Foreign Direct Investment in Africa-Rhetoric or Reality of Development: A Review of Literature

Mulonda Munalula^1, and Mubita Aurick²

¹Department of Development Studies, University of Zambia, Lusaka, Zambia

²Department of Social Work and Sociology, University of Zambia, Lusaka, Zambia

Cite this paper:
Mulonda Munalula and Mubita Aurick. Foreign Direct Investment in Africa-Rhetoric or Reality of Development: A Review of Literature. World Journal of Social Sciences and Humanities. 2017; 3(1):1-7. doi: 10.12691/wjssh-3-1-1

Abstract

This paper discusses Foreign Direct Investment (FDI) in Africa. It is a review of literature that tries to explore and give a more nuanced understanding of the realities of FDI in development in Africa. The paper first shows in the preamble that the world today has become more integrated than ever manifested in high levels of capital flows across different economies. Africa as a continent has been one of the biggest beneficiaries of such capital flows inform of FDI especially given the huge resource endowment and other investment opportunities that the continent presents. The paper then addresses the question of whether this increased inflow of FDI has translated into development for the continent and how. To answer this broad question, the paper uses information collected from secondary sources including published books, articles, seminar papers and research findings from different studies that have been done on the topic across different countries on the continent. These findings help in presenting the empirical side of the debate. The paper shows that FDI’s role in development in Africa has been and still remains positive and crucial. African has benefited in various ways including reduced poverty through economic growth and employment creation among others. Notwithstanding this, there have also been some negative sides to this investment. Based on this, the paper recommends that African countries must be made attractive business environments by strengthening institutions, rule of law, its connectivity with the world and reducing the thickness of their borders. In addition, it is important that host countries must have the right and correct policies for FDI. Countries must develop and strengthen their institutional capacities not only to attract FDI but also to be able to extract some benefits from the foreign firms for their own development. Governments must also enhance human capital development in their countries so that firms can employ and utilize the local human capital.

Keywords:
foreign direct investment development Africa

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