BIZweek n°312 16 oct 2020
BIZweek n°312 16 oct 2020
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  • Parution : n°312 de 16 oct 2020

  • Périodicité : hebdomadaire

  • Editeur : Capital Publications Ltd

  • Format : (260 x 370) mm

  • Nombre de pages : 7

  • Taille du fichier PDF : 3,7 Mo

  • Dans ce numéro : les Seychelles devant Maurice en capitalisation boursière.

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VENDREDI 16 OCTOBRE 2020 BIZWEEK ÉDITION 312 ACTA PUBLICA COMESA BUSINESS COUNCIL – FINANCIAL SERVICES REGULATORS Towards Harmonization of Policies for an Integrated Digital Common Payment Scheme for MSMEs The COMESA Business Council (CBC) convened the Financial Services Regulators Sub-Regional Stakeholder Meeting on the 13th of October 2020. The meeting is the last in the series of six sub-regional sectoral meetings which have been convened over the last month, that have brought together stakeholders comprising of MSMEs, mobile network operators, ICT regulators, commercial banks and micro finance institutions, Fintechs and non-bank operators, under the theme «Harmonisation of Regulatory Policies Towards and Integrated Digital Common Payment Policy Framework for MSMEs.» CBC has been implementing the Digital Financial Inclusion Program to support the design,rs ! r, «Among the challenges impacting industry competitiveness, is the lack of an affordable and effective platformwhich accommodates digital cross-border payments by SMEs. In an effort to address this challenge, CBC’s Digital Financial Inclusion program, piloted in 9 countries (Egypt, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Tanzania, Uganda and Zambia), is expected to catalyze the transition of MSMEs from a cash-dominant to a cash-lite economy, where they have access to affordable, interoperable, secure, and real-time digital financial transactions.» This was said by Ms. Sandra Uwera, Chief Executive Officer of the COMESA Business Council (CBC), ahead of the Financial Services Regulators Sub-Regional Stakeholders Meeting which was scheduled on 13th October development and deployment of an integrated digital financial services infrastructure that is low-cost, interoperable and fraud resistant, that serves micro smalland medium-sized enterprises, particularly women and youth, at the bottom of the financial pyramid. Amongst the expected outcomes is increased access to, anduptake of digital financial services by previously underserved market segments, the MSMEs, particularly those participating in cross-border trade. This will spur on their formalization and also boost intra-regional trade, contributing to the regional integration agenda. The Financial Services Regulators Sub-Regional Stakeholders Meeting, had the participation of the Central Bank Governors, Ministries of Finance, and other financial services regulators from the nine pilot countries, as wellas private sector drivers of the industries in the digital financial ecosystem. The meeting will be informedby outcomes stemming from various sectoral consultations that have been considered and validated, that will further informthe development of a regional digital common payments policy for MSMEs. Such a policy will be foundationupon which a digital integrated regional common payment scheme for MSMEs is developed. Following the above said meeting, CBC will convene a Public-Private Dialogue, in order to validate and adopt the policy framework and agree on the criteria that determines readiness for pilot implementation of the scheme. Outcome of the Meeting «Digital payment systems are a focus area on course to improving the efficiency and performance of SMEs in the region. This is therefore a very important forum which provides Government to Business, Business to Business and Business to Consumer, key policy aspects that needs to be addressed in order to promote intra-COMESA trade which is currently low.» This was said by Mr. Marday Venkatasamy, Chairman of the COMESA Business Council (CBC), in his opening statement during the Financial Services Regulators Sub-Regional Stakeholders Meeting which took place on 13th October. The deliberations attached great importance to the need to promote SMEs’competitiveness across the region. «This will require concerted efforts from both the public and the private sectors, with the public sector ensuring a business-friendly environment and legislation for the promotion of private sector development and investment,» said Mr. Mahmood Mansoor, Executive Secretary of the COMESA Clearing House, and an Advisory Committee member of the CBC Digital Financial Inclusion Program. Reviewed in the meeting were national policies that have been agreedupon by five sectoral stakeholder workgroups, which will be harmonized at regional level forming the basisupon which a digital integrated regional common payment scheme for MSMEs will be developed. The meeting agreeduponeight policy areas for harmonization in the region namely, Anti-Money Laundering (AML)/Combating Financing of Terrorism (CFT), electronic transactions, interoperability, cybersecurity, consumer protection for digital financial services, settlement system operating rules, mobile money guidelines, and national financial inclusion framework The prescribed conditions for banks to benefit from 5% reduced tax rate have been published There has been a major change in the taxation of companies engaged in banking activities which takes effect as from the year of assessment commencing on 01 July 2020. This tax reformis in line with the recommendation of the OECD and the EU and has led to the phasing out of the 80% deemedforeign tax credit regime, which was previously available to banks on their Segment B banking activities. The new banking regime makes no distinction in tax treatment between profits derived from Segment A banking activities (transaction with residents) and Segment B banking activities (transactions with nonresidents and corporations holding global business licenses). As such, the requirement to submit an auditor’s certificate certifying that expenses have been correctly apportioned between Segment A and B activities is no longer applicable. Also, banks are henceforth not entitled to claim credit on foreign tax suffered. The main features of this new regime are the introduction of a reduced tax rate of 5%, the concept of ‘base year’and different tax bands. Conditions to be satisfied to benefit from the reduced tax rate of 5% In order to benefit from the reduced rate of 5%, the bank should grant at least 5% of its credit facilities during an income year to any of the following categories of business: smalland mediumenterprises in Mauritius ; enterprises engaged in agriculture, manufacturing or production of renewable energy in Mauritius ; or operators in African or Asian countries. [Source : PwC Tax Alert – October 2020] 4
VENDREDI 16 OCTOBRE 2020 BIZWEEK ÉDITION 312 OPINION AfCFTA protocol must provide a fair regulatory environment and protection for investors AFRICAN CONTINENTAL FREE TRADE AR CREATING ONE AFRICAN MARK While it should establish a pragmatic framework for investment across the continent, the effect of the global Covid-19 pandemic on Africa and the concomitant economic uncertainty underscores the need for a predictable, fair regulatory environment. The AfCFTA drafters have a singular opportunity to fashion a regime that supports modern investment policies by promoting sustainable development while preserving regulatory autonomy, without introducing uncertainty that undermines the usefulness of investment protections as important risk-mitigation tools. While the protocol’s content remains unclear, it is hoped that it will enhance Africa’s prospects as a desirable investment destination by offering investment protections that support the rule of law and good governance. It should provide appropriate mechanisms for the international enforcement of those protections and harness the contributions of foreign investment to maximise development. However, there is a risk that, should certain emerging trends in intra-African investment instruments be incorporated into the protocol, it may send mixed messages to investors as to the level of protection afforded, thus impeding the protocol’s effectiveness as an investment catalyst. Protecting host states’rights Such trends include the diminution of traditional investment protections, the imposition of loosely defined obligations on investors and the limitation on access to investor-state dispute settlement. These trends, while reflecting a significant effort to addressimbalances in the investor-state relationship and preserve sufficient policy space for jurisdictions with underdeveloped investment frameworks, may be viewed as introducing additional investment risk. The draft Pan-African Investment Code exemplifies this. In its preamble it expressly preserves host states’rights to regulate allaspects of investments within their territories to meet national policy objectives and promote sustainable development. Uncertainty exists as to the usefulness of incorporating this «right» in the preamble, which would not necessarily forma cornerstone of the interpretation of any treaty under the Vienna Convention on the Law of Treaties. Moreover, the inclusion of such broad language may lead investors to question whether the protections outlined elsewhere in the investment code are consequently devalued or undermined. The Common Market for Eastern and Southern Africa common investment agreement protects host states’rights to regulate by permitting member states to impose measures to protect specific interests, such as national security and public morals ; human, animal or plant life and health ; tel POST SCRIPTUM With less than three months before the expected conclusion of negotiations on the African Continental Free Trade Area’s (AfCFTA) protocol on investment, increasing attention is being paid to the protocol’s likely investment protections and rights of recourse for investors in Africa and the environment, provided that they do not constitute arbitrary or unjustifiable discrimination between investors or restrict investment flows. Intra-African bilateral investment treaties likewise incorporate provisions protecting host states’rights to regulate. Unpredictable exercise of regulatory power By including provisions affording host states greater policy space to pursue national development objectives, these investment instruments depart from the traditional investment protection model by placing more emphasis on protecting investors’rights. As the AfCFTA treaty expressly affirms the right of state parties to regulate and achievelegitimate policy objectives, it is likely that the investment protocol will include broad powers to enable host states to implement domestic policy initiatives. While this shift towards achieving a more equitable balance between the rights of investors and host states is understandable, to the extent that the right to regulate is framedin an inconsistent manner, it could result in the unpredictable exercise of regulatory power by some states, eroding investor confidence. Many of these investment instruments carve out exceptions to most favoured nation or national treatment provisions to ensure host states have adequate policy space. The investment code allows member states to adopt measures that derogate from the most favoured nation provision where they are designed to protect public welfare objectives. Equally, sectors specified in a member state’s list of scheduled investment sectors are not subject to most favoured nation treatment. The inclusion of derogations from the most favoured nation and national treatment principles attenuates investor protections and introduces uncertainty as to the interpretation of such protections in the event of a dispute. Mechanism remains unclear Some intra-African investment instruments likewise impose obligations on investors in respect of their conduct in a host state’s territory. For instance, article 19 of the investment code provides that investments shall meet national and internationally accepted standards of corporate governance and obligations to ensure equitable treatment of all shareholders and encourage active co-operation between corporations and stakeholders. While these objectives are commendable, the scope of such obligations is largely undefined, while the mechanism for their enforcement is unclear. It is also questionable whether investment treaties are the best place to address responsible business conduct or whether the domestic law of the investment host state is the more appropriate location for the articulation of these obligations. In respect of the rights of recourse available in interstate and investor-state disputes, African trends display a common theme in which dispute prevention is promoted over dispute resolution, while access to investor-state dispute settlement is limited. The investment code permits recourse to investor-state dispute settlement, provided the investor and member state have first attempted to resolve the dispute within six months through consultations or negotiations. If this fails, the dispute may be referred to arbitration, subject to the exhaustion of domestic remedies. Binding obligation Dispute settlement mechanisms that require recourse to domestic courts have historically faced criticism, particularly where they result in investors having to relyupon inefficient local legal systems to enforce protections. Recently, there has been opposition to this as such a duty can be appropriate, not least where host states have mature legal systems. Ultimately, what is significant for the purposes of the formulation of the investment protocol is that effective dispute settlement mechanisms are easily accessible to ensure predictable enforcement of investor protections, and host states are subject to a binding obligation to comply with the awards granted. Looking beyond intra-African investment instruments, developments emerging from the UN Commission on International Trade Law working group three on investor-state dispute settlement reformand the European Commission’s proposed multilateral investment court may prove instructive. In respect of the proposed format of a multilateral decision-making body, the commission suggested the creation of a two-tiered investment court system to hear disputes under existing and future agreements, which would include a tribunal of first instance and an appellate tribunal. An instrument addressing expectations Other submissions proposed to working group three by countries such as Colombia and Ecuador include novel alternatives to investor-state dispute settlement, such as the adoption of a multilateral convention on investor-state arbitration with core elements and opt-in elements for states that ratify it. Many of the submissions emphasise the potential value of developing a «menu of possible solutions... that member states can choose to adopt, based on their specific needs and interests». A flexible, à la carte style investment arbitration convention may resonate with AfCFTA negotiators seeking to devise a single, coherent dispute settlement regime for a diverse group of jurisdictions. In light of these trends the AfCFTA negotiators have a unique opportunity to contribute to the development and reformof international investment law by creating an instrument that addresses the expectations of investors, stimulates the flow of capital and maximises the contribution of foreign investment to the realisation of domestic, regional and — above all continental — development objectives. [Source : Herbert Smith Freehills LLP - Peter Leon, Ernst Müller and Natasha Rachwal Published in, 11 October 2020] 5

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