Foreign direct investment as source of development finance for Africa : focus on Southern Africa

Abstract

The gap between the investment needs of African countries and the availability of financial resources has been widening as a result of multiple economic setbacks during the last few years Against a background of increasingly unfavorable terms of trade facing exporters of primary commodities, the international debt crises of early 1980s has been the culmination of overleveraged external capitalization to cover the short fall in required financing. In the light of current disproportion between debt and equity in external financing, developing countries are mater-of-factly advised to replace one with the other, as if the two are simple substitutes. This study addresses trends and prospects of foreign direct investments as a source of development finance for Africa with particular reference to selected countries from southern Africa. The paper is organized into a summary of the highlights and two chapters. In the first chapter, trends in foreign direct investment flows are reviewed in terms of their spatial and temporal trends at global, regional, and sub-regional levels during the last two decades. The first part of the second chapter briefly reviews the general economic background and trends of foreign direct investments with reference to Botswana, Lesotho, Malawi, Swaziland, Zambia, and Zimbabwe- The last part of the chapter presents a close up profile of foreign direct investments in Botswana and Lesotho.