Umoru, David and Nwaugha, Livinus and Igbinovia, Beauty (2026) Security Crises, Foreign Direct Investment Flows, and Foreign Exchange Markets In Africa: A Policy Paper. Journal of Governance and Development (JGD), 22 (1). pp. 1-20. ISSN 2289-4756

Preview

PDF - Published Version Available under License Attribution 4.0 International (CC BY 4.0). Download (593kB) | Preview

Abstract

This policy paper examines the relationship between insecurity, foreign direct investment (FDI) inflows, and foreign exchange market performance in selected African countries that have suffered major security crises. The Dunning’s Eclectic Paradigm provides the basis for analysis. Using a mixed-methods approach, the study explores insecurity, FDI trends, and forex market outcomes in ten countries: Nigeria, Ethiopia, Kenya, South Sudan, Mali, Burkina Faso, D.R. Congo, Somalia, Mozambique, and Cameroon. Findings show that insecurity significantly undermines both FDI and forex market performance. These nations, in varying degrees, have suffered capital flight, increased forex volatility, and economic fragmentation due to insecurity. A clear adverse relationship exists between FDI inflows and insecurity: relatively stable nations like Ethiopia (pre-war) and Kenya attract more investment than highly unstable ones such as South Sudan and Somalia. Armed conflicts discourage investment, ruin infrastructure, and disrupt economic activities, hindering human and capital growth. The study contributes uniquely by offering a comparative analysis of security crises, FDI inflows, and forex markets across diverse African economies, with actionable policy recommendations. It emphasizes that no development can flourish amid violent conflict. Even stable economies face perception risks from regional instability. Addressing insecurity is therefore both a national and continental priority for sustaining FDI and healthy forex markets. All-inclusive approaches, military, institutional, diplomatic, and developmental are needed to restore investor confidence and stability. Without deliberate policy action, African countries risk continued economic underperformance, currency crises, and reliance on emergency financial interventions.

Item Type:	Article
Uncontrolled Keywords:	Dunning’s Eclectic Paradigm, degrees of insecurity, currency depreciation, capital flight
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	School of Economics, Finance & Banking
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	09 Nov 2026 09:03
Last Modified:	09 Nov 2026 09:03
URI:	https://repo.uum.edu.my/id/eprint/34672

Actions (login required)

View Item