Introduction

Intra-African cooperation and integration first emerged with the creation of the Organization of African Unity (OAU) in 1963.[1] Thereafter, a shift from the idealism of the Pan-Africanist project to a more modest approach to regional integration, focusing on the sub-regional economic domain of market-driven intra-state, or extra-territorial cooperation was observed. In the 1960s and 1970s, many African states were moved to form regional economic blocs across the continent and it was in this context that the East African Community (EAC) was eventually spawned.

The next milestone in the evolution of African integration happened at the instigation of a combination of systemic factors. In the 1980s, the United Nations through its Economic Commission for Africa (ECA) supported the Lagos Plan of Action (LPA) and the Full Act of Lagos (FAL), initiated by the OAU, as part of its efforts to revitalize the African economy in the wake of the failure of the post-colonial economic strategies of the preceding decades.[2]  The establishment of three regional economic communities (RECs) as a step towards continental integration arose.

The Abuja Treaty of 1991 marked the beginning of another phase in the evolution of African integration.[3] The Abuja Treaty was an improvement on the LPA. While indicting the African leadership with failure to confront Africa’s economic problem, the Abuja Treaty reiterated the importance of regional integration, and in fact set the timeline for full continental economic integration at 2025.

Perhaps the most important phase in African integration was set off by the Sirte summit of 2001 which replaced the OAU with the African Union (AU). The AU perpetuates the OAU paradigm of integration, emphasizing the OAU’s foundational principles of “unity, solidarity, cohesion and co-operation.[4] Indeed, AfCFTA is one of the flagship projects of the African Union’s Agenda 2063, and it is envisaged to create a single continental market for goods and services in Africa.

In June 2015, at the twenty-fifth Summit of the African Union, held in South Africa, African Heads of State and Government agreed to launch negotiations on the creation of the CFTA by 2017 through negotiations on the liberalization of trade in goods and services.[5] 

Later on 21^st March 2018, the African Continental Free Trade Area Agreement (AfCFTA) was concluded and signed in Kigali, Rwanda, by 44 States at the 10^th Extra-Extraordinary Session of Assembly. The agreement is meant to create a single continental market for goods and services, with free movement of businesses, persons and investments. One of the general objectives of the AfCFTA is to develop and promote the regional and continental value chains within Africa. This overarching aim can only be reached through cross-border investment. Cross-border investment is one of the mechanisms which could provide African local producers, importers, exporters, investors, and service providers with opportunities of accessing the markets across Africa. Currently, the current inter-linkages between Partner States among regional economic communities such as the East African Community (EAC) can be said to accelerate and enhance value chains at regional level. With its accession to the AfCFTA agreement, the Republic of Burundi (a Partner State in the EAC), reaffirmed its commitment to contribute to the development of regional value chains through conducive investment regimes dedicated to protection and promotion of cross-border investments.   

It is of paramount importance at this juncture to hold on AC regional value chains as an ultimate goal of realization of AfCFTA, facilitated by domestic cross-border investment in order to deepen Burundi’s economic integration.

Normative frameworks for conducive environment of cross-border investments

• At the continental level

According to AfCFTA agreement, the Member States have undertaken to promote industrial development through diversification and regional value chains development, agricultural development and food security.^[6] In addition, the AfCFTA agreement outlines some ways of achieving the objectives as to cooperation on investment, intellectual property rights and competition policies.[7] The cooperation on investment, as envisioned, encompasses liberalization of investment and protection of cross-border investments.

Furthermore, the main areas of integration include trade in goods, trade in services, investment, intellectual property rights and competition policy.[8]

In addition, the Member States committed, in the AfCFTA agreement, to pursue the objectives of the integration by entering into Phase II which consists in negotiations of cooperation mainly in investment areas.^[9]

Moreover, the AfCFTA agreement is implemented by Protocols on trade in goods and services, investment, intellectual property rights, competition policy, rules and procedures on the settlement of disputes as an integral part of the agreement.^[10] It is emphasized that the field of investment is one of the main areas of cooperation to which the Member States should attach greater importance.

Within the framework of the objectives defined in the protocol on trade in goods of the AfCFTA, member states commit to developing and promoting regional and continental value chains designed to stimulate intra-African trade in goods.^[11] In addition, the AfCFTA's trade in services protocols outline the cooperation and integration objectives of member states. Indeed, they have agreed, among other things, to encourage domestic and foreign investment ^[12] and thus accelerate industrial expansion efforts by promoting the development of regional value chains.^[13]

• At the regional level

At the EAC level, the main legal framework is contained in the EAC Treaty, the Common Market Protocol, and the EAC Model Investment Code, whose objective is, among others, to ensure cross-border investment protection in a sustainable manner. Accordingly, the Partner States have committed to cooperate in the areas of industrial development and investment.^[14] Therefore, the Partner States undertake to promote self-sustaining and balanced industrial growth, ^[15] and to foster the development of indigenous entrepreneurs.^[16] In addition, Partner States are required to make a strategic resolution to facilitate the expansion of small and medium-sized industries, either through contracting or other relationships with larger or smaller firms.^[17] States must take steps to streamline the investment and operation of established industries in order to effectively promote community-level production.^[18] In this regard, Partner States are called upon to create a business-friendly environment through the promotion of favorable investment codes, the protection of basic rights arising from ownership of property, and also the establishment of adequate private sector regulation.^[19] States may consider facilitating the sharing of experiences and the pooling of resources through cross-border investments.^[20]

In the same spirit, the protocol on the common market aims to promote the implementation of the common market within the community through the cooperation of cross-border investments and by ensuring their protection.^[21] Indeed, it ensures the protection of cross-border investments and guarantees returns to investors from other partner states.[22] Three guarantees are granted. First, each Partner State must protect and ensure the security of cross-border investments from another Partner State.^[23] Second, the Common Market Protocol prohibits any form of discrimination against investors from other Partner States and obliges them to grant their nationals treatment no less favorable than that accorded to nationals of any third State.^[24] Third, Partner States must take appropriate compensation measures in case of expropriation and follow the procedure for expropriation in the public interest.^[25]

In particular, the Common Market Protocol obliges partner states to take practical measures to safeguard cross-border investments within two years of the Protocol's entry into force.^[26]

In 2006, the East African Community Model Investment Code was promulgated. It was intended to serve as a tool to guide partner states in the future adoption of national investment codes and policies aimed at enhancing qualitative and quantitative foreign investment in the region.^[27]

• At the Domestic level

At a country level, investments in Burundi are protected by both the Burundi Constitution dated 2018, the Investment Code 2021 and additional laws. The Constitution of Burundi guarantees the protection of a foreign investor throughout the establishment of its activities in Burundi under the conditions provided by a specific law.^[28] In this regard, the Burundi Investment Code guarantees the freedom of establishment of an investment either by an individual or by an entity.^[29] Specifically, foreign investors can establish themselves locally through a Greenfield investment and benefit from the incentives provided for this purpose.

In addition, the 2011 Land Law provides that, subject to reciprocity, foreign investors enjoy the same rights and protections as nationals.^[30] In particular, they can benefit from state land concessions as defined and organized by this law.^[31] However, foreign investors may only have full ownership of land for industrial, agro-industrial, commercial, social, cultural, scientific or residential use.^[32]

Furthermore, the Company Law allows investments through mergers, demergers or partial asset contributions, as well as the change of status of the partners through the acquisition of shareholders in the context of mergers, demergers and partial asset contributions.^[33]

The law on public-private partnership allows the investor to operate for a period of time determined by the amortization period of the physical investments made, the services required of it and the financing methods chosen.^[34]

In addition, the mining law requires that mining agreements include a provision for the state to hold at least 10% (of the capital) [35] for domestic investors to purchase the shares of foreign investors. ^[36] This means that foreign investors are required to partner with the state and domestic investors to establish a company in the country in the mining sector.

Further, the foreign exchange regulations provide that foreign transactions, both in cash and capital, between Burundi and the rest of the world are free and carried out in accordance with these regulations.^[37]

Furthermore, the Law on Privatization of Enterprises provides that in the context of the privatization of an enterprise with public participation, public service or public works, the Inter-Ministerial Committee on Privatization is authorized to negotiate and conclude any contract with any natural or legal person, national or foreign, resident or not in Burundi.^[38]

Similarly, the electricity law sets, among its objectives, the creation of a legal framework favorable to private operators wishing to venture into the energy sector, as well as the establishment of a framework conducive to the liberalization of the sector that allows for fair competition.^[39]

Thus, the Competition Law requires fair competition in the market, prescribes rules and obligations that investors must follow in their business operations to avoid anti-competitive practices and to respect fairness.^[40]

In addition, the Insolvency Law provides effective means of dealing with cross-border insolvency cases to ensure greater legal protection and certainty in trade and investment.^[41] The law also aims to facilitate the exit of companies in financial difficulty in order to protect investments and preserve their business.^[42]

Promotion of Regional Value-chains through Cross-border Investment

To make regional value chains a success, it is important at this stage to discuss opportunities on how to reorganize cross-border investment in Burundi and suggest changes on what should be done. Here are some suggested mechanisms with the intention of improvement:

• Establishment of a special economic center for the development of national strategic industries with a comprehensive and innovative investment scheme:

  The Republic of Burundi has created a special economic zone in WARUBONDO whose activities are regulated by Decree No. 100/29 of 16/2/2017 creating a special economic SEZ in WARUBONDO and setting up a management authority for this zone. Article 4 of the decree sets out the objectives of the zone as, among others, to promote the country's export and attract foreign direct investment and local investment.^[43] In this regard, an ad hoc committee was created to develop an action plan and mechanisms for the implementation of the SEZ. If well managed, the zone should help connect with regional SEZs in EAC partner states and enable cross-border investments. It will also be consistent with Article 23 of the ZACA Protocol on Trade in Goods, which calls on member states to support the establishment and operationalization of SEZs.

• Establishment of a priority local value chain and ongoing preparation of an investment and value-added action plan:

  The Republic of Burundi has recently promulgated an attractive investment framework that has opened up several sectors to investment ranging from agriculture, mining, transport and infrastructure, maritime trade and port development. The country mainly exports tea, coffee, mining and quarrying, and intends to expand its export products to include products from other sectors.

• Inclusion of Private sector stakeholders for coordinated development of the strategic national industries:

  The private sector plays a role in the development of investment strategies in Burundi. The private sector and the general public are key players in the intra-regional trade process. The country is making efforts for the inclusion of the private sector and the general public towards the realization of the African Continental Free Trade Area.

• Ongoing infrastructure projects:

  The country is committed to taking advantage of its infrastructure that was delaying the delivery of raw materials to factories and the delivery of goods to consumers. Indeed, the country has embarked on the development of functional logistics and operational transport infrastructure that are absolutely necessary to decouple production from national borders, such as the project to build the Uvinza-Musongati-Gitega section of the standard gauge railroad, etc....

• Harmonization of law and policies:

• The protocol on trade in services empowers the council of ministers to promote the harmonization of appropriate policies, strategies and measures for the effective implementation of the AfCTA. In fact, the Republic of Burundi is a member state of more than one regional economic bloc (the Common Market for Eastern and Southern Africa (COMESA); the Economic Community of Central African States (ECCAS); the East African Community (EAC); the Economic Community of the Great Lakes Countries (CEPGL); and the Eastern and Southern Africa Cross-Border Initiative (ESA-CBI)). Burundi has begun to harmonize its laws with regional legal instruments aimed, among other things, at creating an enabling legal environment to attract investment and effectively promote regional value chains.

  Conclusion and Recommendations

Cross-border investment is a key asset for Burundi's integration into regional value chains. It can therefore be concluded that the AfCFTA 2018 agreement and Burundi's obligations and rights to cooperate in the promotion of cross-border investments is a key component of the promotion of regional value chains. Indeed, the country has begun to comply with community obligations in line with continental commitments. The country is also in the process of harmonizing and implementing policy instruments. Stakeholders and policy makers are called upon to play their part and ensure full participation in the country's inclusion in the promotion of regional value chains in Africa.

 

REFERENCES

Legal Instruments

International Instruments

African Continental Free Trade Area Agreement, 2018

Regional Instruments

The Protocol on the Establishment of the East African Community Monetary Union, 2013.

The East African Community Model Export Processing Zones Operational Manual, 2011.

The Protocol on the Establishment of the East African Community Common Market, 2010.

The East African Model Investment Code, 2006.

The Protocol on the Establishment of the East African Community Customs Union, 2005.

The Treaty Establishing the East African Community, 1999.

Domestic Legislation

Laws

Law N°1/05 of 23 January 2018 regulating the Commercial Insolvency.

Law No. 1/19 of July 19, 2019 amending Law No. 1/14 of April 27, 2015 on the general regime for public-private partnership contracts.

Law No 1/13 of 23/04/2015 on the reorganization of the Electricity Sector in Burundi.

Law N ° 1/01 of January 16, 2015 revising the law N ° 1/07 of April 26, 2010 related to the code of commerce.

Law N°1/21 of 15 October 2013 regulating the Mining Sector in Burundi.

Law No. 1/01 of 9/02/2012 amending the Law No. 1/03 / of 19/02/2009 on the Organization of the Privatization of Companies with Government’s Participation, Public Services, and Works.

Law N ° 1/13 of 9 August 2011 which revised the N°1/008 of 1 September 1986 related to the Land Code of Burundi.

Law N° 1/09 of May 30^th 2011 on the Code of Private Companies and of Public Participation.

Law N° 1/06 of 25^th day of March, 2010 establishing the Legal Regime of the Competition in Burundi.

Law N ° 1/19 of 17 June 2021 modifying the Law N 1/24 of 10 September 2008 relating to Investment Code Act of Burundi.

Regulations

Exchange Control Regulation of September 2019.

Books

United Nations Conference on Trade and Development (2016), African Continental Free Trade Area:  Policy and Negotiation Options for Trade in Goods, United Nations, New York and Geneva.

D.M. Chacha, “Julius Nyerere: The Intellectual Pan-Africanist and the Question of African Unity”, A Paper Presented at CODESRIA’S 30^th Anniversary Conference, Dakar, Senegal, 08-11 December, 2003.

[1] United Nations Conference on Trade and Development (2016), African Continental Free Trade Area:  Policy and Negotiation Options for Trade in Goods, United Nations, New York and Geneva, p. 1.

[2] Ibid., United Nations Conference on Trade and Development (2016).

[3] Ibid.

[4] The AU’s Constitutive Act, 2000.

[5] Ibid., United Nations Conference on Trade and Development (2016).

[6] Article 3 (g), the Agreement Establishing the African Continental Free Trade Area, 2018.

[7] Ibid., Article 4 (c).  

[8] Article 6, the Agreement Establishing the African Continental Free Trade Area, 2018.

[9] Ibid., Article 7 (1) (b).

[10] Ibid., Article 8.

[11] Article 2 (e), the Protocol on Trade in Goods of the Agreement Establishing the African Continental Free Trade Area, 2018.

[12] Article 3 (c), the Protocol on Trade in Services of the Agreement Establishing the African Continental Free Trade Area, 2018.

[13] Ibid., Article 3 (d).

[14]  Ibid., Articles 79 and 80.

[15]  Article 79 (a), the EAC Treaty.

[16]  Ibid., Article 79 (b).

[17]  Article 80 (1) (c) (i), the EAC Treaty.

[18]  Ibid., Article 80 (1) (d).

[19]  Article 127 (2) (a), the EAC Treaty.

[20]  Ibid., Article 127 (2) (d).

[21] Article 5 (3) (b), the Common Market Protocol.

[22] Ibid., Article 29 (1).

[23] Ibid., Article 29 (2) (a).

[24] Ibid., Article 29 (2) (b).

[25] Ibid., Article 29 (2) (c).

[26] Ibid., Article 29 (3).

[27]  The preamble, the EAC Model Investment Code 2006.

[28] Article 59, Burundi’s Constitution of 2018.

[29]  Article 7 para 1, the Burundi Investment Code of 2021.

[30]  Article 13, the Law N ° 1/13 of 9 August 2011 which revised the N°1/008 of 1 September 1986 related to the Land Code of Burundi.

[31]  Ibid.

[32]  Article 13, the Land Code of 2011.

[33]  Article 92 (3), the Company Law of 2011.

[34]  Article 4, Law No. 1/19 of July 19, 2019 amending Law No. 1/14 of April 27, 2015 on the general regime for public-private partnership contracts.

[35] Article 65, d), the Mining Code of 2013.

[36] Ibid., Article 65, l).

[37]  Article 5 (1), the Exchange Control Regulation of September 2019.

[38]  Article 16, Law No. 1/01 of 9/02/2012 amending the Law No. 1/03 / of 19/02/2009 on the Organization of the Privatization of Companies with Government’s Participation, Public Services, and Works.

[39]  Article 1, the Law No 1/13 of 23/04/2015 on the reorganization of the Electricity Sector in Burundi.

[40]  Article 1, the Law No. 1/06 of 25 March 2010 on Competition in Burundi.

[41] Article 254 (2°), the Law N°1/05 of 23 January 2018 regulating the Commercial Insolvency.

[42] Ibid., Article 254 (5°).

[43] Article 4, Decree N° 100/29 of 16/2/2017 establishing a Special Economic Zone at WARUBONDO and establishment of a managing authority.