceptions Guidelines%20ac- for non-citizens who wish quisition%20of%20 to buy freehold land and apartment%28s%29% property under specific 20incl.residency.pdf investment schemes, namely the Invest Hotel Scheme; Smart City Scheme; Property Development Scheme, Integrated Resort Scheme, Real Estate Scheme, Local Apartments (in condominium developments of at least two levels above ground (G+2). These are typically subject to minimum investment amounts. SADC | Investment Climate Scorecard 123 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 2 Construction – I. Foreign equity Greenfield and Foreign-owned construction Construction Industry Act: https://www. Buildings and limits acquisitions: consultants or contractors Development Board Act cidb.mu/wp-content/ Other Special- More than 67 are not allowed to provide No 35 of 2008 – 1 February uploads/2020/05/Con- ized Activities percent, but consultancy services or 2009 - Amended 38/11 structionIndustryDevel- less than100 carry out construction (P13/12 – cio 2/4/12); 27/13 opmentBoardAct.pdf percent. works in Mauritius unless (cio 21/12/13); P 25/14 (cio Regulation: https://www. it is done in collaboration 1/8/14– sections 18 to 25); cidb.mu/wp-content/ with a local consultant or 2/15 (cio 1/2/15, 26/3/15); uploads/2020/05/ local contractor. Foreign- 31/16 (P 15/17 – cio 1/3/17 CIDB-Collaboration- owned consultants and except for s. 5); 31/16 – P between-Foreign-and- contractors are exempted 11/19 (s. 5(a) – cio 1/4/19); Local-Contractors-Regu- from the application of this 13/19 (cio 25/7/19); 7/2020 lations-2021.pdf rule in relation to a project (cio 7/8/2020); 12/21 – P under an agreement or 9/21 (cio 1/10/21); Act: https://www. arrangement between edbmauritius.org/sites/ Construction Industry Mauritius and a foreign default/files/2021-05/ Development Board State, or a foreign financial Non%20-%20Citizen%20 (Collaboration between or banking institution, or by %28Property%20Restric- Foreign and Local an international financial tion%29%20Act%20 Contractors) Regulations organization. Consultants -%205.5.21.pdf 2021, Government Notice and contractors who have No. 252 of 2021; been operating in Mauritius during the 10 years and NON-CITIZENS 20 years respectively, (PROPERTY RESTRICTION) preceding the coming into ACT No 22 of 1975 – 12 July operation of this subsection 1975 Amended 38/11; 26/12 (1 March 2017) are also (cio 22/12/12); 27/13 (cio exempted. 21/12/13); 9/15 (cio 14/5/15); 33/16 (cio 22/12/16); 10/17 (cio 24/7/17); 11/17 (P53/17 – cio 15/1/18); 11/18 (cio 9/8/18); 13/19 (cio 25/7/19); 7/2020 (cio 7/8/2020); 2/2021 (cio 29/4/2021). 3 Construction – I. Foreign equity Greenfield and Foreign-owned construction Construction Industry Act: https://www. Civil Engineer- limits acquisitions: consultants or contractors Development Board Act cidb.mu/wp-content/ ing More than 67 are not allowed to provide No 35 of 2008 – 1 February uploads/2020/05/Con- percent, but consultancy services or 2009 - Amended 38/11 structionIndustryDevel- less than 100 carry out construction (P13/12 – cio 2/4/12); 27/13 opmentBoardAct.pdf percent. works in Mauritius unless (cio 21/12/13); P 25/14 (cio Regulation: https://www. in collaboration with a 1/8/14– sections 18 to 25); cidb.mu/wp-content/ local consultant or local 2/15 (cio 1/2/15, 26/3/15); uploads/2020/05/ contractor. Foreign-owned 31/16 (P 15/17 – cio 1/3/17 CIDB-Collaboration- consultants and contractors except for s. 5); 31/16 – P between-Foreign-and- are exempted from the 11/19 (s. 5(a) – cio 1/4/19); Local-Contractors-Regu- application of this rule 13/19 (cio 25/7/19); 7/2020 lations-2021.pdf in relation to a project (cio 7/8/2020); 12/21 – P under an agreement or 9/21 (cio 1/10/21); Act: https://www. arrangement between edbmauritius.org/sites/ Construction Industry Mauritius and a foreign default/files/2021-05/ Development Board State, or a foreign financial Non%20-%20Citizen%20 (Collaboration between or banking institution, or by %28Property%20Restric- Foreign and Local an international financial tion%29%20Act%20 Contractors) Regulations organization. Consultants -%205.5.21.pdf 2021, Government Notice and contractors who have No. 252 of 2021; been operating in Mauritius during the 10 years and NON-CITIZENS 20 years respectively, (PROPERTY RESTRICTION) preceding the coming into ACT No 22 of 1975 – 12 July operation of this subsection 1975 Amended 38/11; 26/12 (1 March 2017) are also (cio 22/12/12); 27/13 (cio exempted. 21/12/13); 9/15 (cio 14/5/15); 33/16 (cio 22/12/16); 10/17 (cio 24/7/17); 11/17 (P53/17 – cio 15/1/18); 11/18 (cio 9/8/18); 13/19 (cio 25/7/19); 7/2020 (cio 7/8/2020); 2/2021 (cio 29/4/2021). 124 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Construction – IV. Other Government Preferential treatment The Public Procurement Act: https://ppo.govmu. Civil Engineer- restrictions procurement in public procurement Act 2006 No 33 - 2006 org/Documents/PPA/ ing offers of goods is accorded to Proclaimed 17th January PPA.pdf preference to locally-incorporated small 2008; Regulation: https://ppo. locally-owned and medium enterprises Public Procurement govmu.org/Documents/ firms. (SMEs) or companies; (Regulations 2008); Regulations/Public%20 preferential treatment Procurement%20 in public procurement of Procurement Policy Office %28Regulations%20 works with investment not Circular No. 10 of 2009 2008%29.pdf exceeding 300 million rupees Procurement Policy Office (around US$6.7 million) is Circ: https://ppo.govmu. Circular No. 6 of 2021. accorded [reserved] to 'local org/Documents/Circu- contractors' , which excludes lars/circular1009.pdf 'foreign contractors' as Circ: https://ppo.govmu. defined in the Construction org/Documents/Circu- Industry Development Board lars/Circular%202021/ Act, and which comprises Circular%20No.6%20 'a firm, the control of which of%202021.pdf is vested in a person who is a non-citizen, that carries out construction works in the construction industry'. For other works, a margin of preference for procurement of works is accorded to local SME contractors [since 2008 and until July 2022. However, the application of margins of preference for Works in all Invitations for Bids has been temporarily suspended]. 5 Hotels and III. Restrictions Foreign key Foreign investors in Application Guide, Issue Guide: http://www.touris- Restaurants on key foreign personnel ( top- certain types of tourism of Letter of Approval by mauthority.mu/userfiles/ – Accommoda- personnel level executive accommodations, notably the Ministry of Tourism file/Application%20 tion ( board of positions) not guesthouses and tourist for projects with respect Guide%20for%20pro- directors and permitted.¹ residences, cannot nominate to the Accommodation cessing%20of%20proj- top-level execu- a foreigner for the position Sector, 2017; ects%20approved%20 tives). of Managing Director, except by%20Minister%2012%20 Policy on Investment for the investor him/herself oct%202017%20MT%20 by a non-citizen in a and subject to a proven track 40%20158%205%20 NEW / EXISTING * record in managing similar V5.pdf and MANAGEMENT structures. of a stand-alone (not Pol: http://www.touris- within IRS/RES/PDS) mauthority.mu/userfiles/ Guesthouse/Tourist file/Final%20Policy%20 Residence, 2019. Paper%20Investment%20 by%20Non-Citizen.pdf 6 Hotels and IV. Other FDI-specific Foreign investment in Application Guide, Issue Guide: http://www.touris- Restaurants restrictions minimum certain types of tourism of Letter of Approval by mauthority.mu/userfiles/ – Accommoda- capital accommodation, notably the Ministry of Tourism file/Application%20 tion requirement. guesthouses and tourist for projects with respect Guide%20for%20pro- residences, are subject to the Accommodation cessing%20of%20proj- to FDI-specific minimum Sector, 2017; ects%20approved%20 capital/investment by%20Minister%2012%20 Policy on Investment requirements. oct%202017%20MT%20 by a non-citizen in a 40%20158%205%20 NEW / EXISTING * V5.pdf and MANAGEMENT of a stand-alone (not Pol: http://www.touris- within IRS/RES/PDS) mauthority.mu/userfiles/ Guesthouse/Tourist file/Final%20Policy%20 Residence, 2019. Paper%20Investment%20 by%20Non-Citizen.pdf SADC | Investment Climate Scorecard 125 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 7 Hotels and Res- II. Screening Screening Foreign investment in Criteria for Investment Criteria: http://www. taurants – Food and approval¹ policy mandates businesses requiring a by Non-Citizens in Tour tourismauthority.mu/ and bever- (excludes ap- consideration Tourist Enterprise License, Operator Activities; userfiles/Annex%20 age service provals for the of economic including bars, restaurants, 9-%20Criteria-Non%20 “Tourist Enterprise activities, other acquisition of interests. travel agencies, tour Citizen-Tour%20Opera- License”, Tourism touristic ser- land/real estate operators, and so on, are tor.pdf Authority website; vices and arts, for business subject to approval by the Criteria: http://www. entertain-ment purposes). Ministry of Tourism. Checklist for new tourismauthority.mu/en/ and recreation application for Tourist licence-categories-11/ activities Enterprise License, tourist-enterprise- Tourism Authority, 2021. licence-14.html Checklist: http://www. tourismauthority.mu/ userfiles/OCT%20 2021%20Checklist%20 New%20applications%20 TEL-TAC(2).pdf 8 Media – Radio I. Foreign equity Greenfield and Foreign ownership is limited Independent Act: https://www.iba.mu/ and TV Pro- limits acquisitions: to 49.9 percent in radio and Broadcasting Authority documents/iba_act(2021). gramming and Between 33 and television broadcasting Act No 29 of 2000 – 1 pdf Broadcasting 50 percent. companies. January 2001 Amended (total) 9/15 (cio 14/5/15); GN 153/16 (cio 1/5/16); 21/16 (P56/16 – cio 15/12/16); GN 87/18 (cio 1/10/10); 13/19 (cio 25/7/19); 18/21 (cio 1/1/21, P14/21 – cio 4/12/21). 9 Financial Ser- IV. Other Establishment Local incorporation is Securities Act No 22 of Act: https://www.fscmau- vices – Other Fi- restrictions of branches not required for securities 2005 — 28 September ritius.org/media/67412/ nancial Services allowed/local exchanges. 2007 Amended 20/11 securities-act-2005pdf. (auxiliary to incorporation (cio 16/7/11); 38/11; 15/12 pdf financial mar- required (cio 1/11/12); 27/12 (cio kets: securities (financial 22/12/12); 18/16 (cio and commod- services and 7/9/16); 10/17 (cio 24/7/17); ity exchanges, real estate 11/18 (cio 9/8/18); 13/19 securities investment (cio 25/7/19); 7/2020 (cio and commod- only). 7/8/2020); 9/2021 (cio ity brokerage, 31/7/2021) investment ad- Securities (Collective visory services Investment Schemes and related and Closed-end Funds) activities) Regulations 2008, as amended. 10 Financial IV. Other Establishment Local incorporation is Securities Act No 22 of Act: https://www.fscmau- Services – restrictions of branches not required for managing 2005 — 28 September ritius.org/media/67412/ Other Financial allowed/local collective investment 2007 Amended 20/11 securities-act-2005pdf. Services (trusts, incorporation schemes (cio 16/7/11); 38/11; 15/12 pdf funds and fund required (cio 1/11/12); 27/12 (cio Rule: https://www. manage-ment (financial 22/12/12); 18/16 (cio fscmauritius.org/ activities) services and 7/9/16); 10/17 (cio 24/7/17); media/2169/securi- real estate 11/18 (cio 9/8/18); 13/19 ties__collective_invest- investment (cio 25/7/19); 7/2020 (cio ment_schemes_and_ only). 7/8/2020); 9/2021 (cio closed-end_funds__regu- 31/7/2021) lations_2008.pdf Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008, as amended. 126 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 11 Professional I. Foreign equity Greenfield and Foreign law firms can Law Practitioners Act No Act: https://www.law- Services – limits acquisitions: establish a local offices 55 of 1984 – 1 April 1985 society.mu/wp-content/ Legal Services More than 67 (branch offices) for the Amended 30/11 (P2/12 – cio uploads/2018/12/Law- (domestic law percent, but purposes of providing legal 3/9/12); 18/16 (cio 7/9/16); Practitioners-ACT.pdf counselling and less than 100 services related to foreign 2416 (P 60/16 – 3/1/17) Act: https://www.fscmau- court represen- percent. and international law, as Financial Services Act No ritius.org/media/84940/ ta-tion) well as establishing joint 14 of 2007 – 28 September financial-services-act- ventures with a locally- 2007 Amended 38/11; 15/12 2007pdf.pdf owned law firms in order (P41/12 – cio 1/11/12); 27/12 to provide advice or legal (cio 22/12/12); 27/13 (cio services on, or in relation 21/12/13); 9/15 (cio 14/5/15); to, Mauritian law. Foreign 32/15 (cio 29/1/16); 18/16 law firms can also fully (cio 7/9/16); GN 196/16 own an entity licensed as (cio 1/10/16); GN 241/16 a Global Legal Advisory (cio 15/11/16); 10/17 (cio Services under Section 77A 24/7/17); 11/17 – P53/17 (cio of the Financial Services 15/1/18);11/18 (cio 1/10/18, Act 2007 to provide legal 1/1/19); GN 34/19 (cio services in relation to 30/11/18); 9/19 (cio 29/5/19); laws pertaining to global 21/18 – P7/19 (cio 1/3/19); business, international 13/19 (cio 25/7/19; GN arbitration, corporate laws, 3/2020 (cio 27/12/19); GN taxation law and foreign and 63 of 2020 (cio 5/3/2020); international law. 1/20 (cio 23/3/2020); 5/20 (cio 9/7/2020); 7/2020 (cio 7/8/2020); 15/2021 (cio 5/8/2021). 12 Professional I. Foreign equity Greenfield and Foreign-owned engineering/ Construction Industry Act: https://www.cidb. Services – limits acquisitions: architecture consultant Development Board Act mu/wp-content/up- Engineering More than 67 firms are not allowed No 35 of 2008 – 1 February loads/2020/05/Construc- Services (total) percent, but to provide consultancy 2009 - Amended 38/11 tionIndustryDevelopment- less than 100 services in Mauritius, (P13/12 – cio 2/4/12); 27/13 BoardAct.pdf unless in collaboration (cio 21/12/13); P 25/14 (cio Regulation: https://www. with a local consultant or 1/8/14– sections 18 to 25); cidb.mu/wp-content/ local contractor. In the 2/15 (cio 1/2/15, 26/3/15); uploads/2020/05/CIDB- case of foreign consultancy 31/16 (P 15/17 – cio 1/3/17 Collaboration-between- services, the local except for s. 5); 31/16 – P Foreign-and-Local-Con- consultant’s share of the 11/19 (s. 5(a) – cio 1/4/19); sultants-Regulations-2021. consultancy fee shall not 13/19 (cio 25/7/19); 7/2020 pdf be less than 25 percent of (cio 7/8/2020); 12/21 – P the total consultancy fee. 9/21 (cio 1/10/21); Act: https://www. Foreign-owned engineering/ edbmauritius.org/sites/ Construction Industry architecture consultant default/files/2021-05/ Development Board firms are exempted from Non%20-%20Citizen%20 (Collaboration between the application of this rule %28Property%20Restric- Foreign and Local in relation to a project tion%29%20Act%20-%20 Consultants) Regulations under an agreement or 5.5.21.pdf 2021, Government Notice arrangement between No. 251 of 2021 Mauritius and a foreign State, or a foreign financial Non-Citizens (Property or banking institution, or by Restriction) Act No 22 an international financial of 1975 – 12 July 1975 organization. Amended 38/11; 26/12 (cio 22/12/12); 27/13 (cio 21/12/13); 9/15 (cio 14/5/15); 33/16 (cio 22/12/16); 10/17 (cio 24/7/17); 11/17 (P53/17 – cio 15/1/18); 11/18 (cio 9/8/18); 13/19 (cio 25/7/19); 7/2020 (cio 7/8/2020); 2/2021 (cio 29/4/2021). SADC | Investment Climate Scorecard 127 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 13 Professional I. Foreign equity Greenfield and Foreign-owned engineering/ Construction Industry Act: https://www. Services – limits acquisitions: architecture consultant Development Board Act cidb.mu/wp-content/ Architectural More than 67 firms are not allowed No 35 of 2008 – 1 Febru- uploads/2020/05/Con- Services (total) percent, but to provide consultancy ary 2009 - Amended 38/11 structionIndustryDevel- less than 100 services in Mauritius, (P13/12 – cio 2/4/12); 27/13 opmentBoardAct.pdf percent. unless in collaboration (cio 21/12/13); P 25/14 (cio Regulation: https://www. with a local consultant or 1/8/14– sections 18 to 25); cidb.mu/wp-content/ local contractor. In the 2/15 (cio 1/2/15, 26/3/15); uploads/2020/05/ case of foreign consultancy 31/16 (P 15/17 – cio 1/3/17 CIDB-Collaboration- services, the local except for s. 5); 31/16 – P between-Foreign-and- consultant’s share of the 11/19 (s. 5(a) – cio 1/4/19); Local-Consultants-Regu- consultancy fee shall not 13/19 (cio 25/7/19); 7/2020 lations-2021.pdf be less than 25 percent of (cio 7/8/2020); 12/21 – P the total consultancy fee. 9/21 (cio 1/10/21); Act: https://www. Foreign-owned engineering/ edbmauritius.org/sites/ Construction Industry architecture consultant default/files/2021-05/ Development Board firms are exempted from Non%20-%20Citizen%20 (Collaboration between the application of this rule %28Property%20Restric- Foreign and Local Consul- in relation to a project tion%29%20Act%20 tants) Regulations 2021, under an agreement or -%205.5.21.pdf Government Notice No. arrangement between Act: https://pac-mauri- 251 of 2021 Mauritius and a foreign tius.com/wp-content/ State, or a foreign financial NON-CITIZENS uploads/2017/06/PAC- or banking institution, or by (PROPERTY RESTRIC- ACT-2011-proclaimed-on- an international financial TION) ACT No 22 of 1975 01-March-2012-1.pdf organization. – 12 July 1975 Amended 38/11; 26/12 (cio 22/12/12); 27/13 (cio 21/12/13); 9/15 (cio 14/5/15); 33/16 (cio 22/12/16); 10/17 (cio 24/7/17); 11/17 (P53/17 – cio 15/1/18); 11/18 (cio 9/8/18); 13/19 (cio 25/7/19); 7/2020 (cio 7/8/2020); 2/2021 (cio 29/4/2021) THE PROFESSIONALAR- CHITECTS’ COUNCILACT 2011 Act No. 7 of 2011. 128 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 14 Real Estate II. Screening Screening A non-citizen who wishes to Non-Citizens (Property Act: https://www. Investment – and approval¹ policy mandates hold, purchase or otherwise Restriction) Act No. 22 edbmauritius.org/sites/ Commercial (excludes ap- consideration acquire immovable property of 12 July 1975 Amended default/files/2021-05/ Buildings and provals for the of economic in Mauritius, whether 38/11; 26/12 (cio 22/12/12); Non%20-%20Citizen%20 Units acquisition of interests. freehold or leasehold land, 27/13 (cio 21/12/13); 9/15 %28Property%20Restric- land/real estate needs prior authorization (cio 14/5/15); 33/16 (cio tion%29%20Act%20 for business from the Prime Minister’s 22/12/16); 10/17 (cio -%205.5.21.pdf purposes). Office and Economic 24/7/17); 11/17 (P53/17 – cio PDS Regulation: Development Board unless 15/1/18); 11/18 (cio 9/8/18); https://www.edb- in certain specified cases, 13/19 (cio 25/7/19); 7/2020 mauritius.org/sites/ for example: (i) Holding (cio 7/8/2020); 2/2021 (cio default/files/inline-files/ of immovable property 29/4/2021). economic-development- for commercial purposes board-property-devel- under a lease agreement opment-scheme-regula- not exceeding 20 years; tions-2015-rev-2019_0. (ii) Holding of shares in pdf companies which do not own immoveable property; IHS Regulation: https:// (iii) Holding of immovable www.edbmauritius.org/ property by inheritance or sites/default/files/inline- effect of marriage to a citizen files/investment-promo- under a legal regime of tion-invest-hotel-scheme- community (‘régime legal de regulations-2015-v17.pdf communauté’); (iv) Holding IRS/RES/PDS Guide- of shares in companies listed lines: https://www. on the Stock Exchange of edbmauritius.org/sites/ Mauritius; and (v) Holding default/files/inline-files/ through a unit trust scheme guidelines-for-irs-res- or any collective investment pds-jul-20_3.pdf vehicle as defined in the Securities Act. Guidelines: https://www. edbmauritius.org/sites/ There are also exceptions default/files/2021-11/ for non-citizens who wish Guidelines%20ac- to buy freehold land and quisition%20of%20 property under specific apartment%28s% investment schemes, namely 29%20incl.residency.pdf the Invest Hotel Scheme; Smart City Scheme; Property Development Scheme, Integrated Resort Scheme, Real Estate Scheme, Local Apartments (in condominium developments of at least two levels above ground (G+2). These are typically subject to minimum investment amounts. SADC | Investment Climate Scorecard 129 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 15 Real Estate II. Screening Screening A non-citizen who wishes to Non-Citizens (Property Act: https://www. Investment and approval¹ policy mandates hold, purchase or otherwise Restriction) Act No. 22 edbmauritius.org/sites/ – Residential (excludes ap- consideration acquire immovable property of 12 July 1975 Amended default/files/2021-05/ buildings and provals for the of economic in Mauritius, whether 38/11; 26/12 (cio 22/12/12); Non%20-%20Citizen%20 units acquisition of interests. freehold or leasehold land, 27/13 (cio 21/12/13); 9/15 %28Property%20Restric- land/real estate needs prior authorization (cio 14/5/15); 33/16 (cio tion%29%20Act%20 for business from the Prime Minister’s 22/12/16); 10/17 (cio -%205.5.21.pdf purposes). Office and Economic 24/7/17); 11/17 (P53/17 – cio PDS Regulation: Development Board unless 15/1/18); 11/18 (cio 9/8/18); https://www.edb- in certain specified cases, 13/19 (cio 25/7/19); 7/2020 mauritius.org/sites/ for example: (i) Holding (cio 7/8/2020); 2/2021 (cio default/files/inline-files/ of immovable property 29/4/2021) economic-development- for commercial purposes board-property-devel- under a lease agreement opment-scheme-regula- not exceeding 20 years; tions-2015-rev-2019_0. (ii) Holding of shares in pdf companies which do not own immoveable property; IHS Regulation: https:// (iii) Holding of immovable www.edbmauritius.org/ property by inheritance sites/default/files/inline- or effect of marriage to a files/investment-promo- citizen under a legal regime tion-invest-hotel-scheme- of community (‘régime regulations-2015-v17.pdf legal de communauté’); IRS/RES/PDS Guide- (iv) Holding of shares lines: https://www. in companies listed on edbmauritius.org/sites/ the Stock Exchange of default/files/inline-files/ Mauritius; and (v) Holding guidelines-for-irs-res- through a unit trust scheme pds-jul-20_3.pdf or any collective investment vehicle as defined in the Guidelines: https://www. Securities Act. edbmauritius.org/sites/ default/files/2021-11/ There are also exceptions Guidelines%20ac- for non-citizens who wish quisition%20of%20 to buy freehold land and apartment%28s% property under specific 29%20incl.residency.pdf investment schemes, namely the Invest Hotel Scheme; Smart City Scheme; Property Development Scheme, Integrated Resort Scheme, Real Estate Scheme, Local Apartments (in condominium developments of at least two levels above ground (G+2). These are typically subject to minimum investment amounts. 130 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Real Estate II. Screening Screening A non-citizen who wishes to Non-Citizens (Property Act: https://www. Investment – and approval¹ policy mandates hold, purchase or otherwise Restriction) Act No. 22 edbmauritius.org/sites/ Land (excludes ap- consideration acquire immovable property of 12 July 1975 Amended default/files/2021-05/ provals for the of economic in Mauritius, whether free- 38/11; 26/12 (cio 22/12/12); Non%20-%20Citizen%20 acquisition of interests. hold or leasehold land, needs 27/13 (cio 21/12/13); 9/15 %28Property%20Restric- land/real estate prior authorization from (cio 14/5/15); 33/16 (cio tion%29%20Act%20 for business the Prime Minister’s Office 22/12/16); 10/17 (cio -%205.5.21.pdf purposes). and Economic Development 24/7/17); 11/17 (P53/17 – cio PDS Regulation: Board unless in certain 15/1/18); 11/18 (cio 9/8/18); https://www.edb- specified cases, for example: 13/19 (cio 25/7/19); 7/2020 mauritius.org/sites/ (i) Holding of immovable (cio 7/8/2020); 2/2021 (cio default/files/inline-files/ property for commercial 29/4/2021) economic-development- purposes under a lease board-property-devel- agreement not exceeding 20 opment-scheme-regula- years; (ii) Holding of shares in tions-2015-rev-2019_0. companies which do not own pdf immoveable property; (iii) Holding of immovable prop- IHS Regulation: https:// erty by inheritance or effect www.edbmauritius.org/ of marriage to a citizen under sites/default/files/inline- a legal regime of community files/investment-promo- (‘régime legal de commu- tion-invest-hotel-scheme- nauté’); (iv) Holding of shares regulations-2015-v17.pdf in companies listed on the IRS/RES/PDS Guide- Stock Exchange of Mauritius; lines: https://www. and (v) Holding through a unit edbmauritius.org/sites/ trust scheme or any collective default/files/inline-files/ investment vehicle as defined guidelines-for-irs-res- in the Securities Act. pds-jul-20_3.pdf There are also exceptions for Guidelines: https://www. non-citizens who wish to buy edbmauritius.org/sites/ freehold land and property default/files/2021-11/ under specific investment Guidelines%20ac- schemes, namely the Invest quisition%20of%20 Hotel Scheme; Smart City apartment%28s% Scheme; Property Develop- 29%20incl.residency.pdf ment Scheme, Integrated Resort Scheme, Real Estate Scheme, Local Apartments (in condominium developments of at least two levels above ground (G+2). These are typically subject to minimum investment amounts. 17 Manufactur- I. Foreign equity Listed Foreign investment in a Securities (Investment by Rule: https://www. ing – Food and limits companies. listed Mauritian Sugar Foreign Investors) Rules fscmauritius.org/ Others (food only: Less than Company is limited to 2013. media/3421/securities- products, 33% 15 percent unless the investment-by-foreign- beverages and foreign investor applies investors-rules-2013.pdf tobacco) and obtains an exemption by the Financial Services Commission (FSC). Such an exemption can be granted to investors whose investment policy is to act as a passive investor and who do not exercise or seek to exercise control over any entity in which it invests. For the FDI RR Index, the exemption is assumed to mostly apply to financial (funds, and so on) investors; not FDI-types of investors who would normally seek control over the invested company. SADC | Investment Climate Scorecard 131 Mozambique Summary Highlights FDI Performance Mozambique SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)105 2,212 3,035 5,102 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 106 14.4% 21.6% 31.7% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 842 672 2,457 875 882 1,243 6,419 4,384 6,067 Investments107 (in US$ millions) SADC Scorecard Performance, 2021 Mozambique SADC Average Global Average108 Score under the SADC Scorecard (0-1, with 0 = 0.30 0.19 0.10 no restrictions, and 1= most restrictive)109 Total number of measures 110 43 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 19 11.9 NA. Screening and approval 13 2.8 NA. Restrictions on foreign personnel 4 2.6 NA. Other restrictions 7 7.9 NA. Total number of sectors with measures 111 18 11.4 NA. 105. Source: UNCTAD STAT. 106. Id. 107. fDi Markets, from the Financial Times Ltd. (2022). 108. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 109. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 110. The Scorecard focuses on identifying measures on the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Mozambique, the list of 43 identified measures is found in 23 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 111. The following sectors in Mozambique have covered measures: Agriculture – Crops; Agriculture – Animal production, hunting and related service activities; Electricity, Construction – Buildings and Other Specialized Activities; Construction – Civil Engineering; Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Surface (services incidental to rail and road transport, including rail and road infrastructure, stations, cargo handling and other support activities); Transport – Water (sea and coastal transport); Transport – Water (services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities); Transport – Air (services incidental to air transport, including airports, ground service activities, related cargo handling and other support activities); Hotels and Restaurants – Accommodations; Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (total); Media – Other Media (publishing of books, periodicals and other publishing activities, and web-based media portals); Telecommunications; Financial Services – Insurance (life insurance/reinsurance, pension and related auxiliary services); Forestry and Logging; Professional Services – Legal Services (total); Professional Services – Audit and Accounting (total); Professional Services – Engineering Services (total); Real Estate Investment – Commercial Buildings and Units; Real Estate Investment – Residential buildings and units; Real Estate Investment; Land, Fishing and Aquaculture – Fishing, Mining & Quarrying – Except energy-producing materials and support service activities; Mining and Quarrying – Support service activities; Manufacturing – Food and Others (textiles, wearing apparel, leather and related products); Manufacturing – Food and Others (paper, wood, printing, furniture and other manufacturing); Manufacturing – Chemical, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products (rubber and plastics products, and other non-metallic mineral products); and Manufacturing – Basic Metals and Fabricated Metal Products, except Machinery and Equipment (fabricated metal products, except machinery and equipment). 132 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Restrictions Only those foreign investors Decree No. 43/2009 of 21 Decree: http://invest. restrictions on (post-tax) meeting minimum August on the Regulation apiex.gov.mz/wp-content/ profit/capital investment requirements of the Investment Law uploads/sites/4/2019/08/ repatriation (for (of MZN 2,500,000 [Google translation] Investment-Regula- example, prior [approximately US$ 39,000] tions-43-2009.pdf Decree 20/2021 of 13 April approval, and or meeting certain income, [amendment] Decree: https://gazettes. quantitative or export and employment africa/archive/mz/2021/ time limits). thresholds) are eligible Law No. 3/93 of 24 June mz-government- to capital and profit on Investment. gazette-series-i-dated- repatriation guarantees. 2021-04-13-no-69.pdf Law: https://invest- mentpolicy.unctad. org/investment-laws/ laws/108/mozambique- investment-law 2 Horizontal IV. Other Access to land/ Foreign investors, including Land Law No. 19/97 of Law: http://invest.apiex. restrictions real estate foreign majority-owned 1st October 1997 [Google gov.mz/wp-content/ is subject to firms established in translation] uploads/sites/4/2019/08/ FDI-specific Mozambique, are allowed to Land-Law-19-97.pdf Decree No. 66/98 of 8 restriction hold land use rights (Direito December 1998 on Land Decree: http://invest. (for example, de Uso e Aproveitamento Law Regulations. [Google apiex.gov.mz/wp-content/ prior approval, da Terra or DUAT) provided translation]. uploads/sites/4/2019/08/ quantitative/size it is for business purposes Land-Law-Regula- limits, tax and and subject to approval tion-66-98.pdf so on). by the administration. The DUAT concession comprises Other: http://invest.apiex. two phases: (i) a provisional gov.mz/wp-content/ phase; and (ii) a definitive uploads/sites/4/2019/08/ phase. The interim phase Leis-e-Regulamentos- is the phase during which Relacionados-com- the holder must start the Investimento-Directo-Es- development plan and trangeiro.pdf eventually complete the development. With regard to concessions granted to foreign entities (citizens or foreign entities and/or entities mostly controlled by foreign entities), the duration of the provisional phase is 2 (two) years. In relation to national persons (national citizens or legal persons mostly controlled by foreign entities), the duration is extended to 5 (five) years. 3 Horizontal IV. Other Government Preference is accorded Decree No. 5/2016 Decree: http://www. restrictions procurement to Mozambican-owned Approving the Regulation ufsa.gov.mz/Docs/ offers persons or firms in public for Contracting Public BR_28_I_SERIE_SUPLE- preference to procurement of goods, Works Contracts, Supply MENTO_2016.pdf locally-owned services and public works. of Goods and Provision firms. of Services to the State and revokes Decree No. 15/2010, of 24 May. [Google translation]. SADC | Investment Climate Scorecard 133 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Agriculture – II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Crops and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to specific screening Law No. 3/93 of 24 June procedures for investing in on Investment. these same activities. 5 Agriculture II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. – Animal and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ production, (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- hunting and provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- related service acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf activities land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to different screening Law No. 3/93 of 24 June procedures for investing in on Investment. these same activities. 6 Electricity I. Foreign equity Greenfield and Investors in PPPs, large- Law No. 15/2011 Law: http://extwpr- limits acquisitions: scale projects and business establishing the legs1.fao.org/docs/pdf/ More than 67 concessions are required guidelines for moz165015.pdf percent, but to: (i) sell between 5 and 20 the contracting, Decree: http://extwpr- less than 100 percent of the equity capital implementing and legs1.fao.org/docs/pdf/ percent. to Mozambican investors monitoring process moz165016.pdf within 5 years from the of public-private start of operations; and (ii) partnerships, large-scale Law: https://invest- ensure the participation projects and business mentpolicy.unctad. of Mozambican public or concessions. [Google org/investment-laws/ private legal entities in translation] laws/108/mozambique- the capital of the venture/ investment-law Decree No. 16/2012 consortium, under the terms approving the Regulation that the parties negotiate on guidelines for and agree on, without the contracting, prejudice to the point (i). implementing and monitoring process of public-private partnerships, large-scale projects and business concessions. [Google translation]. 7 Construction – II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Buildings and and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ Other Special- (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- ized Activities provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to specific screening Law No. 3/93 of 24 June procedures for investing in on Investment. these same activities. 134 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Construction – I. Foreign equity Greenfield only: Foreign and majority Decree 94/2013 of 31st Decree: https://www. Civil Engineer- limits Between 33 and foreign-owned companies December Approving the lexlink.eu/FileGet. ing 50 percent. established in Mozambique Regulation for the Activity aspx?FileId=38991 cannot obtain public works of Contractor and Civil and public consultancy Construction Consultant services permits until [Google translate]. after legally operating in Mozambican territory for more than ten years. 9 Distribution II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. – Retail (spe- and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ cialized retail (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- stores) provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to specific screening Law No. 3/93 of 24 June procedures for investing in on Investment. these same activities. 10 Distribution – I. Foreign equity Greenfield and Trading of mineral products Mining Act No. 20/2014 Act: https://113dstor001. Wholesale limits acquisitions: (not by holders of mining [unofficial translation] s3-eu-west-1.amazonaws. Between 33 and rights) is reserved for com/Community+ Decree No. 31/2015 50 percent. companies that are majority Development+in+ approving the Mining owned by Mozambican Mining/Mozambique/Mo- Act Regulation [Google citizens. zambique_Mining_Law_ translation] Law_No._20_2014_Eng- Decree No 63/2021 lish.pdf approving the Regulations Decree: https://inami. on raw diamonds, gov.mz/index.php/ precious metals and files/97/Legislacao%20 gemstones trading Mineira/56/ [Google translation]. Regulamento%20da%20 Lei%20de%20Minas.pdf Decree: https:// inami.gov.mz/images/ Contratos/Decreto- n--63_2021_64_2021- regulamento-de- comercializacao-de- recursos-mineiras.pdf 11 Transport – Sur- I. Foreign equity Greenfield and Investors in PPPs, large- Law No. 15/2011 Law: http://extwpr- face (services limits acquisitions: scale projects and business establishing the legs1.fao.org/docs/pdf/ incidental to rail More than 67 concessions are required guidelines for moz165015.pdf and road trans- percent, but to: (i) sell between 5 and 20 the contracting, Decree: http://extwpr- port, including less than 100 percent of the equity capital implementing and legs1.fao.org/docs/pdf/ rail and road percent. to Mozambican investors monitoring process moz165016.pdf infrastructure, within 5 years from the of public-private stations, cargo start of operations; and (ii) partnerships, large-scale Law: https://invest- handling and ensure the participation projects and business mentpolicy.unctad. other support of Mozambican public or concessions. [Google org/investment-laws/ activities) private legal entities in translation] laws/108/mozambique- the capital of the venture/ investment-law Decree No. 16/2012 consortium, under the terms approving the Regulation that the parties negotiate on guidelines for and agree on, without the contracting, prejudice to the point (i). implementing and monitoring process of public-private partnerships, large-scale projects and business concessions. [Google translation].SADC | Investment Climate Scorecard 135 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Transport – I. Foreign equity Greenfield and Cabotage is reserved for Decree No. 35/2007 of 14 Decree: http://extwpr- Water (sea limits acquisitions: national companies, that is, August on the Regulation legs1.fao.org/docs/pdf/ and coastal Between 33 and companies in which foreign of Commercial Maritime moz111525.pdf transport) 50 percent. shareholding does not Transport [Google exceed 49 percent of the translation]. equity capital. 13 Transport – I. Foreign equity Greenfield and Investors in PPPs, large- Law No. 15/2011 Law: http://extwpr- Water (services limits acquisitions: scale projects and business establishing the legs1.fao.org/docs/pdf/ incidental to wa- More than 67 concessions are required guidelines for moz165015.pdf ter transport, percent, but to: (i) sell between 5 and 20 the contracting, Decree: http://extwpr- including ports below 100 percent of the equity capital implementing and legs1.fao.org/docs/pdf/ and terminal percent. to Mozambican investors monitoring process moz165016.pdf facilities, related within 5 years from the of public-private cargo handling start of operations; and (ii) partnerships, large-scale Law: https://invest- and other sup- to ensure the participation projects and business mentpolicy.unctad. port activities) of Mozambican public or concessions. [Google org/investment-laws/ private legal entities in translation] laws/108/mozambique- the capital of the venture/ investment-law Decree No. 16/2012 consortium, under the terms approving the Regulation that the parties negotiate on guidelines for and agree on, without the contracting, prejudice to the point (i). implementing and monitoring process of public-private partnerships, large-scale projects and business concessions. [Google translation]. 14 Transport – I. Foreign equity Greenfield and Investors in PPPs, large- Law No. 15/2011 Law: http://extwpr- Air (services limits acquisitions: scale projects and business establishing the legs1.fao.org/docs/pdf/ incidental to air More than 67 concessions are required guidelines for moz165015.pdf transport, in- percent, but to: (i) sell between 5 and 20 the contracting, Decree: http://extwpr- cluding airports, less than 100 percent of the equity capital implementing and legs1.fao.org/docs/pdf/ ground service percent. to Mozambican investors monitoring process moz165016.pdf activities, within 5 years from the of public-private related cargo start of operations; and (ii) partnerships, large-scale Law: https://invest- handling and ensure the participation projects and business mentpolicy.unctad. other support of Mozambican public or concessions. [Google org/investment-laws/ activities) private legal entities in translation] laws/108/mozambique- the capital of the venture/ investment-law Decree No. 16/2012 consortium, under the terms approving the Regulation that the parties negotiate on guidelines for and agree on, without the contracting, prejudice to the point (i). implementing and monitoring process of public-private partnerships, large-scale projects and business concessions. [Google translation]. 15 Hotels and I. Foreign equity Greenfield and The business of renting Decree 49/2016 of 1st Decree: http://www. Restaurants limits acquisitions: private accommodations, November (Regulation for anac.gov.mz/wp-content/ – Accommoda- Between 33 and rooms and farms for tourists Tourism Establishments, uploads/2017/08/Regu- tion 50 percent. is reserved for Mozambican Restaurants, Beverages lamento-de-Empresas- citizens and companies and Dance Halls) [Google Turisticos-1.pdf that are majority-owned by translation]. Mozambican citizens. 136 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Hotels and II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Restaurants and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ – Accommoda- (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- tion provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to specific screening Law No. 3/93 of 24 June procedures for investing in on Investment. these same activities. 17 Hotels and Res- I. Foreign equity Greenfield and Foreign shareholding in Decree 53/2015 of 31st Decree: http://www.im- taurants – Food limits acquisitions: travel agencies and tour January approving pacto.co.mz/wp-content/ and bever- Between 33 and operators is limited to 49 the regulation of travel themes/Arpora2_1_0/pdf/ age service 50 percent percent. and tourism agencies AIA/RegulamentoAvali- activities, other and tourist information acaodeImpactoAmbien- touristic ser- professionals. tal.pdf vices and arts, [Google translate]. entertain-ment and recreation activities 18 Hotels and Res- II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. taurants – Food and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ and bever- (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- age service provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- activities, other acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf touristic ser- land/real estate notification or the simplified Economic Activities, Law: https://invest- vices and arts, for business licensing regimes available which comprises the mentpolicy.unctad. entertain-ment purposes). to other Mozambican Simplified License and org/investment-laws/ and recreation investors in many the Prior Communication laws/108/mozambique- activities commercial and services Certificate [Google investment-law activities, thus being subject translate] to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 19 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in Press Law 18/91 of Law: http://www.caicc. and TV Pro- limits acquisitions: TV/radio broadcasting and 10 August [Google org.mz/images/stories/ gramming and Less than 33 printed media companies is translation] documentos/lei_de_imp- Broadcasting percent. limited to 20 percent. rensa.pdf Decree N˚9/93 of 22 June (total) 1993, which provides Decree: https://ga- for the participation of zettes.africa/archive/ private and cooperative mz/1993/mz-govern- enterprises in the ment-gazette-series-i- broadcasting sector supplement-no-3-dated- [Google translation]. 1993-06-22-no-24.pdf 20 Media – Radio III. Restrictions Key foreign Directors of TV/radio Press Law 18/91 of Law: http://www.caicc. and TV Pro- on key foreign personnel (top- broadcasting and printed 10 August [Google org.mz/images/stories/ gramming and personnel level executive media companies must be of translation] documentos/lei_de_imp- Broadcasting (board of positions) not Mozambican nationality. rensa.pdf Decree N˚9/93 of 22 June (total) directors and permitted.¹ 1993, which provides Decree: https://ga- top-level execu- for the participation of zettes.africa/archive/ tives). private and cooperative mz/1993/mz-govern- enterprises in the ment-gazette-series-i- broadcasting sector supplement-no-3-dated- [Google translation]. 1993-06-22-no-24.pdf SADC | Investment Climate Scorecard 137 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 21 Media – Radio III. Restrictions Nationality Directors of TV/radio Press Law 18/91 of Law: http://www.caicc. and TV Pro- on key foreign requirements broadcasting and printed 10 August [Google org.mz/images/stories/ gramming and personnel for board of media companies must be of translation] documentos/lei_de_imp- Broadcasting (board of directors. The Mozambican nationality. rensa.pdf Decree N˚9/93 of 22 June (total) directors and majority must 1993, which provides Decree: https://ga- top-level execu- be Mozambican for the participation of zettes.africa/archive/ tives). nationals. private and cooperative mz/1993/mz-govern- enterprises in the ment-gazette-series-i- broadcasting sector supplement-no-3-dated- [Google translation]. 1993-06-22-no-24.pdf 22 Media – Other I. Foreign equity Greenfield and Foreign shareholding in Press Law 18/91 of Law: http://www.caicc. Media (publish- limits. acquisitions: TV/radio broadcasting and 10 August [Google org.mz/images/stories/ ing of books, Less than 33 printed media companies is translation]. documentos/lei_de_imp- periodicals and percent. limited to 20 percent. rensa.pdf other publish- ing activities, and web-based media portals) 23 Media – Other III. Restrictions Nationality Directors of TV/radio Press Law 18/91 of Law: http://www.caicc. Media (publish- on key foreign requirements broadcasting and printed 10 August [Google org.mz/images/stories/ ing of books, personnel for board of media companies must be of translation]. documentos/lei_de_imp- periodicals and (board of directors. The Mozambican nationality. rensa.pdf other publish- directors and majority must ing activities, top-level execu- be Mozambican and web-based tives). nationals. media portals) 24 Media – Other III. Restrictions Key foreign Directors of TV/radio Press Law 18/91 of Law: http://www.caicc. Media (publish- on key foreign personnel (top- broadcasting and printed 10 August [Google org.mz/images/stories/ ing of books, personnel level executive media companies must be of translation]. documentos/lei_de_imp- periodicals and (board of positions) not Mozambican nationality. rensa.pdf other publish- directors and permitted.¹ ing activities, top-level execu- and web-based tives). media portals) 25 Telecommuni- I. Foreign equity Greenfield and Investors in PPPs, large- Law No. 15/2011 Law: http://extwpr- cations limits acquisitions: scale projects and business establishing the legs1.fao.org/docs/pdf/ More than 67 concessions are required guidelines for moz165015.pdf percent, but to: (i) sell between 5 and 20 the contracting, Decree: http://extwpr- less than 100 percent of the equity capital implementing and legs1.fao.org/docs/pdf/ percent. to Mozambican investors monitoring process moz165016.pdf within 5 years from the of public-private start of operations; and (ii) partnerships, large-scale Law: https://invest- ensure the participation projects and business mentpolicy.unctad. of Mozambican public or concessions. [Google org/investment-laws/ private legal entities in translation] laws/108/mozambique- the capital of the venture/ investment-law Decree No. 16/2012 consortium, under the terms approving the Regulation that the parties negotiate on guidelines for and agree on, without the contracting, prejudice to the point (i). implementing and monitoring process of public-private partnerships, large-scale projects and business concessions. [Google translation]. 26 Financial IV. Other Reciprocity Local incorporation Decree No. 25/2009, of Decree: https://issm. Services – restrictions requirement required for pension fund 17 August: Regulation gov.mz/wp-content/up- Insurance (life management, unless carried on the Constitution loads/2021/03/Decreto- insurance/ out by an authorized "life" and Management of n.-%c2%a6-25.2009-de- reinsurance, insurance agency [branches Pension Funds in Scope 17-de-Agosto-1.pdf pension and of foreign insurance of Complementary related auxiliary companies are permitted]. Social Security [Google services) translation]. 138 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 27 Forestry and I. Foreign equity Greenfield and The exploitation of forest Law No. 10/99 on Forest Act: http://faolex.fao.org/ Logging limits acquisitions: No resources by way of a simple and Wildlife Act docs/pdf/20106E.pdf foreign equity permit is subject to limited Decree No. 30/2012 allowed. quantities and duration, and establishing forestry it is exercised exclusively exploitation requirements by national operators. with an ordinary license. This simple permit regime [Google translation]. is applied to contiguous area not exceeding 10,000 hectares. 28 Professional IV. Other FDI-specific Foreign liberal professionals, Decree No. 43/2009 of 21 Decree: http://invest. Services restrictions minimum such as architects, lawyers, August on the Regulation apiex.gov.mz/wp-content/ capital economists, [accountants, of the Investment Law uploads/sites/4/2019/08/ requirement. auditors and engineers] [Google translation]. Investment-Regula- must, in order to be granted tions-43-2009.pdf the right to a permanent residence permit, generate an annual gross income from their work of not less than one million meticals (around US$ 15,810). For the purposes of the OECD FDI RR Index, such a monetary threshold required for foreign professionals to be eligible for permanent residency in Mozambique are assumed equivalent to minimum capital/investment requirements. 29 Professional IV. Other Establishment Subject to reciprocity Law No. 28/2009 Law: https://www.sal- Services – Legal restrictions of branches not conditions, qualified foreign - Statute of the Bar caldeira.com/index.php/ Services (total) allowed/local lawyers are eligible to enroll Association [Google en/publications/articles/ incorporation to the Mozambican Bar and, translation]. doc_download/245-lei- required consequently, practice the n-28-2009-estatuto-da- (financial legal profession and become ordem-dos-advogados services and partners in Mozambican law real estate firms. investment only.) 30 Professional IV. Other Reciprocity Subject to reciprocity, Law no. 8/2012: Law: https://gazettes. Services – Audit restrictions requirement. foreign auditing/accounting Creates the Order of africa/archive/mz/2012/ and Accounting firms and qualified foreign Accountants and Auditors mz-government- (total) accountants/auditors can of Mozambique and gazette-series-i-dated- register with the Order of approves its Statute 2012-02-08-no-6.pdf Accountants and Auditors [Google translation]. of Mozambique (Ordem dos Contabilistas e Auditores de Moçambique, OCAM) for the purpose of undertaking auditing and accounting activities in Mozambique. 31 Professional II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Services – and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ Engineering (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- Services (total) provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available to which comprises the mentpolicy.unctad. purposes). other Mozambican investors Simplified License and org/investment-laws/ in many commercial and the Prior Communication laws/108/mozambique- services activities, thus being Certificate [Google investment-law subject to the screening translate] procedures for investing in Law No. 3/93 of 24 June these same activities. on Investment. SADC | Investment Climate Scorecard 139 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 32 Real Estate I. Foreign equity Greenfield and Foreign ownership, Decree No. 02/1991 Decree: https://www.sal- Investment – limits acquisitions: No including of foreign majority- - Determines the caldeira.com/index.php/ Commercial foreign equity owned firms established in procedures concerning pt/publicacoes/artigoss/ Buildings and allowed. Mozambique, of properties the sale of real estate in doc_download/16-decre- Units that have historically favor of tenants [Google to-n-02-1991-determina- belonged to the State, or translation] os-procedimentos- have been nationalized by concernentes-a-alien- Ministerial Order No. the State at some point, is acao-de-imoveis-a-favor- 81/2008 – Establishes not allowed. Foreigners de-inquilinos the procedures for can only acquire real estate the sale of real estate Order: https://www. in Mozambique that has intended for the exercise salcaldeira.com/index. never belonged to or been of commercial activity php/pt/publicacoes/arti- nationalized by the state. located in rural areas and goss/doc_download/23- defines the powers of diploma-ministral-n- the bodies involved in it 81-2008-estabelece-os- [Google translation]. procedimentos-para- alienacao-dos-imoveis- Ministerial Order 97/92 of destinados-ao-exercicio- 8 July (the sale of ruined da-actividade-comercial- buildings, unfinished situados-nas-zonas-ru- buildings and dilapidated rais-e-define-as-compe- buildings [Google tencias-dos-orgaos-nele- translation]. intervenientes Order: https://gazettes. africa/archive/mz/1992/ mz-government- gazette-series-i-dated- 1992-07-08-no-28.pdf Other: https://www.sal- caldeira.com/index.php/ en/publications/articles/ doc_download/343-a- proibicao-de-alienacao- de-imoveis-a-es- trangeiros 33 Real Estate II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Investment – and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ Commercial (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- Buildings and provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- Units acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 140 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 34 Real Estate I. Foreign equity Greenfield and Foreign ownership, Decree No. 02/1991 Decree: https://www.sal- Investment limits acquisitions: No including of foreign - Determines the caldeira.com/index.php/ – Residential foreign equity majority-owned firms procedures concerning pt/publicacoes/artigoss/ buildings and allowed, established in Mozambique, the sale of real estate in doc_download/16-decre- units of properties that have favor of tenants [Google to-n-02-1991-determina- historically belonged to translation]. os-procedimentos- the State, or have been concernentes-a-alien- Ministerial Order No. nationalized by the State at acao-de-imoveis-a-favor- 81/2008 – Establishes some point, is not allowed. de-inquilinos the procedures for Foreigners can only acquire the sale of real estate Order: https://www. real estate in Mozambique intended for the exercise salcaldeira.com/index. that has never belonged to of commercial activity php/pt/publicacoes/arti- or been nationalized by the located in rural areas and goss/doc_download/23- state. However, according to defines the powers of diploma-ministral-n- the Mozambican authorities, the bodies involved in it 81-2008-estabelece-os- despite the existence of [Google translation]. procedimentos-para- such requirement, this is no alienacao-dos-imoveis- longer applied in practice. Ministerial Order 97/92 of destinados-ao-exercicio- For the purposes of the 8 July (the sale of ruined da-actividade-comercial- OECD FDI RRI, however, buildings, unfinished situados-nas-zonas-ru- de jure restrictions are buildings and dilapidated rais-e-define-as-compe- considered even though buildings [Google tencias-dos-orgaos-nele- they might not be enforced translation]. intervenientes anymore or might lack implementation rules for Order: https://gazettes. instance. africa/archive/mz/1992/ mz-government- gazette-series-i-dated- 1992-07-08-no-28.pdf Other: https://www.sal- caldeira.com/index.php/ en/publications/articles/ doc_download/343-a- proibicao-de-alienacao- de-imoveis-a-es- trangeiros 35 Real Estate II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. Investment and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ – Residential (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- buildings and provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- units acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf land/real estate notification or the simplified Economic Activities, Law: https://invest- for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate]. to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 36 Real Estate I. Foreign equity Greenfield and Foreign investors, including Land Law No. 19/97 of Law: http://invest.apiex. Investment – limits acquisitions: foreign majority-owned 1st October 1997 [Google gov.mz/wp-content/ Land Between 33 and firms established in translation]. uploads/sites/4/2019/08/ 50 percent. Mozambique, are allowed to Land-Law-19-97.pdf hold land use rights (Direito de Uso e Aproveitamento da Terra or DUAT) provided it is for business purposes — and subject to approval by the administration. SADC | Investment Climate Scorecard 141 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 37 Fishing and I. Foreign equity Greenfield and Until 2018, foreign Fisheries Law No. 22/2013 Law: http://extwpr- Aquaculture – limits acquisitions: investors, including foreign [Google translation]. legs1.fao.org/docs/pdf/ Fishing More than 67 majority-owned companies moz128917.pdf Decree No. 74/2017 percent, but established in Mozambique, approving the Regulation Decree: http://extwpr- less than 100 were not eligible for holding for the Concession of legs1.fao.org/docs/pdf/ percent. commercial fishing licenses. Fishing Rights and Fishing moz172331.pdf Since then, commercial Licensing, as amended fishing rights may be Decree: http://extwpr- by Decree No 60/2018 granted to a legal person legs1.fao.org/docs/pdf/ [Google translation]. whose share capital is moz198043.pdf mostly held by foreigners Decree 89/2020 of 8 (under joint venture with October (Regulation Mozambican investor). on Maritime Fishing Foreign-established or REPMAR) [Google companies may only be translation]. granted fishing rights via international agreements to which Mozambique is a party. 38 Mining and I. Foreign equity Greenfield and Small-scale mining is Mining Act No. 20/2014 Act: https://113dstor001. Quarrying limits acquisitions: reserved for companies [unofficial translation]. s3-eu-west-1.amazonaws. – Except en- Between 33 and that are majority-owned by com/Community+ Decree No. 31/2015 ergy- producing 50 percent. Mozambican citizens. Development+in+Mining/ approving the Mining materials and Mozambique/Mozam- Act Regulation [Google support service bique_Mining_Law_Law_ translation]. activities No._20_2014_English.pdf Decree No 63/2021 Decree: https://inami.gov. approving the Regulations mz/index.php/files/97/ on raw diamonds, Legislacao%20Minei- precious metals and ra/56/Regulamento%20 gemstones trading da%20Lei%20de%20 [Google translation]. Minas.pdf Decree: https:// inami.gov.mz/images/ Contratos/Decreto-n- -63_2021_64_2021-reg- ulamento-de-comercial- izacao-de-recursos-min- eiras.pdf 39 Mining and I. Foreign equity Greenfield and Foreign service providers Law No. 21/2014 on Oil Law: https://www.vda. Quarrying – limits acquisitions: to the petroleum operations [unofficial translation]. pt/xms/files/v1/Newslet- Support service More than 67 must associate with ters/2014/Petroleum_ activities percent, but Mozambican natural or Law_translation.pdf less than 100 juridic persons / majority- percent. owned by Mozambican nationals. Similarly, foreign persons providing services to mining operations must associate themselves with Mozambican natural or legal persons [assuming majority- owned by Mozambican nationals according to the definition under the Law No. 21/2014 on Oil]. 142 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 40 Manufactur- II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. ing – Food and and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ Others (textiles, (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- wearing ap- provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- parel, leather acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf and related land/real estate notification or the simplified Economic Activities, Law: https://invest- products) for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 41 Manufactur- II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. ing – Food and and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ Others (paper, (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- wood, printing, provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- furniture and acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf other manufac- land/real estate notification or the simplified Economic Activities, Law: https://invest- turing) for business licensing regimes available which comprises the mentpolicy.unctad. purposes). to other Mozambican Simplified License and org/investment-laws/ investors in many the Prior Communication laws/108/mozambique- commercial and services Certificate [Google investment-law activities, thus being subject translate] to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 42 Manufactur- II. Screening Screening Foreign investors (foreign Decree No. 39/2017 of Decree: https://gazettes. ing – Chemical, and approval¹ policy mandates legal persons and foreign 28 July Approving the africa/archive/mz/2017/ Rubber, Plastics, (excludes ap- consideration majority-owned companies Simplified Legal Regime mz-government- Fuel Products provals for the of economic established in Mozambique) for Licensing for the gazette-series-i-dated- and Other Non- acquisition of interests. are not eligible for the prior Exercise of Economic 2017-07-28-no-118.pdf Metallic Mineral land/real estate notification or the simplified Activities, which Law: https://invest- Products (rub- for business licensing regimes available comprises the Simplified mentpolicy.unctad. ber and plastics purposes). to other Mozambican License and the Mere org/investment-laws/ products, and investors in many Prior Communication laws/108/mozambique- other non- commercial and services Certificate [Google investment-law metallic mineral activities, thus being subject translate] products) to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment. activities. 43 Manufacturing II. Screening Screening Foreign investors (foreign Decree No. 39/2017 Decree: https://gazettes. – Basic Metals and approval¹ policy mandates legal persons and foreign of 28 July Approving africa/archive/mz/2017/ and Fabricated (excludes ap- consideration majority-owned companies the Simplified Legal mz-government- Metal Prod- provals for the of economic established in Mozambique) Regime for Licensing gazette-series-i-dated- ucts, except acquisition of interests. are not eligible for the prior for the Exercise of 2017-07-28-no-118.pdf Machinery and land/real estate notification or the simplified Economic Activities, Law: https://invest- Equipment (fab- for business licensing regimes available which comprises the mentpolicy.unctad. ricated metal purposes). to other Mozambican Simplified License and org/investment-laws/ products, ex- investors in many the Prior Communication laws/108/mozambique- cept machinery commercial and services Certificate [Google investment-law and equipment) activities, thus being subject translate] to the screening procedures Law No. 3/93 of 24 June for investing in these same on Investment activities. SADC | Investment Climate Scorecard 143 Namibia Summary Highlights FDI Performance Namibia SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)112 -179 -156 412 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 113 -1.4% -1.5% 3.3% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 751 149 4,594 875 882 1,243 6,419 4,384 6,067 Investments114 (in US$ millions) SADC Scorecard Performance, 2021 Namibia SADC Average Global Average115 Score under the SADC Scorecard (0-1, with 0 = 0.14 0.19 0.10 no restrictions, and 1= most restrictive)116 Total number of measures 117 24 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 7 11.9 NA. Screening and approval 1 2.8 NA. Restrictions on foreign personnel 7 2.6 NA. Other restrictions 9 7.9 NA. Total number of sectors with measures 118 10 11.4 NA. 112. Source: UNCTAD STAT. 113. Id. 114. fDi Markets, from the Financial Times Ltd. (2022). 115. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 116. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 117. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, such as on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Namibia, the list of 24 identified measures is found in 25 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 118. The following sectors in Namibia have covered measures: Agriculture, Distribution – Retail; Transport – Surface (road transport and urban rail transport): passenger transport [domestic / international]; Media – Radio and TV Programming and Broadcasting (total), Telecommunications; Financial Services – Insurance (life insurance/reinsurance, pension and related auxiliary services); Financial Services – Insurance (non-life insurance/reinsurance and related auxiliary services); Financial Services – Insurance (non- life insurance/reinsurance and related auxiliary services); Financial Services – Insurance (non-life insurance/reinsurance and related auxiliary services); Forestry and Logging; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Financial Services – Other Financial Services (other financial activities: financial leasing, other credit activities, factoring, venture capital); Professional Services – Legal Services (total); Fishing and Aquaculture – Fishing, Fishing and Aquaculture – Aquaculture; Mining and Quarrying – Except energy-producing materials and support service activities. 144 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Government Public procurement Public Procurement Act: https://mof.gov.na/ restrictions procurement rules concerning goods, Act No. 15 of 2015, as documents/35641/36673/ offers works and services amended. Public+Procurement+ preference to accord preferential Act%2C+2015+%28Ac locally-owned treatment to enterprises t+No.+15+of+2015%29. firms. that are majority-owned pdf/91fbdda7-9ecb-6596- by Namibian citizens. 11cb-36397949fa2e?versi In addition to margins on=1.0&download=true of preference, public procurement of goods, works and services below the following thresholds established by the Minister of Finance are designated for Namibian majority- owned suppliers: Works: Not exceeding N$30,000,000 (around US$ 1.6 million); Consultancy Services: Not exceeding N$10,000,000 (around US$533,000); Goods: Not exceeding N$10,000,000; Non- Consultant Services: Not exceeding N$10,000,000. 2 Horizontal IV. Other Access to local Companies in which foreign Exchange Control Regulation: https:// restrictions finance. investors hold 75 percent Regulations, 1966 Bank www.bon.com.na/ or more of the capital are of Namibia, Currency and CMSTemplates/Bon/ subject to local borrowing Exchanges Guidelines for Files/bon.com.na/ad/ and other financial Business Entities, 2018. ad4875ef-3cfa-414b-8c15- assistance limitations, ba575c6b5cd8.pdf except in relation to working Guideline: https://www. capital finance. bon.com.na/CMSTem- plates/Bon/Files/bon. com.na/e2/e201f924- f0ee-4b17-bb0d-f285eb- d1b131.pdf 3 Agriculture IV. Other Access to land/ Foreign investors and Agricultural (Commercial) Act: https://www.lac. restrictions real estate foreign majority-owned Land Reform Act 6 of org.na/laws/annoSTAT/ is subject to companies in Namibia 1995. Agricultural%20(Com- FDI-specific cannot acquire or lease mercial)%20Land%20 restriction agricultural land, as well as Reform%20Act%206%20 (for example, shares in companies owning of%201995.pdf prior approval, agricultural land, without quantitative/size the prior written consent of limits, tax, and the Minister. so on). 4 Transport – I. Foreign equity Greenfield and Foreign shareholding in Foreign Investment Act: https://media. Surface (road limits acquisitions: taxi and inter-city shuttle Act No. 27 of 1990, as namiblii.org/files/legisla- transport and Between 33 and services companies is amended Government tion/akn-na-act-1990-27- urban rail 50 percent. limited to 49 percent. Notice 75 (Government eng-1993-12-01.pdf transport): pas- Gazette, 15 April, 2010, No. Notice: https://ga- senger trans- 4460)/ zettes.africa/archive/ port [domestic / na/2010/na-govern- international] ment-gazette-dated- 2010-04-15-no-4460.pdf SADC | Investment Climate Scorecard 145 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 5 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in Communications Act No. Act: https://www.cran. and TV Pro- limits acquisitions: radio and TV broadcasting 8 of 2009. na/yglilidy/2019/12/ gramming and Between 33 and firms is limited to 49 percent Communications_Act_8_ Broadcasting 50 percent of the voting capital. of_2009.pdf (total) 6 Telecommuni- I. Foreign equity Greenfield and Foreign shareholding in Communications Act No. Act: https://www.cran. cations limits acquisitions: telecommunication firms is 8 of 2009. na/yglilidy/2019/12/ Between 33 and limited to 49 percent of the Communications_Act_8_ 50 percent. voting capital. of_2009.pdf 7 Financial III. Restrictions Key foreign Foreign investment in life Long-term Insurance Act Act: https://media. Services – on key foreign personnel (top- insurance is only allowed No 5 of 1998 Pension namiblii.org/files/legisla- Insurance (life personnel level executive through the registration tion/akn-na-act-1998-5- Fund Regulations: insurance/ (board of positions) not of a locally incorporated eng-2016-11-28.pdf Pension Funds Act, 1956 reinsurance, directors and permitted.¹ public company managed (Government Notice No Regulation: https:// pension and top-level execu- by a board of directors. 211 of 2018). gazettes.africa/archive/ related auxiliary tives). The managing director na/2018/na-govern- services) and at least 50 percent ment-gazette-dated- of the other directors are 2018-08-31-no-6697.pdf required to be Namibian citizens. Unlisted investment managing companies administering unlisted investments on behalf of pension funds must equally be locally incorporated and have appointed a Namibian citizen to be its portfolio manager and Chief Executive Officer (CEO). 8 Financial III. Restrictions Nationality Foreign investment in life Long-term Insurance Act Act: https://media. Services – on key foreign requirements insurance is only allowed No. 5 of 1998 namiblii.org/files/legisla- Insurance (life personnel for board of through the registration tion/akn-na-act-1998-5- Pension Fund Regulations: insurance/ (board of directors. The of a locally incorporated eng-2016-11-28.pdf Pension Funds Act, 1956 reinsurance, directors and majority must public company managed (Government Notice No Regulation: https:// pension and top-level execu- be Namibian by a board of directors. 211 of 2018). gazettes.africa/archive/ related auxiliary tives). nationals. The managing director na/2018/na-govern- services) and at least 50 percent ment-gazette-dated- of the other directors are 2018-08-31-no-6697.pdf required to be Namibian citizens. Unlisted investment managing companies that administer unlisted investments on behalf of pension funds must equally be locally incorporated and have appointed a Namibian citizen to be its portfolio manager and Chief Executive Officer (CEO). 146 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 9 Financial IV. Other The Foreign investment in life Long-term Insurance Act Act: https://media. Services – restrictions establishment insurance is only allowed No. 5 of 1998. namiblii.org/files/legisla- Insurance (life of branches not through the registration tion/akn-na-act-1998-5- Pension Funds insurance/ allowed/local of a locally incorporated eng-2016-11-28.pdf Regulations: Pension reinsurance, incorporation public company managed Funds Act, 1956 Regulation: https:// pension and is required by a board of directors. (Government Notice No. gazettes.africa/archive/ related auxiliary (financial The managing director 211 of 2018). na/2018/na-govern- services) services and and at least 50 percent ment-gazette-dated- real estate of the other directors are 2018-08-31-no-6697.pdf investment required to be Namibian only). citizens. Unlisted investment managing companies that administer unlisted investments on behalf of pension funds must equally be locally incorporated and have appointed a Namibian citizen to be its portfolio manager and Chief Executive Officer (CEO). 10 Financial Ser- III. Restrictions Nationality Foreign investment in non- Short-term Insurance Act Act: https://media. vices – Insur- on key foreign requirements life insurance is only allowed No. 4 of 1998. namiblii.org/files/legisla- ance (non-life personnel for the board through the registration tion/akn-na-act-1998-4- insurance/re- (board of of directors. A of a locally incorporated eng-2016-11-28.pdf insurance and directors and majority must public company managed related auxiliary top-level execu- be nationals. by a board of directors. The services) tives) managing director and at least 50 percent of the other directors are required to be Namibian citizens. 11 Financial Ser- III. Restrictions Key foreign Foreign investment in non- Short-term Insurance Act Act: https://media. vices – Insur- on key foreign personnel (top- life insurance is only allowed No. 4 of 1998. namiblii.org/files/legisla- ance (non-life personnel level executive through the registration tion/akn-na-act-1998-4- insurance/re- (board of positions) are of a locally incorporated eng-2016-11-28.pdf insurance and directors and not permitted.¹ public company managed related auxiliary top-level execu- by a board of directors. The services) tives). managing director and at least 50 percent of the other directors are required to be Namibian citizens. 12 Financial Ser- IV. Other The Foreign investment in non- Short-term Insurance Act Act: https://media. vices – Insur- restrictions establishment life insurance is only allowed No. 4 of 1998. namiblii.org/files/legisla- ance (non-life of branches through the registration tion/akn-na-act-1998-4- insurance/re- is not of a locally incorporated eng-2016-11-28.pdf insurance and allowed/local public company managed related auxiliary incorporation by a board of directors. The services) is required managing director and at (financial least 50 percent of the other services and directors are required to be real estate Namibian citizens. investment only). 13 Forestry and IV. Other Access to land/ Foreign investors and Agricultural (Commercial) Act: https://www.lac. Logging restrictions real estate foreign majority-owned Land Reform Act 6 of org.na/laws/annoSTAT/ is subject to companies in Namibia 1995. Agricultural%20(Com- FDI-specific cannot acquire or lease mercial)%20Land%20 restrictions agricultural land, as well as Reform%20Act%206%20 (for example, shares in companies owning of%201995.pdf prior approval, agricultural land, without quantitative/size the prior written consent of limits, tax, and the Minister. so on). SADC | Investment Climate Scorecard 147 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 14 Financial Ser- III. Restrictions Nationality The managing director and Stock Exchanges Control Act: https://media. vices – Other Fi- on key foreign requirements the majority of the board Act, 1985, as amended. namiblii.org/files/legisla- nancial Services personnel for the board of directors of a stock tion/akn-na-act-1985-1- (auxiliary to (board of of directors. A exchange entity in Namibia eng-2001-05-14.pdf financial mar- directors and majority must must be composed of kets: securities top-level execu- be Namibian Namibian citizens. and commod- tives) nationals. ity exchanges, securities and commod- ity brokerage, investment ad- visory services and related activities) 15 Financial Ser- III. Restrictions Key foreign The managing director and Stock Exchanges Control Act: https://media. vices – Other Fi- on key foreign personnel ( top- the majority of the board Act, 1985, as amended. namiblii.org/files/legisla- nancial Services personnel level executive of directors of a stock tion/akn-na-act-1985-1- (auxiliary to ( board of positions) not exchange entity in Namibia eng-2001-05-14.pdf financial mar- directors and permitted.¹ must be composed of kets: securities top-level execu- Namibian citizens. and commod- tives). ity exchanges, securities and commod- ity brokerage, investment ad- visory services and related activities) 16 Financial Ser- III. Restrictions Key foreign The portfolio manager NAMFISA (2019), Req: https://www.nam- vices – Other Fi- on key foreign personnel ( top- and compliance officer of “Requirements for fisa.com.na/wp-content/ nancial Services personnel level executive an investment managing Registration as an uploads/2019/08/ (auxiliary to (board of positions) not company in Namibia must Investment Manager.” REQUIREMENTS-FOR- financial mar- directors and permitted.¹ be Namibian citizens. REGISTRATION-AS-AN- Stock Exchanges Control kets: securities top-level execu- INVESTMENT-MANAG- Act No 1 of 1985. and commod- tives). ER-.pdf ity exchanges, Immigration Control Act Act: https://media. securities No. 7 of 1993. namiblii.org/files/legisla- and commod- tion/akn-na-act-1985-1- ity brokerage, eng-2001-05-14.pdf investment ad- visory services Act: https://media. and related namiblii.org/files/legisla- activities) tion/akn-na-act-1993-7- eng-1993-08-19.pdf 17 Financial Ser- IV. Other Establishment Only incorporated local NAMFISA (2019), Req: https://www.nam- vices – Other Fi- restrictions of branches not entities are eligible to “Requirements for fisa.com.na/wp-content/ nancial Services allowed/local administer and hold custody Registration as an uploads/2019/08/ (auxiliary to incorporation of investments in listed Investment Manager.” REQUIREMENTS-FOR- financial mar- required securities on behalf of other REGISTRATION-AS-AN- Stock Exchanges Control kets: securities (financial persons in Namibia. INVESTMENT-MANAG- Act No. 1 of 1985. and commod- services and ER-.pdf ity exchanges, real estate Immigration Control Act Act: https://media. securities investment No. 7 of 1993. namiblii.org/files/legisla- and commod- only). tion/akn-na-act-1985-1- ity brokerage, eng-2001-05-14.pdf investment ad- visory services Act: https://media. and related namiblii.org/files/legisla- activities) tion/akn-na-act-1993-7- eng-1993-08-19.pdf 148 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 18 Financial IV. Other Establishment Trustee and fund Unit Trusts Control Act, Act: https://media. Services – restrictions of branches not management companies 1981 (Act 54 of 1981). namiblii.org/files/legisla- Other Financial allowed/local must be locally incorporated tion/akn-na-act-1981-54- Services (trusts, incorporation in Namibia. eng-2016-11-29.pdf funds and fund required management (financial activities) services and real estate investment only). 19 Financial I. Foreign equity Greenfield and Foreign shareholding in Microlending Act 7 of Act: https://www.lac.org. Services – Other limits acquisitions: "microlender" organizations 2018 na/laws/annoSTAT/Micro- Financial Ser- Between 33 and is limited to 49 percent of lending%20Act%207%20 Immigration. Control Act vices (other fi- 50 percent the voting capital. of%202018.pdf No. 7 of 1993. nancial activities: Act: https://media. financial leasing, namiblii.org/files/legisla- other credit ac- tion/akn-na-act-1993-7- tivities, factoring, eng-1993-08-19.pdf venture capital) 20 Professional IV. Other Reciprocity Only Namibian citizens, Legal Practitioners Act Act: https://namiblii. Services – Legal restrictions requirement. persons lawfully admitted No 15 of 1995, as amended org/akn/na/act/1995/15/ Services (total) to Namibia for permanent eng@2005-11-01 Immigration Control Act residence and that ordinarily No. 7 of 1993. Act: https://media. reside in Namibia; or holders namiblii.org/files/legisla- of an employment permit for tion/akn-na-act-1993-7- the purpose of employment eng-1993-08-19.pdf in the service of the State are eligible to practice the legal profession and be partners in a law firm. Permanent residence permits can only be granted to foreign nationals who are a spouse, dependent, parent of a person permanently resident in Namibia who is able and undertakes in writing to maintain him or her. Foreign lawyers residing in a country declared as a reciprocating country may also be admitted by the Minister of Justice. The conditions subject to which such lawyers, once registered, may practice in Namibia have not yet been regulated. The Chief Justice or, in his or her absence, the Judge-President may grant, having regard to the complexity or special circumstances of a matter [exceptional basis], may grant a certificate authorizing a lawyer who has special expertise relating to the matter to practice in Namibia in relation to the matter for which the certificate was granted. For the purpose of the OECD FDI RR Index, it is assumed that, subject to reciprocity, foreign lawyers may be admitted and practice at par conditions with locally registered lawyers. SADC | Investment Climate Scorecard 149 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 21 Fishing and I. Foreign equity Greenfield and Foreign investment in fishing Marine Resources Act 27 Act: https://www.lac.org. Aquaculture – limits acquisitions: activities is subject to a 49 of 2000 na/laws/annoSTAT/Ma- Fishing Between 33 and percent foreign shareholding rine%20Resources%20 Policy Statement 50 percent. limit. Act%2027%20of%20 (Guidelines) for the 2000.pdf Granting of Rights to Harvest Marine Pol: https://mfmr. Resources, 2013 gov.na/docu- ments/411764/417987/PO Foreign Investments Act LICY+STATEMENT+%28 27 of 1990. GUIDELINES%29+FOR +THE+GRANTING+OF+ RIGHTS+TO+HARVETS+ MARINE+RESOURCES. pdf/427b96bf-6572-5df4- 6cc5-d5d62d547480 Act: https://mit.gov.na/do cuments/41692/88494/1+ Foreign+Investment+Act. pdf/45f765c6-7f31-edfa- 3a6e-f8b411f6f25a?versio n=1.0&t=1603782678048 &download=true 22 Fishing and II. Screening Screening The aquaculture policy Namibia’s Aquaculture Pol: https://mfmr. Aquaculture – and approval¹ policy mandates stipulates that preference Policy, 2001 gov.na/docu- Aquaculture (excludes ap- consideration is to be given to Namibian ments/411764/436209/ Aquaculture Act No.18, provals for the of economic citizens and to ventures Aquaculture+Policy% 2002. acquisition of interests. beneficially controlled 2C+March+2001.pdf/ land/real estate by Namibian citizens to c59fae1d-293d-44b7- for business benefit from the utilization 702c-9ca5de9e0d85 purposes). of Namibia’s natural resources for aquaculture development. For the purposes of the OECD FDI RR Index, it is assumed that this takes place during the licensing process by the Minister since no differential treatment of foreign ownership is explicitly stipulated in the legislation. 150 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 23 Mining and I. Foreign equity Greenfield and Mining operations may be Minerals (Prospecting Act: https://www.lac.org. Quarrying limits acquisitions: No conducted in terms of a and Mining) Act 33 of na/laws/annoSTAT/Miner- – Except en- foreign equity mining claim or a mining 1992. als%20(Prospecting%20 ergy- producing allowed. license. Only the holder and%20Mining)%20 Licenses, Rights and materials and of a valid Non-Exclusive Act%2033%20of%20 Permits: Application support service Prospecting License (NEPL) 1992.pdf Guidelines and activities is allowed to peg a mining Assessment Procedures, Guideline: https://mme. claim, which may not be 2019. gov.na/files/publica- bigger than three hundred tions/e1c_MME_A5_FI- meters by six hundred NAL_2019.pdf meters. Mining claims are granted to Namibian citizens Other: https://www.lex- older than 18 years, or to africa.com/wp-content/ companies wholly owned by uploads/2019/06/Guide- Namibian citizens. However, to-Mining-in-Namibia.pdf a mining claim holder may choose to contract with a foreigner, or a company owned by foreigners to prospect and mine. The holder of an Exclusive Prospecting License (EPL) may apply for a mining license over the prospecting area. There are no restrictions on foreign participation for holding an EPL or Mining License (ML). 24 Mining and I. Foreign equity Acquisition only: Foreign investors can Minerals (Prospecting Act: https://namiblii.org/ Quarrying limits More than 67 acquire only up to 85 and Mining) ACT No. 33 of akn/na/act/1992/33/ – Except en- percent, but percent of a mineral license 1992, as amended eng@2008-12-29#sec_47 ergy- producing less than 100 held by a Namibian license Public Notice, Ministry Notice: https://www. materials and percent. holder. of Mines and Energy, 2 mme.gov.na/files/publi- support service March 2021. cations/eb0_Public%20 activities Notice_Effective%201%20 April%202021.pdf SADC | Investment Climate Scorecard 151 Seychelles Summary Highlights FDI Performance Seychelles SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)119 144 122 157 518 2,858 15,466 8,492 11,027 -156 FDI as a percentage of GDP 120 9.1% 11.5% 12.6% 2.6% 4.3% 4.0% 4.3% 3.0% -1.5% Value of Greenfield 39 357 105 875 1,243 6,419 4,384 6,067 149 Investments121 (in US$ millions) SADC Scorecard Performance, 2021 Seychelles SADC Average Global Average122 Score under the SADC Scorecard (0-1, with 0 = 0.24 0.19 0.10 no restrictions, and 1= most restrictive)123 Total number of measures 124 25 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 21 11.9 NA. Screening and approval 1 2.8 NA. Restrictions on foreign personnel Nil 2.6 NA. Other restrictions 3 7.9 NA. Total number of sectors with measures 125 10 11.4 NA. 119. Source: UNCTAD STAT. 120. Id. 121. fDi Markets, from the Financial Times Ltd. (2022). 122. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 123. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 124. The Scorecard focuses on identifying measures on the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (e.g., such as on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Seychelles, the list of 25 identified measures is found in 11 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 125. The following sectors in Seychelles have covered measures: Agriculture – Crops; Agriculture – Animal production, hunting and related service activities; Construction – Buildings and Other Specialized Activities; Construction – Civil Engineering; Distribution – Retail (specialized retail stores); Transport – Surface (road transport and urban rail transport): passenger transport [domestic / international]; Transport – Surface (road transport and urban rail transport): freight transport [domestic / international]; Transport – Water (sea and coastal transport): passenger transport [domestic / international]; Transport – Water (services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities); Hotels and Restaurants – Accommodation; Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Financial Services – Other Financial Services (trusts, funds and fund management activities); Professional Services – Legal Services (domestic law counselling and court representation); Real Estate Investment; Fishing and Aquaculture– Fishing, Fishing and Aquaculture; Aquaculture, Manufacturing – Food and Others (food products, beverages and tobacco). 152 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal II. Screening Screening Foreign investment in Seychelles Investment Regulation: https://www. and approval¹ policy mandates activities not referenced (Economic Activities) gazette.sc/sites/default/ (excludes ap- considera-tion in the First Schedule Regulations, 2020 (but files/2020-12/SI%20 provals for the of economic (“Economic Activities in this act is currently 148%202020%20-%20 cquisition of interests. Which Non-Seychellois replaced with the new law Seychelles%20Invest- land/real estate May Invest”) or in the in 2022126). ment%20%28Econom- for business Second Schedule [List of ic%20Activities%29%20 Immovable Property purposes). economic activities with a Regulations.pdf (Transfer Restriction) Act, financial limit up to which a 1963 (Cap 95). Act: https://greybook. non-Seychellois may invest], seylii.org/w/se/CAP95 the Reserved Economic Activity Policy or any other Website: https://investin- investment regulation seychelles.com/investors- shall be subjected to the guide/investor-resources/ Economic Needs Test. economic-needs-test 2 Horizontal IV. Other Access to land/ Foreign-owned companies Immovable Properties Act: https://grey- restrictions real estate may acquire or lease private (Transfer Restriction) Act book.seylii.org/w/se/ is subject to land or immovable property 1965, Cap 95 as amended CAP95#!fragment/ FDI-specific for business purposes, zoupio-_Toc384112366/ Policy: Alienation of restriction subject to government BQCwhgziBcwMYgK4Ds- Land and Management (for example, approval. They may also DWszIQewE4BUBTAD- and Sale of State prior approval, lease state-owned land for wBdoAvbRABwEtsBaAf- Land, Government of quantitative/size commercial purposes, but X2zgGYAOAFgEY+AJg4A Seychelles. limits, tax, and they cannot acquire state 2EQEoANMmylCEAIqJC so on). land, except in very specific uAJ7QA5BskRCYXAiUr1 cases. All leases of land WnXoMgAynlIAhdQCU- or immovable property by AogBknANQCCAOQDC- foreign-owned investors for TyVIwACNoUnZxcSA more than 2 years is subject Policy: http://www.luh. to government approval. gov.sc/Files/Doc/Sanc- tions Docs 2020/Policy IPTR September 2017.pdf 3 Agriculture – I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Crops limits acquisitions: No allowed in agricultural (crop (Economic Activities) gazette.sc/sites/default/ foreign equity production) activity. Regulations, 2020 (but files/2020-12/SI%20 allowed. this act is currently 148%202020%20-%20 replaced with the new law Seychelles%20Invest- in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 126-. The text includes the updated legal authority/source. However, regulatory information reflected in the FDI Regulatory Restrictiveness Index should be in force as of end of December 2021. SADC | Investment Climate Scorecard 153 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Agriculture I. Foreign equity Greenfield and Foreign investment is Seychelles Investment Regulation: https://www. – Animal limits acquisitions: No not allowed in animal or (Economic Activities) gazette.sc/sites/default/ production, foreign equity livestock keeping. Regulations, 2020 (but files/2020-12/SI%20 hunting and allowed. this act is currently 148%202020%20-%20 related service replaced with the new law Seychelles%20Invest- activities in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 5 Construction – I. Foreign equity Greenfield and Foreign investment is Seychelles Investment Regulation: https://www. Buildings and limits acquisitions: No not allowed in certain (Economic Activities) gazette.sc/sites/default/ Other Special- foreign equity construction buildings Regulations, 2020 (but files/2020-12/SI%20 ized Activities allowed. and works, notably those this act is currently 148%202020%20-%20 requiring contractor class ii, replaced with the new law Seychelles%20Invest- iii and iv licenses. in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 6 Construction – I. Foreign equity Greenfield and Foreign investment is Seychelles Investment Regulation: https://www. Civil Engineer- limits acquisitions: No not allowed in certain (Economic Activities) gazette.sc/sites/default/ ing foreign equity construction buildings Regulations, 2020 (but files/2020-12/SI%20 allowed. and works, notably those this act is currently 148%202020%20-%20 requiring contractor class ii, replaced with the new law Seychelles%20Invest- iii and iv licenses. in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 7 Distribution I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. – Retail (spe- limits acquisitions: No allowed in certain specific (Economic Activities) gazette.sc/sites/default/ cialized retail foreign equity retail activities (for example, Regulations, 2020 (but files/2020-12/SI%20 stores) allowed. the distribution of pesticides, this act is currently 148%202020%20-%20 ship chandler services and replaced with the new law Seychelles%20Invest- fish mongering services). in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 154 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Transport – I. Foreign equity Greenfield and Foreign investment is Seychelles Investment Regulation: https://www. Surface (road limits acquisitions: No not allowed in private (Economic Activities) gazette.sc/sites/default/ transport and foreign equity omnibus transport services. Regulations, 2020 (but files/2020-12/SI%20 urban rail allowed. Public transport services this act is currently 148%202020%20-%20 transport): pas- are a monopoly of the replaced with the new law Seychelles%20Invest- senger trans- state-owned company in 2022). ment%20%28Econom- port [domestic / Seychelles Public Transport ic%20Activities%29%20 Reserved Economic international] Corporation (SPTC). Regulations.pdf Activities Policy 2020. Policy: https://investinsey- chelles.com/component/ edocman/reserved-eco- nomic-activities-policy,- april-2020/download 9 Transport – I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Surface (road limits acquisitions: No allowed in truck hiring (Economic Activities) gazette.sc/sites/default/ transport and foreign equity service services. Regulations, 2020 (but files/2020-12/SI%20 urban rail allowed. this act is currently 148%202020%20-%20 transport): replaced with the new law Seychelles%20Invest- freight trans- in 2022). ment%20%28Econom- port [domestic / ic%20Activities%29%20 Reserved Economic international] Regulations.pdf Activities Policy 2020. Policy: https://investinsey- chelles.com/component/ edocman/reserved-eco- nomic-activities-policy,- april-2020/download 10 Transport – I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Water (sea limits acquisitions: No allowed in boat charter, (Economic Activities) gazette.sc/sites/default/ and coastal foreign equity ferry services and yacht Regulations, 2020 (but files/2020-12/SI%20 transport): pas- allowed. charter companies with up this act is currently 148%202020%20-%20 senger trans- to 3 yachts in its fleet. replaced with the new law Seychelles%20Invest- port [domestic / in 2022). ment%20%28Econom- international] ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://investinsey- The Liveaboard and Yacht chelles.com/component/ Charter Policy 2020. edocman/reserved-eco- nomic-activities-policy,- april-2020/download Charter: http://tourism. gov.sc/wp-content/ uploads/2020/09/yacht- charter-policy-updat- ed-17-8-2020.pdf 11 Transport – I. Foreign equity Greenfield and Foreign shareholding in Seychelles Investment Regulation: https://www. Water (sea limits acquisitions: yacht charter companies (Economic Activities) gazette.sc/sites/default/ and coastal Between 33 and with 4-5 yachts in its fleet is Regulations, 2020 (but files/2020-12/SI%20 transport): pas- 50 percent. limited to 49 percent. this act is currently 148%202020%20-%20 senger trans- replaced with the new law Seychelles%20Invest- port [domestic / in 2022). ment%20%28Econom- international] ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://investinsey- The Liveaboard and Yacht chelles.com/component/ Charter Policy 2020. edocman/reserved-eco- nomic-activities-policy,- april-2020/download Charter: http://tour- ism.gov.sc/wp-content/ uploads/2020/09/yacht- charter-policy-updat- ed-17-8-2020.pdf SADC | Investment Climate Scorecard 155 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 12 Transport – I. Foreign equity Greenfield and Foreign shareholding in Seychelles Investment Regulation: https://www. Water (services limits acquisitions: companies providing vessel (Economic Activities) gazette.sc/sites/default/ incidental to wa- Between 33 and salvage and refloating Regulations, 2020 (but files/2020-12/SI%20 ter transport, 50 percent. services is limited to 49 this act is currently 148%202020%20-%20 including Ports percent. replaced with the new law Seychelles%20Invest- and terminal in 2022). ment%20%28Econom- facilities, related ic%20Activities%29%20 cargo handling Regulations.pdf and other sup- port activities) 13 Transport – I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Water (services limits acquisitions: No allowed in clearing and (Economic Activities) gazette.sc/sites/default/ incidental to wa- foreign equity shipping agency services. Regulations, 2020 (but files/2020-12/SI%20 ter transport, allowed. this act is currently 148%202020%20-%20 including Ports replaced with the new law Seychelles%20Invest- and terminal in 2022). ment%20%28Econom- facilities, related ic%20Activities%29%20 Reserved Economic cargo handling Regulations.pdf Activities Policy 2020. and other sup- Policy: https://inves- port activities) tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 14 Hotels and I. Foreign equity Greenfield and Foreign shareholding in Seychelles Investment Regulation: https://www. Restaurants limits acquisitions: hotels other than lodging (Economic Activities) gazette.sc/sites/default/ – Accommoda- More than 67 services with 16-24 rooms Regulations, 2020 (but files/2020-12/SI%20 tion percent, but and located on Mahe, this act is currently 148%202020%20-%20 less than 100 Praslin, La Digue, Silhouette, replaced with the new law Seychelles%20Invest- percent. Cerf Island and Ste Anne in 2022). ment%20%28Econom- Islands are limited to 80 ic%20Activities%29%20 percent. Regulations.pdf *Anything above 24 rooms can be 100 percent foreign owned. 15 Hotels and I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Restaurants limits acquisitions: No allowed in accommodation (Economic Activities) gazette.sc/sites/default/ – Accommoda- foreign equity services of up to 15 rooms. Regulations, 2020 (but files/2020-12/SI%20 tion allowed. this act is currently 148%202020%20-%20 replaced with the new law Seychelles%20Invest- in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 156 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 16 Hotels and Res- I. Foreign equity Greenfield and Foreign shareholding in Seychelles Investment Regulation: https://www. taurants – Food limits acquisitions: restaurants with fewer than (Economic Activities) gazette.sc/sites/default/ and bever- Between 33 and 21 covers, as well as in tour Regulations, 2020 (but files/2020-12/SI%20 age service 50 percent. operator services (excluding this act is currently 148%202020%20-%20 activities, other travel agents services) are replaced with the new law Seychelles%20Invest- touristic ser- limited to 49 percent. in 2022). ment%20%28Econom- vices and arts, ic%20Activities%29%20 entertain-ment Regulations.pdf and recreation activities 17 Hotels and Res- I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. taurants – Food limits acquisitions: No allowed in catering, take- (Economic Activities) gazette.sc/sites/default/ and bever- foreign equity away and delivery food Regulations, 2020 (but files/2020-12/SI%20 age service allowed. services. this act is currently 148%202020%20-%20 activities, other replaced with the new law Seychelles%20Invest- touristic ser- in 2022). ment%20%28Econom- vices and arts, ic%20Activities%29%20 Reserved Economic entertainment Regulations.pdf Activities Policy 2020. and recreation Policy: https://inves- activities tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 18 Financial IV. Other Establish-ment Local incorporation Securities Act No. 8 of Act: https://fsasey- Services – Other restrictions of branches required for obtaining a 2007. chelles.sc/component/ Financial Ser- not allowed/ stock exchange license, edocman/consolidated- vices (auxiliary local incorpora- clearing agency license, securities-act-2007-to- to financial mar- tion required securities facility license, 9th-april-2020/ kets: securities (financial securities dealer license and download?Itemid=0 and commod- services and investment advisor license. ity exchanges, real estate securities and investment commodity bro- only). kerage, invest- ment advisory services and related activities) 19 Financial IV. Other Establish-ment Local incorporation not The Mutual Fund and Act: https://fsasey- Services – restrictions of branches required for mutual fund Hedge Fund Act No. 10 of chelles.sc/component/ Other Financial not allowed/ and fund management 2008, as amended edocman/consolidated- Services (trusts, local incorpora- companies. However, mutual-fund-and-hedge- International Corporate funds and fund tion required all licensees under the fund-act-2007-to- Service Providers Act No. management (financial International Corporate 31st-january-2020/ 10 of 2003, as amended. activities) services and Service Providers Act, 2003 download?Itemid=0 real estate (the regulatory legislation for Act: https://fsasey- investment the issuance of international chelles.sc/component/ only). corporate services, edocman/consolidated- international trustee services international-corporate- and foundation services service-providers-act- licenses) are required to be 2003-to-6th-august-2021/ a company incorporated download?Itemid=0 in Seychelles under the Companies Act, 1972. SADC | Investment Climate Scorecard 157 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 20 Professional I. Foreign equity Greenfield and Foreign lawyers are not free Seychelles Investment Regulation: https://www. Services – limits acquisitions: No to register and practice in (Economic Activities) gazette.sc/sites/default/ Legal Services foreign equity Seychelles, except to provide Regulations, 2020 (but files/2020-12/SI%20 (domestic law allowed. legal advice on foreign and this act is currently 148%202020%20-%20 counselling and international law. In principle, replaced with the new law Seychelles%20Invest- court represen- legal services in relation in 2022). ment%20%28Econom- tation) to the Laws of Seychelles, ic%20Activities%29%20 Immovable Property not being listed in the First Regulations.pdf (Transfer Restriction) Act, or Second Schedule of the 1963 (Cap 95). Act: https://greybook. Investment Act, would be seylii.org/w/se/CAP95 subject to screening by the authorities (based on Website: https://investin- an economic needs test seychelles.com/investors- assessment). However, the guide/investor-resources/ authorities have clarified economic-needs-test during the data collection process for the OECD FDI RR Index that foreign investment is not permitted for the provision of legal services on domestic law matters. 21 Real Estate I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. Investment limits acquisitions: No allowed in real estate agency (Economic Activities) gazette.sc/sites/default/ foreign equity services. Regulations, 2020 (but files/2020-12/SI%20 allowed. this act is currently 148%202020%20-%20 replaced with the new law Seychelles%20Invest- in 2022). ment%20%28Econom- ic%20Activities%29%20 Reserved Economic Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download 22 Real Estate I. Foreign equity Greenfield and Foreign investors are Immovable Properties Act: https://grey- Investment limits acquisitions: No not allowed to acquire or (Transfer Restriction) Act book.seylii.org/w/se/ foreign equity lease private- and state- 1965, Cap 95 as amended CAP95#!fragment/ allowed. owned, unless for business zoupio-_Toc384112366/ Policy: Alienation of purposes or own residential BQCwhgziBcwMYgK4Ds- Land and Management use. DWszIQewE4BUBTAD- and Sale of State wBdoAvbRABwEtsBaAf- Land, Government of X2zgGYAOAFgEY+AJg4A Seychelles. 2EQEoANMmylCEAIqJC uAJ7QA5BskRCYXAiUr1 WnXoMgAynlIAhdQCU- AogBknANQCCAOQDC- TyVIwACNoUnZxcSA Policy: http://www.luh. gov.sc/Files/Doc/Sanc- tions Docs 2020/Policy IPTR September 2017.pdf 158 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 23 Fishing and I. Foreign equity Greenfield and Foreign investment in fishing Fisheries Act No. 20 Of Act: https://seylii. Aquaculture – limits acquisitions: activities is restricted to 2014. org/sc/sc/legislation/ Fishing Between 33 and joint-venture (minority Act%2020%20of%20 50 percent. foreign-owned) and 2014%20Fisheries%20 Seychelles (fully foreign- Act%2C%202014.pdf owned) fishing vessels, which can only be registered and licensed for fishing tuna and tuna-like species, and other species as a condition of the license. Such conditions are not required for local (fully Seychellois- owned) fishing vessels. 24 Fishing and I. Foreign equity Greenfield and Foreign shareholding in Fisheries (Aquaculture) Regulation: https://www. Aquaculture – limits acquisitions: companies undertaking Regulations, 2020. gazette.sc/sites/default/ Aquaculture Between 33 and aquaculture activities in the files/2020-12/SI%20 50 percent. inshore zone is limited to 49 160%202020%20-%20 percent. Fisheries%20%28Aqua- culture%29%20Regula- tions%202020.pdf 25 Manufactur- I. Foreign equity Greenfield and Foreign investment is not Seychelles Investment Regulation: https://www. ing – Food and limits acquisitions: No allowed in bacca, lapire (Economic Activities) gazette.sc/sites/default/ Others (food foreign equity (sugar cane-based alcohol Regulations, 2020 (but files/2020-12/SI%20 products, allowed. and juice) manufacturing this act is currently 148%202020%20-%20 beverages and and distribution, as well as replaced with the new law Seychelles%20Invest- tobacco) in primary and secondary in 2022). ment%20%28Econom- processing of all plant ic%20Activities%29%20 Reserved Economic products. Regulations.pdf Activities Policy 2020. Policy: https://inves- tinseychelles.com/ component/edocman/ reserved-economic-ac- tivities-policy,-april-2020/ download SADC | Investment Climate Scorecard 159 South Africa Summary Highlights FDI Performance South Africa SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)127 5,125 3,062 40,889 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 128 1.5% 1.0% 10.9% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 4,765 5,599 6,459 875 882 1,243 6,419 4,384 6,067 Investments129 (in US$ millions) SADC Scorecard Performance, 2021 South Africa SADC Average Global Average130 Score under the SADC Scorecard (0-1, with 0 = 0.03 0.19 0.10 no restrictions, and 1= most restrictive)131 Total number of measures 132 9 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 4 11.9 NA. Screening and approval Nil 2.8 NA. Restrictions on foreign personnel 1 2.6 NA. Other restrictions 4 7.9 NA. Total number of sectors with measures 133 5 11.4 NA. 127. Source: UNCTAD STAT. 128. Id. 129. fDi Markets, from the Financial Times Ltd. (2022). 130. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 131. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 132. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In South Africa, the list of 9 identified measures is found in 10 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 133. The following sectors in South Africa have covered measures: Media – Radio and TV Programming and Broadcasting (total); Financial Services – Insurance; Financial Services – Other Financial Services (trusts, funds and fund management activities), Fishing; and Aquaculture. 160 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Access to local Non-resident persons and Currency and Exchanges Manual: https://www. restrictions finance companies in which non- Manual for Authorised resbank.co.za/content/ residents have an interest Dealers, 2022-04-25. dam/sarb/what-we-do/ of 75 percent or more face financial-surveillance/ local borrowing restrictions financial-surveillance- regarding the acquisition documents/2020/ of residential and/or Currency%20and%20 commercial properties, as Exchanges%20 well as any other financial Manual%20for%20 transaction, including, Authorised%20Dealers. among other things, the pdf purchase and sale of any securities (listed or unlisted), repurchase agreements and any derivative transactions on securities. Authorized borrowing amounts must comply with a 1:1 ratio, that is, for every R1 in cash or assets that a non-resident introduces or owns, such non-resident may borrow an equivalent amount on the local market. Local borrowing by companies in which non-residents have an interest of 75 percent or more is not restricted for the normal trade and working capital financing of operations. 2 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in Electronic Communica- Act: https://www.gov.za/ and TV limits acquisitions: radio and TV broadcasting tions Act 36 of 2005, as documents/electronic- Programming Less than 33 companies is limited to 20 amended. communications-act and percent. percent. And not more than Broadcasting 20 percent of directors (total) of those firms may be foreigners. 3 Media – Radio III. Restrictions Nationality Foreign shareholding in Electronic Communica- Act: https://www.gov.za/ and TV on key foreign requirements radio and TV broadcasting tions Act 36 of 2005, as documents/electronic- Programming personnel for the board companies is limited to 20 amended. communications-act and (board of of directors. percent, and not more than Broadcasting directors A majority 20 percent of directors (total) and top-level must be of those firms may be executives). South African foreigners. nationals. SADC | Investment Climate Scorecard 161 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 4 Media – Radio IV. Other FDI-specific Commercial broadcasters Electronic Act: https://www.gov.za/ and TV restrictions local content are required to comply with Communications Act 36 documents/electronic- Programming requirement. local content requirements of 2005, as amended. communications-act and that are specific to Independent Notice: https://www. Broadcasting foreign-owned production Communications gov.za/sites/default/files/ (total) companies: (1) in respect Authority of South Africa gcis_document/201603/ of a sound broadcasting (ICASA) Regulations on 39844gon346_1.pdf service, a broadcasting Local Television Content service licensee is required Notice: https://www. Notice of 346 of 2016, to broadcast a specified icasa.org.za/uploads/ issued on 23 March 2016. minimum percentage of files/ICASA-Regulations- musical works which qualify ICASA Regulations on on-South-African-Music- as South African music, that South African Music Gazette-39844.pdf is, written or performed Notice of 344 of 2016, by South African citizens, issued on 23 March 2016. and so on; (2) in respect of a television broadcasting service, a broadcasting service licensee is required to allocate a minimum percentage of its total broadcasting time to television programs that have local television content, that is, content produced by a television broadcasting service licensee or by South African citizens or companies that are majority owned by South African citizens. 5 Financial IV. Other Establishment Local incorporation is Insurance Act No 18 of Act: https://www. Services – restrictions of branches not required for undertaking the 2017, as amended resbank.co.za/en/home/ Insurance allowed/local insurance business. Foreign publications/publication- incorporation reinsurers, however, can detail-pages/prudential- required operate through a branch. authority/pa-post- (financial insurance/act/2018/8571 services and real estate investment only). 162 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 6 Financial IV. Other Establishment Local incorporation is Collective Investment Act: https://discover. Services – restrictions of branches not required for trustees and Schemes Control Act 45 sabinet.co.za/discov Other Financial allowed/local custodians of collective OF 2002, as amended erdelivery/1/1/6/7/6/ Services (trusts, incorporation investment schemes, 1/7_0ebad45b43966 Companies Act, 2008. funds and fund required unless they are registered ba/1167617_alt_1228533_ management (financial as branches of foreign fc397b7c9639424. activities) services and institutions in terms of the pdf?response-content-di real estate Banks Act. sposition=inline%3B investment filename%2A%3DU only). TF-8%27%27collective- investment-schemes- control-act-45-of-2002. pdf&Expires=165184529 0&Signature=Zw5a824~ dQBDOmhiOsvOu1CjTPH JjmkPmPHNixLCsBJtTY NUeb4iq4CxJWznAGebT v3Ghjo62AzMiooFUIcT- lnk0rrXsgj9CXlr2LTfejK LkF3as5p8G~~5inz TeehjXebNBsHrs-v40M8o k2YwzjYPH1aOurMOkU NdaNT~Y~BVTEy3QtTr~ sn3i60GPh5ADYrELh5U PgyKrgidLp3jDcBov7T3 YwQH6gZUAnn7UrxRx Mmhi81fHECXOBXWreT kT16E3~4fmfqoAHBiwq- m3ShdhIAzFnpq5DP0U KazWQmYT1Jf-iSKFEhk mx0aNgXMAFAtXxbJtk2 B1IFTSfIieA__&Key-Pair- Id=KZFRMYA8YVF29 Act: https://www.gov.za/ sites/default/files/gcis_ document/201409/ 321214210.pdf 7 Fishing and I. Foreign equity Greenfield and Fisheries and aquaculture Marine Living Resources Act: https://www.gov. Aquaculture limits acquisitions: rights are reserved to Act, No. 18 of 1998, as za/documents/marine- Between 33 and South African right holders amended. living-resources-act-27- 50 percent. (including South African may-1998-0000 citizens and legal entities in which the majority of shareholders are South African persons). They may then form charter agreements with foreign nationals. 8 Transport – Air I. Foreign equity Greenfield and Foreign shareholding in air Air Services Licensing Acts: https://caa. (air transport) limits acquisitions: carriers providing domestic Act No. 115 of 1990, as mylexisnexis.co.za/ Less than 33 service is limited to 25 amended percent. percent of the voting capital International Air Services and to 50 percent for South Act No. 60 of 1993, as African air carriers entitled amended. to international air transport services. 9 Transport – Air I. Foreign equity Greenfield and Foreign shareholding in air Air Services Licensing Acts: https://caa. (air transport) limits acquisitions: carriers providing domestic Act No. 115 of 1990, as mylexisnexis.co.za/ Between 33 and service is limited to 25 amended 50 percent. percent of the voting capital International Air Services and to 50 percent in South Act No. 60 of 1993, as African air carriers entitled amended. to international air transport services. SADC | Investment Climate Scorecard 163 Tanzania Summary Highlights FDI Performance Tanzania SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)134 1,217 685 922 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 135 1.9% 1.0% 1.3% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 895 223 989 875 882 1,243 6,419 4,384 6,067 Investments136 (in US$ millions) SADC Scorecard Performance, 2021 Tanzania SADC Average Global Average137 Score under the SADC Scorecard (0-1, with 0 = 0.32 0.19 0.10 no restrictions, and 1= most restrictive)138 Total number of measures 139 35 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 22 11.9 NA. Screening and approval 1 2.8 NA. Restrictions on foreign personnel 1 2.6 NA. Other restrictions 11 7.9 NA. Total number of sectors with measures 140 14 11.4 NA. 134. Source: UNCTAD STAT. 135. Id. 136. fDi Markets, from the Financial Times Ltd. (2022). 137. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, the SADC Member States are excluded from the calculation of the global average. 138. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 139. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation on an economy-wide basis, as well as for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Tanzania, the list of 35 identified measures is found in 34 legal instruments (legal instruments include laws, regulations, decree, presidential orders, ministerial orders, and official government policy). 140. The following sectors in Tanzania have covered measures: Agriculture – Animal production, hunting and related service activities; Construction; Distribution – Retail (specialized retail stores); Transport – Surface (services incidental to rail and road transport, including rail and road infrastructure, stations, cargo handling and other support activities); Transport – Water (inland water transport): passenger transport [domestic / international]; Transport – Water (services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities); Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities, Media – Radio and TV Programming and Broadcasting (total); Media – Other Media (publishing of books, periodicals and other publishing activities, and web-based media portals); Financial Services – Banking; Financial Services – Insurance, Financial Services. Other Financial Services (trusts, funds and fund management activities); Financial Services – Other Financial Services (other financial activities: financial leasing, other credit activities, factoring, venture capital); Professional Services – Audit and Accounting (total); Professional Services – Engineering Services (total); Professional Services – Architectural Services (total); Real Estate Investment, Fishing and Aquaculture; Fishing, Mining and Quarrying – Energy producing materials (that is, coal, crude petroleum and natural gas); Mining and Quarrying – Except energy-producing materials and support service activities; Manufacturing – Chemical, Rubber, Plastics, Fuel Products; and Other Non-Metallic Mineral Products (coke and refined petroleum products). 164 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Restrictions Only foreign investors Tanzania Investment Act, Act: https://procedures. restrictions on (post-tax) meeting a minimum 1997. tic.go.tz/media/ profit/capital investment threshold INVESTMENT%20ACT.pdf repatriation (higher than required from (for example, domestic investors) have prior approval, access to unconditional quantitative or profit and capital time limits). repatriation. 2 Horizontal IV. Other Access to local Only foreign investors Tanzania Investment Act, Act: https://procedures. restrictions finance. meeting a minimum 1997. tic.go.tz/media/ investment threshold INVESTMENT%20ACT.pdf (higher than required from domestic investors) can be entitled to credit from domestic sources. 3 Horizontal IV. Other Government Government procurement Public Procurement Act, Act: https://www.ppra. restrictions procurement legislation gives preference 2011, as amended. go.tz/phocadownload/ offers to firms that are majority- attachments/Act/Public_ preference to owned by Tanzanian citizens Procurement_Act_2011. locally owned in respect of contracts pdf firms. for public works and Amendment: https:// consultancy services, and www.ppra.go.tz/ to joint ventures between phocadownload/ foreign and local firms for all attachments/PPA_ procurement, including of Ammendment_Act_2016. goods, under international pdf and national competitive tendering. 4 Agriculture I. Foreign equity Greenfield and Foreign shareholding is The Wildlife Conservation Regulation: https://www. – Animal limits acquisitions: limited to 49 percent in the (Game Meat Selling) maliasili.go.tz/uploads/ production, Between 33 and business of selling meat Regulations, 2020. Game_Meat_Selling_ hunting and 50 percent. from authorized hunted Regulation.pdf related service animals (“game meat”). activities 5 Construction I. Foreign equity Greenfield and Foreign (majority-owned) Contractors Registration Act: https://crb.go.tz/ limits acquisitions: construction companies Act of 1997, as amended download/alllegislations/ Between 33 and can only be temporarily The%20Contractors%20 Contractors Registration 50 percent. registered for the purpose Registration%20Act%20 Bylaws, 1999, as amended of carrying out specific of%201997.pdf construction contracts. Regulation: https://crb. go.tz/Legislation 6 Distribution I. Foreign equity Greenfield and Only Tanzanian nationals Pharmacy (Accredited Regulation: https:// – Retail limits acquisitions: No can own pharmacy retail Drugs Dispensing Outlets) media.tanzlii.org/files/ (specialized foreign equity outlets in rural and peri- (Standards and Ethics legislation/tz-act-gn- retail stores) allowed. urban zones. for Dispensation of 2019-185-publication- Medicines) Regulations, document.pdf 2019. SADC | Investment Climate Scorecard 165 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 7 Transport I. Foreign equity Greenfield and Foreign investment in dry The Tanzanian Shipping Regulation: https:// – Surface limits acquisitions: ports is allowed subject to Agencies (Dry Port) www.tasac.go.tz/ (services More than 67 partnership with Tanzanian Regulations, G. N. No 341 uploads/publications/ incidental to percent, but nationals holding at least of 2018. sw1537429064- rail and road less than 100 10 percent interest in the DRY%20PORT%20 transport, percent. business. REGULATIONS-2018_ including GN.NO%20341.pdf Rail and road infrastructure, stations, cargo handling and other support activities) 8 Transport I. Foreign equity Greenfield and Only Tanzanian ships may Merchant Shipping Act, Act: https://www. – Water limits acquisitions: be engaged in local trade 2003 tasac.go.tz/uploads/ (inland water More than 67 (passenger and cargo publications/ Merchant Shipping transport): percent, but cabotage); registration of a sw1542642572- (Registration of Ships passenger less than 100 Tanzanian ship is reserved Merchant_Shipping_ and Licensing of Vessels) transport percent. to Tanzanian nationals, Act_21-2003.pdf Regulations, 2005. [domestic / individuals or corporations Regulation: https:// international] owning ships hired out www.tasac.go.tz/ on bareboat charters to uploads/publications/ nationals of Tanzania, sw1627210182- as well as individuals or Merchant%20 corporations in bona-fide Shipping%20 joint venture shipping (Registration%20 enterprise relationships of%20Ships)%20 with nationals of Tanzania. Regulations,%202005.pdf 9 Transport I. Foreign equity Greenfield and Only Tanzanian ships may Merchant Shipping Act, Act: https://www. – Water limits acquisitions: be engaged in local trade 2003 tasac.go.tz/uploads/ (inland water More than 67 (passenger and cargo publications/ Merchant Shipping transport): percent, but cabotage); registration of a sw1542642572- (Registration of Ships freight less than 100 Tanzanian ship is reserved Merchant_Shipping_ and Licensing of Vessels) transport percent. to Tanzanian nationals, Act_21-2003.pdf Regulations, 2005. [domestic / individuals or corporations Regulation: https:// international] owning ships hired out www.tasac.go.tz/ on bareboat charters to uploads/publications/ nationals of Tanzania, sw1627210182- as well as individuals or Merchant%20 corporations in bona-fide Shipping%20 joint venture shipping (Registration%20 enterprise relationships of%20Ships)%20 with nationals of Tanzania. Regulations,%202005.pdf 10 Transport – I. Foreign equity Greenfield and Foreign shareholding in Tanzania Shipping Act: https://www. Water (services limits acquisitions: private shipping agencies is Agencies Act 2017. tasac.go.tz/uploads/ incidental Between 33 and limited to 40 percent. publications/ to water 50 percent. sw1626341817-THE%20 transport, TANZANIA%20 including Ports SHIPPING%20 and terminal AGENCIES%20ACT,%20 facilities, CAP.%20415.pdf related cargo handling and other support activities) 166 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 11 Transport – I. Foreign equity Greenfield and Foreign investment in port Tanzania Shipping Regulation: https:// Water (services limits acquisitions: terminal operations and Agencies (Port Terminal www.tasac.go.tz/ incidental More than 67 in some miscellaneous Operators) Regulations, uploads/publications/ to water percent, but port services is allowed, 2020 sw1590584749- transport, less than 100 subject to partnership with (PORT%20 Miscellaneous Ports including Ports percent. Tanzanian nationals holding TERMINAL%20 Services Regulations – and terminal at least 10 percent of the OPERATORS)%20 2018 GN No. 343. facilities, share capital in the port REGULATIONS,%20 related cargo operating company or 25 2020%20(1)GN%20 handling and percent in the port services NO%208%2010%20 other support company. JANUARY%202020%20 activities) THE%20TANZANIA%20 SHIPPING%20 AGENCIES.pdf Regulation: https:// www.tasac.go.tz/ uploads/publications/ sw1537429376- MISCELLANEOUS%20 PORT%20SERVICES%20 REGULATIONS-2018_ GN.NO%20343.pdf 12 Transport – I. Foreign equity Acquisition only: Foreign shareholding in a Tanzania Shipping Regulation: https:// Water (services limits Between 33 and shipping agent company is Agencies (Shipping www.tasac.go.tz/ incidental 50 percent. limited to 40 percent. Agents) Regulations, uploads/publications/ to water 2018. sw1538385594- transport, SHIPPING%20 including Ports AGENTS%20 and terminal REGULATIONS-2018_ facilities, GN.NO.339%20(1).pdf related cargo handling and other support activities) 13 Transport – IV. Other FDI-specific Foreign shareholding in a Tanzania Shipping Regulation: https:// Water (services restrictions minimum shipping agent company is Agencies (Shipping www.tasac.go.tz/ incidental capital limited to 40 percent. Agents) Regulations, uploads/publications/ to water requirement. 2018. sw1538385594- transport, SHIPPING%20 including Ports AGENTS%20 and terminal REGULATIONS-2018_ facilities, GN.NO.339%20(1).pdf related cargo handling and other support activities) 14 Hotels and I. Foreign equity Greenfield and Foreign investment in travel The Tourism Act, 2008 Act: http://extwprlegs1. Restaurants limits acquisitions: No agencies, tour operators, fao.org/docs/pdf/ Tourism Agents – Food and foreign equity car rentals and mountain tan85329.pdf (Registration and beverage allowed. climbing and trekking tour Licensing) Regulations, Regulation: https://www. service operators is prohibited. 2015. maliasili.go.tz/uploads/ activities, TOURISM_AGENTS_%28 other touristic Registration_and_ services and Licensing%290001.pdf arts, entertain- ment and recreation activities SADC | Investment Climate Scorecard 167 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 15 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in The Electronic and Regulation: https:// and TV limits acquisitions: companies holding a content Postal Communications tadio.co.tz/wp-content/ Programming Between 33 and services license (that is, (Licensing) Regulations, uploads/2019/08/6._ and 50 percent. radio and TV broadcasting 2018. GN._57__Electronic_and_ Broadcasting license) is limited to 49 Postal_Communications_ (total) percent. Licensing_ Regulations_2018-3.pdf 16 Media – Radio IV. Other FDI-specific Radio and TV broadcasting The Electronic and Regulation: https:// and TV restrictions local content companies face local Postal Communications tadio.co.tz/wp-content/ Programming requirement. content obligations that (Radio and Television uploads/2019/08/SUPP_ and discriminate against locally Broadcasting Content) GN_NO_134_16_03_2018_ Broadcasting established, foreign-owned Regulations, 2018. EPOCA_RADIO_ (total) audiovisual producers. AND_TELEVISION_ BROADCASTING_ CONTENT_ REGULATIONS_2018-1.pdf 17 Media – I. Foreign equity Greenfield and Foreign shareholding in The Media Services Regulation: http://www. Other Media limits acquisitions: printed media companies Regulations, 2017. maelezo.go.tz/storage/ (publishing Between 33 and is limited to 49 percent, app/uploads/public/58 of books, 50 percent. and any change to the d/252/210/58d2522106 periodicals and shareholding structure 7f1018750655.pdf other publishing of a foreign-owned media activities, and company requires the web-based approval of the Director media portals) of Information Services Department. 18 Media – II. Screening Screening Foreign shareholding in The Media Services Regulation: http://www. Other Media and approval¹ policy mandates printed media companies Regulations, 2017. maelezo.go.tz/storage/ (publishing (excludes consideration is limited to 49 percent, app/uploads/public/58 of books, approvals for of economic and any change to the d/252/210/58d2522106 periodicals and the acquisition interests. shareholding structure 7f1018750655.pdf other publishing of land/real of a foreign-owned media activities, and estate for company requires the web-based business approval of the Director media portals) purposes). of Information Services Department. 19 Financial IV. Other Establishment Local incorporation is The Banking and Financial Regulation: https:// Services – restrictions of branches not required for undertaking Institutions (Licensing) www.bot.go.tz/ Banking allowed/local banking activities. Foreign Regulations, 2014. Publications/Acts,%20 incorporation bank branches are not Regulations,%20 required allowed. Circulars,%20 (financial Guidelines/Regulations/ services and en/2020021122491016 real estate 565.pdf investment only). 20 Financial I. Foreign equity Greenfield and Foreign shareholding in The Insurance Act, 2009. Act: https://www.tira. Services – limits acquisitions: insurance companies is go.tz/sites/default/files/ Insurance More than 50 limited to 67 percent. Insurance%20Act%20 percent up to 67 No%2010%20of%20 percent 2009.pdf 21 Financial III. Restrictions Nationality At least one-third of the The Insurance Act, 2009. Act: https://www.tira. Services – on key foreign requirements members of the board of an go.tz/sites/default/files/ Insurance personnel for board of insurance company must be Insurance%20Act%20 (board of directors. citizens of Tanzania. No%2010%20of%20 directors At least one 2009.pdf and top-level member must executives). be a Tanzanian national. 168 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 22 Financial IV. Other Establishment Local incorporation Capital Markets and Act: https://www. Services – restrictions of branches not required for establishing Securities Act, Chapter 79 cmsa.go.tz/uploads/ Other Financial allowed/local and managing collective R.E. 2002, as amended. publications/en- Services (trusts, incorporation investment schemes in 1576056621-THE%20 funds and fund required Tanzania. CAPITAL%20 manage-ment (financial MARKETS%20AND%20 activities) services and SECURITIES%20ACT.pdf real estate investment only). 23 Financial IV. Other Establishment Local incorporation is The Banking and Financial Regulation: https:// Services – restrictions of branches not required for undertaking Institutions (Financial www.bot.go.tz/ Other Financial allowed/local financial leasing, Leasing) Regulations, Publications/Acts,%20 Services incorporation microfinance, and mortgage 2011. Regulations,%20 (other financial required financing activities. Circulars,%20 The Microfinance activities: (financial Guidelines/Regulations/ (Non-Deposit Taking financial services and en/2020031803224012. Microfinance Service leasing, other real estate pdf Providers) Regulations, credit activities, investment 2019. Regulation: https:// factoring, only). www.bot.go.tz/ venture capital) The Banking and Financial Publications/Acts,%20 Institutions (Mortgage Regulations,%20 Finance) Regulations, Circulars,%20 2015. Guidelines/Regulations/ en/202002112249096 7551.pdf Regulation: https:// www.bot.go.tz/ Publications/Acts,%20 Regulations,%20 Circulars,%20 Guidelines/Regulations/ en/202002112249098 0555.pdf 24 Professional I. Foreign equity Greenfield and Foreign shareholding in The Accountants and Regulation: https:// Services – Audit limits acquisitions: accounting and auditing Auditors (Practicing) By- www.nbaa.go.tz/ and Accounting Between 33 and firms is limited to 49 Laws, 2017 uploads/publications/ (total) 50 percent. percent. sw1599740610- The Accountants and PRACTICING%20BY%20 Auditors (Registration) LAWS%202017.pdf By-Laws, 2017. Regulation: https:// www.nbaa.go.tz/ uploads/publications/ sw1533895182- REGISTRATION%20 BYLAW.pdf 25 Professional I. Foreign equity Greenfield and Foreign participation in Engineers Registration Act: https://erb.go.tz/ Services – limits acquisitions: engineering companies ACT, 1997, as amended. index.php/the-act-of- Engineering Between 33 and is limited to minority 1997-and-amendment Services (total) 50 percent. shareholding. 26 Professional I. Foreign equity Greenfield and Foreign participation Architects And Quantity Act: https://www. Services – limits acquisitions: in architectural service Surveyors (Registration) aqrb.go.tz/uploads/ Architectural Between 33 and companies is limited to Act, 2010. publications/en- Services (total) 50 percent. minority shareholding. 1604923201-Act_no_4_ of_2010.pdf SADC | Investment Climate Scorecard 169 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 27 Real Estate I. Foreign equity Greenfield and Foreign majority investment Land Act (Chapter 113), Act: https://tanzlii.org/ Investment limits acquisitions: in land and real estate units 2001. akn/tz/act/1999/4/ Between 33 and is prohibited, unless for the eng@2019-11-30 50 percent. purposes of carrying out commercial activities in Tanzania. 28 Fishing and I. Foreign equity Greenfield and Only Tanzanian vessels Fisheries Act, 2003 Act: http://extwprlegs1. Aquaculture – limits acquisitions: may be engaged in fishing fao.org/docs/pdf/ Deep Sea Fisheries Fishing More than 67 activities in Tanzania's tan53024.pdf Management and percent, but territorial waters and in Development Act, 2020. Act: http://extwprlegs1. less than 100 its Exclusive Economic fao.org/docs/pdf/ percent. Zone, unless exceptionally Merchant Shipping tan199110.pdf authorized by the Minister; (Registration of Ships registration of a Tanzanian and Licensing of Vessels) Regulation: https:// fishing vessel is reserved Regulations, 2005. www.tasac.go.tz/ for Tanzanian nationals, uploads/publications/ individuals or corporations sw1627210182- owning ships hired out Merchant%20 on bareboat charters to Shipping%20 nationals of Tanzania, and (Registration%20 individuals or corporations of%20Ships)%20 in bona-fide joint venture Regulations,%202005.pdf shipping enterprise relationships with nationals of Tanzania. 29 Fishing and IV. Other Access to local Foreign-owned investors Deep Sea Fisheries Act: http://extwprlegs1. Aquaculture – restrictions finance. are not entitled to receive Management and fao.org/docs/pdf/ Fishing investment incentives Development Act, 2020. tan199110.pdf available to citizen-owned companies conducting fishing activities in the Exclusive Economic Zone. 30 Mining and IV. Other FDI-specific Investors in oil and gas The Petroleum Act, 2015. Act: https://www. Quarrying restrictions local content activities are required to tanzania.go.tz/egov_ – Energy requirement. source goods and services uploads/documents/THE_ producing from Tanzanian-owned PETROLEUM_ACT_2015_ materials (that firms. No_sw.pdf is, coal, crude petroleum and natural gas) 31 Mining and I. Foreign equity Greenfield and Foreign investment in Mining Act (Chapter 123), Act: https://tanzlii.org/ Quarrying – limits acquisitions: No companies holding a 2010, as amended. akn/tz/act/2010/14/ Except energy- foreign equity "primary mining license" eng@2019-11-30 producing allowed. (that is, a small-scale materials and mining) is prohibited. support service activities 32 Mining and I. Foreign equity Greenfield and Foreign investment in Mining Act (Chapter 123), Act: https://tanzlii.org/ Quarrying – limits acquisitions: No mining of gemstones is 2010, as amended. akn/tz/act/2010/14/ Except energy- foreign equity prohibited. eng@2019-11-30 producing allowed. materials and support service activities 170 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 33 Mining and I. Foreign equity Greenfield and Foreign investment in The Mining (Local Regulation: https://tanzlii. Quarrying – limits acquisitions: mining activities is subject to Content) Regulations, org/akn/tz/act/gn/2018/3/ Except energy- More than 67 partnership with indigenous 2018. eng@2018-01-10 producing percent, but Tanzanian companies. materials and less than 100 support service percent. activities 34 Mining and IV. Other FDI-specific Mineral rights holders shall Mining Act (Chapter 123), Act: https://tanzlii.org/ Quarrying – restrictions local content give preference to goods 2010, as amended. akn/tz/act/2010/14/ Except energy- requirement. and services produced or eng@2019-11-30 producing rendered by Tanzanian materials and citizens and or local support service companies fully or partly activities owned by Tanzanian citizens. 35 Manufacturing I. Foreign equity Greenfield and Foreign investment in The Petroleum Act, 2015. Act: https://www. – Chemical, limits acquisitions: midstream and downstream tanzania.go.tz/egov_ Rubber, Plastics, More than 67 oil and gas activities is uploads/documents/THE_ Fuel Products percent, but subject to partnership with PETROLEUM_ACT_2015_ and Other Non- less than 100 Tanzanian-owned local No_sw.pdf Metallic Mineral percent. companies holding not Products (coke less than 25 percent of the and refined interests in the business. petroleum products) SADC | Investment Climate Scorecard 171 Zambia Summary Highlights FDI Performance Zambia SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)141 860 -173 -457 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 142 3.7% -1% -2.3% 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 683 881 786 875 882 1,243 6,419 4,384 6,067 Investments143 (in US$ millions) SADC Scorecard Performance, 2021 Zambia SADC Average Global Average144 Score under the SADC Scorecard (0-1, with 0 = 0.19 0.19 0.10 no restrictions, and 1= most restrictive)145 Total number of measures 146 24 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 14 11.9 NA. Screening and approval Nil 2.8 NA. Restrictions on foreign personnel 2 2.6 NA. Other restrictions 8 7.9 NA. Total number of sectors with measures 147 9 11.4 NA. 141. Source: UNCTAD STAT. 142. Id. 143. fDi Markets, from the Financial Times Ltd. (2022). 144. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 145. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 146. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation economy-wide and for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, such as on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Zambia, the list of 24 identified measures is found in 21 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders and official government policy). 147. The following sectors in Zambia have covered measures: Construction – Buildings and Other Specialized Activities; Construction – Civil Engineering; Transport – Surface (interurban railways): freight transport [domestic / international]; Transport – Surface (road transport and urban rail transport); Transport – Air (air transport); Transport – Air (services incidental to air transport, including airports, ground service activities, related cargo handling and other support activities); Media – Radio and TV Programming and Broadcasting; Financial Services – Banking; Financial Services – Insurance; Forestry and Logging; Financial Services – Other Financial Services (auxiliary to financial markets: securities and commodity exchanges, securities and commodity brokerage, investment advisory services and related activities); Real Estate Investment – Land, Mining and Quarrying – Energy-producing materials (that is, coal, crude petroleum and natural gas); Mining and Quarrying – Except energy-producing materials and support service activities. 172 SADC | Investment Climate Scorecard List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal IV. Other Government Foreign-owned companies Citizens Economic Act: https://old.zambialii. restrictions procurement face different rules vis-à-vis Empowerment Act, 2006 org/zm/legislation/ offers citizen-owned companies in (No. 9 of 2006). act/2006/9/cea2006284. preference to public procurement. pdf Citizens Economic locally-owned Empowerment Regulation: https://old. firms. (Preferential zambialii.org/node/12168 Procurement) Act: https://old.zambialii. Regulations, 2011. org/zm/legislation/ The Public Procurement act/2020/no8-2020/ Act, 2020. public-procurement-act- no-8-2020.pdf 2 Horizontal IV. Other FDI-specific Although not a prerequisite Zambia Development Act: https://www.zda. restrictions minimum for investing in Zambia, Agency {ZDA) Act No. 11 org.zm/wp-content/ capital foreign investors are subject of 2006 [repealed by ZDA uploads/2020/12/ZDA- requirement. to higher minimum capital Act No. 17 of 2022]. Act-2006-1.pdf requirements for accessing Amendment: https:// available tax incentives. www.parliament. gov.zm/sites/default/ files/documents/acts/ ACT%20No.%2048%20 OF%202021%2C%20 THE%20ZAMBIA%20 DEVELOPMENT%20 AGENCY%28 AMENDMENT%29%20 BILL.pdf 3 Construction I. Foreign equity Greenfield and Procurement of civil and Citizens Economic Act: https://old.zambialii. – Buildings limits acquisitions: road works not exceeding Empowerment Act, 2006 org/zm/legislation/ and Other Between 33 and 30 billion Kwacha (US$ (No. 9 of 2006). act/2006/9/cea2006284. Specialized 50 percent. 1.4 billion) and public pdf Citizens Economic ctivities building construction Empowerment Regulation: https://old. works not exceeding 20 (Preferential zambialii.org/node/12168 billion Kwacha (over US$ Procurement) 1.1 billion) are reserved for Act: https://old.zambialii. Regulations, 2011. citizen-influenced, citizen- org/zm/legislation/ empowered or citizen- The Public Procurement act/2020/no8-2020/ owned companies. Act, 2020. public-procurement-act- no-8-2020.pdf 4 Construction I. Foreign equity Greenfield and Procurement of civil and Citizens Economic Act: https://old.zambialii. – Civil limits acquisitions: road works not exceeding Empowerment Act, 2006 org/zm/legislation/ Engineering Between 33 and 30 billion Kwacha (around (No. 9 of 2006). act/2006/9/cea2006284. 50 percent. US$ 1.4 billion) and public pdf Citizens Economic building construction Empowerment Regulation: https://old. works not exceeding 20 (Preferential zambialii.org/node/12168 billion Kwacha (over US$ Procurement) 1.1 billion) are reserved for Act: https://old.zambialii. Regulations, 2011. citizen-influenced, citizen- org/zm/legislation/ empowered or citizen- The Public Procurement act/2020/no8-2020/ owned companies. Act, 2020. public-procurement-act- no-8-2020.pdf SADC | Investment Climate Scorecard 173 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 5 Transport I. Foreign equity Greenfield and Investment in certain Citizens Economic Act: https://old.zambialii. – Surface limits acquisitions: sectors/activities (for Empowerment Act, 2006 org/zm/legislation/ (interurban Between 33 and example, poultry and (No. 9 of 2006). act/2006/9/cea2006284. railways): 50 percent. domestic haulage pdf Citizens Economic freight sectors, commercial Empowerment Regulation: http:// transport cleaning services and (Reservation Scheme) extwprlegs1.fao.org/docs/ [domestic / transportation of heavy and Regulations, 2017. pdf/zam172589.pdf international] bulk commodities by road) are reserved for citizens Citizens Economic Regulation: https://old. and citizen-influenced, Empowerment zambialii.org/node/14097 citizen-empowered, or (Reservation Scheme) Regulation: https:// citizen-owned companies Regulations, 2019. old.zambialii.org/zm/ in accordance with Citizens Economic legislation/statutory- the Citizens Economic Empowerment. instrument/2021/no35- Empowerment Act and its (Transportation of Heavy 2021 implementing regulations. and Bulk Commodities by Road) (Reservation) Regulations, 2021. 6 Transport – I. Foreign equity Greenfield and Road service licenses Road Traffic Act, 2002. Act: https://old.zambialii. Surface (road limits acquisitions: (allowing transportation org/zm/legislation/ transport and Between 33 and holders to carry goods and act/2002/11/road-traffic- urban rail 50 percent. passengers) are granted act-no-11-2002.pdf transport) to companies in which not less than 25 percent of membership and all Directors are Zambian citizens, and which are not controlled by persons who are not Zambian citizens. Nonetheless, the relevant authority may [exceptionally] grant a road service license to a person who does not meet such requirements, but who is a holder of an investment license issued in terms of the ZDA Act. 7 Transport – III. Restrictions Nationality Road service licenses Road Traffic Act, 2002. Act: https://old.zambialii. Surface (road on key foreign requirements (allowing transportation org/zm/legislation/ transport and personnel for board of holders to carry goods and act/2002/11/road-traffic- urban rail (board of directors. A passengers) are granted act-no-11-2002.pdf transport) directors majority must to companies in which and top-level be Zambian not less than 25 percent executives). nationals. of membership and all Directors are Zambian citizens, and which are not controlled by persons who are not Zambian citizens. Notwithstanding this, the relevant authority may [exceptionally] grant a road service license to a person who does not meet such requirements, but who is a holder of an investment license issued in terms of the ZDA Act. 174 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 8 Transport – III. Restrictions Key foreign Road service licenses Road Traffic Act, 2002. Act: https://old.zambialii. Surface (road on key foreign personnel ( top- (allowing transportation org/zm/legislation/ transport and personnel level executive holders to carry goods and act/2002/11/road-traffic- urban rail (board of positions) not passengers) are granted act-no-11-2002.pdf transport) directors permitted,¹ to companies in which and top-level not less than 25 percent executives), of membership and all Directors are Zambian citizens, and which are not controlled by persons who are not Zambian citizens. Notwithstanding this, the relevant authority may [exceptionally] grant a road service license to a person who does not meet such requirements, but who is a holder of an investment license issued in terms of the ZDA Act. 9 Transport – I. Foreign equity Greenfield and Investment in certain Citizens Economic Act: https://old.zambialii. Surface (road limits acquisitions: sectors/activities (for Empowerment Act, 2006 org/zm/legislation/ transport and Between 33 and example, poultry and (No. 9 of 2006). act/2006/9/cea2006284. urban rail 50 percent. domestic haulage pdf Citizens Economic transport): sectors, commercial Empowerment Regulation: http:// freight cleaning services and (Reservation Scheme) extwprlegs1.fao.org/docs/ transport transportation of heavy Regulations, 2017. pdf/zam172589.pdf [domestic / and bulk commodities by international] road) are reserved for Citizens Economic Regulation: https://old. and targeted to citizens Empowerment zambialii.org/node/14097 and citizen-influenced, (Reservation Scheme) Regulation: https:// citizen-empowered, or Regulations, 2019. old.zambialii.org/zm/ citizen-owned companies Citizens Economic legislation/statutory- in accordance with Empowerment instrument/2021/no35- the Citizens Economic (Transportation of Heavy 2021 Empowerment Act and its and Bulk Commodities implementing regulations. by Road) (Reservation) Regulations, 2021. 10 Transport – Air I. Foreign equity Greenfield and Domestic air transport Civil Aviation Act, 2016 Act: https://www. (air transport) limits acquisitions: operations are reserved parliament.gov.zm/sites/ Civil Aviation Authority More than 67 to citizen-owned, citizen default/files/documents/ Act, 2012. percent, but -empowered companiesor acts/The%20Civil%20 less than 100 citizen-influenced Aviation%20Act,%20 percent. companies. However, 2016.pdf foreign air operators can be Act: http://www.caa. authorized by the Minister co.zm/ajax/viewfile. to perform international air php?id=121 transport services. SADC | Investment Climate Scorecard 175 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 11 Transport – I. Foreign equity Greenfield and At least 10 percent of the Civil Aviation Act, 2016. Act: https://www. Air (services limits acquisitions: shares of an airport service parliament.gov.zm/sites/ incidental to More than 67 company must be owned by default/files/documents/ air transport, percent, but citizens and citizen-owned acts/The%20Civil%20 including les than 100 companies. Aviation%20Act,%20 airports, percent. 2016.pdf ground service activities, related cargo handling and other support activities) 12 Media – Radio I. Foreign equity Greenfield and Foreign shareholding in The Independent Act: https://www. and TV limits acquisitions: radio and TV broadcasting Broadcasting Authority parliament.gov.zm/sites/ Programming Less than 33 companies is limited to 25 Act, 2002. default/files/documents/ and percent. percent. acts/Independent%20 Broadcasting Broadcasting%20 (total) Authority%2C%202002. pdf 13 Financial IV. Other Establish-ment Branches of foreign banks/ The Banking and Financial Act: https://www. Services – restrictions of branches not financial institutions are not Services Act, 2017. parliament.gov.zm/ Banking allowed/local allowed. Local incorporation sites/default/files/ Companies Act, 2017. incorporation is required for undertaking documents/acts/The%20 required banking activities and Banking%20and%20 (financial various other financial Finance%20Act%20 services and services. No.%207%20of%202017. real estate pdf investment Act: https://www. only). parliament.gov.zm/sites/ default/files/documents/ acts/Companies%20 Act%2C%202017.pdf 14 Financial I. Foreign equity Greenfield and Foreign shareholding in The Insurance Act, 2021. Act: https://www. Services – limits acquisitions: an insurance/reinsurance parliament.gov.zm/ Insurance More than 67 company is limited to 69 sites/default/files/ percent, but percent. . documents/acts/Act%20 less than 100 No.%2038%20OF%20 percent. 2021%2C%20THE%20 INSURANCE%20 ACTpdf_0.pdf 15 Financial I. Foreign equity Acquisition only: Foreign shareholding in an The Insurance Act, 2021. Act: https://www. Services – limits Between 33 and insurance brokerage firm is parliament.gov.zm/ Insurance 50 percent. limited to 49 percent. sites/default/files/ documents/acts/Act%20 No.%2038%20OF%20 2021%2C%20THE%20 INSURANCE%20 ACTpdf_0.pdf 16 Forestry and I. Foreign equity Greenfield and Foreign investment is not The Forests Act, 2015. Act: https://www. Logging limits acquisitions: No allowed in timber production parliament.gov.zm/sites/ foreign equity from a specified forest area. default/files/documents/ allowed. However, timber processing acts/The%20Forest%20 is authorized upon obtaining Act%202015.pdf a sawmill license to process timber using a sawmill or any other wood processing equipment for a period not exceeding five years. 176 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 17 Financial IV. Other Establish-ment Investment advisor and Securities (Collective Rule: http://www. Services – restrictions of branches not securities brokerage firms Investment Schemes) seczambia.org. Other Financial allowed/local are required to be locally Rules, S. I 1631 of 1993. zm/wp-content/ Services incorporation incorporated in Zambia. uploads/2017/06/ (auxiliary required Branches of foreign THE-SECURITIES- to financial (financial companies are not allowed. COLLECTIVE- markets: services and INVESTMENT-SCHEMES- securities and real estate RULES.pdf commodity investment exchanges only). securities and commodity brokerage investment advisory services and related activities) 18 Financial IV. Other Establish-ment Trusts/custodians and fund Securities (Collective Rule: http://www. Services – restrictions of branches not management companies Investment Schemes) seczambia.org. Other Financial allowed/local are required to be locally Rules, S. I 1631 of 1993. zm/wp-content/ Services (trusts, incorporation incorporated in Zambia. uploads/2017/06/ funds and fund required Branches of foreign THE-SECURITIES- management (financial companies are not allowed. COLLECTIVE- activities) services and INVESTMENT-SCHEMES- real estate RULES.pdf investment only). 19 Financial IV. Other Establish-ment Branches of foreign banks/ The Banking and Financial Act: https://www. Services – restrictions of branches financial institutions are not Services Act, 2017. parliament.gov.zm/ Other Financial not allowed/ allowed. Local incorporation sites/default/files/ Companies Act, 2017. Services local incorpora- is required for undertaking documents/acts/The%20 (other financial tion required banking activities and Banking%20and%20 activities: (financial various other financial Finance%20Act%20 financial services and services. No.%207%20of%202017. leasing, other real estate pdf credit activities, investment Act: https://www. factoring, only). parliament.gov.zm/sites/ venture capital) default/files/documents/ acts/Companies%20 Act%2C%202017.pdf 20 Real Estate I. Foreign equity Greenfield and Land that is not for business Lands Act (Chapter 184) Act: https://zambialii. Investment – limits acquisitions: purposes can be alienated of 1995. org/akn/zm/act/1995/29/ Land Less than 33 to foreign nationals having eng@1996-12-31 Zambia Development percent. permanent resident in Agency Act No. 11 of 2006 Act: https://www.zda. the Republic of Zambia, [repealed by ZDA Act No. org.zm/wp-content/ as well as foreign-owned 17 of 2022]. uploads/2020/12/ZDA- companies, in which less Act-2006-1.pdf than 25 percent of the Immigration and issued shares are owned by Deportation Act No. 18 of Act: https://www. non-Zambians, commercial 2010. parliament.gov.zm/ banks and some other non- sites/default/files/ Zambian persons. However, documents/acts/The%20 foreign-owned companies, Immigration%20and%20 in which foreigners hold Deportation%20%20 more than 25 percent of the Act.pdf issue shares, are not entitled to hold alienated land, unless in terms of short-term (not exceeding five years) leases or tenancy agreement. SADC | Investment Climate Scorecard 177 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 21 Mining and I. Foreign equity Greenfield and Small-scale mining and Mines and Minerals Act: http://extwprlegs1. Quarrying limits acquisitions: mineral trading activities Development Act, 2015. fao.org/docs/pdf/ – Energy More than 67 (excluding holders of zam191114.pdf Citizens Economic producing percent, but mining licenses) can only be Empowerment Act, 2006 Act: https://old.zambialii. materials (that less than 100 undertaken by a citizen- (No. 9 Of 2006). org/zm/legislation/ is, coal, crude percent. owned, citizen-influenced act/2006/9/cea2006284. petroleum and or citizen-empowered pdf natural gas) company. 22 Mining and IV. Other FDI-specific Oil companies are required The Petroleum Act: https://old. Quarrying restrictions local content to comply with differential (Exploration and zambialii.org/zm/ – Energy requirement. local content requirements Production) Act, 2008. legislation/act/2008/10/ producing with regard to service peapa2008416.pdf materials (that agencies. Coal mining is, coal, crude companies are equally petroleum and required to meet local natural gas) content requirements [see entry on Mining - except energy-producing materials]. 23 Mining and I. Foreign equity Greenfield and Small-scale mining and Mines and Minerals Act: http://extwprlegs1. Quarrying – limits acquisitions: mineral trading activities Development Act, 2015. fao.org/docs/pdf/ Except energy- More than 67 (excluding holders of zam191114.pdf Citizens Economic producing percent, but mining licenses) can only be Empowerment Act, 2006 Act: https://old.zambialii. materials and less than 100 undertaken by a citizen- (No. 9 Of 2006). org/zm/legislation/ support service percent. owned, citizen-influenced act/2006/9/cea2006284. activities or citizen-empowered pdf company. 24 Mining and IV. Other FDI-specific Mining companies, including The Petroleum Act: https://old. Quarrying – restrictions local content coal mining are required (Exploration and zambialii.org/zm/ Except energy- requirement. to give preference to Production) Act, 2008. legislation/act/2008/10/ producing contractors, suppliers and peapa2008416.pdf materials and service agencies located support service in Zambia and owned by activities citizens or citizen-owned companies. 178 SADC | Investment Climate Scorecard Zimbabwe Summary Highlights FDI Performance Zimbabwe SADC Average Global Average Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 FDI Inflow (in US$ millions)148 280 194 166 518 455 2,858 15,466 8,492 11,027 FDI as a percentage of GDP 149 1.3% 0.9% - 2.6% 2.7% 4.3% 4.0% 4.3% 3.0% Value of Greenfield 1,209 206 1,548 875 882 1,243 6,419 4,384 6,067 Investments150 (in US$ millions) SADC Scorecard Performance, 2021 Zimbabwe SADC Average Global Average151 Score under the SADC Scorecard (0-1, with 0 = 0.10 0.19 0.10 no restrictions, and 1= most restrictive)152 Total number of measures 153 22 25 Not applicable (NA). Total number of measures by policy category Foreign equity limits 2 11.9 NA. Screening and approval 6 2.8 NA. Restrictions on foreign personnel 10 2.6 NA. Other restrictions 4 7.9 NA. Total number of sectors with measures 154 12 11.4 NA. 148. Source: UNCTAD STAT. 149. Id. 150. fDi Markets, from the Financial Times Ltd. (2022). 151. The calculation of global average is based on all countries in the OECD FDI Regulatory Restrictiveness Index for which data were available as of April 14, 2023. This includes 38 OECD countries and 26 non-OECD economies. To avoid double-counting, SADC Member States are excluded from the calculation of the global average. 152. The highest score for any measure in any sector is 1 (the measure fully restricts foreign investment in the sector) and the lowest is 0 (there are no regulatory impediments to FDI in the sector). 153. The Scorecard focuses on identifying measures concerning the entry of foreign direct investment (FDI) in 15 of the Southern African Development Community (SADC) member economies. Specifically, for each country, the Scorecard examined the investment legislation economy-wide and for 22 economic sectors. The following statutory measures on FDI are covered: (1) Limits of foreign equity ownership, (2) FDI screening and approval processes, (3) Employment of foreigners as key personnel and directors, and (4) Operational restrictions (for example, on capital repatriation or land ownership) (cumulatively referred to as ‘covered measures’). In Zimbabwe, the list of 22 identified measures is found in 12 legal instruments (legal instruments include laws, regulations, decrees, presidential orders, ministerial orders, and official government policy). 154. The following sectors in Zimbabwe have covered measures: Agriculture, Distribution – Retail; Distribution – Retail (specialized retail stores); Distribution – Wholesale; Transport – Surface (road transport and urban rail transport): passenger transport [domestic / international]; Transport – Water (inland water transport); Hotels and Restaurants – Accommodations, Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, entertainment and recreation activities; Media – Radio and TV Programming and Broadcasting (total); Telecommunications; Forestry and Logging; Financial Services – Other Financial Services (trusts, funds and fund management activities); Fishing and Aquaculture – Aquaculture; Mining and Quarrying – Except energy-producing materials and support service activities; Manufacturing – Food and other products (food products, beverages and tobacco). SADC | Investment Climate Scorecard 179 List of Measures Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 1 Horizontal II. Screening Screening The establishment of a Companies and Other Act: https://www.dpcorp. and approval¹ policy mandates branch of a foreign company Business Entities Act co.zw/assets/companies- (excludes consideration is subject to approval by the [Chapter 24:31], 2019. and-other-business- approvals for of economic Minister, provided he/she entities-act.pdf Zimbabwe Investment the acquisition interests. does not deem it contrary and Development Agency Act: https://zimlii.org/ of land/real to the public interest. 'Public Act [Chapter 14:37], 2019. akn/zw/act/2019/10/ estate for interest' is not defined in the eng@2020-02-07 business legislation. purposes) 2 Agriculture IV. Other Land/real estate The right to own agricultural Land Commission Act Act: https://zimlii.org/ restrictions ownership land is reserved for [Chapter 20:29], 2008. akn/zw/act/2017/12/ not permitted, Zimbabwean citizens. eng@2018-02-26 Constitution of Zimbabwe but leases are Foreign investors and Amendment (No. 20) Act, Constitution: https:// possible for foreign-owned companies 2013. old.zimlii.org/zw/ the long-term, are entitled to lease legislation/num-act/2013/ that is, over 70 agricultural land for up to Amendment%20 years. 99 years. No.%2020%20of%20 The%20Constitution%20 of%20Zimbabwe/ Constitution%20 of%20Zimbabwe%20 -%2020th%20 Amendment%2022%20 May%202013.pdf 3 Distribution – II. Screening Screening Foreign investment in a Indigenization and Act: https://zimlii.org/ Retail and approval¹ policy mandates “reserved sector of the Economic Empowerment akn/zw/act/2007/14/ (excludes considera-tion economy” (including Act (Chapter 14:33) of eng@2018-03-14 approvals for of economic distribution, artisanal 2008, as amended. Amendment: https:// the acquisition interests. mining, road passenger zimlii.org/akn/zw/ of land/real transportation, among act/2020/10/eng@2020- estate for others) is allowed subject to 12-31 business approval by the Minister. purposes). 4 Distribution III. Restrictions Nationality Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ – Retail on foreign require-ments approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ (specialized key personnel for board of a company in which the eng@2016-12-31#att_1 retail stores) (board of directors. A majority of directors are not directors majority must citizens of Zimbabwe cannot and top-level be nationals. be granted a liquor license. executives). This applies to restaurants, bars, retail and wholesale outlets, hotels, and so on. 5 Distribution III. Restrictions Foreign key Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ – Retail on foreign personnel ( top- approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ (specialized key personnel level executive a foreigner cannot be the eng@2016-12-31#att_1 retail stores) (board of positions) not manager of a company directors permitted.¹ holding a liquor license. This and top-level applies to restaurants, bars, executives) retail and wholesale outlets, hotels, and so on. 6 Distribution – II. Screening Screening Foreign investment in a Indigenization and Act: https://zimlii.org/ Wholesale and approval¹ policy mandates “reserved sector of the Economic Empowerment akn/zw/act/2007/14/ (excludes considera-tion economy” (including Act (Chapter 14:33) of eng@2018-03-14 approvals for of economic distribution, artisanal 2008, as amended. Amendment: https:// the acquisition interests. mining, road passenger zimlii.org/akn/zw/ of land/real transportation, among act/2020/10/eng@2020- estate for others) is allowed, subject to 12-31 business approval by the Minister. purposes) 180 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 7 Distribution – III. Restrictions Nationality Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ Wholesale on key foreign require-ments approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ personnel for board of a company in which the eng@2016-12-31#att_1 (board of directors. A majority of directors are not directors majority must citizens of Zimbabwe cannot and top-level be nationals. be granted a liquor license. executives) This applies to restaurants, bars, retail and wholesale outlets, hotels, and so on. 8 Distribution – III. Restrictions Key foreign Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ Wholesale on key foreign personnel ( top- approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ personnel level executive a foreigner cannot be the eng@2016-12-31#att_1 (board of positions) not manager of a company directors permitted.¹ holding a liquor license. This and top-level applies to restaurants, bars, executives) retail and wholesale outlets, hotels, and so on. 9 Transport – II. Screening Screening Foreign investment in a Indigenization and Act: https://zimlii.org/ Surface (road and approval¹ policy mandates “reserved sector of the Economic Empowerment akn/zw/act/2007/14/ transport and (excludes considera-tion economy” (including Act (Chapter 14:33) of eng@2018-03-14 urban rail approvals for of economic distribution, artisanal 2008, as amended. Amendment: https://zimlii. transport): the acquisition interests. mining, road passenger org/akn/zw/act/2020/10/ passenger of land/real transportation, among eng@2020-12-31 transport estate for others) is allowed subject to [domestic / business approval by the Minister. international] purposes). 10 Transport III. Restrictions Key foreign According to the Ministry Immigration Regulations, Regulation: http://www. – Water on key foreign personnel (top- of Transport and 1998, as amended. zimimmigration.gov.zw/ (inland water personnel level executive Infrastructure Development, index.php/typography/ transport) (board of positions) not captains of vessels must immigration-regulations directors permitted.¹ be Zimbabwean nationals and top-level because there are adequate executives) personnel in the market. This is applied according to the relevant provisions in the Immigration Act and its implementing rules. [The OECD, however, could not identify any specific subsidiary regulation on this specific matter, that is, nationality of masters of vessels]. 11 Hotels and III. Restrictions Nationality Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ Restaurants on key foreign requirements approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ – Accommoda- personnel for board of a company in which the eng@2016-12-31#att_1 tion (board of directors. A majority of directors are not directors majority must citizens of Zimbabwe cannot and top-level be nationals. be granted a liquor license. executives) This applies to restaurants, bars, retail and wholesale outlets, hotels, and so on. 12 Hotels and III. Restrictions Key foreign Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ Restaurants on key foreign personnel ( top- approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ – Accommoda- personnel level executive a foreigner cannot be the eng@2016-12-31#att_1 tion (board of positions) not manager of a company directors permitted.¹ holding a liquor license. This and top-level applies to restaurants, bars, executives) retail and wholesale outlets, hotels, and so on. SADC | Investment Climate Scorecard 181 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 13 Hotels and Res- III. Restrictions Nationality Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ taurants – Food on key foreign require-ments approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ and bever- personnel for board of a company in which the eng@2016-12-31#att_1 age service (board of directors. A majority of directors are not activities, other directors majority must citizens of Zimbabwe cannot touristic ser- and top-level be nationals. be granted a liquor license. vices and arts, executives). This applies to restaurants, entertainment bars, retail and wholesale and recreation outlets, hotels, and so on. activities 14 Hotels and Res- III. Restrictions Key foreign Unless upon (exceptional) Liquor Act (Chapter 14:12) Act: https://zimlii.org/ taurants – Food on key foreign personnel ( top- approval by the Minister, 1965, as amended. akn/zw/act/1984/9/ and bever- personnel level executive a foreigner cannot be the eng@2016-12-31#att_1 age service (board of positions) not manager of a company activities, other directors permitted.¹ holding a liquor license. This touristic ser- and top-level applies to restaurants, bars, vices and arts, executives) retail and wholesale outlets, entertainment hotels, and so on. and recreation activities 15 Media – Radio I. Foreign equity Greenfield and Foreign shareholding Broadcasting Services Act: http://www.jsc.org. and TV Pro- limits acquisitions: No in radio and television Act (Chapter 12:06) of zw/jscbackend/upload/ gramming and foreign equity broadcasting companies 2001, as amended Acts/2014/1206updated. Broadcasting allowed. is typically prohibited. pdf Postal and (total) Notwithstanding, the Telecommunications Act Act: http://www.jsc.org. Minister may, at his or (Chapter 12:05) of 2001, zw/jscbackend/upload/ her absolute discretion, as amended. Acts/2014/1205updated. grant exemptions from pdf those provisions and permit the Authority to issue any broadcasting license to an individual or body corporate approved by the Minister in which the controlling interest or any portion thereof is held by persons who are not citizens of Zimbabwe. According to the OECD FDI RRI methodology, such a measure is recorded as a ‘foreign equity restriction’ instead of ‘foreign investment screening’ due to its exceptional character, that is, only under exceptional circumstances may the Minister approve foreign shareholding in broadcasting companies. 16 Media – Radio III. Restrictions Key foreign Directors of a radio and TV Broadcasting Services Act: http://www.jsc.org. and TV Pro- on key foreign personnel (top- broadcasting company must Act (Chapter 12:06), 2001. zw/jscbackend/upload/ gramming and personnel level executive be Zimbabwean citizens. Acts/2014/1206updated. Broadcasting (board of positions) not pdf (total) directors permitted.¹ and top-level executives). 182 SADC | Investment Climate Scorecard Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 17 Telecommuni- I. Foreign equity Greenfield and Foreign shareholding in Postal and Act: http://www.jsc.org. cations limits acquisitions: a telecommunications Telecommunications Act, zw/jscbackend/upload/ Between 33 and company is limited to 49 [Chapter 12:05] of 2001, Acts/2014/1205updated. 50 percent. percent. as amended. pdf 18 Forestry and IV. Other Land/real estate The right to own agricultural Land Commission Act Act: https://zimlii.org/ Logging restrictions ownership land is reserved to [Chapter 20:29], 2008. akn/zw/act/2017/12/ not permitted. Zimbabwean citizens. eng@2018-02-26 Constitution of Zimbabwe but leases are Foreign investors and Amendment (No. 20) Act, Constitution: https://old. possible for foreign-owned companies 2013. zimlii.org/zw/legislation/ the long-term, are entitled to lease num-act/2013/Amend- that is, over 70 agricultural land for up to ment%20No.%2020%20 years. 99 years. of%20The%20Constitu- tion%20of%20Zimba- bwe/Constitution%20 of%20Zimbabwe%20 -%2020th%20Amend- ment%2022%20May%20 2013.pdf 19 Financial IV. Other Restrictions Foreign investment in Asset Management Act Act: https://zimlii.org/ Services – restrictions on (post- tax) asset management is (Chapter 24:26) of 2004, akn/zw/act/2004/15/ Other Financial profit/capital allowed, subject to local as amended. eng@2016-12-31 Services (trusts, repatriation incorporation. Managers Collective Investment Act: https://zimlii.org/ funds and fund (for example, and trustees of 'internal' Schemes Act (Chapter akn/zw/act/1997/25/ management prior approval, (domestic) collective 24:19) of 1998, as eng@2016-12-31 activities) quantitative or investment must be locally amended. time limits). incorporated. 20 Fishing and IV. Other Land/real estate The right to own agricultural Land Commission Act Act: https://zimlii.org/ Aquaculture – restrictions ownership land is reserved to [Chapter 20:29], 2008. akn/zw/act/2017/12/ Aquaculture not permitted, Zimbabwean citizens. eng@2018-02-26 Constitution of Zimbabwe but leases are Foreign investors and Amendment (No. 20) Act, Constitution: https://old. possible for foreign-owned companies 2013. zimlii.org/zw/legislation/ the long-term, are entitled to lease num-act/2013/Amend- that is, over 70 agricultural land for up to ment%20No.%2020%20 years. 99 years. of%20The%20Constitu- tion%20of%20Zimba- bwe/Constitution%20 of%20Zimbabwe%20 -%2020th%20Amend- ment%2022%20May%20 2013.pdf SADC | Investment Climate Scorecard 183 Legal Authority / N° Sub-sector Policy Measure Details Links to Sources Links to Sources Official Source 21 Mining and II. Screening Screening Foreign investment in a Indigenization and Act: https://zimlii.org/ Quarrying and approval¹ policy mandates “reserved sector of the Economic Empowerment akn/zw/act/2007/14/ – Except en- (excludes consideration economy” (including Act. (Chapter 14:33) of eng@2018-03-14 ergy- producing approvals for of economic distribution, artisanal 2008, as amended Act: https://zimlii.org/ materials and the acquisition interests. mining, road passenger Finance (No. 2) Act, 2020 akn/zw/act/2020/10/ support service of land/real transportation, among (Act 10 of 2020). eng@2020-12-31 activities estate for others) is allowed, subject business to approval by the Minister. purposes). In addition, the State shall also secure that at least 51 percent of the share capital of every designated extractive business, that is, a company, entity or business involved in the extraction of such minerals as may be prescribed by the Minister (in consultation with the Minister responsible for Mines and the Minister responsible for Finance) shall be owned through an appropriate designated entity (that is, the Zimbabwe Mining Development Corporation, the Zimbabwe Consolidated Diamond Company or the National Indigenization and Economic Empowerment Fund) with or without the participation of a community share ownership scheme or employee share ownership scheme or trust, or both. The latter restriction is not specific for foreign-owned investors and, thus, not considered a restriction under the OECD FDI RRI. 22 Manufactur- II. Screening Screening Foreign investment in a Indigenization and Act: https://zimlii.org/ ing – Food and and approval¹ policy mandates “reserved sector of the Economic Empowerment akn/zw/act/2007/14/ Others (food (excludes consideration economy” (including Act (Chapter 14:33) of eng@2018-03-14 products, approvals for of economic distribution, artisanal 2008, as amended. Amendment: https:// beverages and the acquisition interests. mining, road passenger zimlii.org/akn/zw/ tobacco) of land/real transportation, among act/2020/10/eng@2020- estate for others) is allowed subject to 12-31 business approval by the Minister. purposes). 184 SADC | Investment Climate Scorecard Annexes Annexes SADC | Investment Climate Scorecard 185 Annex 1: Questionnaire, Data Collection Process and Project Timelines The questionnaire for the SADC Investment Climate Scorecard is based on the following OECD FDI Regulatory Restrictiveness Index questionnaire. Questionnaire A. Introduction The OECD FDI Regulatory Restrictiveness Index is a de jure policy indicator reflective of market access barriers to FDI and exceptions to national treatment. Non-discrimination is a central tenet of an attractive investment climate. The non-discrimination principle provides that all investors in like circumstances are treated equally, irrespective of their ownership. One of the concepts derived from the principle of non-discrimination in the context of foreign investment is that of national treatment, which requires that a government treat foreign-owned or -controlled enterprises no less favourably than domestic enterprises in like situations. No government applies national treatment across the board, even in OECD Member countries where restrictions on foreign investment tend, on average, to be lower than in other parts of the world. If other attributes of the investment climate are favourable, investors may still come even if they face some operational restrictions once established, but restrictions specific to foreign direct investment (FDI) have been found to result in less FDI overall. Beyond the impact on FDI, any policy that favours some firms over others involves a cost, notably less competition and hence lower firm-level efficiency. For this reason, exceptions to non-discrimination need to be regularly evaluated with a view to determining whether the original motivation behind an exception (for example, safeguarding essential security- interests, protection based on the infant industry argument) remains valid, supported by an evaluation of the costs and benefits, including an assessment of the proportionality of the measure. Broad consideration of the costs and benefits is especially important in the service sectors that support a wide range of economic activities across the economy. 186 SADC | Investment Climate Scorecard B. Assessment framework The OECD FDI Regulatory Restrictiveness Index assessment is based on a review of the relevant sector-specific and horizontal legislation for the purposes of identifying all market access barriers to FDI and exceptions to national treatment. The collection of such information is supported by the questions below, which provide guidance on the key relevant issues to look for when reviewing the legislation. For the completeness of the assessment, please answer the horizontal and sector-specific-related questions for each of the sectors: Part A: Horizontal measures (that is, measures that apply to all sectors of the economy) [In addition to your explanatory comments, please provide the actual legal text and/or make explicit reference to the relevant provision in the legislation, as well as indicate the link for accessing the legislation online if available]. Law / Question Response Regulation Please provide the definition of foreign investor applied in your jurisdiction and its legal authority. Does your country adopt a negative list approach, whereby foreign investments are allowed in all sectors without discrimination unless otherwise specified in the laws and regulations of the country and in international treaties to which the country is a party? If so, have these discriminatory measures been compiled into a negative list of sectors fully or partially restricted to foreign investors? Please provide a copy of the list. If not, has the government undertaken a stocktaking exercise of existing restrictions to foreign investment? Please share the document. SADC | Investment Climate Scorecard 187 Law / Question Response Regulation Please provide information on any measure applying horizontally across economic sectors on the following issues: 1) Foreign shareholding limitations or joint-venture requirements (either on greenfield investments or acquisitions of domestic companies by foreign-owned investors, including listed companies). 2) Screening or prior approval mechanisms applying exclusively, or in a different manner, to investments by foreign-owned enterprises (either greenfield investments or acquisitions of domestic companies). If the case, please explain its scope and rationale: • Is it a screening and approval requirement for the entry of the investment or only for obtaining any incentive provided in the law? • What are the criteria for approval (for example, national security; economic needs test, and so on)? • Are the criteria for approval transparently and clearly established in the law and regulations? • Do decisions have to be rendered within a specified time? Are the reasons for rejecting a project published? • Can the investor appeal the decision? • Is there a system for monitoring commitments by the investor once established? • Are screening policies subject to a periodic review of their effectiveness and necessity? 3) Restrictions on key foreign personnel (for example, nationality requirements for companies’ board of directors members; government approval, nationality requirement, quotas and labour markets tests applicable to top-level management positions, such as chairman, CEO/president and directors). 4) Restrictions on land acquisition applying exclusively, or in a different manner, to foreign- owned investors (both acquisition of land and other real estate assets needed for business operations). If land acquisition is not allowed, please describe the applicable leasing terms and possible extension periods. 5) Other operational restrictions affecting investments by foreign-owned enterprises (for example, local incorporation requirement, reciprocity requirement, preference for domestically-owned companies in government procurement, different minimum capital requirements than required for domestically-owned investments, local content requirements, restrictions on profit/capital repatriation, and so on). 188 SADC | Investment Climate Scorecard Part B: Sector-specific measures for 22 sectors For each of the 22 specific sectors, information was collected based on the following questions: Sector and definition [In responding to the questions, in addition to any explanatory comments, please provide the actual legal text and/or make explicit reference to the relevant provision in the legislation, as well as indicate the link for accessing the legislation online if available]. Law / Question Response Regulation Any activity or sub(activity) in the sector which is closed to private investment (domestic or foreign), that is, where a state-owned enterprise holds a de jure monopoly over the activity. Please describe if foreign equity in the referred company is allowed. Any foreign equity limitation or joint-venture requirement applying to real estate investments by foreign investors, including if any limit applies to the aggregate foreign participation (for example, limitations on the share of condominium units in a building that may be owned by foreign investors).Please indicate any limit to foreign ownership of land and real estate assets (commercial and residential units) not used for business purposes, that is, not directly associated with a company’s business activity. Any screening or prior approval mechanism applying only, or in a different manner, to foreign investments/acquisition of real estate not used for business purposes, that is, not directly associated with a company’s business activity. Please indicate if any threshold conditions apply ( for example, applies only to investment above a certain amount or only to investments where the share of foreign participation is greater than a certain percentage). Please explain the criteria and procedures for approval. Any restrictions on the employment of key foreign personnel (board of directors, chairman, CEO/president and directors), such as nationality requirements for members of companies’ board of directors, nationality requirement, quotas and labour markets tests applicable to top-level management positions). Any other operational restriction affecting investments by foreign-owned enterprises (e.g., local incorporation requirement, reciprocity requirement, preference for domestically- owned companies in government procurement, different minimum capital requirements than required for domestically-owned investments, local content requirements, restrictions on profit/capital repatriation, and so on). Sector list and definitions: 1. Agriculture (includes crops, animal production, hunting and related service activities). 2. Forestry. 3. Fishery (includes fishing, aquaculture, FDI limits applied to the ownership or registration of vessels). 4. Mining and quarrying (includes oil extraction, coal, crude petroleum and natural gas, and related support service activities). 5. Manufacturing – Food and others (includes food products, beverages, textiles, apparel, leather products, paper, wood and furniture, printing, and other related products). SADC | Investment Climate Scorecard 189 6. Manufacturing – Oil refining and chemicals (includes manufacturing of refined petroleum, chemicals, rubber, plastics and pharmaceuticals, and other related products). 7. Manufacturing – Metals, machinery and other minerals; (includes manufacturing of basic metals and fabricated metal products, except machinery and equipment (see next section). 8. Manufacturing – Electrical, electronics and other instruments; (includes manufacturing of computer, electronic and optical products, electrical equipment, and machinery and equipment). 9. Manufacturing – Transport equipment (includes manufacturing of motor vehicles / cars, trailers, semi-trailers, and other transport equipment). 10. Electricity - Generation and distribution (includes energy generation (and distribution) from renewable and non- renewable sources, including hydroelectric, biomass, solar, other renewable-energy technologies power plants, coal, gas, oil, and nuclear power plants). 11. Construction (includes construction of buildings and other specialized activities, as well as civil engineering). 12. Distribution – Retail (includes specialized and non-specialized retail stores, including supermarket and department store). 13. Distribution – Wholesale. 14. Transport – Surface (includes road and railway transport (domestic and international passenger and freight transport), and services incidental to rail and road transport, including rail and road infrastructure, stations, cargo handling and other support activities). 14b. Transport – Water transport (includes inland, sea/maritime and coastal transport, including domestic and international, passenger and freight. It also includes ownership or registration of vessels, and services incidental to water transport, including ports and terminal facilities, related cargo handling and other support activities). 14c. Transport – Air transport (includes passenger and freight, domestic and international air transport, including services incidental to air transport, including airports, ground service activities, related cargo handling and other support activities). 15. Hotels and Restaurants (includes accommodation, travel agencies and tour operators, restaurants/bars, arts, entertainment and recreation activities). 16. Media - Radio and TV broadcasting, and other media, including radio and TV broadcasting, printed media (publishing of books, periodicals), and web-based media portals. It also includes music, motion picture, video and TV production and related activities, including recording, post-production, distribution and projection). 17. Communications - Fixed and mobile telecommunications, includes fixed telecommunications (facilities and services- based wired telecommunication service services, including internet service providers) and mobile telecommunications facilities and services-based mobile telecommunication services, including satellite telecommunications services and value-added services). 18. Financial Services – Banking 19. Financial Services – Insurance (includes life and non-life insurance/reinsurance, pension and related auxiliary services). 20. Financial Services – Other finance (includes securities and commodity exchanges and brokerage services, investment advisory services and related activities; trusts, funds and fund management activities, venture capital; and other financial services: financial leasing, factoring, and so on). 21. Business services (legal, accounting and audit, architectural and engineering services). This includes legal services (domestic law counselling and court representation, foreign and international law counselling); audit, accounting and tax consultancy services; engineering services; and architectural services. Please include any limits to foreigners holding some sort of ownership or becoming partners of companies in business services sectors. This applies to the ownership and not to the ability to practice the profession (that is, foreigners could potentially be allowed to invest in such business even if foreign natural persons may not be allowed to practice the activity or join the local professional association, for example, foreign lawyers may not be allowed to represent clients in the courts.) 22. Real estate investment (includes real estate investment in commercial and residential buildings and units, and in land). Please include any limit to foreign ownership of real estate investment (both land and property) not for business purposes, that is, not directly associated with a company’s business activity.) 190 SADC | Investment Climate Scorecard Sector structure and correspondence to International Standard Industrial Classification (ISIC), 4th revision (ISIC rev. 4) Sector and subsectors Further Activity ISIC Rev. 4 Breakdowns 1. Agriculture (Total) A01 Agriculture – Crops A011-3; 0161, 0163-4 Agriculture – Animal production, hunting and related service activities A014-5; 0162, 017 2. Forestry and Logging (Total) A02 3. Fishing and aquaculture (Total) A03 Fishing and aquaculture – Fishing A031 Fishing and aquaculture – Aquaculture A032 4. Mining and Quarrying (Total) B05-09 Mining and Quarrying – energy-producing materials (that is, coal, crude petroleum and natural B05-06 gas) Mining and Quarrying – except energy-producing materials and support service activities B07-08 Mining and Quarrying – support service activities B09 5. Manufacturing – Food and others (Total) C10 Manufacturing – Food and others (food products, beverages and tobacco) C10-12 Manufacturing – Food and others (textiles, wearing apparel, leather and related products) C13-15 Manufacturing – Food and others (paper, wood, printing, furniture and other manufacturing) C16-18, 31-32 6. Manufacturing – Chemical, rubber, plastics, fuel products and other non-metallic mineral C19-23 products (Total) Manufacturing – Oil refining and Chemicals (Coke and refined petroleum products) C19 Manufacturing – Oil refining and Chemicals (Chemical and pharmaceutical products) C20-21 Manufacturing – Oil refining and Chemicals (rubber and plastics products, and other non- C22-23 metallic mineral products) 7. Manufacturing – Basic metals and fabricated metal products, except machinery and C24-25 equipment (Total) Manufacturing – Metals, Machinery and other Minerals (basic metals) C24 Manufacturing – Metals, Machinery and other Minerals (fabricated metal products, except C25, 28, 33 machinery and equipment) SADC | Investment Climate Scorecard 191 8. Manufacturing – Machinery and equipment (Total) C26-27 Manufacturing – Machinery and equipment (computer, electronic and optical products) C26 Manufacturing – Machinery and equipment (electrical equipment) C27 Manufacturing – Machinery and equipment (machinery and equipment n.e.c.) C28 9. Manufacturing – Transport Equipment (Total) C29-30 Manufacturing – Transport Equipment (motor vehicles, trailers and semi-trailers) C29 Manufacturing – Transport Equipment (other transport equipment) C30 10. Electricity (Total) D3510 Electricity – Generation (Total) D3510 Electricity – Generation (renewable energy, for example, hydroelectric, biomass, solar and D3510 other renewable-energy technologies power plants) Electricity – Generation (non-renewable energy, for example, coal, gas, oil and nuclear power D3510 plants) Electricity – Distribution (Total) D3510 11. Construction (Total) F41-43 Construction – buildings and other specialized activities F41, 43 Construction – civil engineering F42 12. Distribution – Retail (Total) G45, 47 Distribution – Retail (non-specialized retail stores, including supermarket and department stores) G471, 478-9 Distribution – Retail (specialized retail stores) G45, 472-77 13. Distribution – Wholesale (Total) G45-46 14. Transport (Total) H49-52 Transport – Surface, excluding pipelines (Total) H491-2, 5210, 5221, 5224 Transport – Surface (interurban railways) H491 Passenger H4911 transport [domestic / international] Freight H4912 transport [domestic / international] Transport – Surface (road transport and urban rail transport) H492 Passenger H4921-2 transport [domestic / international] 192 SADC | Investment Climate Scorecard Freight H4923 transport [domestic / international] Transport – Surface (services incidental to rail and road transport, Rail/road- including rail and road infrastructure, stations, cargo handling and other related: 5210, support activities) 5222, 5224-9 Transport – Water (Total) H50, 5210, 5222, 5224-9 Transport – Water (sea and coastal transport) H501 Passenger H5011 transport [domestic / international] Freight H5012 transport [domestic / international] Transport – Water (inland water transport) H502 Passenger H5021 transport [domestic / international] Freight H5022 transport [domestic / international] Transport – Water (services incidental to water transport, including ports and terminal Maritime/ IWT- facilities, related cargo handling and other support activities) related: 5210, 5222, 5224-9 Transport – Air (Total) H51, 5210, 5223- 9 Passenger H511 air transport [domestic / international] Freight air H512 transport [domestic / international] Transport – Air (services incidental to air transport, including airports, ground service activities, H5210, 5223-9 related cargo handling and other support activities) SADC | Investment Climate Scorecard 193 15. Accommodation, Food Services, Arts, Entertainment and Recreation – I55-6, N79, Total R90-93 Hotels and Restaurants – Accommodation I55 Hotels and Restaurants – Food and beverage service activities, other touristic services and arts, I56, N79, R90-93 and entertainment and recreation activities 16. Media (Total) J58-9, 60, 63 Media – Radio and TV Programming and broadcasting activities (Total) J60 Media – Radio and TV broadcasting (radio broadcasting) J601 Media – Radio and TV broadcasting (TV programming and broadcasting activities) J602 Media – Other media (Total) J58-9, 63 Media – Other media (publishing of books, periodicals and other publishing activities, and J58, 63 web-based media portals) Media – Other media (Motion picture, video and television programme production, sound J59 recording and music publishing activities) 17. Telecommunications (Total) Telecommunications – Fixed (facilities and services-based wired telecommunication service J611 services, including internet services providers) Telecommunications – Mobile (facilities and services-based mobile telecommunication services, J612-9 including satellite telecommunications services and value-added services) 18. Financial Services – Banking (Total) K6419 19. Financial Services – Insurance (Total) K65, 662 Financial Services – Insurance (life insurance/reinsurance, pension and related auxiliary K6511, 652-53, services) 662 Financial Services – Insurance (non-life insurance/reinsurance and related auxiliary services) K6512, 652, 662 20. Financial Services – Other Financial Services (Total) K643-9, 661, 663 Financial Services – Other Financial Services (auxiliary to financial markets: securities and K661 commodity exchanges, securities and commodity brokerage, investment advisory services and related activities) Financial Services – Other Financial Services (trusts, funds and fund management activities) K643, 663 Financial Services – Other Financial Services (other financial activities: financial leasing, other K649 credit activities, factoring, venture capital) 194 SADC | Investment Climate Scorecard 21. Professional Services (Total) M691-2, 702, 71, 721, 74 Professional Services – Legal Services (Total) M691 Professional Services – Legal Services (domestic law counselling and court representation) M691 Professional Services – Legal Services (foreign and international law counselling) M691 Professional Services – Audit and Accounting (Total) M692 Professional Services – Audit and Accounting (audit) M692 Professional Services – Audit and Accounting (accounting and tax consultancy) M692 Professional Services – Engineering Services (Total) M711, 721 Professional Services – Architectural Services (Total) M711, 741 22. Real Estate Investment – Total L68 Real Estate Investment – commercial buildings and units L68 Real Estate Investment – residential buildings and units L68 Real Estate Investment – land L68 Data Collection Process The questionnaires were completed in late 2021 and in completing the questionnaires, provide guidance in throughout 2022 by independent legal experts for each compiling relevant laws and regulations, and respond country. Designated government focal points oversaw to any technical questions and queries of the meeting the project in each of the SADC member states. Their key participants. The workshops also allowed for information tasks were: sharing and exchanging lessons from experience of • Completing questionnaires for each of the SADC individual member states. Regularly (biweekly) updated member states. progress sheets tracked individual countries’ progress • Providing ongoing support to SADC Secretariat and on key performance indicators, including the number of member States toward the governments’ own efforts completed questionnaire sections, the number of identified in contributing to the project objectives. laws and regulations, and the number of consulted and • Reviewing the completed questionnaires to ensure contributing government entities. All collected information quality and to fill any gaps. was stored on a shared drive to allow for easy access by all project participants, as well as to enable informal peer The legal experts and government focal points met every reviews. This created a fully transparent, yet competitive two weeks for virtual implementation and capacity- environment, thus allowing the country teams to work building workshops with the World Bank and the OECD. The faster and to learn from each other. objectives of these workshops were to review progress SADC | Investment Climate Scorecard 195 Project Timelines The project followed the following timeline: • Submission of the completed questionnaires. • Project preparation (March-September 2021) » Phase 2: Analysis (May 2022 – November 2022) » Initial project coordination by World Bank, the • Iterations with the World Bank / OECD to ensure OECD and SADC Secretariat. completeness and accuracy of the questionnaire » Project launch webinar in September 2021. information. • Implementation (October 2021-November 2022) • Construction of the SADC Investment Climate » Phase 1: Questionnaire distribution, completion, Scorecard data for all countries. and submission (October 2021 – April 2022) • Validation (December 2022 – February 2023) • Distribution of project questionnaires to the SADC » Workshop to present draft scorecard data. member states . » Validation by member states . • Governments complete the questionnaires, aided by • Launch and delivery (March-October (planned date) the complementary legal research by the contracted 2023) law firm as needed. » Launch workshop and dissemination. » Discussion of reform options, priorities, and next steps. 196 SADC | Investment Climate Scorecard Annex 2: General List of Government Bodies and Public Agencies Contributing to the Project Governments and public agencies are the respondents to the project questionnaire. However, because the questionnaire covers 22 sectors of the economy, experience from other countries has shown that inter-ministerial and inter-agency coordination and collaboration are needed to successfully complete the questionnaire in most economies. The following is a general list of government bodies and public agencies that are usually best placed to provide accurate questionnaire responses based on the laws and regulations affecting FDI in the economy overall and in each of the sectors. Questionnaire Section Suggested Government Respondent Overall and Economy-Wide Section • Investment policy body in the government (for example, a department in the Ministry of Economy, Ministry of Trade, and so on) • Trade negotiators • Investment promotion agency / Economic development board • Ministry of Justice (legal department) • Ministry of Foreign Affairs (international economic diplomacy department, legal department) • Other 1. Agriculture • Ministry of Agriculture or equivalent 2. Forestry • Ministry of Natural Resources or equivalent 3. Fishery • Ministry of Natural Resources or equivalent 4. Mining and quarrying (including oil extraction) • Ministry of Natural Resources or equivalent 5. Manufacturing – Food and others • Ministry of Economy, Ministry of Industry, or equivalent 6. Manufacturing – Oil refining and Chemicals • Ministry of Economy, Ministry of Industry, or equivalent 7. Manufacturing – Metals, Machinery and Other Minerals • Ministry of Economy, Ministry of Industry, or equivalent • Ministry of Natural Resources or equivalent SADC | Investment Climate Scorecard 197 Questionnaire Section Suggested Government Respondent 8. Manufacturing – Electrical, Electronics and Other • Ministry of Economy, Ministry of Industry, or equivalent Instruments 9. Manufacturing – Transport Equipment • Ministry of Economy, Ministry of Industry, or equivalent Ministry of Transportation 10. Electricity (generation and distribution) • Ministry of Natural Resources • Ministry of Economy, Ministry of Industry, or equivalent • Electricity regulatory agency 11. Construction • Ministry of Development 12. Distribution – Retail • Ministry of Economy 13. Distribution – Wholesale • Ministry of Economy 14. Transport (surface, air and water/maritime) • Ministry of Transportation 15. Hotels and Restaurants • Ministry of Tourism 16. Media (Radio and TV broadcasting, and other media) • Ministry of Culture 17. Communications (fixed and mobile telecommunications) • Ministry of Telecommunications 18. Financial Services – Banking • Ministry of Finance • Central Bank • Regulatory agency for banking 19. Financial Services – Insurance • Ministry of Finance • Central Bank • Regulatory agency for insurance 20. Financial Services – Other Finance • Ministry of Finance • Central Bank • Regulatory agency for finance 21. Business Services (Legal, Accounting and Audit, • Ministry of Economy or equivalent Architectural and Engineering Services) • Licensing body for business services 22. Real Estate Investment • Ministry of Development or equivalent Source: World Bank, OECD, SADC Secretariat 198 SADC | Investment Climate Scorecard Annex 3: Indicative List of Laws and Regulations used for Completing the Questionnaire Part 1: Horizontal / Economy-wide laws and regulations • National FDI Policy • Investment Law and related regulations (or similar instruments) • Companies Act and related regulations (or similar instruments) • Constitution • Foreign exchange-related laws and regulations • Land Act and related regulations (or similar instruments) • Law on Public Procurement • Employment/Manpower Act and related regulations (or similar instruments) • Immigration Law Part 2: Sectoral laws and regulations – 22 sectors • Examples: • Agriculture: Law on Agriculture / Agricultural land Law / Natural Resources Law • Forestry: Forestry Act / Natural Resources Law • Fisheries: Law on Fisheries / Law on Aquaculture / Merchant Shipping Law / Natural Resources Law • Mining and quarrying (including Oil and Gas): Mining Law / Petroleum Law / Natural Resources Law • Electricity: Law on Electricity / Renewable Energy • Construction: Construction Services Law / Concessions Law / Public Procurement Law • Manufacturing: Sector-specific regulations • Distribution: Trade law / Shopping centers / department stores regulations • Hotels and restaurants: Law on Tourism / Law on Travel and Tour Services / Food Establishment Licensing Regulations • Transport: Road transportation law / Law on Railway Transportation / Law on Maritime Transport / Merchant Shipping Legislation / Air Transportation Law / Concessions Law / PPP Law • Media: Broadcasting Laws / Printed Media Laws / Law on Audio-visual Production • Telecommunications: Law on Telecommunications / Telecommunication Licensing Regulations • Financial services: Banking Law / Law on Insurance, Pension / Law on Securities / Law on Financial Markets, and so on. • Professional services: Law on Accounting and Auditing / Law on Lawyers/Legal Services / Law on Bar Association / Law on Architects/Engineers • Real Estate investment: Condominium Law / Law on Real Estate / Land Law Source: World Bank Group, OECD SADC | Investment Climate Scorecard 199 Annex 4: Revised Scoring Framework: All Measures I. Foreign equity limits Scores Greenfield and acquisitions No foreign equity allowed 1.00 Foreign equity < 33% of total equity 0.80 Foreign equity <= 50% of total equity 0.60 Foreign equity > 50% but <= 67% of total equity 0.40 Foreign equity > 67% but <100% of total equity 0.20 Acquisitions only / divestment obligations / equity limits apply, but branches allowed (financial services only) No foreign equity allowed 0.50 Foreign equity < 33% of total equity 0.40 Foreign equity <= 50% of total equity 0.30 Foreign equity > 50% but <= 67% of total equity 0.20 Foreign equity > 67% but <100% of total equity 0.10 Greenfield only / listed companies only / privatized companies No foreign equity allowed 0.25 Foreign equity < 33% of total equity 0.20 Foreign equity <= 50% of total equity 0.15 Foreign equity > 50% but <= 67% of total equity 0.10 Foreign equity > 67% but <100% of total equity 0.05 200 SADC | Investment Climate Scorecard II. Screening and Approval Scores Screening policy mandates consideration of economic interests¹ 0.1 [Memo item] Other discriminatory screening mechanism (for example, for essential security interests Not scored and public order) III. Restrictions on key foreign personnel/directors Scores Foreign key personnel (that is, top-level executive positions) not permitted² 0.0500 Nationality requirements for board of directors Majority must be nationals 0.0500 At least one must be national 0.0250 IV. Other restrictions Scores Reciprocity requirement 0.1000 Restrictions on (post tax) profit/capital repatriation (for example, prior approval, quantitative or time 0.0500 limits) Establishment of branches not allowed/local incorporation required (financial services and real 0.0500 estate investments only) Access to local finance 0.0500 Discriminatory minimum capital requirement 0.0500 Discriminatory local content requirement 0.0500 Government procurement offers preference to locally-owned firms 0.0500 Access to land/real estate is subject to discriminatory restriction (for example, prior approval, 0.0500 quantitative/size limits, tax etc.) Land/real estate ownership not permitted but leases possible – short-term: less than 30 years³ 0.0500 Land/real estate ownership not permitted but leases possible – medium-term: up to 70 years³ 0.0250 Land/real estate ownership not permitted but leases possible – long-term: over 70 years³ 0.0125 Note: (¹) Excludes investments by foreign state-owned enterprises (SOEs) and land/real estate for business purposes [the latter is recorded under “IV. Other restrictions”]; (²) This also includes high-ranking seafarer’s professions in the case of fisheries and water transport, such as captain/master of a merchant vessel; (³) Score scaled by a factor of 5 for agriculture and forestry and not scored in relation to land in border and coastal areas. SADC | Investment Climate Scorecard 201 Data Collection Process Answers Answer code Scores Fully applied Fully applied: The measure is assumed to apply to almost the entire STF1 1 universe of activities within the respective sector or sub-sector breakdown (90% or more) Largely applied Largely applied: The measure is assumed to affect a highly STF2 0.75 significant share of activities within the respective sector or sub- sector breakdown (between 50% and 90%) Fairly applied Fairly applied: The measure is assumed to affect an important but STF3 0.5 not overwhelming share of activities within the respective sector or sub-sector breakdown (between 30% and 50%) Moderately applied Moderately applied: The measure is assumed to affect a small STF4 0.25 share of activities within the respective sector or sub-sector breakdown (between 10% and 30%) Marginally applied Marginally applied: The measure is assumed to affect only a rather STF5 0.1 limited number of minor activities within the respective sector or sub-sector breakdown (between 5% and 10%) Residually applied Residually applied: The measure is assumed to affect only a few STF6 0.05 residual market segments within the respective sector or sub- sector breakdown (less than 5%) Note: Categorization is based on the OECD Secretariat’s assessment of a measure’s scope at the time of its inclusion in the database. Such an assessment is intended to be as standardized as possible across countries; hence it is not necessarily reflective of the relevance of the measure in each country (for example, in terms of market size). The adjustment factor will be revised over time, subsequent to material reforms, thus justifying a change in the adjust- ment factor or following changes in the Secretariat’s understanding of the scope of the measure. Where relevant, any modification will be also reflected retroactively. 202 SADC | Investment Climate Scorecard Annex 5: Services Trade Restrictiveness Index- Sector and Topic Coverage Classification of Measures in the Services Trade Policy Database (STPD) A. Conditions on market entry A1. Forms of entry (including foreign equity limits) A2. Quantitative measures (for firms and natural persons) A.3. Conditions on licensing/investment screening/qualifications relating to market entry A4. Other conditions of market entry B. Conditions on Operations B1. Conditions on supply of services B2. Conditions on service suppliers B3. Conditions on government procurement B4. Other conditions on operations C. Measures affecting Competition C1. Conditions on conduct of firms C2. Governmental rights/prerogatives (including public ownership) C3. Other measures affecting competition D. Administrative Procedures and Regulatory Transparency D1. Administrative procedures D2. Regulatory transparency (including licensing) D3. Nature of regulatory authority (measures related to nature of regulator) D4. International standards D5. Other regulatory environment and administrative procedures E. Miscellaneous Source: World Bank Group-WTO SADC | Investment Climate Scorecard 203 Sector Subsector Distribution services Retailing services Distribution services Wholesale trade services Financial services Life insurance Financial services Non-life insurance Financial services Reinsurance and retrocession Financial services Commercial banking Professional services Accounting services Professional services Auditing services Professional services Legal services: Host country advisory services Professional services Legal services: Host country representation services Professional services Legal services: Home country law and/or third country law (advisory/representation) Professional services Architectural services Professional services Engineering services Computer services Communication services Postal and courier services Communication services Fixed-line telecommunication services Communication services Mobile telecommunication services Communication services Internet services Communication services Audiovisual - Television services Communication services Audiovisual - Motion picture services Communication services Audiovisual - Sound recording services Construction services Transport services Maritime: Freight transport Transport services Maritime cargo-handling, storage, warehousing and container station depot services Transport services Maritime intermediation auxiliary services Transport services Road: Freight transportation Transport services Rail: Freight transportation Transport services Air freight domestic Transport services Air freight international Transport services Air passenger international Transport services Air passenger domestic Tourism services Hotel services Tourism services Travel agencies and tour operators Tourism services Tourist guide services Health services Source: World Bank Group-WTO 204 SADC | Investment Climate Scorecard A program supported by: And implemented by: