Accounting for the Effect of Foreign Direct Investment on Economic Growth, Post IFRS Adoption in Selected Sub-Saharan African Countries (1999-2015)

Abstract

This study analysed the effect of Foreign Direct Investment (FDI) on economic growth of selected Sub Saharan African countries (Nigeria, Ghana and South Africa) after their adoption of International Financial Reporting Standard (IFRS). The effect of FDI on macro-economic variables-Gross Domestic Product (GDP) and External Reserves were analysed. Ex-post Facto research design was adopted for the study. Secondary data were collected from United Nations Conference on Trade and Development (UNCTAD), World Investment Reports, (2016); United Nations Statistics, national accounts main aggregate data base (2015) and Index Mundi, (2015) and were presented in tables and graphs. Models were formulated while data were analysed using Dummy Variable Regression model. Findings revealed that FDI had positive effect of GDP of Nigeria and Ghana but of negative effect on that of South Africa. However, in post IFRS adoption Nigeria had significant reduction in the effect of FDI on GDP while Ghana and South Africa had no significant difference in the effect of FDI on GDP in those periods. Equally discovered were that FDI inflows had significant effect on external reserve of Ghana but of no significant effect on that of Nigeria. Its effect on External Reserve of South Africa was negative but insignificant. There were no significant difference in the effect of FDI on external reserve of Nigeria, Ghana and South Africa in the pre and post-IFRS adoption era. It was recommended amongst others that nations should look inwards into other factors that would support FDI and economic growth like institutional factors and infrastructure but not relying on IFRS adoption alone, as IFRS alone cannot attract FDI and bring development.