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

Christian S. Otchia ()
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Christian S. Otchia: Nagoya University

Journal of Industry, Competition and Trade, 2025, vol. 25, issue 1, No 10, 28 pages

Abstract: Abstract 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.

Keywords: Investment; Profitability; Firm data; World Bank Enterprise Survey; Manufacturing; Africa (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10842-025-00444-x

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