Academic journal article Strategic Review for Southern Africa

African Structures for Governing Foreign Direct Investment: A Critique

Academic journal article Strategic Review for Southern Africa

African Structures for Governing Foreign Direct Investment: A Critique

Article excerpt


African countries have warmed up to foreign direct investment (FDI) in the past two decades. In an attempt to attract more FDI, most countries have reformed their FDI policies and institutions. However, the national structures governing FDI have not been studied in-depth. This policy-science research uses a unique conceptual framework and an institutionalist approach to expose and critique national policies and institutions for FDI in Africa. The current African structures governing FDI reflect a messy web, difficult to decipher and inadequate to form a foundation for a continental regime. Policy learning and structural convergence may be essential for better FDI governance.

1. Introduction

African countries have warmed up to FDI in the past two decades or so. This is a change from the late 1960s to the early 1980s when some African countries displayed antagonistic postures, made anti-transnational corporation (TNCs) rhetoric and implemented practices that were in some instances informed by socialist and communist ideologies (Wold Bank 1991; Schroeder 2008). The current positive perceptions of FDI by African countries are consistent with what is happening worldwide (Zeng 2010). Whereas much of the FDI in the period of the 1960s to 1980s was mainly from the developed countries, nowadays FDI is flowing from both developed and developing countries (UNCTAD 2005). And, there is hunger for FDI in many parts of the world leading to cutthroat competition among countries to attract it (Zarsky 2005).

Although most African countries want FDI, they inadvertently reduce it to capital or financial flows that affect the national statements of accounts. Such a parochial view of FDI is regrettable and unfortunate because FDI should be viewed as a multidimensional bundle of resources that includes capital, technology, organisational, marketing and managerial skills affecting economies in a multidimensional way (Man-yuchi 2016).

In an attempt to attract more FDI, most countries in Africa have reformed their structures, that is, the policies and institutions for governing FDI (Mugabe 2005). Such policy and institutional reforms have overtly been encouraged and facilitated by agencies such as the United Nations Conference on Trade and Development (UNCTAD), TNCs and civil society groups (UNCTAD 2012a; 2016a). For a number of countries on the continent, the policy and institutional changes have been far-reaching. Despite these reforms, FDI has seemingly continued to evade African countries (Mijiyawa 2012). Even though the continent has overall received increased flows of FDI (Ajayi 2006), it has remained the least recipient of FDI when compared to other continents (UNCTAD 2014a).

The national structures for governing FDI in Africa have gone largely unnoticed in academia. There are two possible reasons for this. In part, because the reforms in the last decade or so have been too quick. But many academics engaged in examining FDI have also been, far too exclusively, in my opinion, preoccupied with the volumes, trends and destinations of FDI, and the role FDI plays in developing and emerging countries in a globalised economy, to the neglect of all else.

The existing related literature that explains FDI policies explores the content and effects of FDI policies worldwide (UNCTAD 2009; 2010a,b; 2011a,b;c; 2012b,c; 2013a,b;c 2014b; 2015a,b,c; 2016b). However, this literature does not examine the other non-content or reveal institutional issues pertaining to FDI. Furthermore, the literature explains FDI policies from an investor and home country point of view, ignoring the explanations of host countries. Therefore, most of the related literature has an effect of obfuscating and concealing rather than clarifying and illuminating the key points pertaining to the structures for FDI, especially as they relate to African countries.

The questions to be answered through this research are: What are the generic structures created by African countries to govern FDI? …

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