sadc protocol on finance and investment

SADCPROTOCOLONFINANCEANDINVESTMENT

PREAMBLE

WE,theHeadsofStateorGovernmentof:

TheRepublicofAngola

TheRepublicofBotswana

TheDemocraticRepublicoftheCongo

TheKingdomofLesotho

TheRepublicofMadagascar

TheRepublicofMalawi

TheRepublicofMauritius

TheRepublicofMozambique

TheRepublicofNamibia

TheRepublicofSouthAfrica

TheKingdomofSwaziland

TheUnitedRepublicofTanzania

TheRepublicofZambia

TheRepublicofZimbabwe

HAVINGregardtoArticle21oftheTreatywhichenjoinsMemberStatestocooperateinallareasnecessarytofosterregionaldevelopmentandintegration;

NOTINGArticle22oftheTreatywhichcallsfortheconclusionofprotocolsasmaybenecessaryineachareaofcooperationandwhichshallspellouttheobjectivesandscopeof,andtheinstitutionalmechanismsfor,cooperationandintegration;

FURTHERnotingthattheRISDPmapandtargetsforenhancingsocio-economicdevelopmentanddeeperregionalintegration;

CONSCIOUSoftheircollectivedutytoachieveeconomicgrowthandbalancedintraregionaldevelopment,compatibilityamongnationalandregionalstrategiesandprogrammes,todeveloppoliciesaimedattheprogressiveeliminationofobstaclestothefreemovementofcapitalandlabour,goodsandservices,andoftheresidentsoftheMemberStates,improveeconomicmanagementandperformancethroughregionalcooperation,andtocreateappropriateinstitutionsandmechanismsfortheimplementationofprogrammesandoperationsintheRegion;

CONVINCEDoftheneedtoaccelerategrowth,investmentandemploymentintheSADCRegionthroughincreasedcooperation,coordinationandmanagementofmacroeconomic,monetaryandfiscalpoliciesandtoestablishandsustainmacroeconomicstabilityasapreconditiontosustainableeconomicgrowthandforthecreationofamonetaryunionintheRegion;

RECOGNISINGtheincreasingimportanceofthedevelopmentandstrengtheningoffinancialandcapitalmarkets,andtheroleplayedbyinvestmentandtheprivatesectorinproductivecapacityandincreasedeconomicgrowthandsustainabledevelopment;

RECOGNISINGtheimportanceofthelinkbetweeninvestmentandtrade,andtheneedforgreaterregionalcooperationtoenhancetheattractivenessoftheRegionasaninvestmentdestination;

MINDFULofthedifferentlevelsofeconomicdevelopmentofMemberStatesandoftheneedtoshareequitablyinthebenefitsofregionalintegration;

HEREBYAGREEasfollows:

ChapterONE.DefinitionsandObjectivesArticle1.Definitions

1.InthisProtocol,termsandexpressionsdefinedinArticle1oftheTreatyshallbearthesamemeaningunlessthecontextotherwiserequires.

2.InthisProtocol,unlessthecontextotherwiserequires:

"Annex"meansanAnnextothisProtocol;

"BIS"meanstheBankforInternationalSettlements;

"capitalmarket"meansamarketwherecapitalfunds,debtorequitiesandanyotherfinancialinstrumentaretraded

"CCBG"meanstheCommitteeofCentralBankGovernorsinSADC;

"CentralBank"means,inrelationtoaStateParty,thecentralbankofthatStateParty;

"CommitteeofMinistersresponsibleforFinanceandInvestment"meanstheCommitteeofMinistersforpolicydevelopmentandpolicymakingforfinanceandinvestmentmatters,orsuchsimilarbodyastheCouncilmayestablish;

"CommitteeofSeniorTreasury"meansthetechnicaladvisorybodytotheCommitteeofMinistersforFinanceandInvestmentOfficialsconsistingofHeadsofTreasuries;

"DFIs"means,inrelationtoaStateParty,thosefinancialinstitutionswhicharedesignated,orclassified,asDevelopmentFinanceInstitutionsbythatStateParty;

"financialmarkets"meansmarketsfortheexchangeofcapitalandcreditintheeconomy;

"Protocol"meansthisSADCProtocolonFinanceandInvestmentincludingitsannexes;

"StateParty"meansaMemberStatethathasratifiedoraccededtothisProtocol;and

"RISDP"meanstheRegionalIndicativeStrategicDevelopmentPlan.

Article2.Objectives

1.ThisProtocolseekstofosterharmonisationofthefinancialandinvestmentpoliciesoftheStatePartiesinordertomakethemconsistentwithobjectivesofSADCandensurethatanychangestofinancialandinvestmentpoliciesinoneStatePartydonotnecessitateundesirableadjustmentsinotherStateParties.

2.Theobjectivereferredtoinparagraph1shallbeachievedthroughfacilitationofregionalintegration,co-operationandco-ordinationwithinfinanceandinvestmentsectorswiththeaimofdiversifyingandexpandingtheproductivesectorsoftheeconomy,andenhancingtradeintheRegiontoachievesustainableeconomicdevelopmentandgrowthanderadicationofpovertyby:

(a)creatingafavourableinvestmentclimatewithinSADCwiththeaimofpromotingandattractinginvestmentintheRegion;

(b)achievingandmaintainingmacroeconomicstabilityandconvergencewithintheRegion;

(c)co-operatinginrespectoftaxationandrelatedmatterswithintheRegion;

(d)co-operatingandco-ordinatingamongstStatePartiesincollaborationwithCentralBanksonexchangecontrolpolicies;

(e)establishingprincipleswhichwillfacilitatethecreationofacoherentandconvergentstatusinthelegalandoperationalframeworksofCentralBanks;

(f)establishingaframeworkforco-operationandco-ordinationbetween(amongst)CentralBanksonpayment,clearingand

settlementsystems;

(g)co-operatingintheareaofinformationtechnologyandcommunicationstechnologyamongstCentralBanks;

(h)co-operatingonbanksupervisionamongstCentralBanks;

(i)co-operatingintheactivitiesofDFIsintheRegion;

(j)co-operatingintheareaofnon-bankingfinancialinstitutionsandservices;

(k)facilitatingthedevelopmentofcapitalmarketsintheRegion;

(l)co-operatingintheareaofSADCStockExchanges;

(m)co-operatingwithregardtoanti-moneylaunderingissuesamongstStateParties;and

(n)cooperationinrespectofaSADCProjectPreparationandDevelopmentFund.

2.Theobjectivessetoutinparagraph1,theimplementationthereofandthemechanismforsuchimplementationarefullydescribedintheAnnexestothisProtocol.

ChapterTWO.Co-operationonInvestmentArticle3.Co-operationonInvestment

StatePartiesshallco-ordinatetheirinvestmentregimesandcooperatetocreateafavourableinvestmentclimatewithintheRegionassetoutinAnnex1.

ChapterTHREE.MacroeconomicConvergenceArticle4.MacroeconomicConvergence

StatePartiesshallconvergeonstability-orientatedeconomicpoliciesandshallco-operateassetoutinAnnex2.

ChapterFOUR.Co-operationInTaxationandRelatedMattersArticle5.Co-operationInTaxationandRelatedMatters

StatePartiesshallco-operateintaxationmattersandco-ordinatetheirtaxregimeswithintheRegionassetoutinAnnex3.

ChapterFIVE.Co-operationAmongCentralBanksArticle6.Co-operationandCo-ordinationonExchangeControls

StatePartiesshallco-operateandco-ordinatetheirexchangecontrolpoliciesassetoutinAnnex4.

Article7.TheLegalandOperationalFrameworks

StatePartiesshallharmonizethelegalandoperationalframeworksoftheirrespectiveCentralBanksassetoutinAnnex5.

Article8.Payments,ClearingandSettlementSystems

StatePartiesshallensureco-operationamongsttheirrespectiveCentralBanksinrelationtopayments,clearingandsettlementsystemsassetoutinAnnex6.

Article9.Co-operationIntheAreaofInformationandCommunicationTechnology

StatePartiesshallensureco-ordinationandco-operationamongsttheirrespectiveCentralBanksinrelationtooperationsintheareaofinformationandcommunicationtechnologyassetoutinAnnex7.

Article10.Co-operationbetweenBankingSupervisors

StatePartiesshallfacilitateco-operationbetween(amongst)regionalbankingsupervisorsandtheharmonizationofbankingsupervisorystandardsandpracticesassetoutinAnnex8.

ChapterSIX.NetworkofDfisArticle11.FacilitationofActivitiesofDfis

Inordertoincreaseeffectivelycrossborderflowsoffinanceforprojects,StatePartiesagreetoestablishaDevelopmentFinanceInstitutionsNetworkandtofacilitatetheactivitiesoftheirrespectiveDevelopmentFinanceInstitutionsandtoensureco-operationbetweentheseDevelopmentFinanceInstitutionsassetoutinAnnex9.

ChapterSEVEN.Co-operationInRegionalCapitalandFinancialMarketsArticle12.RegulationandSupervisionofNon-bankingFinancialServices

StatePartiesshallharmonizetheregulationofnon-bankingfinancialinstitutionsandshallfacilitateco-operationbetweentherespectiveregulatorsandsupervisorsofsuchinstitutionsassetoutinAnnex10.

Article13.DevelopmentofCapitalandFinancialMarkets

StatePartiesshallco-operateindevelopingandstrengtheningnationalcapitalandfinancialmarketswiththeintentionofcreatingaregionalcapitalandfinancialmarketassetoutinAnnexes10and11.

Article14.Co-operationAmongMemberStockExchanges

StatePartiesshallfacilitateco-operationbetweentheirrespectivestockexchangesassetoutinAnnex11.

ChapterEIGHT.Anti-moneyLaunderingArticle15.Co-operationwithRegardtoAnti-moneyLaundering

StatePartiesshallco-operatewithregardtoanti-moneylaundering.

ChapterNINE.ProjectPreparationandDevelopmentFundArticle16.DevelopmentofaSadcProjectPreparationandDevelopmentFund

StatePartiesagreetoestablishaProjectPreparationandDevelopmentFundtofinancethepreparationanddevelopmentofprojectsbywayofprovidingtechnicalassistancetowardsprojectidentification,projectselectionandfeasibilitystudiesandtoparticipateinthefinancingofselectedprojects.

ChapterTEN.InstitutionalandAdministrativeArrangementsArticle17.EstablishmentofInstitutions

ThefollowinginstitutionsaretobeestablishedinaccordancewithArticles9,10and11oftheSADCTreaty:

(a)theCommitteeofMinistersforFinanceandInvestment;

(b)theCommitteeofCentralBankGovernorsinSADC;and

(c)thePeerReviewPanel.

Article18.TheCommitteeofMinistersforFinanceandInvestment

TheCommitteeofMinistersforFinanceandInvestmentshallconsistoftheMinistersresponsibleforfinanceandfor

investmentofeachStatePartyanditshallmeetatleastonceayear.

Article19.TheCommitteeofCentralBankGovernorsInSadc

1.TheCCBGshallconsistoftheGovernoroftheCentralBankofeachStateParty.

2.TheCCBGshallmeetatleastonceayearandwillreporttotheCommitteeofMinistersforFinanceandInvestment.

Article20.PeerReviewPanel

1.ThePeerReviewPanelshallconsistof:

(a)theCommitteeofMinistersforFinanceandInvestment;and

(b)CentralBankGovernorsfromeachoftheStateParties.

2.ThePeerReviewPanelshallmeetonceayeartoeffecttheprovisionsofmacroeconomicmonitoringandsurveillanceasprovidedforinArticle7ofAnnex2.

Article21.InstitutionalMechanisms

1.TheinstitutionalmechanismsforimplementationofthisProtocolshallcomprisetheIntegratedCommitteeofMinisters,theCommitteeofMinistersforFinanceandInvestment,theCCBG,thePeerReviewPanelandtheSecretariat.

2.TheCommitteeofMinistersforFinanceandInvestmentshallcreatesuchcommittees,sub-committeesorinstitutionsasitdeemsnecessaryforpurposesoftheeffectiveimplementationofthisProtocol.

Article22.FunctionsandResponsibilities

1.ThefunctionsandresponsibilitiesoftheIntegratedCommitteeofMinistersareassetoutinArticle12oftheSADCTreaty.

2.TheCommitteeofMinistersforFinanceandInvestmentshalloverseetheimplementationofthisProtocol.

3.TheCCBGshallberesponsiblefortheimplementationofthoseaspectsthatarespecificallyallocatedtoit:

(a)bytheCommitteeofMinistersforFinanceandInvestment;and

(b)inthevariousAnnexesofthisProtocol.

4.TheSecretariatshallensureclosecollaborationwith;

(a)StateParties;and

(b)allrelevantinstitutionsonfinance,investmentandotherrelatedmattertheRegion.

ChapterELEVEN.FinalProvisionsArticle23.Annexes

1.StatepartiesmaydevelopandadoptannexesfortheimplementationofthisProtocol.

2.AnAnnexshallformanintegralpartofthisProtocol.

3.TheadoptionofannexesunderthisArticleshallbedoneinaccordancewithArticle26.

Article24.SettlementofDisputes

1.StatePartiesshallusetheirbestendeavours,throughco-operationandconsultation,toachieveconsensusintheinterpretation,applicationandimplementationofthisProtocol.

2.WhereStatePartiesareunabletoachieveconsensusintheinterpretation,applicationandimplementationofanyArticleofthisProtocol,ascontemplatedinparagraph1,and:

(a)theAnnexrelatingtosuchArticlecontainsprovisionswhichdealwithdisputesordifferencesarisinginrelationtosuchArticle,suchprovisionsshallbeappliedinrespectofthedisputeordifferencerelatingtosuchArticle;

(b)theAnnexrelatingtosuchArticledoesnotcontainprovisionswhichdealwithdisputesordifferencesarisinginrelationtosuchArticle,theStatePartieswhicharepartiestothedisputeordifferencerelatingtosuchArticlewillusetheirbestendeavourstosettlesuchdisputeordifferencethroughnegotiationsingoodfaith.

3.StatePartiesagreethatif,inrelationtoadisputeordifferencecontemplatedinparagraph2(b)theStatePartieswhicharepartiestosuchdisputeordifferenceareunabletosettlesuchdisputeordifferencethroughnegotiationwithinthreemonthsfromthetimethedisputesordifferencesarose,suchdisputeordifferenceshallbereferredtotheTribunalforadjudication.

Article25.GeneralUndertaking

1.StatePartiesshalltakesuchappropriatemeasuresasarenecessarytoensurethattheirrespectiveobligationsarisingfromthisProtocolarefulfilled.

2.StatePartiesshallco-operatewitheachotherinaddressinganyimpedimentsthatmayariseasaresultofanyaction,orlackofaction,byanyStatePartyonissueshavingamaterialbearingonthosefinanceandinvestmentmatterswhicharenotcoveredinthisProtocol.

Article26.Amendments

1.AnyStatePartymayproposeamendmentstothisProtocol.

2.ProposalsforamendmentstothisProtocolshallbemadetotheExecutiveSecretarywhoshalldulynotifyallMemberStatesoftheproposedamendmentsatleastthirty(30)daysinadvanceof

ConsiderationoftheamendmentsbytheStatesParties.SuchnoticemaybewaivedbytheMemberStates.

3.AmendmentstothisProtocolshallbeadoptedbyadecisionofthreequartersofalltheStatePartiesandshallbecomeeffectivethirty(30)daysaftersuchadoption.

Article27.Signature

ThisProtocolshallbesignedbythedulyauthorisedrepresentativesoftheMemberStates.

Article28.Ratification

ThisProtocolshallbesubjecttoratificationbythesignatoryStatesinaccordancewiththeirconstitutionalprocedures.

Article29.EntryIntoForce

ThisProtocolshallenterintoforcethirty(30)daysafterthedepositofinstrumentsofratificationbyatleasttwo-thirdsofalloftheMemberStates.

Article30.Accession

ThisProtocolshallremainopenforaccessionbyanyMemberState.

Article31.Withdrawal

1.AnyStatePartymaywithdrawfromthisProtocolupontheexpirationoftwelve(12)monthsfromthedateofgivingwrittennoticetotheExecutiveSecretarytothateffect.

2.AnyStatePartythathaswithdrawnpursuanttoparagraph1ofthisArticleshallceasetoenjoyallrightsandbenefitsunderthisProtocoluponthewithdrawalbecomingeffective.

3.AnyStatePartythathaswithdrawnpursuanttoparagraph1ofthisArticleshallremainboundbytheobligationsunderthisProtocolforaperiodoftwelve(12)monthsfromthedateofgivingnotice.

Article32.Depositary

1.ThisoriginaltextofthisProtocol,allinstrumentsofratificationandallinstrumentsofaccessionshallbedepositedwiththeExecutiveSecretary,whoshalltransmitcertifiedcopiesthereoftoallMemberStates.

2.TheExecutiveSecretaryshallnotifytheMemberStatesofthedatesonwhichinstrumentsofratificationandinstrumentsofaccessionhavebeendepositedunderparagraph1.

3.TheExecutiveSecretaryshallregisterthisProtocolwiththeSecretariatoftheUnitedNations,theCommissionoftheAfricanUnionandsuchotherorganisationsastheCouncilmaydetermine.

INWITNESSWHEREOF,WE,theHeadsofStateorGovernment,havesignedthisProtocol.

DONEat.....on18dayofAugust2006inthree(3)originaltextsintheEnglish,FrenchandPortugueselanguages,alltextsbeingequallyauthentic.

RepublicofAngola

RepublicofBotswana

DemocraticRepublicofCongo

KingdomofLesotho

RepublicofMadagascar

RepublicofMalawi

RepublicofMauritius

RepublicofMozambique

RepublicofNamibia

RepublicofSouthAfrica

KingdomofSwaziland

UnitedRepublicofTanzania

RepublicofZambia

RepublicofZimbabwe

ANNEXES

TheHighContractingParties:

COMMITTEDtoachievingthebroadobjectivesoftheSADCassetoutintheTreatyandspecificallytoachievingeconomicgrowthandsustainabledevelopmentthroughregionalintegrationandworkingthroughIPAsintheRegion;

RECOGNISINGtheincreasingimportanceoftheroleplayedbyinvestmenttoadvanceproductivecapacityandincreaseeconomicgrowthandsustainabledevelopmentandtheimportanceofthelinkbetweeninvestmentandtrade;

CONCERNEDwiththelowlevelsofinvestmentintotheSADC,eventhoughanumberofmeasureshavebeentakentoimprovetheinvestmentenvironment;

AIMINGtocreatenewemploymentopportunitiesandimprovelivingstandardsinourterritories;

ACKNOWLEDGINGthatthereisaneedforgreaterregionalcooperationamongIPAsintheRegioninordertoenhancetheattractivenessoftheRegionasaninvestmentdestination;

CONSCIOUSthatwithouteffectivepoliciesoninvestmentprotectionandpromotion,theRegionwillcontinuetobemarginalisedintermsofinvestmentinflowsandsustainableeconomicdevelopment;and

WISHINGtobeguidedbytheideals,objectivesandspiritoftheProtocolinthefacilitationandstimulationofinvestmentflowsandtechnologytransferandinnovationintotheRegion


Article1.Definitions

1.InthisAnnex,termsandexpressionsdefinedinArticle1oftheProtocolshallbearthesamemeaningunlessthecontextotherwiserequires.

2.InthisAnnex,unlessthecontextotherwiserequires:

"bond"meansadebtinstrumentintermsofwhichtheissuerthereofisobligedtore-pay,tothebondholderonaspecifiedmaturitydate,theprincipalamountofaloan(and,ordinarily,interestthereon)madebythebondholdertotheissuer;

"company"meansanyentityconstitutedororganisedundertheapplicablelawsofanyState,whetherornotforprofit,andwhetherprivatelyorgovernmentallyownedorcontrolled,andincludesacorporation,trust,partnership,soleproprietorship,branch,jointventure,association,orothersuchorganisation;

"HostGovernment"meansthegovernmentoftheStatePartyinwhoseterritoryaninvestmentismadeorlocated;

"HostState"meanstheStatePartyinwhoseterritoryaninvestmentismadeorlocated;

"ICSIDConvention"meanstheConventionontheSettlementofInvestmentDisputesbetweenStatesandNationalsofOtherStates,doneatWashington,March18,1965;

"investment"meansthepurchase,acquisitionorestablishmentofproductiveandportfolioinvestmentassets,andinparticular,thoughnotexclusively,includes:

(a)movableandimmovablepropertyandanyotherpropertyrightssuchasmortgages,liensorpledges;

(b)shares,stocksanddebenturesofcompaniesorinterestinthepropertyofsuchcompanies;

(c)claimstomoneyortoanyperformanceundercontracthavingafinancialvalue,andloans;

(d)copyrights,know-how(goodwill)andindustrialpropertyrightssuchaspatentsforinventions,trademarks,industrialdesignsandtradenames;

(e)rightsconferredbylaworundercontract,includinglicencestosearchfor,cultivate,extractorexploitnaturalresources:

ProvidedthatnothinginthisdefinitionshallpreventaStatePartyfromexcludingshort-termportfolioinvestmentsofaspeculativenatureoranysectorsensitivetoitsdevelopmentorwhichwouldhaveanegativeeffectonitseconomy.AStatePartythathasinvokedthisprovisionshallnotifytheSecretariatforinformationpurposeswithinaperiodofthree(3)months;

"IPAs"meanstheinvestmentpromotionagenciesofStatePartiesthat:

(a)activelypromoteandfacilitateinvestments;

(b)proactivelyidentifybusinessopportunitiesforinvestments;

(c)encourageexpansionofexistinginvestments;

(d)developafavourableinvestmentimageoftheircountries;

(e)makerecommendationsforimprovementsoftheircountriesasinvestmentdestinations;

(f)keeptrackofallinvestorsenteringandleavingthecountryforthepurposeofanalysisintermsofinvestmentperformance;or

(g)playtheroleofadvisinginvestorsuponrequestontheavailability,choiceorsustainabilityofpartnersinjointventureprojects.

2.NothinginthisdefinitionpreventsaStatePartyfromexcludingshort-termportfolioinvestmentsofaspeculativenatureoranysectorsensitivetoitsdevelopmentorwhichwouldhaveanegativeeffectonitseconomy.StatePartieswhohaveinvokedthisclauseshallnotifytheSADCSecretariatforinformationpurposeswithinaperiodofthree(3)months.

"investor"meansapersonthathasbeenadmittedtomakeorhasmadeaninvestment;

"least-developedmeans",forpurposesofArticle19ofthisAnnex,thosecountriesStatePartiesclassifiedassuchbytheUnitedNations;

"MIGA"meanstheMultilateralInvestmentGuaranteeAgency;

"MIGAConvention"meanstheConventionEstablishingtheMultilateralInvestmentGuaranteeAgency

"NewYorkConvention"meanstheUnitedNationsConventionontheConventionRecognitionandEnforcementofForeignArbitralAwards;

"person"meansanaturalpersonoracompany;

"PPP"meansPublicPrivatePartnership;

"returns"meanstheamountsyieldedbyaninvestmentandinparticular,thoughnotexclusively,includesprofits,interest,capitalgains,dividends,royaltiesandfees;

"SMME"meansSmallMicroandMediumEnterprises,asdefinedbyeachStatePartyinitsrelevantlegislationasqualifyingforsuchstatus;

"Stateentity"means,means,anyagency,departmentorinstrumentalityoftheGovernmentofaStatePartyandanycorporation,juristicperson,institution,undertakingorentitywhichisdirectlyorindirectlyownedorcontrolledbythatStateParty,whichareengagedinactivitiesofacommercialnature;

"territory"means,inrelationtoaStateParty,thetotallandareaofthatStatePartyand,inrelationtoacoastalStateParty,includes,inaddition,theterritorialseaandanymaritimeareasituatedbeyondtheterritorialseaofthatcoastalStatePartywhichhasbeen,ormightinthefuturebe,designatedunderthenationallawofthatcoastalStateParty,inaccordancewithinternationallaw,asanareawithinwhichthatcoastalStatePartymayexerciserightswithregardtothesea-bed,subsoilandnaturalresources;

"thirdState"meansanystatethatisnotaStateParty;and

"UNCITRALArbitrationRules"meansthearbitrationrulesoftheUnitedNationsCommissiononInternationalTradeLaw.

Article2.PromotionandAdmissionofInvestments

1.EachStatePartyshallpromoteinvestmentsinitsterritory,andadmitsuchinvestmentsinaccordancewithitslawsandregulations.

2.TheHostStateshallfacilitateandcreatefavourableconditionstoattractinvestmentsinitsterritorythroughsuitableadministrativemeasuresand

Inparticularinthematterofexpeditiousclearanceofauthorisationsinaccordancewithitslawsandregulations.

3.Forthepurposesofcreatingapredictableinvestmentclimate,StatePartiesshallnotarbitrarily,andwithoutgoodreason,amendorotherwisemodifytothedetrimentofinvestors,theterms,conditionsandanybenefitsspecifiedintheletterofauthorisation.

Article3.PromotionofLocalandRegionalEntrepreneurs

1.StatePartiesshallsupportthedevelopmentoflocalandregionalentrepreneursandenhanceregionalproductivecapacitywithintheRegionthrough,interalia:

(a)skillsdevelopmentandenhancementprogrammes;

(b)SMMEdevelopment;

(c)appropriateinvestmentsintosupportinginfrastructure;and

(d)othersupply-sidemeasuresandpoliciesnecessarytoenhanceglobalcompetitiveness.

2.Inprovidingsupportdescribedinparagraph1ofthisArticle,StatePartiesmayplaceemphasisonindustriesthatprovideup-streamanddown-streamlinkagesandhaveafavourableeffectonattractingforeigndirectinvestmentandgenerating

increasedemployment.

Article4.PublicPrivatePartnerships

StatePartiesshallco-operateonpoliciesandotherrelatedissuesthatwillencourageandfacilitatetheuseofPPPstoensuredevelopmentintheRegion.

Article5.InvestmentProtection

InvestmentsshallnotbenationalisedorexpropriatedintheterritoryofanyStatePartyexceptforapublicpurpose,underdueprocessoflaw,onanon-discriminatorybasisandsubjecttothepaymentofprompt,adequateandeffectivecompensation.

Article6.InvestorsoftheThirdState

1.InvestmentsandinvestorsshallenjoyfairandequitabletreatmentintheterritoryofanyStateParty.

2.Treatmentreferredtoinparagraph1shallbenolessfavourablethanthatgrantedtoinvestorsofthethirdState.

Article7.GeneralExceptions

1.NotwithstandingtheprovisionsofArticle6,StatePartiesmayinaccordancewiththeirrespectivedomesticlegislationgrantpreferentialtreatmenttoqualifyinginvestmentsandinvestorsinordertoachievenationaldevelopmentobjectives.

2.StatePartiesundertaketoeventuallyharmonizetheirrespectivedomesticpoliciesandlegislationwithinthespiritofnon-discriminationassetoutinArticle6.

3.TheprovisionsofArticle3shallnotapplytoadvantages,concessionsorexemptionswhichmayresultfromabilateralinvestmenttreaty,FreeTradeArea,CustomsUnion,EconomicUnion,MonetaryUnionorothermultilateralarrangementforeconomicintegrationinwhichaStatePartyisparticipatingormayparticipate.

Article8.Transparency

StatePartiesshallpromoteandestablishpredictability,confidence,trustandintegritybyadheringtoandenforcingopenandtransparentpolicies,practices,regulationsandproceduresastheyrelatetoinvestment.

Article9.RepatriationofInvestmentandReturns

EachStatePartyshallensurethatinvestorsareallowedfacilitiesinrelationtorepatriationofinvestmentsandreturnsinaccordancewiththerulesandregulationsstipulatedbytheHostState.

Article10.CorporateResponsibility

Foreigninvestorsshallabidebythelaws,regulations,administrativeguidelinesandpoliciesoftheHostState.

Article11.SourcingofRequisiteSkills

StatePartiesshall,subjecttotheirnationallawsandregulations,permitinvestorstoengagekeypersonnelandothernecessaryhumanresourcesoftheirchoice,regardlessofnationalityunderthefollowingcircumstances:

(a)wheretheskillsdonotexistintheHostStateandtheRegion;

(b)whereStatePartiesaresatisfiedthatthesourcingofsuchskillswillbeincompliancewithregionalpolicies;and

Wheresuchsourcingwouldenhancethedevelopmentoflocalcapacitythroughskillstransfer.

Article12.OptimalUseofNaturalResources

StatePartiesshallpromotetheuseoftheirnaturalresourcesinasustainableandanenvironmentallyfriendlymanner.

Article13.EnvironmentalMeasures

StatePartiesrecognisethatitisinappropriatetoencourageinvestmentbyrelaxingdomestichealth,safetyorenvironmentalmeasuresandagreenottowaiveorotherwisederogatefrom,internationaltreatiestheyhaveratified,oroffertowaiveorotherwisederogatefrom,suchmeasuresasanencouragementfortheestablishment,acquisition,expansionorretentionintheirterritories,ofaninvestment.

Article14.RighttoRegulate

NothinginthisAnnexshallbeconstruedaspreventingaStatePartyfromexercisingitsrighttoregulateinthepublicinterestandtoadopt,maintainorenforceanymeasurethatitconsidersappropriatetoensurethatinvestmentactivityisundertakeninamannersensitivetohealth,safetyorenvironmentalconcerns.

Article15.CapitalMovements

1.StatePartiesshallencouragethefreemovementofcapital.

2.Notwithstandingtheprovisionsofparagraph1,StatePartiesmayregulatecapitalmovementssubjecttotheirdomesticlawsandregulations,whennecessitatedbyeconomicconstraints.

3.StatePartiesthatintroducenewregulationsinthecircumstancesdescribedinparagraph2shallnotifytheSecretariatforinformationpurposeswithinaperiodofthree(3)monthsofintroducingsuchregulations.

Article16.CompetitionPolicy

StatePartiesundertakethroughco-operationtoadvanceacompetitionpolicyintheRegion.

Article17.Intra-regionalandExtra-regionalAgreementsfortheAvoidanceofDoubleTaxation

1.WithaviewtoencouragingthemovementofcapitalwithintheRegion,particularlytotheleast-developedcountries,StatePartiesundertake,inlinewiththeirundertakingsassetoutinAnnex3,toconcludebetweenthemselvesagreementsfortheavoidanceofdoubletaxation.

2.StatePartiesagree,inlinewiththeirundertakingsassetoutintheAnnex3,toapproachtheirnegotiationsforagreementsfortheavoidanceofdoubletaxationwithcountriesoutsidetheregiononthebasisofmutuallyagreedprinciples.

Article18.Trade,InvestmentandIndustrialPolicy

Inrecognizingtheimportanceofthelinkbetweentradeandinvestment,StatePartiesagreetopursuetradeopennessandintra-regionalindustrialpoliciesandtoreducebarrierstointra-regionaltradeinpursuanceoftheprinciplesoftheSADCProtocolonTradeandanyotherrelevantSADCinstruments.

Article19.HarmonisationofPoliciesandLaws

StatePartiesshallpursueharmonisationwiththeobjectiveofdevelopingtheregionintoaSADCinvestmentzone,whichshall,amongothers,includetheharmonisationofinvestmentregimesincludingpolicies,lawsandpracticesinaccordancewiththebestpracticeswithintheoverallstrategytowardsregionalintegration.

Article20.ConditionsFavouringLeastDevelopedCountries

1.StatePartiesshallestablishconditionsfavouringtheparticipationofleast-developedcountriesofSADCintheeconomicintegrationprocess,basedontheprinciplesofnon-reciprocityandmutualbenefit.

2.Forthepurposeofensuringthatleast-developedcountriesofSADCreceiveeffectivepreferentialtreatment,StatePartiesshallinvestigatetheestablishmentofmarketopeningsaswellasthesettingupofprogrammesandotherspecificformsofcooperationincludinginrelationtoderogationsinrespectofinvestmentincentives.

Article21.AdherencetoInternationalConventionsandPractices

StatePartiesmayconsideraccedingtomultilateralagreementsoninvestmentdesignedtopromoteorprotectinvestments,suchas:

(a)theICSIDConventionof1965;

(b)theMIGAConvention,1985;and

(c)theNewYorkConvention,1958.

Article22.RegionalCooperationonInvestment

StatePartiesshallthroughtheirrelevantinstitutionspromoteregionalcooperationintheareaofinvestment,includingPPPs,toensuredevelopmentintheRegion;

Article23.InvestmentPromotionAgencies

StatePartiesshallensurethattheirIPAs:

(a)carryouttheirinvestmentpromotionactivities,inlinewiththeirnationalandregionaldevelopmentpriorities;

(b)advisetheGovernmentofthatStateParty,theprivatesectorandotherstakeholdersintheformulationandreviewofpoliciesandproceduresthataffectinvestmentandtrade;and

(c)increaseawarenessoftheirinvestmentincentives,opportunities,legislation,practices,majoreventsaffectinginvestmentsandotherrelevantactivitiesthroughregularexchangeofinformation.

Article24.TheRoleoftheSecretariat

TheSecretariatshallensureclosecollaborationwithStatePartiesandallrelevantinstitutionsoninvestmentandotherrelatedmattersintheRegion.

Article25.RelationshipwithotherOrganisations

StatePartiesshallpursueandpromotepoliciesthatwillincreasecooperationwithotherregionalandinternationalorganisationsonissuesrelatingtoinvestment.

Article26.BilateralInvestmentTreaties

StatePartiesmayconcludebilateralinvestmenttreatieswiththirdStates.

Article27.AccesstoCourtsandTribunals

StatePartiesshallensurethatinvestorshavetherightofaccesstothecourts,judicialandadministrativetribunals,andotherauthoritiescompetentunderthelawsoftheHostStateforredressoftheirgrievancesinrelationtoanymatterconcerninganyinvestmentincludingjudicialreviewofmeasuresrelatingtoexpropriationornationalizationanddeterminationofcompensationintheeventofexpropriationornationalisation

Article28.SettlementofInvestmentDisputes

1.DisputesbetweenaninvestorandaStatePartyconcerninganobligationofthelatterinrelationtoanadmittedinvestmentoftheformer,whichhavenotbeenamicablysettled,andafterexhaustinglocalremediesshall,afteraperiodofsix(6)monthsfromwrittennotificationofaclaim,besubmittedtointernationalarbitrationifeitherpartytothedisputesowishes.

2.Wherethedisputeisreferredtointernationalarbitration,theinvestorandtheStatePartyconcernedinthedisputemayagreetoreferthedisputeeitherto:

(a)TheSADCTribunal;

(b)TheInternationalCentrefortheSettlementofInvestmentDisputes(havingregardtotheprovisions,whereapplicable,oftheICSIDConventionandtheAdditionalFacilityfortheAdministrationofConciliation,ArbitrationandFact-FindingProceedings);or

(c)AninternationalarbitratororadhocarbitraltribunaltobeappointedbyaspecialagreementorestablishedundertheArbitrationRulesoftheUnitedNationsCommissiononInternationalTradeLaw.

3.Ifafteraperiodofthree(3)monthsfromwrittennotificationoftheclaimthereisnoagreementtooneoftheabovealternativeprocedures,thepartiestothedisputeshallbeboundtosubmitthedisputetoarbitrationundertheArbitrationRulesoftheUnitedNationsCommissiononInternationalTradeLawastheninforce.ThepartiestothedisputemayagreeinwritingtomodifytheseRules.

4.TheprovisionsofthisArticleshallnotapplytoadispute,whicharosebeforeentryintoforceofthisAnnex.


RECALLINGtheprovisionsofChapterThreeoftheProtocolwhichrequiresco-operationonmacroeconomicconvergence;

RECOGNISINGtheneedtoaccelerategrowth,investmentandemploymentintheSADCRegionthroughincreasedco-operationandco-ordinationinrespectofmacroeconomicpolicies;

CONVINCEDthatregionaleconomicintegrationandmacroeconomicstabilityarepreconditionstosustainableeconomicgrowthandforthecreationofamonetaryunionintheRegion;

DETERMINEDtomaximiseco-operationandco-ordinationintheimplementationandmanagementofsustainablemacroeconomicpoliciesandtoreducethedivergenceinmacroeconomicaggregatesamongStateParties;

COMMITTEDtotheestablishmentofadynamic,sustainableandcredibleregionaleconomicentity;

DEDICATEDtogoodgovernance,accountableandtransparentpublicresourcemanagement,





"budgetdeficit"meanstheextenttowhichthegovernmentofthatStatePartysexpenditureandnetlendingexceedsreceiptsfromrevenueandgrants;

"currentaccount"meanstherecordoftransactionsingoods,services,incomeandcurrenttransfersbetweenresidentsofthatStatePartyandnon-residents;

"GDP"meanstheGrossDomesticProductofaStateParty;

"inflation"meanstherateofchangeinthegeneralpricelevelusingaheadlineindex;

"macroeconomic"meanstheconvergencebyStatePartiestolowconvergenceandstablelevelsofinflation,sustainablebudgetdeficits,publicandpubliclyguaranteeddebt,andcurrentaccountbalances;

"marketdistortions"meansregulatoryorstructuralobstructionsofthemarketclearingprocess;

"monetisationofdeficits"means,thefinancingofthebudgetdeficit(s)ofaStatePartythroughthecreationofmoney;

"publicandpubliclyguaranteeddebt"means,debtconsistingof:

(a)loansmadetoaStateParty(includingloanstopublicentitiesandthegovernmentoftheStateParty);and

(b)guaranteesgrantedbyaStateParty(includingguaranteesgrantedbypublicentitiesandthegovernmentoftheStateParty).

Article2.PrinciplesofMacroeconomicConvergence

1.InordertoachieveandmaintainmacroeconomicstabilitywithintheRegion,StatePartiesshallconvergeonstability-orientatedeconomicpoliciesimplementedthroughasoundinstitutionalstructureandframeworkandtothisend,StatePartiesshallco-operateandbeboundbythisAnnex.

2.Stability-orientatedeconomicpolicies,inrelationtoaStateParty,include,butarenotlimitedto:

(a)restrictinginflationtolowandstablelevels;

(b)maintainingaprudentfiscalstancebasedontheavoidanceoflargebudgetdeficits,monetisationofdeficitsandhighorrisingratiosofpublicandpubliclyguaranteeddebttoGDP;

(c)avoidinglargefinancialimbalancesintheeconomyoftheStateParty;and

(d)minimisingmarketdistortions.

Article3.IndicatorsofMacroeconomicConvergence

1.ThemacroeconomicconvergenceintheRegionshallbemeasuredandmonitoredbythefollowingindicators:

(a)therateofinflationinaStateParty;

(b)theratioofthebudgetdeficittoGDPinaStateParty;

(c)theratioofpublicandpubliclyguaranteeddebttoGDP,takingaccountofthesustainabilityofsuchdebt,inaStateParty;and

(d)thebalanceandstructureofthecurrentaccountinaStateParty.

2.StatePartiesshallidentifycommonguidelinesforeachoftheindicatorsreferredtoinparagraph1andsuchothercomplementaryindicatorsasmaybeagreed,includingstructuralperformanceandfinancialconditions.

Article4.FiscalandMonetaryPolicyCooperation

1.EachStatePartyshallformulate,implementandmaintainitsfiscalandmonetarypoliciesthataretransparent,consistentandcontributetowardstheachievementoftheprinciplesreferredtoinArticle2.

2.EachStatePartyshallformulateandimplementfiscalandmonetarypoliciesthataresustainableandminimisenegativespill-overeffectsintoanyotherStateParty.

Article5.InformationandData

1.StatePartiesshall,forpurposesofArticle8,providesuchdataandreportsasarerequiredbytheCommitteeofMinistersforFinanceandInvestmentfortheimplementationandmonitoringofmacroeconomicconvergence.

2.DatashallbeprovidedbyStatePartiesinaccordancewithinternationallyacceptabledatastandardsasdefinedbytheInternationalMonetaryFund.

Article6.InstitutionalArrangements

1.PursuanttoArticle21(2)oftheProtocol,theCommitteeofMinistersofFinanceandInvestmentherebyestablishesaCommitteeofSeniorTreasuryOfficialswhichshallberesponsiblefortheimplementationofthisAnnexandshallreportonsuchimplementationtotheCommitteeofMinisters..

2.TheCommitteeofSeniorTreasuryOfficialsmaymakeuseofanystructureorrecommendtotheCommitteeofMinistersforFinanceandInvestment,theestablishmentofanystructurethatmaybenecessarytofacilitatetheimplementationofthisAnnex.

3.ForthepurposesofthisAnnex,theCommitteeofMinistersforFinanceandInvestmentshallcollaboratewiththeCCBG.

Article7.MonitoringandSurveillance

1.ThePeerReviewPanelshallestablishacollectivesurveillanceproceduretomonitormacroeconomicconvergence,determinespecifictargets,assessprogressrelativetothosetargetsandprovideadviceoncorrectiveactions,assetoutin

thisArticle.

2.StatePartiesshallpresenttothePeerReviewPanelanannualmacroeconomicconvergenceprogrammewhichwillinclude:

(a)areviewofrecenteconomicdevelopmentsintheStateParties;

(b)progressrelativetoprevioustargets;

(c)medium-termobjectivesfortheagreedmacroeconomicconvergenceindicators;and

(d)specifictargetsfortheindicatorsreferredtoinsub-paragraph(c)aboveoverathree-yearperiod.

3.ThePeerReviewPanelshallevaluateandmonitortheannualmacroeconomicconvergenceprogrammessubmittedbyStateParties,determinewhethersuchmacroeconomicconvergenceprogrammessatisfythecommonguidelines,adviseonpossiblechanges,compareoutcomeswithpreviousprogrammesandmakesuchrecommendationsasthePeerReviewPanelmaydeemappropriateinaccordancewiththeTreaty.

4.ThePeerReviewPanelshallissueacommuniqueexplainingitsassessmentsreferredtoinparagraph3.

Article8.ReviewoftheSadcProgrammeonMacroeconomicConvergence

TheCommitteeofMinistersforFinanceandInvestmentmayreviewthemacroeconomicconvergenceprogrammeforSADCasnecessary.

PREAMBLE


RECALLINGtheprovisionsofChapterFouroftheProtocolwhichrequireco-operationontaxationandrelatedmatters;

RECOGNISINGtheneedtotakesuchstepsasarenecessarytomaximisetheco-operationofStatePartiesintaxationmattersandtoco-ordinatethetaxregimesoftheStateParties;and

DETERMINEDtotakesuchstepsasarenecessarytomaximisethecooperationoftheStatePartiesintaxationmatters;





"customsduty"meansataxnormallyappliedtoimportedgoods;

"directtax"meansataxleviedunderitsdomesticlaws,byacountryonpersons(includingjuristicpersons),inrespectofincome,capitalgains,networth,property,donationsandgiftsandincludesestateduties;

"doubletaxation"meansanimpositionofsimilartaxesbytwoormoretaxjurisdictionsonthesametaxpayerinrespectofthesameincomeorcapital;

"e-commerce,e-billing,ore-CustomsClearance"meanstheconductoffinancialtransactions,orcustomsclearance,byelectronicmeans,

"exceptionalcases"means,inrelationtotaxincentives,thoseexceptionstotheguidelinesenvisagedinArticle4agreedtobyStateParties,ontheuseoftaxincentiveswithintheRegionespeciallyfollowingnaturaldisastersorwars;

"exciseduty"meansadutyimposedbyacountryunderitsdomesticlawoncertaingoodsmanufacturedorproducedinthecountryorimportedintothatcountry,beingataxleviedonaspecificbasis,eitheronthebasisoftheweightorvolumeofthegoods,oronanadvalorembasis,oronaprofitbasis.

"harmfultaxcompetition"meansasituationwherethetaxsystemsofajurisdictionaredesignedinsuchawaythattheyerodethetaxbasesofotherjurisdictionsandattractinvestmentsorsavingswhichoriginateelsewhere,facilitatingtheavoidanceoftaxesinsuchotherjurisdictions;

"indirecttax"meansanytax(otherthanadirecttax)thatacountryimposesonconsumptionortransactionsunderdomesticlaw,andincludesVAT,salestaxes,exciseduties,stampduties,servicestaxes,registrationdutiesandfinancialtransactiontaxes;

"levy"meansataxinrespectofspecificitems,transactions,orevents,andwhichtaxisleviedatafixedorflatrate;

"luxurygoodsandservices"meansgoodsandserviceswithanincomeelasticityofgreaterthanone;

"MutualAgreement"meanstheprocedureenvisagedinArticle25oftheModelTaxConventiononIncomeandonCapitaloftheOrganisationforEconomicCooperationandDevelopment;

"mutualassistance"meanssucharrangementsasaremadebetweentwocountriesorjurisdictionsinordertoimprovetheefficiencyoftheirrespectivetaxationsystems;

"SADCTaxDatabase"meansthetaxdatabaseintowhichStatePartiesshalldepositinformationontaxonacontinuousbasis,ascontemplatedinArticle2;

"SADCModelTaxAgreement"meanstemplates,asadoptedbytheCommitteeofMinistersforFinanceandInvestment,forbilateralagreementsfortheavoidanceofdoubletaxationandthepreventionoffiscalevasionwithrespecttotaxesonincomeandoncapital,oragreementsformutualassistancewithregardtoindirecttaxes,tobeusedbyStatePartiesbetweenoramongstthemselvesorwithcountriesoutsidetheCommunityascontemplatedinArticle5(4);

"salestax"meansataximposedasapercentageofthepriceofgoodsorservicesandwhichisordinarilybornebythebuyerbuttheliabilityforrenderingpaymentofthetaxtotheauthoritiesisplacedonthesupplierofthegoodsorservices;

"tax"meansacompulsoryunrequitedfinancialcontributionimposedbyagovernmentorjurisdiction;

"taxincentives"means,inrelationtoaStateParty,fiscalmeasuresthatareusedtoattractlocalorforeigninvestmentcapitaltocertaineconomicactivitiesorparticularareasinacountryand,withoutlimitingthegeneralityoftheforegoing,includesthosemeasurescontemplatedinArticle5(2);

"TaxSparingArrangement"meansanarrangementintermsofwhichthegovernmentofresidenceofaninternationalinvestorrecognisestaxincentivesgrantedbyahostcountryforpurposesofattractinginvestmentsandprovidingrelieffromincometaxunderthedomesticlawsofthatgovernment,asifnormaltaxhadbeenimposedinrespectofthatinvestorinthehostcountry;

"TaxAgreement"meansanybilateralagreementconcludedbyStatePartiesbetweenoramongstthemselvesorwithcountriesoutsidetheCommunity,fortheavoidanceofdoubletaxationandthepreventionoffiscalevasionwithrespecttotaxesonincomeandoncapitalorformutualassistancewithregardtoindirecttaxes;

"VAT"meansavalueaddedtaximposedongoodsorservices,whichisleviedateachstageintheproductionanddistributionprocessandisbornebythefinalconsumerofsuchgoodsorservices,but,wheretheliabilityforrenderingpaymentofsuchtaxtotheauthoritiesisplaceduponthesupplierofthegoodsorservices.

Article2.SadcTaxDatabase

1.IntheinterestsofSADC,StatePartiesshallputinplaceacomprehensiveSADCTaxDatabasewhichispubliclyaccessiblewithintheRegion.

2.StatePartiesshall,collectively,takesuchstepsasarenecessarytofurtherdeveloptheSADCTaxDatabaseandtoprovidetheSecretariatwithsuchinformationasisrequiredtomaintaintheSADCTaxDatabase.

3.ThedevelopedSADCTaxDatabaseshall,inrelationtoeachStateParty,includedetailsinrespectofthatStatePartyof:

(a)alldirecttaxes,indirecttaxesandlevies,includingapplicablerates,implementationdates,exemptionsandallowances;

(b)alltaxincentivesoffered,includingimplementationdatesandconditionsimposed;

(c)allTaxAgreementsandtheirrespectiveimplementationdates;and

(d)appropriatestatisticsonrevenuecollectionandtherevenueimportanceofvariousinstrumentsincluding:

(i)thesalesvolumesorvalueofproductsandservicesthataresubjecttoIndirectTaxes,andtherevenuecollectedfromsuchproductsandservices;and

(ii)therevenuecollectedfromdirecttaxes.

4.EachStatePartyshallprovideatleastonanannualbasisandwhensignificantchangesoccur,informationinregardtothatStatePartyasisrequiredbytheSecretariattoupdatetheSADCTaxDatabase.

Article3.CapacityBuilding

1.StatePartiesshall,intheinterestsofSADC,developtheprofessionalismandexpertiseoftaxofficialsthroughouttheRegion,anddevelopaneffectiveenablingenvironmentthat:

(a)issupportiveoflife-longtraining,developmentofskillsandlearningfortheStateParties'personnelinrespectoftaxdesign,policydevelopmentandrevenueadministration;

(b)willeffectivelyequipsuchpersonneltoutilisetheirexpertisetoprotecttherespectiveindividualtaxbasesofStatePartiesagainstthepracticesoftaxavoidanceorevasionbydomesticandinternationaltaxpayersoperatingwithintheirrespectivejurisdictions;and

(c)willenablesuchpersonneltointroduce,develop,maintainandengendertaxationbestpracticesintheirrespectiveStateParties.

2.Inordertofullyimplementthewide-rangingstepsenvisagedinthisAnnex,eachStatePartyshall:

(a)activelysupportinitiativesaimedatdevelopingskillsandtaxationbestpracticesacrosstheRegion,includingtheexchangeofpersonnelandinformation,andtheprovisionofmutualassistance,trainingworkshops,seminars,andtrainingevents;and

(b)makeprovision(fromtheinternalbudgetofthatStatePartyand/orappropriateco-operatingpartnersupport)forresourcestodefraythecostsofongoingtrainingdevelopmentandtheinteractionofthetaxofficialsofthatStatePartyacrossallcapacitiesordisciplines.

3.StatePartiesshallmeettheinformationtechnologyanddigitalchallengesfacedbyStateParties,andworktogetherinrespondingtosuchchallenges,includingthereviewofissuesrelatingtoe-commerce,e-billing,ore-customsclearance,andtheimpactthate-commerce,e-billing,ore-customsclearancemayhaveontaxrevenuecollectionandontheflowofgoodsandservices.

Article4.ApplicationandTreatmentofTaxIncentives

1.StatePartiesshallendeavourtoachieveacommonapproachtothetreatmentandapplicationoftaxincentivesandshall,amongstotherthings,ensurethattaxincentivesareprovidedforonlyintaxlegislation.

2.Taxincentivesmayincludeanyoneormoreofthefollowing:

(a)investmentallowancesinadditiontofulldepreciationallowances;

(b)aninvestmenttaxcreditwhereacertainpercentageoftheacquisitioncostisdeducted,inadditiontonormaldepreciationdeductions,fromthetaxliability;

(c)thefullcostofacquisitionoftheassetisallowedasadeductionfromthetaxableprofitsoftheyearinwhichtherelevantinvestmentwasmade;

(d)accelerateddepreciationallowances;

(e)decliningbalancedepreciationallowances;

(f)taxprivilegedexportprocessingorenterprisezones;and

(g)taxholidays.

3.StatePartiesshall,inthetreatmentandapplicationoftaxincentives,endeavourtoavoid:

(a)harmfultaxcompetitionasmaybeevidencedby:

(i)zeroorloweffectiveratesoftax;

(ii)lackoftransparency;

(iii)lackofeffectiveexchangeofinformation;

(iv)restrictingtaxincentivestoparticulartaxpayers,usuallynon-residentsofthatStateParty;

(v)promotionoftaxincentivesasavehiclefortaxminimisation;or

(vi)theabsenceofsubstantialactivityinthejurisdictionofthatStatePartytoqualifyforataxincentive;and

(b)introducingtaxlegislationthatprejudicesanotherStatePartyseconomicpoliciesoractivitiesof,ortheregionalmobilityofgoods,services,capitalorlabour.

4.StatePartiesshall,collectively,throughthe(Committeeof)MinistersresponsibleforFinanceandInvestment,developandadoptguidelinesfortaxincentivesintheRegion,includingprovisionforexceptionalcases.

5.InordertoadvanceacompetitionpolicywithintheRegion,StatePartiesshallcollectivelydevelopafiscalframeworkfortaxincentivesthatwill,amongotherthings,focuson:

(a)theeffectivenessofproposedtaxincentivesinachievingtheirstatedpolicygoals;

(b)therevenuecostslikelytobesufferedbythefiscusofeachoftheStatePartiesasaresultoftheapplicationofproposedtaxincentives;

(c)theextenttowhichtheabsenceofTaxSparingArrangementsinTaxAgreementsbetweenStatePartiesreducetheeffectivenessoftaxincentives,particularlythoseaimedatattractingforeigndirectinvestments;

(d)theimpactthatproposedtaxincentiveswillhaveonthecollectivecostsof,orcollectiveburdenon,taxadministrationintheRegion;and

(e)theeffectsthattaxincentiveshaveontheoveralldistributionofthetaxburdenwithineachStateParty.

Article5.TaxAgreements

1.StatePartiesshall,collectively,developacommonpolicyforthenegotiationofTaxAgreementsbetweenoramongstthemselvesorwithcountriesoutsidetheRegion.

2.EachStatePartyshall,inaccordancewithitsconstitutionalprocedures,strivetoensurethespeedynegotiation,conclusion,ratificationandeffectiveimplementationofTaxAgreements.

3.StatePartiesshall,collectively,takesuchstepsasarenecessarytoestablishamongstthemselvesacomprehensivenetworkofagreementsfortheavoidanceofdoubletaxationthatwillassistinexpeditingtheeffectiveexchangeofinformation,mutualagreementproceduresandco-operationamongstthemselves.

4.StatePartiesshall,inpursuitofacommonpolicyfordealingwithTaxAgreements,developaModelTaxAgreementforSADCthat,amongotherthings,takesaccountoftheparticularsocio-economicdevelopmentneedsofeachStateParty.

5.StatePartiesshall,oncompletionoftheModelTaxAgreementreferredtoinparagraph4,drawupguidelinesfortheeffectiveexchangeofinformation,theimplementationofMutualAgreementprocedures.

Article6.IndirectTaxes

1.StatePartiesshalleffectivelyco-operateintheharmonisationoftheadministrationofindirecttaxes.

2.EachStatePartyshall,inlinewiththeWorldTradeOrganisationagreements,graduallysubstitutetaxesoninternationallytradedgoodsandserviceswithbroad-basedindirecttaxesonconsumption.

3.StatePartiesshall,collectively,exploreareasofpossibleco-ordinationforpolicyformulationandadministrationinrespectofexcisedutieson:

(a)tobaccoproducts;

(b)alcoholicbeverages;

(c)non-alcoholicbeverages;

(d)fuelproducts;

(e)luxurygoodsandservices;and

(f)anyotherexcisablegoodsandservices.

4.EachStatePartyshall,asfarasispossible,promotetheuseofexcisedutyonanadvalorembasisonluxurygoodsandservicesasanalternativetotheapplicationofmultipleVATratesorsalestaxrates;providedthatitisacceptedthattheclassificationofgoodsandservicesasbeingluxurygoodsandservicesmay,duetoshiftsineconomicandsocialconditions,changefromtimetotime.

5.StatePartiesshall,inanefforttominimiseincidentsofsmuggling,takesuchstepsasarenecessarytoharmonisetheapplicationofexcisedutyrates,withparticularregardtotobaccoproducts,alcoholicbeveragesandfuelproducts.

6.StatePartiesshalltakesuchstepsasarenecessarytoexchangeinformationamongthemselves,andtoengageinsuchprogrammesofmutualassistanceandco-operationasmaybeappropriate,inordertopreventunlawfulactivitiesand,inparticular,thesmugglingofgoodsandtheimportationofcounterfeititems.

7.StatePartiesshallinanefforttocombatcross-bordersmugglingactivities,identifyareasofco-operationandagreementfor:(i)theprotectionoftheirrespectivetaxbases;and(ii)addressingtheproblemoftaxleakageandgapsintaxcompliance.

8.StatePartiesshallgiveconsiderationtoenteringintobilateralagreementswitheachother,basedonaSADCmodeltaxagreementinordertodealwith,amongotherthings,theexchangeofinformationon

VATandsalestaxandtomakeprovisionformutualassistanceonmatterssuchaseffectiverevenuecollection.

9.StatePartiesshallidentifyandexploreareasofpossibleco-ordinationandco-operationintheformulationofpolicyon,andtheadministrationof,VATandsalestax.

10.StatePartiesshalltakesuchstepsasarenecessarytoharmonisetheirVATregimesandshall:

(a)setminimumstandardVATrates;and

(b)harmonise,overtime,theapplicationofzero-ratingandVATexemptionofgoodsandservices.

Article7.SettlementofDisputes

1.StatePartiesshalldevelopmechanismsandproceduresforthesettlementoftaxdisputesbetweenStateParties,includingtheestablishmentofaSADCbodyforthesettlementofsuchtaxdisputes.

2.UntilsuchtimeasthemechanismsandproceduresforthesettlementoftaxdisputesbetweenStatePartiesaredeveloped,andtheSADCbodyforthesettlementofsuchtaxdisputesisestablished,asenvisagedinparagraph1,StatePartiesshallsettleanydisputeordifferencearisingfromtheinterpretation,applicationorimplementationofthisAnnex3inaccordancewithArticle24oftheProtocol.

PREAMBLE


RECALLINGtheprovisionsofChapterFiveoftheProtocol,whichrequireStatePartiestoco-operateandcoordinatetheirexchangecontrolpolicies;

RECOGNISINGthefactthatSADCeconomiesarecharacterisedbysignificantexchangecontroldivergencesintermsofcurrencyconvertibilityandexchangecontrolliberalisation;

DETERMINEDtoachieveco-operationandcoordinationofexchangecontrolpolicies,





"capitalandfinancialreceiptoraccounttransactions"means,alltransactionsthatinvolvethepaymentofcapitaltransfersandtheacquisitionordisposalofnon-produced,non-financialassets,aswellasalltransactionsassociatedwithchangesofownershipintheforeignfinancialassetsandliabilitiesoftheeconomyofthatStatePartyandsuchchangesincludethecreationandliquidationofclaimson,orby,therestoftheworldinrelationtothatStateParty;

"currencyconvertibility"means,theabilityofresidentsofthatStatePartyandnon-residentstoexchangethecurrencyofthatStatePartyforforeigncurrencyandtoutilisetheforeigncurrencyintransactions.AmeasureofcurrencyconvertibilityofaStatePartyistheabsenceofrestrictionson:

(a)Themakingorreceiptofpaymentsforinternationaltransactions;and

(b)theexchangeofthecurrencyofthatStatePartyforforeigncurrencyforsuchpurposes;

"currentaccounttransactions"means,alltransactions(otherthanthoseinfinancialitems)thatinvolveeconomicvaluesandoccurbetweenresidentsofaStatePartyandnon-residents,andincludesoffsetstocurrenteconomicvaluesprovidedoracquiredwithoutaquidproquo;

"SADCExchangeControlCommittee"meanstheSADCExchangeControlCommitteecontemplatedinArticle4(1).

Article2.Objectives

StatePartiesshall:

(a)establishaframeworkforco-operationandco-ordinationwithregardtothepromotionofexchangecontrolinrespectof:

(i)currentaccounttransactions;and

(ii)capitalandfinancialaccounttransactions;

(b)reviewexchangecontrolpoliciestoensureexchangecontrolconvergenceasStatePartiesmovetowardsfullexchangecontrolliberalisation;

(c)implementexchangecontrolpoliciesaimedatachievingfullcurrencyconvertibilityamongstStateParties;

(d)improvetheavailabilityofinformationregardingcross-borderforeignexchangeflowsamongstStateParties,withtheaimoffacilitatingperformancemonitoringandassessment,aswellasofmaintainingtransparencyandaccountability.

Article3.Co-operationandCoordination

1.StatePartiesshallco-operateandco-ordinateexchangecontrolpoliciesinorderto:

(a)liberalisecurrentaccounttransactionsamongstStateParties;

(b)liberalisecapitalandfinancialaccounttransactionsbetweenStateParties;

(c)achieveconvergenceandfullcurrencyconvertibilitybetweenStateParties;and

(d)improvetheavailabilityofinformationregardingcross-borderforeignexchangeflowsbetweenStateParties.

2.StatePartiesshallconcludemultilateralagreementsbetweenthemselvestoprovidefortheconversionandrepatriationofStatePartiesbanknotesthroughtheforumoftheirrespectiveCentralBanks.


1.ToachievetheobjectivesstatedinArticle2ofthisAnnex,theStatePartiesshallestablishaSADCExchangeControlCommittee.

2.EachStatePartyshallberepresentedontheSADCExchangeControlCommitteebyonerepresentativefromtheMinistryofthatStatePartyresponsibleforfinanceandinvestmentandonerepresentativefromtheCentralBankofthatStateParty.

3.DecisionsoftheSADCExchangeControlCommitteeshallbebyconsensus.

4.EachStatePartyshallrespondpromptlytoanyrecommendationmadetothatStatePartybytheSADCExchangeControlCommitteeandifthatStateParty,afterconsultation(whereconsultationisrequired)withitsMinistryresponsibleforfinanceandinvestment,decidestoimplementsuchrecommendation,thatStatePartyshalldosopromptly.

5.TheSADCExchangeControlCommitteeshallreporttotheCommitteeofSeniorTreasuryOfficialsandtotheCCBG.

Article5.FunctionsoftheSadcExchangeControlCommittee

1.InordertofacilitateandensurecontinuedcompliancewiththisAnnex,StatePartiesshallholdregularconsultationsamongthemselveswithaviewtoreconcilingtheirrespectiveinterestsintheformulation,modificationandimplementationofexchangecontrolpoliciesfortheRegionandinregardtoanyothermatterarisingfrom,orrelatingtoexchangecontrol.

2.TheSADCExchangeControlCommitteeshall:

(a)forthefulfilmentofitsfunctions,conveneinregularsessionatleasttwiceineveryyearand,ifsorequestedbyanyStateParty,atsuchothertimebeingassoonaspossibleafterreceiptofsuchrequestbythatStateParty;

(b)expediteasfaraspossibleanybusinessreferredtoit;

(c)useitsbestendeavourstofindasolutionsatisfactorytoallStatePartiesinregardtoanymatterreferredtoit,andmakerecommendationstoStatePartiesaccordingly;

(d)determineitsownprocedures,includingtheestablishmentofsuchsubcommitteesas,initsopinion,arenecessary.

Article6.Consultations

1.StatePartiesshallconsultwithoneanotherand,whererequired,withtheirrespectiveMinistriesresponsibleforfinanceandinvestment,inordertoimprovetheoperationandimplementationofexchangecontrolandtoresolveanymattersthatmayariseinthisregard.

2.EachStatePartyshall,inordertoenabletheotherStatePartiestotakesuchactionasmaybenecessarytofulfiltheirrespectiveobligationsandtoprotecttheirrespectiveinterestsunderthisAnnex4,incircumstanceswheretheurgencyoftherelevantmatterprecludespriorconsultationwithsuchotherStatePartiesthroughtheSADCExchangeControlCommittee,notifysuchotherStatePartiesandtheSADCExchangeControlCommitteeofanychangeinthatStatePartysexchangecontrolpoliciesorintheadministrationthereof,includinganyamendmentstotheexchangecontrolprovisionsofthatStatePartywhichmayaffecttheinterestsofsuchotherSADCStateParties.SuchnotificationshallbemadebythatStateParty,wherepracticable,beforesuchchangeor,ifsuchnotificationinadvanceisimpossibleorimpracticable,suchnotificationshallbemadeimmediatelyaftersuchchange.

3.IfanyStatePartywishestoconsultwithanyotherStatePartyonanyexchangecontrolissuewhichdoesnotdirectlyaffectalloftheStateParties,thatStatePartymayconsultwithsuchotherStatePartybutshallnotifytheremainingStateParties,inadvance,ofitsintentiontodoso,andshall,assoonaspossibleaftertheconclusionofsuchconsultationfurnishtheremainingStatePartieswithareportontheresultsofsuchconsultations.

4.TheStatePartyfurnishingitsreportunderparagraph3shalllaythemeetingefore^SADCExchangecntrolCommitteeatitsfollowing

PREAMBLE


RECOGNISING

ThatthemainobjectiveofSADCistoachievesustainabledevelopmentintheCommunity;

ThedeterminationofthegeneralmonetarypolicyframeworkvestsinGovernment,theresponsibilityformonetarypolicyformulationandimplementationrestswiththerespectiveCentralBanks;

AnappropriatelegalframeworktofacilitatesoundoperationsofCentralBanksisimperative;

ThepresentdiverselegalandoperationalframeworksofCentralBanksintheRegionneedtomovetowardsamorecoherentandconvergentstatustofacilitatetheharmonisationofmonetarypolicyintheregion;

MonetarypolicycredibilityandeffectivenessisenhancedbyindependenceofCentralBanks;

ThedevelopmentofasoundlegalandoperationalframeworkshallpromoteandfostertheoperationalindependenceofCentralBanks;

TheharmonisationofthelegalandoperationalframeworksofCentralBanksshallenhanceoperationalefficiency,foster

greaterco-operationamongStatePartiesandencourageCentralBankstoworktowardsthearticulationofoneprimaryobjective,whichistomaintainpricestability;

ConsultationamongstCentralBanks,withtheMinistersresponsibleforFinanceandInvestment,individuallyandcollectively,willimprovetheoperationandimplementationofthisAnnexandhelptoresolveanymattersthatmayarise;





"Board"meansBoardofDirectorsoftheCentralBank;

"LegalCommittee"meansacommitteeestablishedintermsofArticle6;

"ModelCentral"meansaModelActtoserveasaguidelineforBankStatuteStatePartieswhenformulatingCentralBanklegislation.

Article2.Scope

ThroughtheprovisionsofthisAnnex,theStatePartiesshallpromotethemutualco-operation,co-ordinationandharmonisationofthelegalandoperationalframeworksofCentralBankswhichshallculminateinthecreationofaModelCentralBankStatutefortheRegionascontemplatedbytheRISDP.

Article3.Objectives

TheobjectivesofthisAnnexareto:

(a)establishprinciplesthatshallfacilitatethecreationofacoherentandconvergentstatusinthelegalandoperationalframeworksofCentralBanks;

(b)promotetheadoptionofprinciplesthatshallfacilitatetheoperationalindependenceofCentralBanks;

(c)createbestpracticesinthelegalandoperationalframeworksofCentralBanks;and

(d)providetheframeworkforthecreationofaModelCentralBankStatutewhichshallbeconsideredandapprovedbytheMinistersresponsiblefornationalfinancialmatters.

Article4.AgreementonPrinciples

1.InordertoachievetheobjectivessetoutinArticle2andfosterharmonisationinthelegalandoperationalframeworks,theCentralBanksshall,intheirrespectiveStateParties,worktowardstherealisationandattainmentoftheprinciplessetoutinthisArticle.

2.Principlesforconvergentstatus:

(a)StatePartiesshallmovetowardstheadoptionofpricestabilityastheprimaryobjectiveoftheircentralbanks;

(b)CentralBanksshallcontributetothepursuitoffinancialstability;

(c)theaccountsofCentralBanksshallbeauditedbyindependentauditorsappointedbytheBoard/shareholdersofeachCentralBank;

(d)theobjectives,legalformandcapacity,duties,powersandfunctionsoftheCentralBanksshallbesetoutincleartermsandasexhaustivelyaspossibleintheCentralBanklegislation;

(e)lendingbyCentralBankstogovernment,itsagenciesandpoliticalsubdivisionsshallbediscouraged;

(f)unrealisedexchangelossesorgainsineachfinancialyearshallbemadegood,asagreedbetweenthegovernmentandtheCentralBank,withinthefollowingyearinordertofacilitatetheorderlyexecutionofmonetaryandexchangerate

policies;and

(g)overduegovernmentsecuritiesandotherindebtednessofgovernmentanditsvariousagenciesshall,attheendofeachfinancialyear,befirstredeemedfromanyavailablesurplusincomebeforethetransferoftheresiduetogovernment.

3.Principlesforoperationalindependence:

(a)ThereshouldexistlegislativeprovisionsensuringtheoperationalindependenceofCentralBanksandtheownershipstructuresofCentralBanksshouldnotbepermittedtocompromisethisindependence;

(b)theformulationandimplementationofmonetarypolicybyCentralBanksshallberecognisedandexplicitlyprovidedforintheCentralBankstatute;

(c)thebudgetofeachCentralBankshallbeapprovedbyitsownBoard;

(d)appointmentofaGovernorandDeputyGovernor(s)shallvestintheHeadofStateorGovernmentofeachStatePartyandwhereapplicable,shallberatifiedbytheLegislature;

(e)CentralbankinglegislationshallprovideforfairandtransparentprocedureandgroundsunderwhichtheGovernorsandDeputyGovernorsmayberemovedfromoffice;

(f)membersoftheBoardofDirectorsofCentralBanksshouldbeappointedfromamongpersonsofprovenexperienceinfieldsrelevanttocentralbanking:

(i)byMinistersresponsibleforFinanceandInvestment;and

(ii)bytheshareholdersasprescribedbyrelevantlegislation,inthecaseofcentralbankswithprivateshareholders;

(g)whereascivilservantsmay,whereindividualcountrycircumstancesrequire,sitontheBoardofcentralbanks,suchappointmentswhichmaycompromisetheindependenceofthecentralbanksshouldbeintheminority;and

(h)MembersofParliamentshallbedisqualifiedfromsittingontheBoardsofcentralbanks.

4.Principlesfortransparencyandaccountability:

(a)Thereshallbeestablishedamonetarypolicycommitteewhosecomposition,structureandfunctionsshallbepubliclydisclosed;

(b)legislationshouldstipulatetheextentandfrequencyoffinancialandoperationaldisclosuresbyCentralBankstoparliamentoracommitteeofparliament,andalsotothepublicatlarge;

(c)theremunerationandbenefitsofGovernors,DeputyGovernorsandmembersoftheBoardshouldbedisclosedtoparliamentannually;and

(d)everyCentralBankshallpublishanannualreportdetailingitsoperationsandauditedfinancialstatements.Thereportshallbedistributedtoallstakeholders.

(e)NotwithstandingtheestablishmentoftheMonetaryPolicyCommitteeinArticle4(4)(a)above,theGovernorshallbeultimatelyaccountableandresponsibleformonetarypolicy.

Article5.AreasandNatureofCo-operation

InordertoachievetheobjectivesofthisAnnex,StatePartiesshall(throughCentralBanks)co-operateinthefollowingareas:

(a)promotingtheenhancementofaccountabilityandtransparency;

(b)establishingguidelinesconsistentwiththeprimaryobjectiveonCentralBanklendingpoliciestogovernmentandcommercialbanks;

(c)safeguardingtheeconomicviabilityofCentralBanksthroughadequatecapitalisation;

(d)adoptinginternationallyacceptedbestpracticesforaccountingandfinancialmanagement,aswellas,reportingrequirements;

(e)allowingforthesharingofinformationamongstCentralBankswithoutbreachofsecrecyandconfidentialitylaws;

(f)providingforproperproceduresintheeventofadissolutionofanyCentralBank;

(g)pursuinginternationalbestpracticesthroughtheratificationbythelegislature,wherethelocalcircumstancespermit,oftheappointmentoftheGovernorandDeputyGovernor(s);

(h)ensuringthatthepowerstoapprovethebudgetoftheCentralBanksrestwiththeBoards;and

(i)inanyotherareasthatwillfostertheharmonisationofthelegalandoperationalframeworksofCentralBanks.

Article6.LegalCommittee

1.InordertofacilitateandensurecontinuedcompliancewiththisAnnex,toreconciletherespectiveinterestsintheformulation,modificationandimplementationofconcurrentlegislationfortheRegion,theharmonisationoflegalandoperationalframeworksofCentralBanksaswellasanyothermatterarisingunderthisAnnex,CCBGshallestablishaLegalCommittee.

2.EachCentralBankshallberepresentedontheLegalCommitteebyonelegalexpertandoneeconomicexpert.Shouldtheneedarise,otherexpertsmaybeco-opted.

3.TheresolutionsoftheLegalCommitteeandtheSteeringCommitteecontemplatedinArticle7shallbebytheconsensusoftheappointedexperts.

4.TheLegalCommitteeshallbeaccountabletotheCCBG.

Article7.FunctionsandProceduresoftheLegalCommittee

1.TheLegalCommitteeshall:

(a)reviewandmonitortheprogressoftheharmonisationofthelegalandoperationalframeworksofCentralBanks,includingthedecisionmakinginstrumentstobedevelopedtoachieveharmonisation;

(b)encouragetheadoptionofmodelactsandtheuseofadvisoryoptions,recommendations,regulationsanddraftagreementstoachieveharmonisation;

(c)considerandrecommendamendmentstorelevantlegislation;

(d)providetechnicalassistanceandadvicetoCentralBanksasandwhenrequired;

(e)makerecommendationstoCentralBanksinrelationtoanymattersarisingfromtheimplementationofthisAnnex;

(f)carryoutanyothertasksthatmaybeassignedtoitbytheCCBG;and

(g)channelallrequestsfromStatePartiestotheCCBG.

2.Fortheperformanceofitsfunctions,theLegalCommitteeshall:

(a)conveneinregularsessionatleastonceeveryyear;

(b)determineitsownprocedures,includingtheestablishmentofsuchsubcommitteesasmaybenecessary;and

(c)appointaSteeringCommitteeofnotfewerthanfourandnotmorethansevenmembers,whichmembersshallbeappointedonarotationalbasis.

3.TheSteeringCommitteeshalldetermineitsownproceduresincludingappointmentofachairperson.

Article8.Consultation

1.CentralBanksshallconsultwithMinistersresponsibleforFinanceandInvestmentinareasnecessarytoensureproperco-ordinationbetweenfiscalandmonetarypolicies.

2.CentralBanksshallconsultwithoneanotherandwiththeirrespectiveMinistersresponsibleforFinanceandInvestment,toimprovetheoperationandimplementationofthisAnnexandtoresolveanymattersthatmayarise.

3.ShouldaCentralBankwishtoconsultanotherCentralBankonanyissuearisingfromthisAnnexbutnotdirectlyaffectingallotherCentralBanks,itmaydosoandshouldthematterbesignificant,notifytheotherCentralBanksassoonaspossibleandthereafter,furnishthemwithareportontheresultsoftheconsultations.

PREAMBLE


RECALLINGtheprovisionsofChapterFiveoftheProtocolwhichrequiresco-operationonpayment,clearingandsettlementsystems;

RECOGNISINGthatpaymentsystemsarecriticaltothefinancialinfrastructureandthecirculationofmoney,andareintegraltoeconomicactivity;

RECOGNISINGthatCentralBanksmustco-operatethroughpolicycoordination,capacitybuildingandsystemdevelopmentwhichinturnwillcontributetowardspaymentsystemreform,facilitationofcross-borderpayments,andsupportformonetarypolicyobjectives;





"clearingsystemmeans",asetofprocedureswherebyfinancialinstitutionspresentandexchangedataand/ordocumentsrelatingtothetransferoffundsorsecuritiestootherfinancialinstitutionsatasinglelocation(clearinghouse),andsuchproceduresmayincludeamechanismforthecalculationofparticipantsbilateraland/ormultilateralnetpositionswithaviewtofacilitatingthesettlementoftheirrespectiveobligationsonanetornet-netbasis(BISRedBook);

"currencyconvertibility"means,theabilityofresidentsofthatStatepartyandnon-residentstoexchangethecurrencyofthatStatePartyforforeigncurrencyandtoutilisetheforeigncurrencyintransactions.AmeasureofcurrencyconvertibilityofaStateParty"istheabsenceofrestrictionson:

(a)themakingorreceiptofpaymentsforinternationaltransactions;and

(b)theexchangeofthecurrencyofthatStatePartyforforeigncurrencyforsuchpurposes

"paymentsystem"meansasetofinstruments,bankingproceduresandtypically,inter-bankfundstransfersystemsthatensurethecirculationofmoney(BISRedBook);

"SADCPaymentSystem,SteeringCommittee"meanstheSADCPaymentSteeringCommitteecontemplatedinArticle4(1);.

"SADCPaymentSystemWorkingGroup"meanstheSADCPaymentSystemWorkingGroupcontemplatedinArticle4(2);

"settlement"meansanactthatdischargestherespectiveobligationsoftwoormorecounterpartiesincurredinrespectofthetransferoffundsorsecuritiesbetweensuchcounterparties;

"settlementsystem"means,thesystemofaStatePartyusedtofacilitatesettlement.

Article2.Scope

1.ThescopeofthisAnnexconcernsissuesrelatingtopayment,clearingandsettlementsystemswithineachStateParty,(aswellasfortheRegionasawhole,)andStatePartiesagreethattheapplicationofthisAnnex6isintendedtoculminateinconvergentnationalpaymentsystemfeatures,policies,practices,rulesandprocedureswithintheRegion.

2.NothingcontainedinthisAnnexshallpreventorlimit,inanyway,anyStatePartyfromadvancingfurtherthananyotherStatePartyoralloftheotherStatePartiestogether.

Article3.Objectives

TheobjectiveofthisAnnexistoestablishaframeworkforco-operationandcoordinationbetweenCentralBanksonpayment,clearingandsettlementsystemsinorderto:

(a)defineandimplement,ineachStateParty,asafeandefficientpaymentsystembasedoninternationallyacceptedprinciples;

(b)defineandimplementacross-borderpaymentstrategyfortheRegion;

(c)identify,measure,minimiseandmanagepaymentsystemrisk(inparticularsystemicriskrelatingtopaymentsystems);

(d)achieveconvergenceacrosstheRegionofthefeatures,policies,practices,rulesandproceduresrelatingtopaymentsystems,clearingsystemandsettlementsystem;

(e)conductongoingpaymentsystemoversightaimedatreducingandeliminatingcross-bordersettlementriskandsystemicfinancialrisk.

Article4.Co-operationandCo-ordination

1.InordertoachievetheobjectivessetoutinArticle3,theCentralBankineachStatePartyshall,inco-operationwiththeotherCentralBanksintheRegion,:

(a)sensitisethekeystakeholdersinthatStatePartytopaymentsystemissues;

(b)buildpaymentsystemcapacityinthatStateParty;

(c)identifyandmeasurepaymentsystemriskinthatStateParty,andestablishappropriateproceduresforthemanagementofsuchrisk;

(d)developalegalframeworkinthatStatePartytosupportmodernpaymentsystemmechanisms;

(e)monitor,onanongoingbasis,internationalpaymentsystembestpracticesandalignthepaymentsystemdevelopmentsinthatStatePartyinaccordancetherewith;

(f)defineandimplementapaymentsystemstrategyinthatStateParty.

2.TheCentralBankofeachStatePartyshall,inco-operationwiththeotherCentralBanks:

(a)defineandimplementacross-borderpaymentstrategyfortheRegion,whichstrategymaybebasedoncurrencyconvertibilitywithintheRegionor,inthefuture,onasinglecurrencyfortheRegion;

(b)identifyandmeasurepaymentsystemsriskandestablishappropriateproceduresforthemanagementofsuchrisk;

(c)establishandmaintainmutuallybeneficialrelationshipswithinternationalbodiessuchastheWorldBank,theBISandthecentralbanksofthirdStates;and

(d)keepabreastofmoderntrendsinpayment,clearingandsettlementsystems.


1.CentralBanksshall,throughtheforumoftheCCBG,establishaSADCPaymentSystemSteeringCommitteewhichshallberesponsiblefortheimplementationofthisAnnex.StatePartiesagreethat

2.EachCentralBankshallappointonepersontoserveontheSADCPaymentSystemSteeringCommittee.

3.TheSADCPaymentSystemSteeringCommitteeshallestablishaSADCPaymentSystemWorkingGroup,andtheSADCPaymentSystemSteeringCommitteeshalldelegatetheday-to-dayadministrationrelatingtotheimplementationofthisAnnextotheSADCPaymentSystemWorkingGroup.

4.TheSADCPaymentSystemWorkingGroupshallcompriseprojectleader,aprojectmanagerandsuchnumberofpaymentsystemanalystsasareappointedbytheSADCPaymentSystemSteeringCommittee.

5.TheSADCPaymentSystemWorkingGroupshallberesponsiblefortheimplementationofthisAnnexonadailybasis.

Article6.FunctionsoftheSadcPaymentSystemSteeringCommitteeandtheSadcPaymentSystemWorkingGroup

1.TheSADCPaymentSystemSteeringCommitteeshall:

(a)reviewandmonitorprogressinrespectoftheobjectivessetoutinArticle3;

(b)initiatesuchtasksandprojectsastheSADCPaymentSystemSteeringCommitteemaydeemnecessaryinorderto

supportoftheobjectivessetoutinArticle3;

(c)considerandrecommendtheenactmentof,oramendmentsto,legislationofStatePartiesrelatingtopaymentsystem,clearingsystemandsettlementsystem,includingthemakingandamendmentofrulesandprocedures,riskmanagementpoliciesandanyothermattersrelevanttosuchlegislationandsuchpaymentsystem,clearingsystemandsettlementsystems;

(d)discussandreachconsensusonstrategicissuesrelatingtotheobjectivessetoutinArticle3;

(e)meetatleastonceineveryyearor,ifnecessaryandifsorequestedbyanyStateParty,morefrequently;

(f)establishitsownprocedures,includingtheestablishmentofsuchsub-committeesastheSADCPaymentSystemSteeringCommitteemaydeemnecessary;

(g)establishapaymentsystemoversightfunctionfortheRegion;and

(h)keeptheCCBGinformedofthedevelopmentandprogressinachievingtheobjectivessetoutinArticle3.

2.TheSADCPaymentSystemWorkingGroupshall:

(a)worktowardsachievingtheobjectivessetoutinArticle3;

(b)accomplishthetasksdelegatedtoitbytheSADCPaymentSystemSteeringCommittee;

(c)reportprogressonallaspectsofitsworktotheSADCPaymentSystemSteeringCommitteeonaregularbasis;

(d)takesuchinitiativesasitmayconsiderappropriatetobuildpaymentsystemskillswithintheRegion;

(e)monitortheprogressofeachStateParty,andoftheRegion,inmatterscontemplatedinthisAnnex6andreportsuchprogresstotheSADCPaymentSystemSteeringCommittee;

(f)makesuchinformationrelatingtomatterscontemplatedinthisAnnex6asitmayconsiderappropriateavailabletothepublicandallinterestedpartieswithintheRegion;and

(g)developmutuallybeneficialliaisonwithinternationalbodiessuchastheWorldBank,theBISandthecentralbanksofThirdStates.


CentralBanksshall,throughtheforumoftheCCBG,consultwithoneanotherinorderto:

(a)improvetheiroperationsandtoimplementtheprogramsandmatterscontemplatedinthisAnnex,andtoresolveanyissuesthatmayariseinrelationthereto;and

(b)assistinthedevelopmentofmutuallyagreeableapproachesforstrengtheningthesafetyandefficiencyoftherespectivePayment,ClearingandSettlementSystemsofStatePartieswhileavoiding,whereverpossible,conflictsthatmayarisefromtheapplicationofdifferingregulatorypracticesinrespectofsuchPayment,ClearingandSettlementSystems.

Article7.PracticalMeasures

StatePartiesagreethattheCCBGmaytakesuchpracticalmeasuresasmaybeconsiderednecessarybytheCCBGtofacilitatetheimplementationofthisAnnex6.

PREAMBLE


RECALLINGtheprovisionsofChapterFiveoftheProtocolwhichrequirescooperationintheareaofinformationandcommunicationstechnologyamongstCentralBanks;

RECOGNISINGthattheutilisationofmoderninformationandcommunicationtechnologysolutionsiscriticalinenablingandsupportingmodernandflexiblecentralbankingandfinancialsystemsoperationswithineachStatePartyandwithintheRegion;

RECOGNISINGthatthecurrentlevelofutilisationofinformationandcommunicationstechnologysolutionswithinCentralBanksislowcomparedtodevelopedcountries;

RECOGNISINGthatbyutilisinginformationandcommunicationstechnologysolutionsCentralBankscanattainandmaintainhighlevelsofeffectiveness,efficiency,performanceandsustainableglobalcompetitiveness;

RECOGNISINGtheneedtoco-operatethroughpolicyco-ordination,capacitybuildingandtheutilisationofinformationandcommunicationstechnologyinmodernbusinessfunctionsandoperationsinordertosupportandenablecurrentandfuturegoalsofCentralBanksandfinancialsystemswithintheRegion;and

RECOGNISINGthenecessityofco-ordinationintheutilisationofmoderninformationandcommunicationstechnologysolutionstoenableandsupportthemodernisationofCentralBankandfinancialsystemoperations;





"ICT"meansInformationandCommunicationsTechnology;

"ICTProgrammeOffice"meanstheCentralBanksInformationandCommunicationsTechnologyProgrammeOfficecontemplatedinArticle5(3);

"ICTSteeringCommittee"meanstheCentralBanksInformationandCommunicationsTechnologySteeringCommitteecontemplatedinArticle5(1);

"ICTWorkingGroup"meanstheCentralBanksInformationandCommunicationsTechnologyWorkingGroupcontemplatedinArticle5(5);

"FinancialSystem"means,inrelationtoeachStateParty,thefinancialinstitutions,financiallegislation,financialmarkets,andfinancialpoliciesandinfrastructureofthatStateParty;

I"CTapplication"meansasetofsoftwareprogramsthatareeitherpurchasedordeveloped,andthatformanintegralpartofanICTSolution,

"ICTsolution"meansanICTbasedsystemthatcontributestoabusinesssolutionandsupportsabusinessactivity;

"paymentsystem"meansasetofinstruments,bankingproceduresandtypically,inter-bankfundstransfersystemsthatensurethecirculationofmoney(BISRedBook);

"thirdState"meansanystatethatisnotaStateParty.

Article2.Objective

TheobjectiveofthisAnnexistoestablishaframeworkforco-operationandcoordinationbetweenCentralBanksinordertoobtainthebenefitsoftheutilizationofmodernICTsolutionsinsupportingandenablingmodernbusinessfunctionsandoperationswithintheRegion.

Article3.Scope

1.ThescopeofthisAnnex7isissuesrelatingtotheutilisationofICTSolutionswithin:

(a)CentralBanks;

(b)FinancialSystemsintheRegion;

(c)CentralBankandFinancialSysteminitiativesintheRegion.

2.TheimplementationofthisAnnexisintendedtoculminateinthesupportandenablingofmodernbusinessfunctionsandoperationswithinCentralBanks,FinancialSystemsintheRegionandfinancialoperationsintheRegion,throughtheutilisationofmodernICTsolutions.

3.Thebusinessfunctionsandoperationsreferredtoinparagraph2include:

(a)thepaymentsystems(asdefinedinAnnex6)andcross-borderpaymentsystems;

(b)balance-of-paymentsreportingsystems;

(c)economicresearch;

(d)CentralBanksupervision;

(e)internationalbankingandmoneymarketoperations;

(f)stockexchangeoperationsineachStatePartyandtheRegion;

Article4.Co-operationandCo-ordination

InordertoachievetheobjectivessetoutinArticle2andtheresultingbenefits,CentralBankofeachStatePartyshall:

(a)proactivelysupporttheinitiativesandprojectsoftheCCBGwithsuitableiCtsolutions;

(b)createawarenessofthesignificantbenefitsthatICTsolutionscanprovideinsupportingandenablingmodernworld-classbusinessoperationsinthatStatePartyandtheRegion;

(c)engagewithandencourage,otherCentralBanksandFinancialSystemoperatorstoutiliseICTsolutionstoenhancetheirrespectivebusinessoperationsinorderthat,overtime,allFinancialSystemoperatorsintheRegionreceivethefullbenefitofutilisingICTsolutionsatworld-classlevels;

(d)embraceICTsolutionstoenablethatCentralBanktobemoresuccessfulinachievingitsgoals,bothdomesticallywithintheRegion,andinternationally,andsuchgoalsshouldinclude:

(i)aspiringtotheprimarydomesticandinternationaloperationsofamoderncentralbank;

(ii)obtaininginternationalcredibilityfortheFinancialSystemwithinthatStateParty,individuallyandcollectivelywithotherCentralBanks;

(iii)achievingglobalcompetitivenessoftheFinancialSystemwithinthatStateParty,individuallyandcollectivelywithotherCentralBanks;

(e)assisttheotherCentralBanksintheacquisition,utilisationandsupportofstrategicICTsolutionswheresuchICTsolutionsmakeasignificantcontributiontoenablingnewandmodernoperationsandimprovingexistingfunctions;

(f)buildahighlevelofICTskillsatstrategic,managerialandtechnicallevelsinordertoensurethatthatCentralBankhasthecapacity,overthelongterm,toacquire,maintainandsupportappropriateandeffectiveICTSolutions;

(g)endeavourtoadoptatechnologicalframeworkthatwillenable-

(i)electroniccollaborationbetweenthatCentralBanksofficialsandtheofficialsoftheotherCentralBanks;

(ii)effectiveandefficienttransmissionofdatabetweenthatCentralBankandtheotherCentralBanks;

(iii)sharingoftheICTSolutionsofthatCentralBankwiththeotherCentralBanksinordertoreducecosts,andtoacceleratetheprocessofICTSolutionutilizationwithintheRegion;

(h)establishsuchICTSolutionsasarenecessarytoenablejointactivitiesbetweenthatCentralBankandtheotherCentralBanksandtoattainsuchobjectivesasaremutuallyagreedbetweenthatCentralBankandtheotherCentralBanks;and

(i)contributetothedevelopmentofacentreofexcellence,withintheRegion,forinformationrelatingtotheFinancialSystemofthatStateParty.


1.CentralBanks,throughtheforumoftheCCBG,shallestablishaCentralBanksInformationandCommunicationsTechnologySteeringCommittee,andsuchICTSteeringCommitteewillberesponsiblefortheimplementationofthisAnnex.

2.EachCentralBankshallappointonepersontoserveontheICTSteeringCommittee.

3.TheICTSteeringCommitteeshallestablishaSADCCentralBanksICTProgrammeOffice,andtheICTSteeringCommitteeshalldelegatetheday-to-dayadministrationrelatingtotheimplementationofthisAnnextosuchICTProgrammeOffice.

4.TheICTProgrammeOfficeshallcomprisethechairpersonoftheICTSteeringCommittee,aprogrammemanagerandaprojectsco-ordinatorappointedbytheICTSteeringCommitteeandadministrativestaffappointedbytheICTSteeringCommittee.

5.TheICTSteeringCommitteeshallestablishaSADCCentralBanksICTWorkingGroup,towhichtheICTSteeringCommitteelmaydelegatesuchtacticalandguidancefunctionsasdeterminedbytheICTSteeringCommittee.

Article6.FunctionsofIctSteeringCommittee,IctProgrammeOfficeandIctWorkingGroup

1.TheICTSteeringCommitteeshall:

(a)discussandreachconsensusonthestrategicandtacticaldirectionrequiredtoachievetheobjectivessetoutinArticle2;

(b)reviewandmonitorprogressinrespectoftheobjectivessetoutinArticle2;

(c)initiatesuchtasksandprojectsastheICTSteeringCommitteemaydeemnecessaryinordertosupporttheobjectivessetoutinArticle2;

(d)establishitsownprocedures,includingtheestablishmentofsuchadditionalworkinggroupsandprojectteamsastheICTSteeringCommitteemaydeemnecessary;

(e)keeptheCCBGinformedofthedevelopmentandprogressinachievingtheobjectivessetoutinArticle2;

(f)attendtorequestsfromtheCCBGandotherstakeholderswheresuchrequestsfallwithinthescopeofthisAnnex;

(g)meetatleastannuallyor,ifnecessaryandifsorequestedbyanyStateParty,morefrequently.

2.TheICTProgrammeOfficeshall:

(a)worktowardsachievingtheobjectivessetoutinArticle2;

(b)accomplishthetasksdelegatedtoitbytheICTSteeringCommittee;

(c)reportprogressonallaspectsofitsworktotheICTSteeringCommitteeonaregularbasis;

(d)takesuchinitiativesasmaybeconsideredappropriatebyittobuildICTskillswithinCentralBanksandtheFinancialSystemoperatorswithintheRegion;

(e)developmutuallybeneficialliaisonswithinternationalbodies,suchastheWorldBank,theBISandthecentralbanksofthirdStates.

3.TheICTWorkingGroup:

(a)meetatleasttwiceayeartoreviewprogressinachievingtheobjectivessetoutinArticle2;

(b)providesuchguidancefunctionstotheICTProgrammeOfficeasaredelegatedtotheICTWorkingGroupbytheICTSteeringCommitteeintermsofArticle5(5);

(c)communicateandconsultwiththeICTSteeringCommittee,onaregularbasis,onallaspectsoftheworkoftheICTWorkingGroup.


1.CentralBanksshall,throughtheforumoftheCCBG,consultwithoneanotherinorderto:

(a)improvetheoperationsandtheimplementationofthematterscontemplatedinthisAnnexandtoresolveanyissuesthatmayariseinrelationthereto;and

(b)monitorandassesstheachievementoftheobjectivessetoutinArticle2.

3.IfanyCentralBankwishestoconsultwithanyotherCentralBankonanymajorissuearisingunder,orrelatingto,thisAnnexwhichdoesnotdirectlyaffectalloftheCentralBanks,thatCentralBankmayconsultwithsuchotherCentralBankbutshallnotifytheremainingCentralBanks,inadvance,ofitsintentiontodoso,andshall,assoonaspossibleaftertheconclusionofsuchconsultation,furnishtheremainingCentralBankswithareportontheresultsof

Suchconsultation.

4.TheReporttobefurnishedunderparagraph3shallbelaidbytheCentralBankissuingtheReportbeforetheICTSteeringCommitteeatitsfollowingmeeting.

PREAMBLE


RECOGNISINGtheimportanceofhavingsoundbankssinceBanks:

(a)aretheprincipaldepositoryforthegeneralpublicsliquidfundsandthesafetyandreadyavailabilityofthesefundsfortransactionsare:

(i)theresponsibilityofbanksmanagement;and

(ii)essentialtothestability,efficiencyandsoundnessofthefinancialsystem;

(b)employthegeneralpublicsfundstomakeloansandinvestments,therebyallocatingscarcesavingstoproductiveuseswithintheeconomyandtheintermediationprocesshelpstochannelfundstoeconomicsectorsthatmakethemostefficientandproductiveuseoffunds;

(c)serveasthemainconduitformonetarypolicyimplementationbetweenthecentralbankandtheeconomy;and

(d)providethebackboneforthenationalpaymentsmechanismandareliableandefficientpaymentsmechanismisanessentialcomponentinanyeconomy.

FURTHERRECOGNISINGthatitisimportantforCentralBanksintheRegiontoco-operateintheareasofpolicyformulation,capacitybuilding,systemsdevelopmentwithaviewto:

(a)facilitatingeffectiveapplicationofinternationalregulatoryandsupervisorystandardsinordertopromoteandmaintainthesoundnessofbanksintheRegion;

(b)harmonisebankingregulatoryandsupervisorymattersthroughtheimplementationoftheobjectivesmentionedbelow;



1.InthisAnnex,termsandexpressionsdefinedinArticle1oftheAnnexshallbearthesamemeaningunlessthecontextotherwiserequires.


"Banks"meansdeposittakinginstitutionsthatarelicensedand/orregulatedandsupervisedbytheCentralBankand/orothersupervisoryauthority;

"BIS"meansBankforInternationalSettlements;

"IMF"meansInternationalMonetaryFund;

"FATF"meansFinancialActionTaskForce;

"SADCCentralBanks"meansCentralBanksofStateParties.

Article2.Objective

1.TheobjectiveofthisAnnexistoestablishaframeworkforco-operationandco-ordinationbetweenSADCCentralBanksonbankingregulatoryandsupervisorymattersinorderto:

(a)promoteineachMemberState,anefficientandeffectivebankingregulatoryandsupervisorysystembasedoninternationallyacceptedprinciples;

(b)establisharegionalbankingregulatoryandsupervisorystrategy;

(c)promotetheidentification,measurementandmanagementofbankingrisks,includingsystemicrisks;and

(d)promoteharmonizationofbankingregulatoryandsupervisorymatters,policies,practices,rulesandproceduresacrosstheRegion.

Article3.Scope

1.ThisAnnexdealswithissuesrelatingtobankingregulationandsupervisionwithineachStateParty,aswellastotheregionasawhole..

2.NothinginthisAnnexpreventsorrestrictsanyStatePartyfromadvancingfurtherthancanbeachievedbyallStatePartiestogether.

Article4.AreasandNatureofCo-operationandCo-ordination

1.InordertoachievetheobjectiveofthisAnnex,SADCCentralBanksshall:

(a)sensitisekeystakeholderstobankingregulatoryandsupervisoryissues;

(b)buildbankingregulatoryandsupervisorycapacity;

(c)identifyandmeasurebankingrisksandestablishappropriateproceduresforthemanagementofsuchrisks;

(d)developalegalframeworkthatissupportiveofmodernbankingregulatoryandsupervisorypractices;

(e)promoteandmaintainadomesticbankingregulatoryandsupervisorystrategyinlinewithinternationalbestpractices;and

(f)monitorandevaluate,onanongoingbasis,internationalbankingregulatoryandsupervisorybestpracticesandaligndomesticbankingregulatoryandsupervisorydevelopmentsthereto.

2.Onaregionalbasis,theSADCCentralBanks,throughtheSADCSubcommitteeofBankingSupervisors,shall:

(a)defineandimplementaregionalbankingregulatoryandsupervisorystrategy,basedoninternationalstandards;

(b)identifyandmeasureregionalbankingregulatoryandsupervisoryrisksandestablishappropriateproceduresforthemanagementofsuchrisks;

(c)establishandmaintainmutuallybeneficialrelationshipswithinternationalbodiessuchastheWorldBank,theIMF,FATF,theBISandnon-SADCCentralBanks;

(d)keepabreastwithmodernpracticesinbankingregulatoryandsupervisorymatters,includingdepositorprotection,anti-moneylaunderingcomplianceandcombatingthefinancingofterrorism;and

(e)shareinformationregardingbankingregulatoryandsupervisory

Matters,includinginformationonothernon-deposittakinginstitutions,aspermittedbylegislationofthemembercountries.


1.TheCCBGshallestablishaSADCSubcommitteeofBankingSupervisorsthatshallberesponsiblefortheimplementationofthisAnnex.

2.EachSADCCentralBankshallappointaperson(s)toserveontheSADCSubcommitteeofBankingSupervisors.

Article6.FunctionsoftheSadcSubcommitteeofBankingSupervisors

1.TheSADCSubcommitteeofBankingSupervisorsshall:

(a)establishitsownprocedures,includingtheelectionofachairpersonandestablishmentofworkinggroups,ifsorequired;

(b)meetatleastonceayearormorefrequentlyifrequired;

(c)initiatesuchtasksandprojectsasarenecessaryinsupportoftheobjectivesofthisAnnex;

(d)reviewandmonitorprogressinrespectoftheimplementationoftheobjectivesofthisAnnex;

(e)keeptheCCBGinformedofdevelopmentsandprogressinrespectoftheobjectivesofthisAnnex;

(f)considerandrecommendamendmentstotheCCBGwithrespecttobankingsupervisorymattersandregulatorylegislation,rulesandprocedures,riskmanagement,trainingprogrammesandotherrelevantmatters;

(g)discussandreachconsensusonstrategicissuesrelatingtothisAnnex;and

(h)makerecommendationstotheCCBGonthestrategicandtacticaldirectiontobeadoptedregardingbankingregulatoryandsupervisoryissues.


ThroughtheSADCSubcommitteeofBankingSupervisors,SADCCentralBanksshallconsultwithoneanother(eachother)to:

(a)improvetheoperationsofthisAnnexinordertofacilitateitsimplementationandtoresolveanymattersthatmayarise;and

(b)assistinthedevelopmentofmutuallyagreeableapproachesforstrengtheningthesafetyandsoundnessofthebankingsystemsinSADCwhileavoiding,whereverpossible,conflictsthatmayarisefromtheapplicationofdifferingregulatoryandsupervisorypracticesinthebankingsystem.

PREAMBLE


RECALLINGtheprovisionsofChapterSixoftheProtocolwhichrequirescooperationondevelopmentfinance;

RECOGNISINGtheincreasingimportanceoftheroleplayedbydevelopmentfinanceinstitutionsinfinancingdevelopmentintheRegionandadvancingproductivecapacity,therebyincreasingeconomicgrowthandsustainabledevelopment,





"capitaladequacymeans",inrelationtoafinancialinstitution,theminimumcapitalrequirementsprescribedbytheCentralBankoftheStatePartyinwhoseterritorythatfinancialinstitutionissituatedand,inrelationtoaDFIinrespectofwhichnosuchminimumcapitalrequirementsaresoprescribed,thepolicyrelatingtominimumcapitalrequirementstobedevelopedbytheNetwork,withtheassistanceoftheDevelopmentFinanceResourceCentre,whichpolicywillsetouttheminimumrequirementsofcapitaltorisk-weightedassetsforthatDFI;

"CEO"means,inrelationtoaDFI,thechiefexecutiveofficeroftheDFI;

"creditrating"means,inrelationtoanentityorenterprise,asthecasemaybe,theformalevaluationbyaratingagencyofthepresentandpastfinancialperformance,andcredithistory,ofthatentityorenterprise,asthecasemaybe,includingtheabilityofthatentityorenterprise,asthecasemaybe,torepayitsdebts,andisusedtodeterminetheinvestmentgradeofthatentityorenterprise,asthecasemaybe,forpurposesoftheraisingofcapitalbythatentityorenterprise,asthecasemaybe,onthefinancialandcapitalmarkets;

"creditrisk"means,inrelationtoaborrower,theriskthattheborrowermaynotbeabletomeetitscontractualobligationstorepaythedebtoftheborrower;

"debt"means,inrelationtoaborrower,theobligationoftheborrowertorepaymoneyslenttotheborrowerbyalender,withorwithoutinterest,tothelender,onaspecifieddateoroveraspecifiedperiodoftime;

"DFI"meansDevelopmentFinanceInstitution;

"DevelopmentFinanceResourceCentre"meanstheDevelopmentFinanceResourceCentreestablishedinArticle8(1)ofthisAnnex;

"enterprise"meansanyentity,corporation,trust,partnership,associationofpersons,foundation,soleproprietorship,branch,jointventure,association,orsimilarorganization,entityorassociationofpersons,whichisengagedinactivitiesofacommercialnature;

"enterprise-wideriskmanagement"means,inrelationtoanenterprise,acomprehensiveviewofriskforthatenterprisewhichincorporatesidentification,measurement,limitsetting,monitoringandcontrolofriskinrespectofthatenterprise,andtakesintoaccountcreditrisk,marketriskandoperationalrisk;

"entity"meansanyjuristicpersonconstitutedororganisedundertheapplicablelawsofanyStatePartyorthirdState,whetherornotforprofit,andwhetherprivatelyorgovernmentallyownedorcontrolled;

"EstablishmentAgreement"means,inrelationtoaDFI,thememorandumandarticlesofassociationof,orotherfoundingorconstitutivedocumentestablishing,theDFI;

"equity"meansmoneysinvestedinanentityoranenterprise,asthecasemaybe,byaninvestor,andforwhichtheentityortheenterprise,asthecasemaybe,isordinarilyexpectedtopayareturntothatInvestor,usuallyintheformofdividends;

"financialinstitution"means,inrelationtoaStateParty,anyinstitutionwhichisclassifiedasafinancialinstitutionbytherelevantlegislationofthatStateParty:financialinstitutionsordinarilyincludedepositoryinstitutions(suchasbanks)whichcollectfundsfromthepublicbywayofdeposits,andnon-depositaryinstitutions(suchasinsurancecompanies)whichcollectfundsfromthepublicbywayof,amongotherthings,sellinginsurancepolicies;

"floatingratenote"meansabondintermsofwhichtheprincipalamountoftheloanbearsinterestatafloating(asopposedtoafixed)interestrate;

"GeneralMeeting"meanstheGeneralMeetingoftheNetworkcontemplatedinArticle3(4);

"juniordebt"means,inrelationtoaborrower,thedebtofthatborrowerwhichissubordinatedtotheotherDebtofthatborrower(includingtheseniordebtofthatborrowerandthemezzaninedebtofthatborrower),andwhichaccordinglyrankslowestinpriorityofpayment;

"limitedrecourse"means,inrelationtoaborrower,that,ifthatborrowerdefaultsintherepaymentofadebtofthatborrower,therelevantlender(s)mayonlyhaverecoursetocertainassetsofthatborrowerwhenclaiming,orinstitutingproceedings,fortherepaymentofthatdebtand,whereapplicable,interestthereon;

"loanlossprovisioning"means,inrelationtoafinancialinstitution,thosevoluntaryprovisionsmadebythatfinancialinstitutionoutofthecurrentincomeofthatfinancialinstitutiontocoverpotentiallosstothatfinancialinstitutionfromloansmadebythatfinancialinstitutiontoborrowerswhichareconsideredbythatfinancialinstitutiontohaveadversecreditrisks,itbeingrecordedthatsuchvoluntaryprovisionsmayreducethecapitaladequacyrationofthatfinancialinstitution;

"marketrisk"meanstheriskofareductioninthemarketvalueofanasset(whichriskiscommontoallassetsofthesameclassortypeasthatasset)asaresultofmovementsinfinancialmarketvariablessuchasinterestrates,foreignexchangerates,equitypricesandcommodityprices;

"mediumtermnote"meansabondwithamedium-termmaturityrangingbetween3and5years;

"mezzaninedebt"means,inrelationtoaborrower,thedebtofthatborrowerwhichissubordinatedtotheseniordebtofthatborrower,butwhichisnotsubordinatedtothejuniordebtofthatborrower,andwhichaccordinglyrankshigherthansuchjuniordebt,butlowerthansuchseniordebt,inpriorityofpayment;

"DFINetwork"meansthecollectiveofnationaldevelopmentfinanceinstitutionsoftheSADCasrecognisedinArticle2;

"non-recourse"means,inrelationtoaborrower,that,ifthatborrowerdefaultsintherepaymentofadebtofthatborrower,(i)therelevantlender(s)maynothaverecoursetoanyassetsofthatborrowerwhenclaiming,orinstitutingproceedings,fortherepaymentofthatdebtand,whereapplicable,interestthereon,and(ii)therelevantlender(s)mayonlyhaverecoursetotheassetsoftheprojectinrespectofwhichthatdebtwasincurredbythatborrowerwhenclaiming,orinstitutingproceedings,fortherepaymentofthatdebtand,whereapplicable,interestthereon;

"operationalrisk"means,inrelationtoanentityorenterprise,asthecasemaybe,theriskofdirectorindirectlossto,ordamagetothereputationof,theentityorenterprise,asthecasemaybe,whichisduetodeficienciesorerrorsintheinternaloperationsoftheentityorenterprise,asthecasemaybeorganization,whichdeficienciesorerrors(i)maybeattributabletotheemployeesofthatentityorenterprise,asthecasemaybe,thatentityorenterprise,asthecasemaybe,thecontrolroutines,processortechnologyofthatentityorenterprise,asthecasemaybe,ortheexecutionoflegal,fiduciaryandagencyresponsibilitiesinrespectofthatentityorenterprise,asthecasemaybe,or(ii)whichmaybe

attributabletoexternaleventswhicharebeyondthecontrolofthatentityorenterprise,asthecasemaybe;

"paripassuranking"means,inrelationtoaborrower,thedebtofthatborrowerwhich(i)ranksequally,inpriorityofpaymenttotherelevantlender(s),withalloftheotherdebtofthatborrowerwhichisofthesameclassortypeasthatdebt(suchclassortypebeingdetermined,amongotherthings,withreferencetothestatusoftherelevantdebtsassecuredornotsecuredand/orSubordinatedornotSubordinated),and(ii)whichdebtisaccordinglynotsubordinatedtoanyoftheotherdebtofthatborrowerwhichisofthesameclassortypeasthatdebt;

"politicalrisk"means,inrelationtoaStateParty,theriskofachangeinthepoliticalsituationofthatStatePartystemmingfrom,amongotherthings,achangeinthecontrolofthegovernmentofthatStateParty,achangeinthesocialfabricofthatmemberState,ortheexistenceofothernon-economicfactorswhichaffectthatStateParty.Politicalriskcoversthepotentialfor(i)internalandexternalconflictswithinorinvolvingthatStateParty,(ii)theexpropriationofpropertyinthatStateParty,and(iii)theinconvertibilityofthecurrencyofthatStateParty:TheassessmentofpoliticalriskrequiresananalysisoffactorssuchastherelationshipsbetweenvariousgroupsinthatStateParty,thedecision-makingprocessinthegovernmentofthatStateParty,andthehistoryofthatStateParty;

"preferredcreditorstatus"means,inrelationtoaborrower,thatlevelofpriorityforrepaymentofdebtsconferredbyInternationalLawonmultilateralfinancialinstitutionssuchastheWorldBank,IMFandAfricanDevelopmentBank.theconferringbythatborrower,inrespectofadebtofthatborrower,ofthatlevelofpriorityofpaymentofthatdebttotherelevantlenderswhichresultsinthatdebtbeingrepaidbythatborrowertotherelevantlenders,notwithstandingthatthatborrowerdefaultsintherepaymentofanyoftheotherdebtofthatborrowertoanyotherlender(s).

"project"meansthedevelopmentorexploitation,withintheRegion,ofaright,naturalresourceorotherassetwitheconomicorfinancialvaluelocatedinanyterritory;

"projectcycle"meansthedifferentphasesofaproject,including(i)projectidentificationandpreparation,(ii)financingtheprojectandnegotiationsbetweentherelevantborrowerandlender,(iii)obtainingcreditapprovalinrespectoftherelevantborrowerinrelationtotheproject,aswellassuchotherapprovalsasarerequiredbytheboard/governingbodyoftherelevantlender,(iv)draftingandreviewingtherelevantloanandrelatedprojectdocumentation,(v)implementing,supervisingandcompletingtheproject;and(vi)evaluatingtheproject;

"projectfinance"meansamechanismforfinancingaprojectwhere,ordinarily,thebulkofsuchfinancingisbywayofdebtfinance(whichisrepaidprincipallyoutoftherevenuesproducedbytheProject)andnotbywayofequitycapital;

"publicentity"means,inrelationtoaStateParty:

(a)anyagency,departmentorinstrumentalityofthegovernmentoftheStateParty;

(b)theCentralBankoftheStatePartyoranyentityholdingallorasubstantialpartoftheforeignreservesorinvestmentsoftheStateParty;

(c)anyprovince,region,stateorotherpoliticalsubdivisionofthatStatePartyincludingmunicipalities;and

(d)anycorporation,juristicperson,institution,undertakingorentitywhichisdirectlyorindirectlyownedorcontrolledbytheStateParty;

"Secretariat"meanstheSecretariatoftheDFISubCommittee;

"security"means,inrelationtoaborrower,anyasset(whethercorporealorincorporeal)offeredassecurityorcollateralbytheborrowertotherelevantlender,tosecuretherepayment,bytheborrower,ofthedebtoftheborrowerwhichisowedtosuchlender;

"securitisation"meansamechanismwhichprovidesaperson(knownastheoriginator)withimmediatecash,raisedindirectlythroughtheissueofbondsontherelevantfinancialexchange,bymeansofthesalebythatoriginatorofcertainreceivables,suchasrightstoberepaidanydebt,toaspecialpurposevehicle,whichspecialpurposevehiclepaysthepurchasepriceofsuchreceivablesoutoftheproceedsoftheforementionedissueofbonds.TheBondsaresecuredbysuchreceivables;

"seniordebt"means,inrelationtoaborrower,thedebtofthatborrowerwhichisnotsubordinatedtoanyoftheotherdebtoftheborrower(includingthejuniordebtofthatborrowerandthemezzaninedebtoftheborrower),andwhichaccordinglyrankshighestinpriorityofpayment;

"SpecialPurposeVehicle"means,inrelationtoasecuritisation,anentitywhichisusedinthatsecuritisationto(amongotherthings)purchasetherelevantreceivablessoldbytherelevantoriginatorandsuchentityisnotownedorcontrolledbythe

relevantoriginator,andthebalancesheetofsuchentitydoesnotneedtobeconsolidatedwiththatoftherelevantoriginatorforaccountingpurposes;

"Stateloan"means,inrelationtoaStatePartyandforpurposesofthisAnnex,anagreementofloanconcludedbetweentheStatePartyasborrowerandtherelevantDFIaslenderinrespectofaprojectforpurposesoffinancingofthatproject;

"subordination"means,inrelationtoaborrower,thatadebt(orclassofdebt)ofthatborrowerranks,inpriorityofpayment,lowerthanotherdebt(orclassesofdebt)oftheborrowerand,accordinglytheborrowerwillnotrepaythedebt(orclassofdebt)totheotherrelevantlender(s)(thesubordinatedorjuniorlender(s))untilsuchotherdebt(orclassesofdebt)has/havebeenrepaidtosuchotherrelevantlender(s)(theseniorlender(s)),andsubordinatedshallhaveacorrespondingmeaning;

"swap"meansatransactionconcludedbetweentwoormorecounterpartieswhichisaimedatmanagingtheriskof,amongotherthings,interestrateorcurrencyfluctuations.Inasimplecurrencyswapthecounterpartiesagreeselltoeachacurrencywithacommitmenttore-exchangetheprincipalamountatthematurityofthetransaction.Inaninterestrateswapthecounterpartiesagreetoexchangeperiodicinterestpayments.Swapsmaypermitacounterpartytomoreeffectivelymanageitsdebt;

"syndication"meansanarrangementwhich,inrespectofadebtofaborrower,providesformultiple(oragroupof)lenders(syndicatelenders),andwhichordinarilyprovidesforeachsuchsyndicatelendertoincuronlysuchobligationsasrelatetothatportionofthatdebtwhichisowedbythatborrowertothatsyndicatelender;

Article2.EstablishmentoftheNetwork

1.StatePartiesagreethatconsistentwiththedecisionofCouncilof2002,thereisherebyrecognised,anetworkofdevelopmentfinanceinstitutionstaskedwithdeliveryontheSADCCommonAgenda,tobeknownastheSADCDFINetworkandwhichshalloperateundertheprincipleofsubsidiary.

2.MembershiptotheNetworkshallbeopentoallDFIsoperatingatanationallevelwithintheterritoryofaStateParty.

Article3.ObjectivesoftheNetwork

StatePartiesagreethattheobjectivesoftheNetworkshallbeto:

(a)collaborateonProjects;

(b)poolresourcesinordertomobilisefunds,bothwithinandoutsidetheRegionforpurposesoffinancingdevelopmentProjectsintheRegion;

(c)investmoneysintheformofequitycapitalinDFIswherethisisconsidereddesirablebytheNetworkinGeneralMeeting;

(d)investjointlyinnewstructuresshouldthesebeconsiderednecessarybytheNetworkinGeneralMeeting;

(e)collaborateontheestablishmentofappropriateinstitutionalarrangementsandmechanismstofacilitatetheco-operationofDFIsandtomeetthedevelopmentfinanceneedsintheRegion;

(f)co-operatein:

(i)capacitybuildinginitiatives,includingtheexchangeofpersonnel;

(ii)strengtheningICT(asdefinedinAnnex7),theexchangeofinformationandthesharingofdata,allofwhichareaimedatinformationsharingandcommunicationamongDFIsandwithotherrelevantinstitutions;

(iii)suchpolicyresearchandanalysis,andtechnicalcooperation,asisrequiredtofacilitateandsupportinteractionsbetweenDFIsmoreeffectively;

(iv)settingupjointfunctionalunits,jointworkingmeetings,andconsultationsonmattersofcommoninterest.

Article4.OperationoftheNetwork

1.StatePartiesagreethattheNetworkshallholdGeneralMeetingsofalloftheDFIsasoftenasitisdeemednecessarybytheNetwork,butinanyeventatleasttwiceeveryyear.

2.StatePartiesagreethateachDFIshallberepresentedatGeneralMeetingsbyitsChiefExecutiveOfficerand,inthe

absenceofthatChiefExecutiveOfficer,bythatChiefExecutiveOfficer'srepresentative.

3.StatePartiesagreethatatthefirstGeneralMeetingtheNetworkshall:

(a)appoint,fromtheCEOs,achairpersonandvice-chairpersonallofwhomshallserveforoneyear;

(b)determinetherulesandproceduresofGeneralMeetings;

(c)electaBoardofTrusteestocarryoutoversightoftheactivitiesoftheDFRCandreportthereontothegeneralmeetingoftheDFInetwork.Theboardshalldetermineitsrulesandproceduresandshallmeetatleastfourtimesayear.

4.StatePartiesagreethataquorumfortheGeneralMeetingsshallbeatleastone-halfofthetotalnumberofDFIs(whichone-halfshallrepresentDFIsfromatleastone-thirdofalloftheStateParties),(i)presentinpersonattheGeneralMeetinginquestion,or(ii)representedatthatGeneralMeetingbywrittenproxysenttotheSecretariatpriortothatGeneralMeeting.

5.StatePartiesagreethatthattwenty-one(21)-calendardaysnoticeofaGeneralMeetingwillbegiventoallCEOs.

6.StatePartiesagreethat,unlessotherwisedecidedbytheNetworkataGeneralMeetingtheNetworkshallbesupportedinitswork,administrativeandrelatedactivitiesbytheDevelopmentFinanceResourceCentre.

Article5.Decisions

1.StatePartiesagreethatdecisionsandresolutionsofanyGeneralMeetingshallbebyconsensus.Whereconsensuscannotbereached,decisionsandresolutionsofanyGeneralMeetingshallbetakenbyamajorityoftheCEOs(i)presentattheGeneralMeetinginquestionor(ii)representedatthatGeneralMeetingbywrittenproxysenttotheDevelopmentFinanceResourceCentrepriortothatGeneralMeeting.

2.StatePartiesagreethateachCEOshallhaveonevoteinanyGeneralMeetingandthechairpersonorthevice-chairpersonwillhaveasecondorcastingvote.

Article6.FinancingoftheNetworksActivities

StatePartiesagreethattheNetworkshalldecideinaGeneralMeetingonthemobilisationofresourcesandthepoolingoffacilitiesinordertofinancetheactivitiesandadministrationcostsoftheNetwork.

Article7.CapacityBuildingandStrengtheningofDfis

1.StatePartiesagreethatDFIswill,throughtheforumoftheNetwork,cooperateincapacitybuildinginitiativesincludingtheexchangeofpersonnelandtothisendthatDFIs,throughtheforumoftheNetwork,will:

(a)co-operateinthedevelopmentofappropriatetrainingcoursesandprogrammesinordertofurtherdevelopandenhancetheskillsofthemanagementandstaffoftheNetwork;

(b)facilitatethesecondmentofmanagementandstafftoprovideforthepracticaltransferofknowledgeandskillsbetweenandamongDFIs;

(c)encouragementoringprogrammesforyoungprofessionalsbetweenandamongDFIs;

2.StatePartiesagreethatDFIswill,throughtheforumoftheNetwork,collaborateinordertostrengthenandenhancethecreditworthinessofDFIsand,tothisendthatDFIswill,throughtheforumoftheNetwork:

(a)shareexperiencesandpracticesinrespectofdevelopmentbankingbetweenandamongDFIs;

(b)shareknowledgebetweenandamongDFIsinrespectofcredit-enhancementtechniques,includingtheacquisitionofinternationalCreditRatings;

(c)withtheassistanceoftheDevelopmentFinanceResourceCentre,exchangeexperiencesbetweenandamongDFIsinthedevelopmentofcreditandrelatedpolicies,proceduresandmethodologies,includingloanbookmanagementandLoanLossProvisioning;

(d)inco-operationwiththeDevelopmentFinanceResourceCentre,developacommonapproachbetweenandamongDFIstoEnterprise-wideRiskManagementbaseduponbestinternationalpractices,includingaCapitalAdequacyframeworkforthesoundriskmanagementoftherespectiveDFIs;

(e)fosterexchangebetweenandamongDFIsofappropriatetechnologies.

Article8.TheDevelopmentFinanceResourceCentre

1.StatePartiesagreethatconsistentwithCouncildecisionof2002thereisherebyrecognised,undertheprincipleofsubsidiarity,theDevelopmentFinanceResourceCentreasaSADCinstitutionforpurposesofsupportingthecapacitybuildingandotherinitiativesoftheNetwork.

2.StatePartiesagreethatthemissionoftheDevelopmentFinanceResourceCentrewillbetoactasacatalystforsustainabledevelopmentwithintheNetworkinordertoimproveinvestmentsinto,andenhancetheprosperityoftheRegion.StatePartiesagreethatincarryingoutitsfunctionsthecoreresponsibilitiesoftheDFRCwillbeto:

(a)effectcapacitybuildingandtrainingofmanagersandstaffofDFIs;

(b)supportthestrengtheningofDFIsinallsectorsoftheirrespectiveactivities;

(c)offerapolicyresearchandanalysiscapabilityfortheRegion;

(d)facilitatethemobilisationandsharingofinformationthroughacentralhubforICT(asdefinedinAnnex7);

(e)engageinconfidence-buildingmeasureswithintheRegionforpurposesofsupportingInvestments;

(f)offeradvisoryservicestothegovernmentsofStatePartiesandtoDFIsinrespectofdevelopmentresourcesandfinancialservices;

(g)identifyandpromoteopportunitiesforco-operationandcoordinationindevelopmentfinanceintheRegion;

3.StatePartiesagreethatparticipationintheDFRCwillbeopentoallDFIsintheNetwork.ThemembersoftheBoardoftheDevelopmentFinanceResourceCentrewillbedrawnfromtheCEOsandseniormanagementofDFIsandsuchotherexternalpartners(includingprivatesectorandinternationalpartners)asmayberequired.

4.StatePartiesagreethatthemajorstakeholdersoftheDevelopmentFinanceResourceCentrewillbe:

(a)beneficiariesofDFIprogrammesandProjects;

(b)fundingagencies,includingfinancialandinvestmentinstitutionsandinternationalco-operatingpartners;

(c)thegovernmentsofStateParties.

5.StatePartiesagreethatthemainclienteleoftheDevelopmentFinanceResourceCentreshallbetheDFIs.

6.StatePartiesagreethattheNetworkwillinGeneralMeetingdeterminesuitablefinancingmechanisms,andsuitablefinancingsourcesforrecurrentexpenditure,forfundingtheactivitiesoftheDevelopmentFinanceResourceCentre,includingthelevyingofmembershipcontributions.

Article9.Co-operationonProjectsIntheRegion

1.StatePartiesagreethatDFIsthroughtheforumoftheNetwork,willcooperateinmobilizingbothfinancialandhumanresourcesforpurposesofundertakingsustainabledevelopment,investmentandtradefinanceprojectsintheRegion.

2.StatePartiesagreethatanyDFIintheNetworkmayparticipateincrossshareholdinginanyotherNetworkmember.

3.ForpurposesofthisArticle9,StatePartiesagreethatco-operationonprojectsincludestechnicalassistanceinprojectidentification,prefeasibilityandfeasibilitystudies,projectdevelopment,andtechnicalassistanceprovidedbyanyDFIduringanyprojectcycle.

4.StatePartiesagreethatDFIsthroughtheforumoftheNetwork,willharmonizeandapplyinternationalbestpracticecreditriskmanagementpolicies,proceduresandmethodologiesto,theappraisalandapprovalofcross-borderandotherinvestmentanddevelopmentprojects,andStatePartiesagreethatDFIswillconsideronlysustainable,commerciallyviableProjects.

5.StatePartiesagreethatifaStatePartyrequeststheinvolvementofaNetworkmemberinanon-financiallyviablebuteconomicallyimportantproject,suchinvolvementwillbecarriedoutonafeebasisbytheNetworkmemberprovidedsuchprojectisfinancedthroughpublicfundsorgrantfundingderivedfromfiscaltransfersorfrommultilateralfinanciers.

6.StatePartiesagreethatwhenco-operatinginthefinancingofinvestmentProjectsinanyStateParty,theDFIs,throughtheforumoftheNetworkandanyotherco-financierswillundertakejointappraisalsofsuchprojectsandusesuchopportunities,whereverpossible,forthepurposesofbuildingcapacity.StatePartiesagreethatDFIs,throughtheforumoftheNetworkwillensurethat,inrelationtoamezzaninedebtstructureinvolvingbothseniorandjuniordebt,thepartiesholdingthejuniordebtaresatisfiedthatallrelevantriskshavebeenappropriatelyidentified,pricedandmitigated.

7.StatePartiesagreethatDFIsmay,throughtheforumoftheNetwork,makefinancingavailableforsustainabledevelopmentandinvestmentprojectsbywayofdebtfinanceorbyinvestingmoneysintheformofequitycapitalorotherwise,inanyEntityorEnterpriseorPublicEntitywhichislocatedintheRegion,unlesssuchfinancingactivityisprohibitedbytheEstablishmentAgreementsortherelevantenablinglegislationoftheDFIs.

8.StatePartiesagreethatDFIs,throughtheforumoftheNetwork,must,inco-operatinginthefinancingofinvestmentprojectsintheRegion,andexceptasmaybedeterminedbytherespectiveEstablishmentAgreementsandtherelevantenablinglegislationofDFIs,explore,amongotherthings,theuseofco-financing,syndication,subordination,orotherstructuredfinancearrangementsusing,withoutlimitingthegeneralityoftheforegoing,anyoneormorecombinationsofthefollowingtypesofinstrumentsortechniques:

(a)long-termdebt(ofamaturityof6ormoreyears);

(b)medium-termdebt(ofamaturityof3-5years);

(c)short-termdebt(ofamaturityof1-2years);

(d)linesofcreditforon-lendingpurposes;

(e)seniordebt;

(f)mezzaninedebt;

(g)juniordebt;

(h)projectfinancing;

(i)public-privateinvestmentpartnerships;

(j)variable,floatingorfixedinterestrates(includingFloatingRateNotes);

(k)equity;

(l)swaps;

(m)securitisation;

(n)guarantees,whetherpartialorfull;

(o)anyothertailored-creditenhancementinstrument;

(p)specialpurposevehicles;

(q)export/importfinance;

(r)short-termtradefinance;

(s)stateloans.

9.StatePartiesagreethat,forpurposesofthisArticle9,DFIs,throughtheforumoftheNetwork,mayfinanceSpecialPurposeVehiclesandpoolsuchresourcesasmayberequiredwithinsuchSpecialPurposeVehicles.

10.StatePartiesagreethatDFIswill,throughtheforumoftheNetwork,forpurposesoffacilitatingtheuseoftheinstrumentscontemplatedinparagraph7above,co-operateinthecreationofanenablingregulatoryenvironmentinordertodevelopvibrantfinancialandcapitalmarketsintheRegion.

11.StatePartiesagreethat,inaccordancewithparagraph8above,DFIsmay,throughtheforumoftheNetwork,engageintransactionsamongstthemselvesaimedatfinancingdifferentprojectcyclesofasustainabledevelopmentorinvestmentproject,dependinguponthenatureoftheproject,theindividualfinancingmandatesoftherespectiveDFIsandthefinancingrequirementsateachprojectcycle.

Article10.PreferredCreditorStatusorPariPassuRanking

1.StatePartiesagreethatinordertoenableDFIs,throughtheforumoftheNetworktooperateeffectivelyandwithminimalriskinthefinancingofinvestmentprojectsinthepublicsector,theStatePartywillgrantPreferredCreditorStatustothoseDFIswhichareorwillbefinancingsuchinvestmentprojects.

2.StatePartiesagreethatanyStatePartyunabletograntPreferredCreditorStatus,ascontemplatedinparagraph1above,willconferPariPassuRankingontheDFIsconcerned.

Article11.PoliticalRiskInsuranceGuaranteeFacility

StatePartiesagreethat,inordertoenableDFIs,throughtheforumoftheNetworktomitigateagainstandminimizePoliticalRiskinthefinancingofpublicsectorprojects,theywillsupporttheNetworkininvestigatingthefeasibilityandprovideresourcestowardstheestablishmentofaregionalinsuranceguaranteefacilityaimedspecificallyatinsuringagainstPoliticalRiskinsuchprojects.

Article12.WaiverofStateImmunitiesandRecognitionandEnforcementofForeignJudgmentsandArbitralAwards

1.EachStatePartyacknowledgesthatthisAnnex9contemplatescooperationinactivitiesofacommercialnature.Tothisend,eachStatePartyunconditionallyandirrevocablyagreesthat:

(a)ifanyproceedings,includinganyarbitrationproceedings,arebroughtagainstthatStatePartyoritsassetsinrelationtoanycommercialtransactionscontemplatedinthisAnnex9noimmunityfromsuchproceedingsshallbeclaimedbyoronbehalfofthatStatePartyorwithrespecttoitsassets;

(b)thataStatePartywaivesanyrightofimmunitythatithas,ormayacquireinthefuture,inthejurisdictionoftheTerritoryofanyStatePartyinwhichanysuchproceedingsareinstituted;

(c)thatStatePartyconsents,generally,totherecognitionandenforcement,intheTerritoryofanyotherStateParty,ofanyjudgmentorarbitralawardagainstthatStateParty,inrespectoftheproceedingscontemplatedinsub-paragraph(a)above;

(d)thatStatePartyagreesthat,theUnitedNationsConventionontheRecognitionandEnforcementofForeignArbitralAwards,1958,shallgoverntherecognitionandenforcement,againstthatStateParty,ofthejudgmentorarbitralawardreferredtoinsubparagraph(c)above.

2.EachStatePartyagreesthatnotwithstandingtheprovisionsofparagraph1above,thewaivercontemplatedinparagraph1(b)aboveshallnotextendtotheassetsofthatStatePartywhichareprotectedbydiplomaticandconsularprivilegesandimmunitiesundertheViennaConventiononDiplomaticRelations1961andtheViennaConventiononConsularRelations1963.

Article13.ActivitiesUndertakenonBehalfofStateParties

StatePartiesagreethatDFIs,throughtheforumoftheNetwork,maycarryoutsuchactivitiesasarerequestedbyStateParties.

Article14.SettlementofDisputesbetweenDfis

1.StatePartiesagreethattheDFIswhoarepartiestoanydisputeordifferencearisingfromtheinterpretation,applicationorimplementationofthisAnnex9willusetheirbestendeavourstosettlesuchdisputeordifferencethroughgoodfaithnegotiations,conciliationormediation.

2.StatePartiesagreethat,ifthedisputeordifferencereferredtoinparagraph1abovecannotbesettledthroughgoodfaithnegotiations,conciliationormediationwithinthreemonthsaftersuchdisputeordifferencehasarisen,thepartiestosuchdisputeordifferencewillsubmitsuchdisputeordifferencetoanarbitraltribunalinaccordancewiththeprovisionsofthisArticle14.

3.Thearbitraltribunalcontemplatedinparagraph2aboveshallbecomposedofatleastthreearbitratorschosenfromtherosterofpresidingarbitratorscontemplatedinparagraph9below.

4.EachDFIwhichisapartytotherelevantdisputeordifferenceshallnominateoneofthearbitratorsreferredtoin

paragraph3tositonthearbitraltribunal(whicharbitratorshallnotbeanationalofthatStatepartywhoseDFIisapartytothedisputeordifference)withintwomonthsofreceiptbythatDFIoftherequestforarbitration.

5.Thechairmanofthearbitraltribunalshallbeappointed,fromamongthearbitratorsselectedintermsofparagraph4above(orfromtherosterofpresidingarbitratorscontemplatedinparagraph9below)byagreementofthepartiestotherelevantdisputeordifference.

6.If(i)apartytotherelevantdisputeordifferencefailstonominateitsarbitrator,ascontemplatedinparagraph4above,or(ii)thepartiestosuchdisputeordifferencefailtoagreeontheappointmentofthechairmanofthearbitraltribunal,ascontemplatedinparagraph5above,asthecasemaybe,withinthreemonthsoftherequestforarbitrationreferredtoinparagraph4above,anypartymayapproachtheSADCExecutiveSecretarytomaketheappointmentofsucharbitratororsuchchairman,asthecasemaybe.

7.Thechairmanofthearbitraltribunalappointedintermsofparagraphs4or5aboveshall,inrespectoftheDFIswhicharepartiestotherelevantdisputeordifference,notbeanationalofanyofthoseDFIsStateParties.

8.StatePartiesagreethat:

(a)thearbitraltribunalcontemplatedinparagraph3aboveshallreachitsdecisionbymajorityofvotes,witheacharbitratorhavingonevoteandthechairmanhavingacastingvoteintheeventofadeadlock;

(b)thedecisionofthearbitraltribunalshallbefinalandbindingonallthepartiestothedisputeordifference;and

(c)thearbitraltribunalshalldetermineitsownproceduresandmakeitsowndeterminationswithregardtothecostsoftherelevantarbitrationproceedings.

9.StatePartiesagreethat:

(a)DFIs,throughtheforumoftheNetwork,willestablishandmaintain,arosterofatleast25presidingarbitratorsfromalistofhighlyskilledprofessionalswhoareexperiencedininternationalfinanceandinvestmentmatters;

(b)thepresidingarbitratorsreferredtoinsub-paragraph(a)willbeappointedbyconsensusoftheDFIsandwithoutregardtothenationalityofsuchpresidingarbitrators,providedthattheDFIswill,asfaraspossible,ensurethattherosterofpresidingarbitratorsadequatelyrepresentsalloftheStateParties;and

(c)WherethereisnoconsensusoftheDFIsinappointingthepresidingarbitratorsreferredtoinsub-paragraph(a)sucharbitratorswillbeappointedbytheChairmanoftheDFINetwork.

Article15.Sanctions

1.StatePartiesrecognisethatsanctionsmaybeimposedonanyDFINetworkmemberifthatmemberengagesinanyorallofthefollowing:

(a)thememberisinarrearswithcontributionstotheDevelopmentFinanceResourceCentreforaperiodexceedingoneyear,exceptonexceptionalcircumstancesdeemedacceptablebytheNetwork;

(b)thememberfailstomaintainanacceptablerecordofattendance,i.e.failuretoattend3consecutivemeetingsoftheNetworkinanyoneyear,withoutgoodreasondeemedacceptablebytheNetwork;

(c)thememberengagesinanact,orimplementspolicies,thatunderminetheobjectivesoftheNetworkanditsDFRC,andresultsinreputationalriskoftheNetworkanditsDFRC,asdeemedbytheNetworkaswarrantingsuchsanctions.

2.SanctionsasdeterminedbytheNetworkshallincludeamongothers,andonacasebycasebasis:

a)Withdrawalofmembershipbenefits,suchasparticipationinresearchandtrainingprogrammes,bytheSADC-DFRCExecutive;

b)Withdrawaloffundscommittedtoanyproject(s)benefitingtheresponsibleDFI,exceptthatprojectsalreadyincommissionmayatthediscretionoftheNetworkbecompleted.Butnofurthersuchresourcesshallthereafterbecommitted;

c)Suspensionfrommembership:mayattendmeetings,butmaynotspeaknorvote;

d)ExpulsionfromtheDFINetwork.

3.ThememberundersanctionshallhowevercontinuetobeliablefortheirportionofthecontributionstotheDFRCwhendue,unlessithasotherwiseterminateditsmembership,whereinsuchcontributionsasaredueshallbeset-offagainstanybenefitsenjoyedbythememberfromDFRCprogrammes.TheDfRcshallthenhavetherighttoclaimrepaymentofanysuchfundssoexpendedonbehalfofthatmemberasacontractualobligationofthesaidmember.

4.ThesanctionsreferredtoshallbeappliedbytherespectiveorgansoftheDFINetwork,exceptthattheapplicationshallbesubjecttothefollowingprocedure:

a)AfterthethirdquarteroftheFinancialYearinwhichtheNetworkmemberisinarrears,theDFRCwillsendafinalreminderoftheoutstandingbalancedue;

b)IfthereisstillnopaymentmadebytheendoftheFinancialYear;orifthememberhasfailedtoattend3consecutivemeetingsoftheNetworkinthatyear;orifthememberhasengagedinanactthatisdeemedtohavedamagedthereputationoftheNetworkoritsDFRC,theDFRCwillnotifytheNetworkMemberofitsintentiontoimposethesanctionsasperparagraphs1and2ofthisPolicy;

c)AfterthethirdQuarteroftheFinancialYear,afinalnoticewillbeissuedtotheMember,andareporttabledwiththeBoardattheirnextmeetingrecommendingexpulsion.Thememberhasarighttoattendsuchmeetingtopresenttheircaseifany.

5.ThedecisiontoexpelamemberwillbetakenatafullmeetingoftheDFISub-committeeontherecommendationoftheBoard,withatwo-thirdsmajoritydecisionofallmemberspresent.

6.AnexpelledmembermaybereadmittedbyafullmeetingoftheDFISub-committee,aftercarefulconsiderationbyandonrecommendationoftheBoard,withatwo-thirdsmajoritydecisionofallmemberspresent.

Article16.

TERMINATIONOFMEMBERSHIPINTHENETWORK

StatePartiesagreethatexceptasprovidedforinArticle15(3),themembershipofaDFIintheNetworkmaybeterminatedinthefollowinginstances:

a)OnthewindingupoftheaffairsoftheDFIconcernedbytheStateParty,anditsceasingtoexistasaninstitution;

b)OnexpulsionoftheDFIassetoutinArticle15;

c)OntheterminationoftheStatePartysmembershipinSADC.

PREAMBLE


RECALLINGthattheCommitteeofInsurance,SecuritiesandNon-BankingfinancialAuthoritiesofSADC(CISNA)wasestablishedinJune1998bytheInsurance,SecuritiesandNon-BankingFinancialAuthoritiesintheSADCRegion(theAuthorities);

NOTINGthatastrategywasdevelopedtogivedirectiontotheactivitiesOfCISNAandtocontributetothesoundregulation,effectivesupervisionandrapiddevelopmentofthefinancialservicesindustries;

REALISINGthatfinancialinstitutionssupervisedbytheAuthoritiesarecriticalformobilisingsavingswhichareimportantfortheexpansionofproductivecapacityandthatsuchinstitutionsrequireasupportingregulatoryframework:

(a)whichwillattracttheinvestmentsrequiredforcreatingeconomicdevelopmentwithintheRegion;

(b)formanagingthefinancialrisksfacedbythefinancialinstitutionsandusersoffinancialproductsandservicesintheRegion;and

(c)whichmustnotonlybeefficientbutalsoproperlyenforced;

AWAREthatthereshouldbecloseco-operationbetweentheAuthoritiesforthepurposeofcarryingoutCISNAsobjectivesinthepursuitofcomplementarygoalstoachieveanintegratedandcredibleSADCcapitalmarket;

NOTINGtheincreasingneedforinternationalization,andharmonisationoffinancialinstitutionsandtheinterdependenceoftheactivitiesoffinancialinstitutionsduetotheuseofmoderntechnologyandcloserco-operationbetweenfinancial

institutions;

RECOGNISINGtheneedtomobilisesavingsthatcanbeusedtoexpandSADCsproductivecapacity;

FURTHERNOTINGthatbroadobjectiveshavebeensetintheCISNAStrategicPlantoachievethesuccessfulregulationandsupervisionofnonbankingfinancialinstitutionsandtheneedtoshareinformation.

CONSCIOUSthattheachievementoftheobjectivesreferredtointheCISNAStrategicPlanwillbeaccomplishedatdifferenttimesandindifferentphases;

NOTINGtheestablishmentofCISNA,theadoptionoftheCISNAMOUand

TheobligationsimposedontheAuthoritiesinthesaidMOU



1.InthisAnnex,termsandexpressionsdefinedinArticle1oftheTreatyshallbearthesamemeaningunlessthecontextotherwiserequires.


"Authority"meansanyorganorentityresponsiblefortheregulationandsupervisionofnonbankingfinancialinstitutionsintheirrespectivejurisdictionswithinSADCoranydesignatedrepresentativeofsuchauthority;

"CISNA"meanstheCommitteeofInsurance,SecuritiesandNon-bankingFinancialAuthoritiesofSADCandtheAuthorities;

"CISNAStrategicPlan"meanstheCISNAStrategicPlansetoutinAddendumAtothisAnnex;

"non-bankingfinancialinstitutions"meansanyprovideroffinancialadvisoryandintermediaryservices,collectiveinvestmentschemes,insuranceinstitutionsandretirementfundsregulatedorsupervisedbytheirrespectiveAuthorities;

"financialproductsandservices"meanslong-termandshort-terminsurancecontractsorpolicies,benefitsprovidedbyretirementfunds,financialadvisoryandintermediaryservices,shares,debentures,bondsandotherformsofsecuritiseddebt,futuresandderivativeproductsincludingcommodityderivatives,participatoryinterestsincollectiveinvestmentschemes,andothersecuritiestradedintherespectivejurisdictionsoftheAuthorities;

"financialservicesindustry"meansthesupplyoffinancialproductsandservicesbyfinancialinstitutionsthroughouttheRegion;

"jurisdiction"meansthecountry,stateoranyotherterritory,asthecasemaybe,inwhichanAuthoritycanexerciseitspowers;

"IAIS"meanstheInternationalAssociationofInsuranceSupervisors;

"IOPS"meanstheInternationalOrganisationofPensionRegulatorsandSupervisors;

"IOSCO"meanstheInternationalOrganisationofSecuritiesCommissions;

"RequestedAuthority"meanstheAuthoritytowhomarequestismadeintermsofthisAnnex;

"RequestingAuthority"meanstheAuthoritymakingarequestpursuantintermsofthisAnnex;

"securities"meansbonds,shares,stock,debentures,securitiseddebtinstruments,equityinstruments,debtinstruments,futuresandderivativeinstruments(includingcommodityderivatives),participatoryinterestsincollectiveinvestmentschemes,andanysimilarsecuritiesto,orcombinationof,theaforementioned.

Article2.EstablishmentoftheCommitteeofInsuranceSecuritiesandNon-bankingFinancialAuthorities

ThereisherebyestablishedaCommitteeofInsurance,SecuritiesandNonBankingAuthoritiesoftheSouthernAfricanDevelopmentCommunity.

Article3.CommunicationandExchangeofInformation

1.Thereshouldbehigh-levelcontactbetweentheAuthoritiesinordertoinformeachotherofanysignificantchangesintheirrespectiveregulatoryenvironmentswithaviewtoharmonizingeachAuthoritysapproachonthesubjectcoveredbythesharedinformation.

2.TheAuthoritiesshallputoneanotherontheirmailinglistsforthereceiptofperiodicalsandotherimportantcommunications.

3.TheAuthoritieswillencourageandenhancecontactamongstthestaffoftheAuthorities

Article4.InformationSharing

1.TheRequestedAuthorityshoulduseitsbesteffortstoobtaininformationfromitsownrecordsorfrominstitutionswithinitsjurisdictioninordertoprovideaRequestingAuthoritywithinformationthatwillallowsuchauthoritytofulfilitsregulatoryandsupervisoryresponsibilities.

2.IfanyAuthoritycomesintopossessionofinformationthatwouldbelikelytoassistanotherAuthorityinadministeringorenforcingthelawsorregulationsforwhichitisresponsible,thefirst-mentionedAuthoritywillendeavourtonotifytheotherAuthorityoftheexistenceofthatinformation.

Article5.RequestforInformationandAssistance

1.TheprovisionsoftheAnnexontheExchangeofInformationandSurveillanceofSecurities,InsuranceandRetirementActivitieswill,withthenecessarychanges,applyto:

(a)requestsforinformationandassistance;

(b)theexecutionofsuchrequests;

(c)thepermissibleusesofinformation;

(d)therightsofRequestedAuthorities;

(e)confidentiality;and

(f)thecostsofinvestigations.

Article6.CompliancewithInternationalStandards(diagnosticExcercise)

1.Inordertoassistthelegislaturewiththedraftingoramendingoflegislationthatiscompliantwithinternationalstandards,theAuthoritiesshall:

(a)undertakeintheirrespectivejurisdictionsadiagnosticstudy,analysisorassessmentthatfocusesprimarilyonassessingtheregulatoryframeworkandsupervisorypracticesintermsoftheobjectivesandprinciplesoftheIOSCO,theIAISandtheIOPS;

(b)beforesubmissionoftheassessmentsverifysuchassessmentsthroughAuthoritypeerorthirdpartyreview;and

(c)adoptanddeveloptherequiredstructuresinlinewiththeobjectivesandprinciplesrecommendedbyIOSCO,IAISandIOPS,iftheassessmentdemonstratesthatiswhatisrequired.

Article7.RelationshipwithInternationalBodies

1.TheAuthoritiesshould:

(a)becomemembersofandliaisewithIOSCO,IAISandIOPS;and

(b)disseminatetootherAuthorities,whoarenotmembersofIOSCO,IAISandIOPS,informationderivedfromthoseinstitutions.

Article8.DevelopmentProgramme

1.StatePartiesagreethat,theAuthoritiesshould,inordertodevelopfocusedprogrammesfortheirrespectivefinancialservicesindustries,assessthelevelofdevelopmentoftheirnon-bankingfinancialinstitutionswithregardto,interalia:

(a)thesupplyanduseoffinancialproductsandservices;

(b)levelofcompetition;and

(c)anybarrierstodevelopment.

Article9.HarmonisedFinancialRegulatoryRegime

TheAuthoritiesshallworktowardstheharmonisationoftheirrespectivelawsandregulationsandregulatoryandsupervisorypracticeswiththeaimofpreventingorreducingregulatoryarbitrage.

Article10.TrainingandEducationofStaff

TheAuthoritiesshall:

(a)ensurethatbothlocalandforeigntrainingopportunitiesaredeveloped,expandedandhostedthroughouttheRegion,andmadeavailabletothestaffofallAuthorities;

(b)identifytheirtrainingneeds;

(c)explorethedevelopmentprogramme(s)suitablefortheirneeds;

(d)assistasmuchaspossiblewiththepresentationofsuchtrainingprogrammes;

(e)organiseandencourageattachmentsthroughouttheRegionorabroadtoprovideon-the-jobtraining;

(f)organiseattachmentsandshallmutuallyagreeonthedurationthereof.

1.TheAuthorities:

(a)shallidentifycross-borderactivitiesthatcouldformthesubjectofcross-borderco-operationamongstAuthorities,andbetweenAuthoritiesandforeigncounterparts(i.e.thepreventionofunscrupulousoperations,increasedaccesstoinformation,duallistings,theintroductionoflegislationtopreventmoneylaundering,includingthefinancingofterrorism);and

(b)arecommittedtofacilitatemutualexchangeofinformationandassistance.

Article12.ConsumerAwarenessCampaigns

1.TheAuthoritiesshall:

(a)assisteachotherwiththeintroductionofsuitableconsumerawarenesscampaignsfortheirrespectivejurisdictions;

(b)sharewithoneanotherproblemsidentifiedandmethodologiesusedtopromotetheirrespectiveawarenesscampaigns;

(c)identifytheconsumerawarenesscampaignsandinitiativesalreadyintroducedintheirrespectivejurisdictionstoinformandeducateconsumersoffinancialproductsandservices;and

(d)assesswhetheradequateprogrammeshavebeenintroducedandimplementinitiativesthatwillenhanceconsumerawareness.

Article13.MeetingsandSubcommittees

1.TheAuthoritiesshallmeetasoftenasdeemednecessarybutatleasttwiceeachyear;andshallbyconsensus,appointaChairpersonandVice-Chairpersonforaperiodofnotmorethantwoyears.

2.TheChairpersonandtheVice-ChairpersonsoappointedwillrepresentCISNAatmeetingsoftheSeniorTreasuryOfficials.

3.TheAuthoritiesshalldeterminetherulesandproceduresofallmeetings.

4.TheAuthoritiesmay,byconsensus,setupsuchsub-committeesasmaybedeemednecessarytocarryoutanyspecificassignmentordutyofCISNA.

Article14.Referrals

IfanyAuthoritybelievesthatamatterfallsmoreappropriatelywithinthejurisdictionofanotherAuthority,orthatsomejointactionisrequiredindealingwiththematter,suchmattershouldbereferredtotheotherAuthorityassoonasisreasonablypracticable.

Article15.CessionandAssignment

AnAuthorityordesignatedrepresentativeofsuchAuthoritymaynotcede,assignortransferanyrightorobligationgrantedunderthisAnnexwithoutthepriorwrittenconsentofalltheAuthorities,whichconsentshallnotbeunreasonablywithheld.


TheAuthoritiesshallassistoneanothertodevelopapproachesforstrengtheningtheregulation,supervisionandtheefficiencyofthefinancialinstitutionsintheAuthoritiesrespectivejurisdictionswhileavoiding,wherepossible,conflictsthatmayarisefromtheapplicationofdifferingregulatoryandsupervisorypractices.

PREAMBLE


RECALLINGtheprovisionsofChapterEightoftheProtocolwhichrequiresco-operationinRegionalCapitalandFinancialMarkets,

CONSCIOUSofacollectivedutytoattaintheobjectivesSADC,topromoteandtransformthewholeSouthernAfricanRegionintoadynamicandwellintegratedeconomicblock;toachievethevisionoftheCommitteeofSADCStockExchanges(COSSE)toestablishbytheyear2006,anintegratedrealtimenetworkofthenationalsecuritiesmarketswithinSADC;topavethewaytowardscross-borderlistingsand,tradingandinvestmentsamongthedifferentMemberExchangesofSADCinordertofacilitatetheprocessoffinancialintegrationwithintheRegion;

DETERMINEDtotakethenecessarystepstomaximisetheco-operationofMemberExchangesandtoencouragethedevelopmentofaharmonisedsecuritiesmarketenvironmentwithintheRegion;

RECOGNISINGtheneedtocooperatewithnationalregulatorsaswellasCISNAinthepursuitofcomplementarygoalstoachieveanintegratedandcredibleSADCcapitalmarket;

CONVINCEDoftheneedtoimprovetheoperational,regulatoryand,technicalunderpinningsandcapabilitiesofSADCExchangestomaketheirsecuritiesmarketsmoreattractivetobothregionalandinternationalinvestors;toincreasemarketliquidityandenhancetradinginvarioussecuritiesandfinancialinstruments;topromotethedevelopmentofefficient,fairandtransparentsecuritiesmarketswithintheRegion;toencouragethetransferoftheintellectualcapitalofthesecuritiesmarketsandthetechnicalexpertiseamongtheMemberExchangesofCOSSE;andtoencourageinteractionamongmarketparticipants.

NOTINGANDCONFIRMINGtheestablishmentofCOSSE,theCOSSEMOUrecordingthestepstobetakenbyMemberExchangestobuildandenhanceco-operationandtocommunicateandco-ordinatetheireffortsfortheirmutualbenefitandthatoftheRegion;

THESTATEPARTIESHEREBYAGREEasfollows:




"COSSE"meanstheCommitteeofSADCStockExchanges;

"marketparticipant"meansanypersonauthorisedtodealinfinancialinstrumentsand/ortheirintermediariesinthejurisdictionofanyoftheMemberExchanges;

"MemberExchange"meansaSADCSecuritiesorFinancialExchange;

Article2.Co-operation

IncommittingtothefurtherdevelopmentandgrowthofSADC,MemberExchangesshallextendmultilateralco-operationandassistancetooneanotherin,butnotlimitedto,thefollowingareas:

1.CommunicationandExchangeofInformation.

(i)ChiefExecutivesofMemberExchangesmustliaisewithoneanotherinordertoinformallMemberExchangesofprospectivemajorchangestotheirrespectivemacro-infrastructuresandregulatoryenvironmentswithaviewtoseekingwherepracticable,harmonisation,ofeachExchangesapproachtotherespectiveAuthorities;

(ii)TheMemberExchangeshallplaceallotherMemberExchangesontheirmailinglistsfordistributionofperiodicalsandotherimportantcommunications;

(iii)TheMemberExchangesshallencourageandenhancecontactandcommunicationsbetweenmarketparticipantsandMemberExchanges.

2.InformationSharing

(i)WhereaMemberExchangeincompliancewithitsregulatoryresponsibilitiesrequires,informationrelatingtomembersofanotherMemberExchangeortoanytransactioninfinancialinstrumentseffectedoneitherMemberExchange,theMemberExchangefromwhichtheinformationisrequested,shalluseitsbestefforts,toobtainsuchinformationfortherequestingMemberExchange;

(ii)Theinformationreferredtoinparagraph2(i)includesbutisnotlimitedtoinformationanddocumentsrelatingtomarkettradingclearingandtheidentity,tradingactivityandpositionsofitsmembersandcustomers;

(iii)Requestsforinformationintermsofparagraph2shallbeinwritinganddeliveredtotheregisteredaddressoftheMemberExchangefromwhichsuchinformationisrequested;

(iv)AnychangeintheregisteredaddressofaMemberExchangeshallbepromptlynotifiedtoallMemberExchanges;

(v)Arequestforinformationmustincludethepurposeoftherequest,andspecifytheinformationsought.MemberExchangesmustco-operateandcommunicatewithoneanothersothatallrequestsforinformationandallinformationprovidedinresponsetosuchrequestsareclearlyunderstood;

(vi)IfaMemberExchangebelievesthatarequestfallsoutsidethescopeofthisAnnex10,orhasreasontoquerytheinformationrequested,itshallprovideinwritingreasonsforitsbelieforquerytotherequestingMemberExchange.TheMemberExchangesshallendeavourtoresolveingoodfaith,anydisagreementbetweenthemregardinganyrequestforinformationoranyresponsetosuchrequest;

(vii)AMemberExchangeshalluseitsbesteffortstoprocuretheinformationrequestedandshalltransmitsuchinformationtotherequestingMemberExchangeasexpeditiouslyaspossible;

3.Training

(i)SecondmentsofstaffshallbeencouragedamongtheMemberExchanges.Thedurationofthesecondments,theprogrammeandaclearidentificationofareastobecoveredwillbeagreedbytheMemberExchangesconcerned;

(ii)Areasoftrainingshallinclude,listingrequirements,surveillancemethodology,managementandmarketinformationsystems,dataanalysisanddisseminationmechanisms;

(iii)Co-operationinareasofmarketresearch,developmentandorganisationalstructureshallbeenhancedandregularised.

4.DevelopmentofSecuritiesExchangeProfessionals

MemberExchangesshallprovideoneanotherwithinformationontheStockExchangeExaminationsSyllabusandassistoneanotherinsettingupstandardcoursesformarketprofessionals.

5.SurveillanceandSelf-Regulation

MemberExchangesshall,totheextentpermittedbyapplicablelegislation,co-operateandshareexperiencesinmatterspertainingtoMarketSurveillanceandSelf-Regulation.

6.Cross-BorderListings

Withaviewtoofferingentrepreneurstheopportunityofalistingonasecuritiesexchange,MemberExchangesshallshareindividualexperiencesandinitiativesincludingtwo-tiermarkets,andidentifyfactorsinthemicroandmacroenvironments

thatimpedemarketgrowth.MemberExchangesshallalsoexploreopportunitiesforthedevelopmentofjointproductsandthecrosslistingofcompaniesontheMemberExchanges.Cross-marketharmonisationoflistingrequirementsshouldbepursuedonanon-goingbasis.

7.NewInvestors

RecognisingtheneedtodeveloptheeconomiesoftheStateParties,improvemarketliquidityandtoofferthebenefitsofsecuritiesexchangeinvestmentstothewidestpossibleeligiblesectionsoftheirrespectivepopulations,theMemberExchangesshallshareanddiscusswithoneanothertheirinitiativestoencourageinvestors.MemberExchangesmustalsoidentifyproblemsthatinhibitthebroadeningofshareownershipanddiscusssolutionsforsolvingthoseoranyotherproblems.

Article3.Confidentiality

1.InformationthatisobtainedbyMemberExchangesintermsofthisAnnex,whichisnototherwisepubliclyavailable,isconfidentialandsubjecttoparagraph2noMemberExchangeshalldisclosesuchinformation

2.TheinformationprovidedbytheMemberExchangesmaynotbegiventoanythirdpartywithoutthepriorwrittenconsentoftheoriginatingparty,exceptthatneitherpartyshallbeprecludedfrom:

(a)usingtheinformationinformalregulatoryorlegalproceedingsorinvestigationsinitiatedbytherecipientforthepurposeofcarryingoutitsregulatoryresponsibilities;

(b)furnishingsuchinformationtotherelevantregulatorybody,ortoanyotherregulatoryauthorityhavingresponsibilityforthesupervisionorregulationofinvestmentbusiness,tradinginfinancialinstrumentslistedinthatcountry,orforanyotherfinancialservices;or

(c)releasingtheinformationundercompulsionoflaw.

Article4.LimitationofLiability

1.NoMemberExchangeshallbeliableforanylosssustainedbyordamagecausedtotheotherMemberExchangeortoanyotherpersontowhominformationisdisclosedintermsofthisAnnex,asaresultofthedisclosureofsuchinformationorofanyactdoneoromittedtobedoneintermsofthisAnnex.

2.Apartyreferredtoinparagraph1aboveshallhoweverbeliableforanylossordamagecausedbyanyintentionalwrongfulactinusingsuchinformationprovidedintermsofthisAnnex,inamannerwhichdoesnotaccordwiththeprovisionsofthisAnnex.

Article5.CessionandAssignment

NoMemberExchangemaycede,assignorinanyothermannertransferanyofitsrightsorobligationsunderthisAnnexwithoutthepriorwrittenconsentoftheotherMemberExchanges.

Article6.ImplementationStrategy

1.InordertoimplementthisAnnex,MemberExchangesshall:

(a)activelysupportinitiativesaimedatdevelopingskillsandbestpracticesacrossSADC,includingexchangesofpersonnelandinformation,mutualassistanceandtrainingevents;

(b)usetheirbesteffortstomakeavailabletooneanother,asandwhenrequired,atmutuallyconvenienttimes,SeniorOfficers,withtheMemberExchangerequestingthevisitbeingresponsibleforitscosts;and

(c)secondMemberExchangepersonneltothevariousMemberExchangesasandwhentheneedarisesandonreasonableterms.

2.COSSEshallberesponsibleforthemonitoringandfollow-upoftheundertakingsoftheMemberExchangesunderthisAnnex.

3.MemberExchangesshallreporttoCOSSE,atitsmeetings,onthestepstakeninrelationtothefulfilmentoftheirobligationsunderthisAnnex10.

Article7.AdmissionofNewMembers

NewmemberswishingtobecomeapartytothisAnnexshallsubmitanapplicationtoCOSSE,whichafterconsideringtheapplication,shallinformtheapplicant,inwritingofitsdecisiontograntordeclineanysuchapplicantaccessiontothestatusofMemberExchange.

sadc protocol on finance and investment

Documents