The potential for FDI : Angola and Nigeria compared : a comparative study

Smit, Pierre (2001-12)

Thesis (MBA)--Stellenbosch University, 2001.

Thesis

ENGLISH ABSTRACT: The aim of this study is to compare the potential for foreign direct investment (FDI) in Angola and Nigeria. The investment criteria of WAIPA (World Association for Investment Agencies) and UNCTAD (United Nations Conference on Trade and Development) were used as framework for comparison. FDI is of great importance to developing countries in as far as the inflow of foreign capital to host countries, transfer of knowledge and technology takes place thereby strengthening the economy of host countries to compete in the global economy. The point of departure was that Angola and Nigeria do not meet the WAIPAIUNCTAD investment requirements, but yet they receive large amounts of FDI. This reason for these inflows of FDI, was one of the key questions that needed to be answered. The study showed that both Angola and Nigeria have large oil and natural gas reserves, and that the majority of FDI that they receive, are invested in these sectors. Natural resources are one of the WAIPAIUNCTAD investment criteria. Die conclusion of the study was that Angola and Nigeria do not meet the majority of the investment criteria, and this is also the explanation that there is very little FDI investment outside of the oil sector in these two countries. The most important conclusion is that multi-national companies will invest in countries if conditions are not ideal, but that the returns are higher than the risk associated with the investment. This is the case in Angola and Nigeria with their large oil and natural gas reserves.

AFRIKAANSE OPSOMMING: Die doel van hierdie werkstuk is, om die potensiaal vir direkte buitelandse investering (DFI) van Angola and Nigeria te vergelyk. Die investerings kriteria van WAIPA (World Association for Investment Agencies) en UNCTAD (United Nations Conference on Trade and Development) is gebruik as vergelykings raamwerk. DFI is van groot belang vir ontwikkelende lande deurdat buitelandse kapitaal in die gasheer land belê word, oordrag van kennis en tegnologie plaasvind en dus daardeur die gasheer land se ekonomie versterk en meer kompeterend maak om in die globale ekonomie te funksioneer. Daar is van die veronderstelling uitgegaan dat Angola en Nigeria nie aan die vereistes voldoen van WAIPA/UNCTAD nie, maar ten spyte daarvan ontvang hierdie lande nog steeds groot bedrae DFI. Die rede vir hierdie verskynsel is een van die kernvrae wat beantwoord moes word deur die werkstuk. Dit blyk uit die werkstuk dat beide Angola en Nigeria oor groot bronne olie en natuurlike gas besit en dat die oorgrote meerderheid van die DFI wat hierdie lande ontvang, in hierdie sektor belê word. Natuurlike hulpbronne is een van die WAIPA/UNCTAD kriteria vir DFI. Die gevolgtrekking van die studie is dat die Angola en Nigerie nie aan die meerderheid van hierdie belegings kriteria voldoen nie, en dat dit die verklaring is dat daar uiters min DFI beleggins buite die olie sektor in hierdie twee lande is. Die belangrikste gevolgtrekking is egter dat multi nasionale maatskapye wel in lande sal belê indien die opbrengs op investerings groter is as die risiko verbonde daaraan, soos in die geval van Angola en Nigeria met hul groot olie hulpbronne.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/52555
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