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Exploring the role of governance in shaping Foreign Direct Investment in sub-Saharan Africa

Author

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  • Saheed Akande Shittu

    (University of South Africa)

  • Lourens J Erasmus

    (University of South Africa)

Abstract

The study examines how quality of governance influences the Foreign Direct Investment (FDI) inflows in Sub-Saharan Africa. The study adopts a quantitative research strategy that utilises panel data of selected countries during 28 years, that is, 1996-2023. Indicators of governance like Government Effectiveness (GE), Political Stability and Absence of Violence (AV), Rule of Law (RL), Regulatory Quality (RQ) and Voice and Accountability (VA). The findings indicate that Strong Governance frameworks significantly enhance FDI inflows in Sub-Saharan Africa. VA was found to be a very strong positive determinant. GE and PS were also found to have negative relationships in within-country analyses. The IFRS adoption, being a uniform variable throughout the sampled countries, was observed to increase investor confidence. These results imply that the improvement of governance are synergies that help to establish the stable, transparent, and predictable environment sought by investors. Thus, policymakers can improve the governance systems and provide citizen involvement in order to boost foreign investment and attract sustainable capital and economic growth in the region. Key Words: Governance, Foreign direct investment, Sub-Saharan Africa

Suggested Citation

  • Saheed Akande Shittu & Lourens J Erasmus, 2026. "Exploring the role of governance in shaping Foreign Direct Investment in sub-Saharan Africa," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 8(2), pages 202-212, April.
    • Handle: RePEc:adi:ijbess:v:8:y:2026:i:2:p:202-212
    DOI: 10.36096/ijbes.v8i2.1176
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