Date of Defense

12-8-2017

Date of Graduation

12-2017

Department

Finance and Commercial Law

First Advisor

Wenling Lu

Second Advisor

Bolortuya Einkhtaivan

Third Advisor

Simba Chirara

Abstract

Historically, many African nations have been seeking foreign capital to fuel local growth in the form of foreign direct investment. Foreign Direct Investment (FDI) has been cited as a key foundation for developing economies to grow and has been the major form of investment in African nations. This study focuses on Egypt, Morocco, Nigeria, South Africa and Algeria - the five biggest economies in Africa. However, within these nations, as the leading economic indicators of growth; such as GDP have increased due to an increase in FDI, there have been many negative consequences that have arisen and some that are not easily reversible.

These negative consequences, in most cases have been increasing unemployment rates, high poverty rates, dilapidated economic infrastructure, a rapid plummet of natural mineral resources, and brain drain, among many others. The data compiled and compared within this thesis proves that FDI alone, in its current form, is not adequate to fuel real, sustainable, long-term growth.

One of the solutions of this problem, is Impact Investing. Impact Investments are investments used in such a way that benefits the environment as well as society. This thesis suggests that impact investments be approached on both the supply side and demand side of FDI.

On the supply side; fund managers and foreign corporations should actively seek to promote sustainable investments that boost returns while building strong relationships with local governments and communities. Furthermore, increasing their brand recognition and acceptance from their investor clients.

On the demand side, local governments, through Green Banks, should manage the type of FDI that is allowable and distributing foreign capital into more sustainable projects that impact communities and their environments. Thus, channeling the flow of FDI into education, clean environments and broader societal initiatives.

In conclusion, although Impact Investing does not solve every negative consequence of FDI, it provides a more transparent, efficient and effective way of distinctively improving FDI and reducing its negative consequences.

Access Setting

Honors Thesis-Restricted

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