This dissertation focuses on Foreign Direct Investment (FDI) in the oil sector of Africa, more specifically in Nigeria and Angola. A large problem faced by most African countries is their low domestic investment. This is due to the low savings rates in these countries. FDI serves as a supplement to domestic investment and therefore allows for increased production and growth in the region that can ultimately lead to better development. Further, FDI brings forth positive spill over effects that can further increase levels of development in African countries. Therefore, it is beneficial for African countries to achieve higher levels of FDI inflows. The African oil sector has, in recent years, received much deserved attention as Africa supplied approximately 11 percent of worldwide oil supply and the African untapped oil reserves constitute approximately 10 percent of the total worldwide proven oil reserves in 2010. There are currently 19 African countries known to have significant oil reserves and further surveying may increase this number. This dissertation focuses on Nigeria and Angola as these countries are the continent’s largest producers of oil and their oil sectors are the sectors with the strongest FDI inflows. Through economic and policy reforms and increased share in global oil supply, it is believed that these countries can be the drivers of economic growth and development in the region. Greater FDI is needed to fully exploit the available oil resources. Although many studies have been done on the factors that attract FDI, very few studies have focussed on oil sector specific FDI. Therefore, the aim of this dissertation is to determine and compare the factors that attract oil sector FDI in Nigeria and Angola. This dissertation undertakes both a literature review and an empirical analysis. The literature review provides an overview of FDI theory, the motives for investment, the types and benefits thereof; an overview of the African and, more specifically, the Nigerian and Angolan oil industry and the influence that FDI inflows have had on this sector. The current FDI inflow trends and oil sector FDI in Nigeria and Angola are reviewed. The dissertation examines and compares the current state of the Nigerian and Angolan oil industries. The empirical analysis consists of a country comparison through four least square regression models (domestic models for Nigeria and Angola and global models for both countries) using data between 1990 and 2011 obtained from the World Data Bank and the 2012 BP statistical review. The data used will describe the traditional determinants of FDI inflows as set out in literature review and other determinants derived from past studies of FDI inflows in transitional economies and oil sector dependent countries. In Nigeria and Angola, the problems of lack of accurate and sufficient data over a longer time period persist, as they do in most African countries. The main findings are that significant domestic influences of FDI inflows in Angola include: lower public power to entice private gain; better policies that are effectively enforced to improve civil and public services; and the proven oil reserves. This entails that government policy, transparency and their oil reserves are held in high regard by the foreign investors in Angola. In Nigeria, however, domestic influences of FDI inflows include: better citizen ability to select a government; freedom of expression; freedom of association and a free media; better ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development; and oil production. This indicates that democracy, government policy and oil production are highly regarded by foreign investors who invest in Nigeria. Therefore, it can be argued that, even though results for factors influencing FDI inflows differ, there are similarities as government policy and the oil sector in general influence both countries even though the issues in both countries are not necessarily the same. However, on a global level, investment in the two countries is driven by completely different factors. According to the models, Angolan FDI inflows are driven by global oil production (supply) in the previous year whereas FDI inflows in Nigeria are correlated to the oil price in the previous year. Both of these models, however, leave much to be desired as they have low R2 values which indicate that they explain very little of what influences FDI inflows in the countries. / MCom (International Trade), North-West University, Potchefstroom Campus, 2014

This dissertation focuses on Foreign Direct Investment (FDI) in the oil sector of Africa, more specifically in Nigeria and Angola. A large problem faced by most African countries is their low domestic investment. This is due to the low savings rates in these countries. FDI serves as a supplement to domestic investment and therefore allows for increased production and growth in the region that can ultimately lead to better development. Further, FDI brings forth positive spill over effects that can further increase levels of development in African countries. Therefore, it is beneficial for African countries to achieve higher levels of FDI inflows. The African oil sector has, in recent years, received much deserved attention as Africa supplied approximately 11 percent of worldwide oil supply and the African untapped oil reserves constitute approximately 10 percent of the total worldwide proven oil reserves in 2010. There are currently 19 African countries known to have significant oil reserves and further surveying may increase this number. This dissertation focuses on Nigeria and Angola as these countries are the continent’s largest producers of oil and their oil sectors are the sectors with the strongest FDI inflows. Through economic and policy reforms and increased share in global oil supply, it is believed that these countries can be the drivers of economic growth and development in the region. Greater FDI is needed to fully exploit the available oil resources. Although many studies have been done on the factors that attract FDI, very few studies have focussed on oil sector specific FDI. Therefore, the aim of this dissertation is to determine and compare the factors that attract oil sector FDI in Nigeria and Angola. This dissertation undertakes both a literature review and an empirical analysis. The literature review provides an overview of FDI theory, the motives for investment, the types and benefits thereof; an overview of the African and, more specifically, the Nigerian and Angolan oil industry and the influence that FDI inflows have had on this sector. The current FDI inflow trends and oil sector FDI in Nigeria and Angola are reviewed. The dissertation examines and compares the current state of the Nigerian and Angolan oil industries. The empirical analysis consists of a country comparison through four least square regression models (domestic models for Nigeria and Angola and global models for both countries) using data between 1990 and 2011 obtained from the World Data Bank and the 2012 BP statistical review. The data used will describe the traditional determinants of FDI inflows as set out in literature review and other determinants derived from past studies of FDI inflows in transitional economies and oil sector dependent countries. In Nigeria and Angola, the problems of lack of accurate and sufficient data over a longer time period persist, as they do in most African countries. The main findings are that significant domestic influences of FDI inflows in Angola include: lower public power to entice private gain; better policies that are effectively enforced to improve civil and public services; and the proven oil reserves. This entails that government policy, transparency and their oil reserves are held in high regard by the foreign investors in Angola. In Nigeria, however, domestic influences of FDI inflows include: better citizen ability to select a government; freedom of expression; freedom of association and a free media; better ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development; and oil production. This indicates that democracy, government policy and oil production are highly regarded by foreign investors who invest in Nigeria. Therefore, it can be argued that, even though results for factors influencing FDI inflows differ, there are similarities as government policy and the oil sector in general influence both countries even though the issues in both countries are not necessarily the same. However, on a global level, investment in the two countries is driven by completely different factors. According to the models, Angolan FDI inflows are driven by global oil production (supply) in the previous year whereas FDI inflows in Nigeria are correlated to the oil price in the previous year. Both of these models, however, leave much to be desired as they have low R2 values which indicate that they explain very little of what influences FDI inflows in the countries. / MCom (International Trade), North-West University, Potchefstroom Campus, 2014

South Africa was invited to join the Brazil, Russia, India and China (BRIC) group at the end of 2010, mainly because South Africa is viewed as the ‘gateway’ into Africa, and South Africa is also considered to be the link between BRIC and the Southern African Development Community (SADC). It is expected that the BRIC countries will increase their foreign direct investment (FDI) to South Africa. This inflow of BRIC FDI may lead to the advantages of boosting SADC exports, which is important as it may lead to the SADC countries experiencing expanded market opportunities, and exports have for a long time been viewed as an engine of economic growth. It has been further indicated that it is evident that relatively few studies have been conducted on the relationship between FDI and exports within the African context and that this relationship is not well understood. In light of these shortcomings in the literature, the first aim of this study was to attempt to contribute to the literature on FDI in SADC by investigating the relationship between BRIC FDI inflows on SADC exports. From the assessment of recent studies conducted on the relationship between FDI and exports in developed, developing and African countries a number of conclusions have been made. The first was that the majority of the studies conducted between 2000 and 2011 by various authors used causality tests and regression models to determine the relationships between FDI and exports. It also seemed that bi-directional causality is most often found, thereby indicating that FDI has a positive influence on exports and exports also have a positive influence on FDI. The secondary research aim, to determine the specific relationship between the BRIC’s FDI on SADC exports to BRIC and the world, was analysed by means of a descriptive and empirical study (correlation test, regression model, Granger causality test and panel data causality testing method), and the results indicated that, from 2003 to 2011, there was a strong positive correlation between BRIC FDI inflows to SADC and SADC exports to BRIC (59 per cent) and the world (96 per cent). The regression analysis showed that 53 per cent of the variance in the SADC exports to the BRIC is explained by BRIC FDI, while 99 per cent of the variance in the SADC exports to the world is explained by BRIC FDI. Finally the Granger causality test results indicated that BRIC FDI inflows contributed to higher exports from SADC, specifically SADC exports to the world. This was however not the case for SADC exports to BRIC. The results further suggest that there is a possible cointegration between BRIC FDI and the SADC exports to the world, reflecting, among other things, that the simultaneous movement of BRIC FDI inflows with SADC exports to the world may be mainly due to exogenous factors rather than a direct causal relationship. The BRIC FDI inflows on the SADC exports to the world being significant is a motivation for the SADC group to further motivate integration, co-operation and participation within BRIC, as this may possibly lead to further inward FDI flows, which may further promote exports to the world. Future studies would include determining the market forces that contribute to the simultaneous movement of BRIC FDI inflows into SADC, with the SADC exports to the world. / MCom (International Trade), North-West University, Potchefstroom Campus, 2013

South Africa was invited to join the Brazil, Russia, India and China (BRIC) group at the end of 2010, mainly because South Africa is viewed as the ‘gateway’ into Africa, and South Africa is also considered to be the link between BRIC and the Southern African Development Community (SADC). It is expected that the BRIC countries will increase their foreign direct investment (FDI) to South Africa. This inflow of BRIC FDI may lead to the advantages of boosting SADC exports, which is important as it may lead to the SADC countries experiencing expanded market opportunities, and exports have for a long time been viewed as an engine of economic growth. It has been further indicated that it is evident that relatively few studies have been conducted on the relationship between FDI and exports within the African context and that this relationship is not well understood. In light of these shortcomings in the literature, the first aim of this study was to attempt to contribute to the literature on FDI in SADC by investigating the relationship between BRIC FDI inflows on SADC exports. From the assessment of recent studies conducted on the relationship between FDI and exports in developed, developing and African countries a number of conclusions have been made. The first was that the majority of the studies conducted between 2000 and 2011 by various authors used causality tests and regression models to determine the relationships between FDI and exports. It also seemed that bi-directional causality is most often found, thereby indicating that FDI has a positive influence on exports and exports also have a positive influence on FDI. The secondary research aim, to determine the specific relationship between the BRIC’s FDI on SADC exports to BRIC and the world, was analysed by means of a descriptive and empirical study (correlation test, regression model, Granger causality test and panel data causality testing method), and the results indicated that, from 2003 to 2011, there was a strong positive correlation between BRIC FDI inflows to SADC and SADC exports to BRIC (59 per cent) and the world (96 per cent). The regression analysis showed that 53 per cent of the variance in the SADC exports to the BRIC is explained by BRIC FDI, while 99 per cent of the variance in the SADC exports to the world is explained by BRIC FDI. Finally the Granger causality test results indicated that BRIC FDI inflows contributed to higher exports from SADC, specifically SADC exports to the world. This was however not the case for SADC exports to BRIC. The results further suggest that there is a possible cointegration between BRIC FDI and the SADC exports to the world, reflecting, among other things, that the simultaneous movement of BRIC FDI inflows with SADC exports to the world may be mainly due to exogenous factors rather than a direct causal relationship. The BRIC FDI inflows on the SADC exports to the world being significant is a motivation for the SADC group to further motivate integration, co-operation and participation within BRIC, as this may possibly lead to further inward FDI flows, which may further promote exports to the world. Future studies would include determining the market forces that contribute to the simultaneous movement of BRIC FDI inflows into SADC, with the SADC exports to the world. / MCom (International Trade), North-West University, Potchefstroom Campus, 2013

Attracting foreign direct investment (FDI) is of utmost importance for African countries in order to create employment opportunities, reduce poverty and to ensure sustainable economic growth. Despite Africa’s exceptional FDI performance during the past decade, the majority of FDI inflows have been directed to a few selected countries. As investors face many risks when investing in developing countries it is argued that risk perception plays a vital role in the FDI inflows into Africa. This thesis focuses on the relationship between risk and FDI. A structural equation model is used to analyse this relationship with a dataset of ten risk categories and FDI data from 42 African countries. The importance of SEM for this study lies in the capability of modelling data from multiple groups. Hence, the four sectors used comprise metals, automotive, communications and the real estate sector. Overall results indicate that government effectiveness and legal and regulatory risks produce the biggest concern for investors. The conclusion is that there are different risk patterns regarding FDI in Africa. The empirical results further imply that if African countries wish to attract the levels of FDI required to stimulate economic growth, policies are needed to reduce risks in order to create a favourable investment climate for investors. / Thesis (MCom (International Trade))--North-West University, Potchefstroom Campus, 2013.

Attracting foreign direct investment (FDI) is of utmost importance for African countries in order to create employment opportunities, reduce poverty and to ensure sustainable economic growth. Despite Africa’s exceptional FDI performance during the past decade, the majority of FDI inflows have been directed to a few selected countries. As investors face many risks when investing in developing countries it is argued that risk perception plays a vital role in the FDI inflows into Africa. This thesis focuses on the relationship between risk and FDI. A structural equation model is used to analyse this relationship with a dataset of ten risk categories and FDI data from 42 African countries. The importance of SEM for this study lies in the capability of modelling data from multiple groups. Hence, the four sectors used comprise metals, automotive, communications and the real estate sector. Overall results indicate that government effectiveness and legal and regulatory risks produce the biggest concern for investors. The conclusion is that there are different risk patterns regarding FDI in Africa. The empirical results further imply that if African countries wish to attract the levels of FDI required to stimulate economic growth, policies are needed to reduce risks in order to create a favourable investment climate for investors. / Thesis (MCom (International Trade))--North-West University, Potchefstroom Campus, 2013.