ZCAS /UNIVERSITY

FACULTY OF LAW

STUDENT NO : CL1935

TASK : ASSIGNMENT ONE

COURSE NAME: INVESTMENT LAW

COURSE CODE : L242

DUE DATE : 14/03/2020

LECTURER : Mr Anamela

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Table of contents

1.0 Introduction ………………………………………………………………….3

1.1 Foreign investment ……………………………………………………………3

2.0 Foreign Investment in Host Countries…………………………………………………...3

2.1expropriation ………………………………………………………………………. 4

3.0 Expropriation Protection on foreign investors ………………………………….4

3,1Conclusion……………………………………………………………………………...5

4.0 Bibliography…………………………………………………………………………..8

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1.0 Introduction 12

The development of industrial revolution in the western world and Europe in particular spurned a new era of
economic activity in Africa through the Berlin conference of 1885.The late 1980s saw an increased mining
activities of the British South African Company(BSA) through various Concession such as the Lochner
Concession signed with the Litunga in modern day Zambia. This can well be said to be the origin of foreign
direct investment into Zambia and many other African Countries at large.

This essay begins with a discussion on the concept of foreign investment. It will then look at the Analysis of
Foreign Direct Investment in Host Countries before analyzing the what expropriation is, then the essay will
respond to Newcomebe’s discussion to why foreign investors need expropriation protection. Furthermore, the
essay will then conclude with the authors opinion on the subject matter.

1.1 Foreign Investment

Foreign investment can be generally understood as the transfer of capital to a country, commonly referred to as
the host country, by a non-resident entity. Foreign investors are by large very welcome, they take risk, they put
up capita and they provide some jobs and development which is crucial for other industries and small
businesses to get off the ground, Investment laws in the republic of Zambia are mainly covered by the Zambia
Development Agency Act no. 11 of 2006 of the laws of Zambia. The purpose of this Agency is to attract foreign
investment, set conditions for its entry into Zambia, simply the investment process for the foreign investor and
facilitate and promote

2.0 Foreign Investment in Host Countries

The decade of the 1990s was an active period for the signing of bilateral investment treaties. The principal focus
was the protection and promotion of foreign investment. Host countries often try to channel investment into
new infrastructure and other projects to boost development. Greater competition from new companies can lead
to productivity gains and greater efficiency in the host country and it has been suggested that the application of
a foreign entity’s policies to a domestic subsidiary may improve corporate governance standards. Furthermore,

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Srijanee Bhattacharyya, Legal regimes governing Foreign Direct Investment (FDI) In host Countries,2012, UK
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foreign investment can result in the transfer of soft skills through training and job creation, the availability of
more advanced technology for the domestic market and access to research and development resources.3 The
local population may be able to benefit from the employment opportunities created by new businesses.
However, there has been concern over the environmental impact of unregulated FDI and the depletion of natural
resources, for example, the overconsumption of water by large scale commercial projects. Host countries can
also cede control of vital industries to foreign investors unless protective measures are in place. Although FDI is
generally seen as a longer-term investment there are fears over the risk of volatility that comes from liberalizing
domestic industries and the increased exposure to global markets. Local businesses may suffer due to the
pressure exerted by larger multinational competitors with significant competitive advantages4

2.1 EXPROPRIATION

the process or action of dispossessing someone’s property. In the Zambian framework, expropriation and
compensation are reflected in the Constitution, the Lands Acquisition Act and the Zambia Development Agency
Act.

When the government is expropriating a property from investors they must state and prove that it is of public
interest or it is for the beneficial of the public, the must state

3.0 Expropriation Protection on foreign investors 5

, Foreign Direct Investment provides a major source of capital which brings with it up to date technology in general and in

particular benefits a country's economy as a whole by creating an environment for the transfer of general knowledge and

of specific technologies in production and distribution, industrial upgrading, employment well as work experience. . In

order to attract foreign investment not only does a country need to be endowed with abundant natural resources but also it

is of the essence to provide incentives by protecting investors from political risks such as expropriations and transfer risks

such as currency control and inconvertibility of funds. The Constitution houses the Bill of Rights in Part III. It is from the

Bill of Rights that all investors, local and foreign, can glean the protections over their property rights. Article 16(1)

provides: “Except as provided in this Article, no property of any description shall be compulsorily taken possession of,

and no interest in or right over property of any description shall be compulsorily acquired, unless by or under the authority

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Srijanee Bhattacharyya, Legal regimes governing Foreign Direct Investment (FDI) In host Countries,2012, UK
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Jean-Yves P. Steyt, "Comparative Foreign Direct Investment Law: Determinants of the Legal Framework and the Level of Openness
and Attractiveness of Host Economies" (2006). LL.M. Graduate Research Papers. Paper 1
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The Constitution houses the Bill of Rights in Part III. It is from the Bill of Rights that all investors, local and foreign, can glean the
protections over their property rights. Article 16(1) provides:
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of an Act of Parliament which provides for payment of adequate compensation for the property or interest or right to be

taken possession of or acquired.”

Section 19(1) of the ZDA Act provides:

“(1) An investor’s property shall not be compulsorily acquired nor shall any interest in or right over such property be
compulsorily acquired except for public purposes under an Act of Parliament relating to the compulsory acquisition
of property which provides for payment of compensation for such acquisition

3,1Conclusion

In response to NEWCOMBE’S why foreign investors should receive expropriation protections when
similar protections may not be available to nationals. I agree in the manner that foreign invertors bring
revenue in to the country, they bring employment to local people at large and for this there is a need to set
incentives that indicates the protection of foreign investors, however this incentives will attract a lot more
foreign direct investors to invest in to the host nation that is there must be a need to have expropriation
protection

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4.0 Bibliography

Table of books and Papers

1. Jean-Yves P. Steyt, "Comparative Foreign Direct Investment Law: Determinants of the Legal
Framework and the Level of Openness and Attractiveness of Host Economies" (2006). LL.M.
Graduate Research Papers. Paper 1

2. Marina Kamanzi, A comparative analysis of Zambia Development Agency Act and the
repealed Investment Act of 1993,2012, University of Zambia, Lusaka
3. OECD Benchmark Definition of Foreign Direct Investment, Fourth Edition, 2008. Vol. XX,

4. Srijanee Bhattacharyya, Legal regimes governing Foreign Direct Investment (FDI) In host
Countries,2012, UK
5. https://www.investopedia.com/terms/d/direct-investment.asp
6. http://www.zda.org.zm/?q=content/investment-incentives

Table of statutes

1. Zambia Development Agency Act no 6 of 2011