ABSTRACT
The main interest of this study was to examine the impact of exchange rate fluctuations on foreign direct investment in emgring Africa economies. Speficically, this study investigated the effect of exchange rate volatility, total population, total labour force and lending interest rate on foreign direct investment.
The cross-sectional panel research design was employed to examine the effects. Data for the study was collected from World Bank Development Indicators (World Bank Database) for the period 1990 to 2021. The fixed and random effects regression procedures were applied on panel data covering six (6) countries in Sub-Saharan Africa namely: Botswana, Nigeria, Kenya, South Africa, Malawi and Zambia. The analysis was carried out using E-view 10.0 econometric software.
The random effec regression revealed that exchnage rate fluctuations (volatility) negatively and significantly infleunce FDI, while market size has postive and significant impact on FDI. This study also found that labour supply negatively and signficantly infleunce FDI, while lending interest rate postively and signifcantly deterimne FDI in Sub-Saharan Africa. This study recommends among others that the national government in Sub-Saharan Africa should formulate policy aimed at stabilizing exchange rate because the fluctuation in local current is capable of discouraging foreign investment inflows into the continent.
