Public Citizen | 3 March 2025
Corporate colonization through trade: A new scramble for Africa
Many free trade and investment agreements allow multinational corporations to undermine democracy via a secret pseudo-court system known as Investor-State Dispute Settlement (ISDS). ISDS has become a significant concern for African nations, as it often privileges multinational corporations at the expense of local governance and public welfare. This system allows foreign investors to sue governments over policies that might affect their profits, like denial of a mining permit or implementation of a new toxic chemical ban, leading to substantial financial and sovereignty costs for the host countries.
And the crisis is only propelled by the historical lack of critical analysis regarding the impacts of ISDS on the region. Public Citizen’s Global Trade Watch has been working to fill this gap of research, and in December released a report, “The Scramble for Africa Continues: Impacts of ISDS on African Countries,” detailing the rise in cases since the 1990s and the trend of corporations suing the former colonies of their home countries.
Since 1993, African governments have been the target of 171 ISDS claims, overwhelmingly from investors headquartered in the Global North. In total, African states have been ordered to pay over $5.7 billion to corporations, with an additional $19.5 billion still at stake in ongoing cases. However, due to the lack of publicly available information for many disputes, the actual amounts paid and sought are likely significantly higher.
More than 70% of the corporations that have launched ISDS lawsuits against African nations are based in Australia, Europe, and the United States. European investors account for 32% of all ISDS cases against African countries.
Notably, many of these nations were former colonizers of African territories, including Belgium, Italy, France, Germany, the Netherlands, Portugal, Spain, and the United Kingdom. Since the inception of ISDS, 40% of all cases filed by investors from these countries have targeted the very territories their country once colonized. Each flag on the map below represents an instance of a corporation challenging a former colony of its home country.
The report spotlights select ISDS cases, including the egregious example of von Pezold v. Zimbabwe, in which a Swiss-German family filed a claim against Zimbabwe’s 1980 land reform policy. The law sought to redistribute farmland from European owners to displaced locals post-independence – a measure specifically aimed at reversing the damage of colonialism. The tribunal ruled in favor of the family, ordering Zimbabwe to pay over $64 million, plus an additional $1 million in “moral damages.”
“The ISDS mechanism, as it stands, disproportionately favors multinational corporations, leaving African countries vulnerable to costly litigations that impede their policy-making autonomy,” emphasized GTW Research Director and author of the report Iza Camarillo.
International trade was a key instrument for geopolitical power and colonization for centuries. In a “post-colonial” world, ISDS allows corporations to assume the status of sovereign governments and formalize their neocolonialist power.
The United States maintains ISDS pacts with several African countries, including Cameroon, the Democratic Republic of the Congo, Egypt, Morocco, Mozambique, Rwanda, Senegal, and Tunisia. To date, U.S. investors have launched 13 ISDS cases against African governments, resulting in over $200 million in known awards and settlements.
The financial burden of a government litigating an ISDS case, compounded with the high risk of losing and being forced to pay millions, can deter governments from implementing public interest policies at all. This “chilling effect” is particularly alarming in sectors like mining, where efforts to enhance labor standards, ensure fair wages, and enforce workplace safety can be stifled by the threat of ISDS claims.
Indigenous communities often bear the brunt of ISDS cases, as they are frequently excluded from direct participation in proceedings that affect their lands and livelihoods. Legal briefs submitted on behalf of these communities are routinely dismissed, marginalizing their voices and concerns. This exclusion perpetuates a cycle where corporate interests supersede the rights and well-being of local peoples, undermining social and environmental justice.
The people who have lived with the consequences of ISDS worldwide have formed social movements calling for its elimination to safeguard sovereignty and facilitate equitable development. This past November, more than 40 civil society organizations and advocacy groups adopted the Entebbe Declaration in Uganda, presenting an African-led vision to reform global investment frameworks. The Declaration calls for sustainable, human rights-centered investment policies, the replacement of ISDS with equitable regional dispute mechanisms, and prioritization of renewable energy, local value addition, and environmental protection to align with climate and development goals.
Historically, the U.S. has been one of the strongest proponents of ISDS, making it our duty to lead the charge in dismantling it in our investment agreements. And the opposition to ISDS is growing every day across the political spectrum.
In the post-colonial era, ISDS has continued the legacy of injustice, particularly impacting the Global South and Indigenous peoples by favoring foreign corporations at the expense of Indigenous lands and resources, mirroring colonial power dynamics. To strengthen sustainable and just supply chains with African countries, particularly with regard to the ‘critical minerals’ needed for the clean energy transition, elimination of ISDS should be a top priority.
“The era of colonialism may be over, but the power dynamics of resource extraction remain alive and well,” says Camarillo. “ISDS is an extension of the same economic model that has prioritized foreign interests at the expense of African sovereignty and development for decades. It’s time to dismantle this relic from colonialism once and for all and prioritize democracy and sovereignty.”
Download the report, The Scramble for Africa Continues: Impacts of ISDS on African Countries
