Sharp Daily
No Result
View All Result
Wednesday, July 23, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Economy

Why the obsession with foreign investors is holding back local wealth

Malcom Rutere by Malcom Rutere
June 10, 2025
in Economy
Reading Time: 2 mins read

For years, African economies have welcomed foreign capital investment through strategies such as tax holidays which are meant to reduce entry costs into the market, relaxed capital controls which makes it easier to convert local currency into foreign exchange and special economic zones with relaxed zoning and planning laws and allowing long-term land leases. Foreign Direct Investment has been dubbed as the key to development and growth but is foreign capital investment proving beneficial to Africa or is it affecting Africa’s ability to generate wealth from its own resources. Despite foreign investment being important in facilitating capital which helps in fast-tracking infrastructure such as roads, expanding industrial capacity and integrating local markets into global supply chains, Africa needs to empower its own people other than favouring foreign investors as this will shift dependence from foreign countries and foster economic growth.

The harsh reality of foreign capital is its high volatility. The investors who put in their money during a boom in Africa’s economy will be the first to withdraw their capital once the economy is in a recession. These sudden withdrawals can cause shocks in respective sectors which may eventually lead to destabilization of the economy. For instance, during the COVID-19 pandemic, foreign investors fled the bond and equity markets in masses, which triggered sharp currency depreciations with outflows exceeding USD 5.0 bn in the first quarter of 2020 with USD 3.1 bn coming from the South African market alone. These outflows stressed Central banks in Africa, leading to reduced net foreign assets and worsening liquidity constraints which undermined the capacity of banks to facilitate African trade.

Local investors face barriers such as high minimum investment requirements in private equity and infrastructure instruments, poor financial literacy and insufficient protection from foreign influence and cultural bias to land and savings schemes instead of diversified investment. Funds in SACCOs, for instance, could be more useful in powering locally owned enterprises or buying equity stakes in national assets if there is a suitable framework to facilitate such investments.

Africa should reevaluate the significance of foreign investment in their respective countries. They should strive to encourage local investors to participate in investing into the country’s economic welfare instead of crowding it with volatile foreign investments. They should implement policies such as incentivizing co-investment between foreign and local capital, creating platforms for diaspora investors for more engagement besides the regular remittances, ease barriers to entry for local investors and ensuring transparency and accountability in major foreign investment deals.

RELATEDPOSTS

Why young professionals should care about pensions

July 23, 2025

How multinationals crashed Softa Bottling Company

June 10, 2025

Africa must stop undermining themselves as its greatest source of investment power is in its own people not in European boardrooms. From entrepreneurial youth to vibrant savings and cooperative societies, Africa has the capacity to finance its own future.

Previous Post

Kenya’s economic ascent and what it means for East Africa.

Next Post

A guide to investing in Africa

Malcom Rutere

Malcom Rutere

Related Posts

Economy

How Kenya can reinforce fiscal rules to prevent recurrent budget overruns

July 23, 2025
Economy

Strategies to boost alcohol and tobacco tax revenues

July 16, 2025
Economy

How Kenya is future-proofing its economy against illicit finance

July 9, 2025
Economy

The mechanics of currency manipulation

June 27, 2025
Economy

What happened to president Ruto’s economic dream?

June 27, 2025
Economy

Kenya must tame stock market volatility to unlock corporate growth

June 26, 2025

LATEST STORIES

Why young professionals should care about pensions

July 23, 2025

How Kenya can reinforce fiscal rules to prevent recurrent budget overruns

July 23, 2025
commercial illustrator

Why Kenyan private equity firms should consider continuation funds as an exit strategy

July 23, 2025

Transferring Your Retirement Benefits Between Pension Schemes in Kenya

July 23, 2025

Invest in stability: introducing the Cytonn USD money market fund

July 18, 2025

The Importance of Asset Diversification on Kenyan Pension Funds

July 18, 2025

Park your money where it grows: Why more Kenyans are turning to Cytonn Money Market Fund

July 16, 2025

Strategies to boost alcohol and tobacco tax revenues

July 16, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024