GB502 Week 7 Discussion

Unit 7: Lecture

Food for Thought

https://youtu.be/pt6e0KNDA2c

Sub Saharan Africa faces FDI paradox

The private sector in Sub-Saharan Africa requires a legal and regulatory environment that fosters business and supports the idea of strong institutions with effective monitoring and enforcement powers. In this way, informal enterprises will become formal, and formal enterprises will expand to employ more people. Tax payments will be affordable; property rights will be respected, and lenders will accept these properties as collateral; innovation will pick up, growth in inventions that will be patented and protected legally. Once the law safeguards investments against arbitrary expropriation, entrepreneurs will have greater access to capital.

Business entry, property registration, trading, and tax payments will be simplified and streamlined, businesses will have more incentives to invest, expand, create jobs, and respect the rules. Countries with heavy regulations of business entry, on the other hand, will experience higher levels of corruption and informal economic activities.

Over the past few years, Sub-Saharan African countries have implemented an increasing number of reforms seeking to transform the legal and regulatory environment to inspire competition, free trade, and foreign direct investment (FDI). Yet the business climate in the region still remains less attractive than in others parts of the world. 

Reference

· African Development Report (2011).  African Development: The Legal And Regulatory Environment (Links to an external site.) . Retrieved from  https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/African%20Development%20Report%202011%20-%20Chapter%202-The%20Legal%20and%20Regulatory%20Environment.pdf