FDI and Its Impact on Growth in Africa

Abstract

Given the huge infrastructure gap, high public debt and low budget spending of African countries, additional capital is required to boost growth. While there are multiple options of domestic vs foreign capital, equity vs debt and impact investment vs grant, each country must determine the right mix of investment types it seeks in relation to its needs. Beyond FDI from China, USA and EU countries, there have been increased intra-Africa investments as seen in the expansion of companies like Dangote Cement, MTN and African banks internationalising into other African countries. As the AfCFTA gears into action, intra-African trade and investments are expected to further increase. But how can Africa position itself as the terminus for FDIs and appropriate optimal value for sustained economic development? This chapter helps to understand how governments and enterprises across Africa must deliberately ensure FDIs are designed and deployed to the unique features of the continent.