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<p>We investigate the drivers of private investment in Africa over the period 2002–2018 using a newly constructed firm-level panel data. We document several sources of evidence that together show profitability plays a smaller role in explaining private investment. The effect of value added to capital appears larger. Decomposing our findings by industries, we find that value added plays a more important role in investment growth in the food processing and other manufacturing sectors. Finally, we show that investment in the service sector has been growing even in countries with a poor business environment.</p>

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What is Driving Private Investment Growth in Africa? New Evidence from Firm-Level Panel Data

  • 期刊论文

  • 发表日期：

    2025年3月18日

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  • Christian S. Otchia

摘要

We investigate the drivers of private investment in Africa over the period 2002–2018 using a newly constructed firm-level panel data. We document several sources of evidence that together show profitability plays a smaller role in explaining private investment. The effect of value added to capital appears larger. Decomposing our findings by industries, we find that value added plays a more important role in investment growth in the food processing and other manufacturing sectors. Finally, we show that investment in the service sector has been growing even in countries with a poor business environment.