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Investment and Development Finance (330)

Hardly a multilateral meeting goes by without its attendees committing themselves to the promotion of peace and security across the globe. The Sixth BRICS Summit, hosted from 14-16 July in Brazil, was no exception. BRICS member states (Brazil, Russia, India, China and South Africa) have, time and again, declared their commitment to 'building a harmonious world of lasting peace and common prosperity', yet the various Summit declarations are sketchy at best on how these five countries intend to go about achieving this objective.
The South African Institute of International Affairs (SAIIA) and the Graduate Business School at UCT hosted a roundtable discussion on 28 July 2014 on the US-Africa Leaders Summit, 'What Future Does it Hold for US-Africa Trade and Investment Relations?'
A country’s international economic agenda is invariably shaped by its domestic constraints and socio-economic development objectives. The BRICS (Brazil, Russia, India, China and South Africa) states are no exception.
This week saw the Department of Trade and Industry (dti) Budget Vote presented to the Parliamentary Portfolio Committee on Trade and Industry. SAIIA would like to congratulate Minister Rob Davies on his reappointment and wishes both the Minister and dti officials well for the implementation of their work programme.
After five years of introspection and institution building, the sixth BRICS summit offers an opportunity for the group to focus on its relations with the rest of the world. Relations with the Group of 7 (G-7) are particularly contentious. Russia's exclusion from the G-8 following the crisis in Crimea has moved the BRICS to the centre stage in Russian foreign policy thinking, and risks pulling the group onto an opposition footing with the West.
The BRICS countries (Brazil, Russia, India, China and South Africa) were brought together by their investment returns and growth potential, but for the group to act they must find some common purpose.
As the BRICS meet in Fortaleza, Brazil from 14-16 July 2014, attention is once again on the group’s efforts to establish two new financial institutions: the New Development Bank and the Contingent Reserve Arrangement. Negotiations are underway on both and, while it remains uncertain that they will be officially launched in Fortaleza, substantial progress is expected to be announced at the summit.

Green economic growth is constructed around six main sectors: green or renewables energies; green and energyefficient buildings; clean transportation; water management and conservation; waste management, including recycling; and land management, including multiple land use.

Green energy, though, is at the heart of the green economy in the 21st Century. The threat of disruptive climate change has directed attention on the central role that energy plays in shaping the future interaction between humankind and the natural resources on which it is dependant. It is vital that renewable energy sources and green industries become more competitive relative to the entrenched fossil fuels, thus enhancing the attractiveness of investing in the green economy.

South Africa’s approach to regulating the protection of foreign investments and investors has become controversial. It has centered on the future of bilateral investment treaties (BITs), pitting the European Union (EU) against the South African government. The debate was precipitated by the SA government’s decision to terminate or not renew BITs. Now it is refocusing on the Promotion and Protection of Investment Bill, released on 1 November 2013. A three-month window for public comments on the bill has recently closed.
Held in Paris each May to coincide with the annual OECD Ministerial Council Meeting, the OECD Forum is a major international stakeholder summit. In 2014, SAIIA is proud to be an official knowledge partner for the Forum.
2013 was a difficult year for the five BRICS countries. China and Brazil faced slowing growth, South Africa and India were hit by currency instability, and concern over Russia’s governance deepened (before recent events in the Ukraine pitched them into all-out crisis). As doubts have mounted, investors have increasingly turned back to traditional investment destinations like the United States and Europe, as well as to new formations like the MINTs (Mexico, India, Nigeria and Turkey).
In 2012 Walmart announced the acquisition of a majority stake in South African retail chain Massmart. The deal, valued at USD$2.4 billion, was one of the largest single inflows of foreign direct investment (FDI) into South Africa, and signified that the formerly isolated country at the tip of the African continent had transformed into a gateway to the emerging ‘new growth market’ in Africa. But the Walmart deal met with mounting resistance.
The increasingly adversarial nature of labour relations is having a dampening effect on South Africa’s mining investment prospects. On the eve of the 2014 African Mining Indaba (3 to 6 February 2014), observers worried about the persistent labour crisis and its likely long-term effect on investor sentiment should pay attention to three key pressure points. In conjunction, they will determine the future viability of South Africa’s mining industry.
SAIIA Occasional Paper No 167, December 2013
SAIIA Occasional Paper No 165, November 2013
Monday, 02 December 2013

The Africa by Numbers Report

On 2 December 2013, SAIIA hosted a presentation by Ernst & Young Services (Pty) Ltd on their Africa by Numbers Report, which focuses on the Africa growth story and provides analyses of investment trends, infrastructure projects and economic sectors attracting the most FDI.
South Africa is undergoing a significant transition in its approach to inward FDI. Various Bilateral Investment Treaties (BITs) signed immediately after the end of apartheid are now being allowed to expire, and these BITS are set to be replaced by a single domestic investment regime.
South African Finance Minister Pravin Gordhan this week gave a keynote address at the South African Institute of International Affairs and the University of Pretoria’s Second Annual African G-20 Conference, themed “The G-20 and Africa's Economic Growth and Transformation”, in Rosebank, Johannesburg, on November 11 2013.
South Africa's cabinet has recently approved the draft Promotion and Protection of Investment bill, which is set to replace a score of bilateral trade agreements. While investors fear that the bill may threaten the security of foreign investment, the Department of Trade and Industry has assured investors they will have strong protection under the new law, with the right to international arbitration once all domestic means of resolving a dispute have been exhausted.
SAIIA Occasional Paper No 162, November 2013
SAIIA Policy Briefing No 78, November 2013
SAIIA Occasional Paper No 156, October 2013
In this podcast, Jakkie Cilliers, Executive Director of the Institute for Security Studies looks at South Africa's economic plans through his research on the country's draft National Development Plan. He speaks to SAIIA's Chief Executive, Elizabeth Sidiropoulos, about his findings and what it reveals about the future of SA's economic strategy.   
On 6 September 2013, SAIIA held a closed event to discuss foreign investments into South And Southern Africa.
Leaders of the Group of 20 (G-20) nations gather in St Petersburg, Russia, today, under a Syrian war cloud. Global economic crisis is in the air again, this time centred on emerging markets. The G-20 cannot fix geopolitical problems; nor will it rescue the world from Federal Reserve chairman Ben Bernanke’s tapering of quantitative easing.
SAIIA Policy Briefing 70, August 2013