The Global Economic Downturn and African Economy – Recent Trends and Future Prospects

Foreign Direct Investments (FDIs) is crucial in spurring economic growth and poverty reduction in developing countries, especially in the context of globalization and liberalization. For that reason there is in existence, intense competition among developed and developing countries to attract FDI (IFC, 2007). According to the World Bank, while 2007 was a record year for FDI to developing economies, the credit crunch will greatly impede this progress as foreign direct investment (FDI) and equity investment are come under pressure. The impact of the crisis on developing countries of Africa will affect different types of international resource flows: private capital flows such as Foreign Direct Investment (FDI), portfolio flows and international lending; official flows such as development finance institutions; and capital and current transfers such as official development assistance and remittances. The global economic crisis has tested the strength and reliance of many economies around the globe particularly in Africa, resulting in the collapse of large financial institutions, the “bail out” of banks by national governments and downturns in stock markets around the world. The current study seeks to investigate the impact the wake of ongoing global Economic downturn on the FDIs to Africa with a particular focus on Namibia. Namibia currently struggles with the problem of high unemployment rates and the current global economic crisis is likely to worsen the situation