## Foreign Direct Investment in Africa—Some Case Studies

_IMF Working Papers, April 1, 2002_

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## Bibliographic details
- Authors: Anupam Basu, Krishna Srinivasan
- Published: April 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451848182.001

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### Summary and main findings
- Reviews experiences of a few countries in Sub-Saharan Africa that have succeeded in attracting fairly large amounts of foreign investment.
- Concludes that sustained efforts to promote political and macroeconomic stability and implement essential structural reforms have been key elements contributing to success in attracting a substantial volume of FDI.
- Emphasizes strong leadership that has helped promote democracy and overcome social and political strife, and a firm commitment to economic reform, as important determinants of FDI attraction.
- Notes that the adoption of sound fiscal and monetary policies, supported by an appropriate exchange rate policy, and a proactive approach to removing structural impediments to private sector activity have had a positive bearing on investor sentiment.
- Underscores the importance of relying on stability and a broad-based reform effort to encourage foreign investment in Africa.

### Determinants of FDI highlighted
- Political stability and promotion of democracy.
- Macroeconomic stability via sound fiscal and monetary policies.
- Appropriate exchange rate policy.
- Structural reforms to remove impediments to private sector activity.
- Strong leadership and commitment to economic reform.
- Positive investor sentiment resulting from the above factors.

### Policy implications and recommendations
- Pursue sustained political and macroeconomic stability as foundational to attracting FDI.
- Implement essential structural reforms to facilitate private sector activity.
- Maintain sound fiscal and monetary policies and an appropriate exchange rate policy to support investor confidence.
- Promote strong, reform-minded leadership to address social and political strife and to advance democratic governance.
- Adopt a proactive approach to removing structural impediments and barriers to private investment.

### Subjects and keywords
- Subjects: Balance of payments, Economic sectors, Environment, Exports, Foreign direct investment, International trade, Natural resources, Privatization, Tax incentives, Taxes.
- Keywords: a number of country; a number of host-country factor; Africa; Asia and Pacific; Central and Eastern Europe; countries in Africa; credit risk rating; economic reform; economic reforms; equity capital; Europe; Exports; FDI flow; FDI inflow; Foreign direct investment; Global; host-country market; market size; monopoly Lesotho Electricity Corporation; Natural resources; private sector; Privatization; reform program; stability; Tax incentives; WP.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/foreign-direct-investment-in-africa-some-case-studies-15670_