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Institutional Environment and Investor Confidence in the East and Horn of Africa

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  • Jelle Bulle Noor

Abstract

This paper examines the relationship between the institutional environment and investor confidence in four East and Horn of Africa countries Kenya, Uganda, Tanzania, and Ethiopia using data from Afrobarometer (Rounds 8–9) and the Trading Economics Business Confidence Index (2024). Key institutional indicators include trust in government institutions, perceived corruption, governance performance, and rule of law. Results from an ordinary least squares (OLS) regression reveal that stronger institutional environments marked by higher trust, lower corruption, and effective governance are positively associated with higher business confidence levels. Country-specific effects show Kenya and Tanzania exhibit the strongest investor optimism, while Ethiopia’s transitional governance context dampens confidence. The findings underscore the central role of institutional quality in shaping regional investment sentiment and economic stability.

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Handle: RePEc:eom:jbfhea:v:1:y:2025:i:1:p:38-49
DOI: 10.66699/1gqk1e73
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