Linkages and Spillover Effects of South African Foreign Direct Investment in Botswana and Kenya

Research Africa Network WP/19/039

26 Pages Posted: 21 Jul 2019

See all articles by Felix Nandonde

Felix Nandonde

Sokoine University of Agriculture

Richard Adu-Gyamfi

International Trade Centre (ITC)

Tinaye Mmusi

Gaborone University

Herbert Wamalwa

University of Nairobi

Simplice Asongu

African Governance and Development Institute

Johannes Opperman

Stellenbosch University

Jeremiah Makindara

Sokoine University of Agriculture

Date Written: July 21, 2019

Abstract

In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.

Keywords: Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya

JEL Classification: E23, F21, F30, L96, L98, O55

Suggested Citation

Nandonde, Felix and Adu-Gyamfi, Richard and Mmusi, Tinaye and Wamalwa, Herbert and Asongu, Simplice and Opperman, Johannes and Makindara, Jeremiah, Linkages and Spillover Effects of South African Foreign Direct Investment in Botswana and Kenya (July 21, 2019). Research Africa Network WP/19/039. Available at SSRN: https://ssrn.com/abstract=3423679 or http://dx.doi.org/10.2139/ssrn.3423679

Felix Nandonde

Sokoine University of Agriculture ( email )

PO Box 3000
Morogoro
Tanzania

Richard Adu-Gyamfi

International Trade Centre (ITC) ( email )

54-56 Rue de Montbrillant
Geneva
Switzerland

Tinaye Mmusi

Gaborone University ( email )

Botswana

Herbert Wamalwa

University of Nairobi ( email )

Nairobi
Kenya

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Johannes Opperman

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

Jeremiah Makindara

Sokoine University of Agriculture ( email )

PO Box 3000
Morogoro
Tanzania

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