While African States are well endowed with natural resources, especially those related to mines and petroleum, their populations do not sufficiently benefit from their extraction. Foreign investors and multinational corporations are often the main beneficiaries, with countries receiving a share of revenue that may ultimately inflict long-term damage to their national economies. An important instrument through which multinational companies protect their interests is the stabilisation clause that attempts to freeze the regulatory power of the state for the duration of the contract.

Stabilisation clauses impose obligations on the state, typically for the exclusive benefit of the foreign investor, to maintain the law and its application unchanged for the duration of the contract. The relevant law and practice could include anything from the fiscal regime of the contract (e.g. not to raise the tax rate, the royalty rate, the export duties on the production, etc.), to the environmental regime (e.g. allocating liability for environmental damage, etc.), to the labour law regime (e.g. how many foreigners can be employed in the project, what their seniority and salary levels are going to be, their work permit in the country that determines how long they will be allowed to be in the country, etc.) etc.

Concept Note