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An Analysis of Trends in Foreign Direct Investment Inflows to Africa

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  • Edward E. Marandu
  • Paul T. Mburu
  • Donatus Amanze

Abstract

This study examines the trends in Foreign Direct Investment (FDI) inflows to Africa, with the ultimate aim of proposing implications for policy action. The main source of data for this study is the UNCTAD (2018) database which at the time of the study contained FDI data from 1990 to 2016. The findings show that, although Africa is in dire need for FDI due to scarcity of capital, it is not able to attract as much FDI compared to advanced countries and other developing regions. The little FDI that comes to Africa is concentrated sub-regionally and country-wise. Region-wise, most FDI is concentrated on Southern Africa followed by Northern Africa with East Africa and Central Africa at the bottom. Country-wise, the two main recipients of FDI in each sub-region are Angola and South Africa (Southern Africa); Egypt and Morocco (North Africa); Nigeria and Ghana (West Africa); Tanzania and Ethiopia (East Africa) and Congo and the Democratic Republic of Congo (Central Africa). The FDI that comes into the continent is further concentrated in the primary (extractive) sector. As a result the benefits to the region have not been as significant as in East Asia where FDI was mainly into the secondary (manufacturing) sector. It is concluded that, FDI is a growth point that countries can count on as a source of resources for development, however, Africa need to change the approach adopted in promoting FDI, which focuses on providing incentives to creating a domestic environment conducive to entrepreneurship and business in general.

Suggested Citation

  • Edward E. Marandu & Paul T. Mburu & Donatus Amanze, 2019. "An Analysis of Trends in Foreign Direct Investment Inflows to Africa," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 10(1), pages 20-32, January.
    • Handle: RePEc:jfr:ijba11:v:10:y:2019:i:1:p:20-32
    DOI: 10.5430/ijba.v10n1p20
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    References listed on IDEAS

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    1. Adugna Lemi & Sisay Asefa, 2003. "Foreign Direct Investment and Uncertainty: Empirical Evidence from Africa," The African Finance Journal, Africagrowth Institute, vol. 5(1), pages 36-67.
    2. World Bank, 2003. "Global Economic Prospects and the Developing Countries 2003 : Investing to Unlock Global Opportunities," World Bank Publications - Books, The World Bank Group, number 14781.
    3. Dani Rodrik, 1998. "Trade Policy and Economic Performance in Sub-Saharan Africa," NBER Working Papers 6562, National Bureau of Economic Research, Inc.
    4. Reinhart, Carmen & Rogoff, Kenneth, 2002. "FDI to Africa: The role of price stability and currency instability," MPRA Paper 13872, University Library of Munich, Germany.
    5. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447.
    6. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
    7. Cockcroft, Laurence & Riddell, Roger C., 1991. "Foreign direct investment in sub-Saharan Africa," Policy Research Working Paper Series 619, The World Bank.
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    Cited by:

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    2. Kimiagari, Salman & Mahbobi, Mohammad & Toolsee, Tushika, 2023. "Attracting and retaining FDI: Africa gas and oil sector," Resources Policy, Elsevier, vol. 80(C).

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