Africa, a continent abundant with natural recourses, a continent with the second highest population after Asia, a continent so diverse in terms of culture and land, is also a continent with much negativity associated in the eyes of investors. Even so, with the lack of infrastructure and political stability, Africa has always been a large receiver of global foreign direct investment (FDI) which has mainly been in the commodities sector. Why? Other than to state the obvious, I am going to investigate current examples, focusing on the objectives of the investing multinational corporations.
Traditionally, inward FDI was received from former colonial rulers and the USA as political ties were in place and a lot of African countries were in debt, preventing full independence of choice. Over recent years Africa has started to rectify many issues such as the IMF debts and other debts with the West like the odious debt incurred by South Africa, this has allowed certain countries to develop cities and economies which can compete on a global level. For the first time in history Africa hosted the World Cup, facilitating to thousands of tourists, not only does this show how well the continent has developed over recent years but it also shows the potential Africa has for further development and investment. However, the FDI inflow into Africa is very geographically and sector concentrated. In fact, South Africa, Egypt, Nigeria, Morocco, Sudan, Equatorial Guinea, The Democratic Republic of Congo, Algeria and Chad equate 86% of FDI inflow alone, (UNCTAD.org, 2010).
Considering Africa is made up of 57 countries, this goes to show that a lot huge amount of Africa is deemed non investable, for now maybe? The investment regimes into Africa have positive effects for the development of local economies on the surface, but when we examine some of the consequences Africa faces, it will become clear that FDI doesn’t always serve the purpose to benefit the African people. FDI from the West, into Africa has declined over recent years, this has been due to many factors but the financial crisis and the fall in commodity prices played a significant role. Henceforth, over recent years the FDI inflow to Africa from developing economies has been growing significantly. With the increase in foreign investment, the world has seen a growing demand for translation services where multiple documents are needed to be translated from business to business.
