Economic Risks and Foreign Direct Investments (FDIs) In Sub-Saharan Africa

In spite of the crucial role played by Foreign Direct Investment (FDI) in enhancing domestic savings and investments, many developing countries still face challenges in attracting substantial inward FDI compared to other economies in the developing world. This can be attributed to the absence of a conducive institutional and economic environment that is necessary to effectively attract and accommodate inbound FDI. The purpose of this study was to determine the impact of economic risks on FDIs in the Sub-Saharan African region. The study adopted a time-variant data covering the period 2000 to 2019 from which a panel was compiled on 15 SSA countries. The FDI data for the study were obtained from World Development Indicator (WDI) while Country Risks Data were sourced from the International Country Risk Guide (ICRG) published by the Political Risk Service (PRS) Group. The degree of association between the dependent and independent variables was determined using descriptive statistics, and panel econometric techniques of the generalized method of moment (GMM). According to the research, the coefficient of Inflation (0.0003%) and GDP per capita (-0.020%) have a significant negative influence at 5% level while the coefficient of real GDP (0.103%) and control variable of Global Financial Crisis (0.379%) have a significant positive effects on FDIs in Sub-Saharan Africa at 5% and 1% level respectively. The study concluded that in order to attract more FDI, SSA nations should build a higher-quality corporate structure and a more consistent financial system. The study therefore, recommended that SSA governments should continue to execute inflation-lowering policies through their monetary and fiscal policies in order to attract FDIs inflows and maintain an FDI-friendly environment for their countries in SSA.



Journal Title: Baze University Journal of Entrepreneurship & Interdisciplinary Studies

Category: Economics

ISSN: 2971-7124

Year of Establishment: 2022

Section: Centre for Foundation & Interdisciplinary Studies, Baze University.

Volume: 2

Issue: 1

Total Download: 0

Olusegun Opeyemi Oni, Salaudeen Funsho Abdulrasaq and Tope Joan C-Oluwatosin. 2024 Economic Risks and Foreign Direct Investments (FDIs) In Sub-Saharan Africa. Baze University Journal of Entrepreneurship & Interdisciplinary Studies. 2 (1). 1-18. https://doi.org/10.61955/AEUKKK

Our Partners