FOREIGN DIRECT INVESTMENT INFLOWS AND EMPLOYMENT CREATION IN SUB-SAHARAN AFRICA

Abstract

Foreign Direct Investment (FDI) has long been regarded as a catalyst for economic growth in Sub-Saharan Africa (SSA), yet the extent to which it translates into sustainable employment creation remains contested. This paper examines the relationship between FDI inflows and employment generation across SSA from 2014 to 2024, a decade characterized by fluctuating global capital flows, pandemic-induced shocks, and policy reforms. Using trend analysis of open-source datasets from the World Bank, UNCTAD, and the International Labor Organization, the study reveals that while FDI inflows to SSA increased significantly in key resource-rich and service-oriented economies, the employment elasticity of these inflows has remained weak. The findings show that FDI was more effective in creating jobs in manufacturing and telecommunications than in extractive industries, were capital intensity limited employment spillovers. Moreover, regional disparities persisted, with East Africa attracting more employment-intensive investments than Central Africa. The analysis underscores the importance of aligning FDI attraction strategies with domestic job creation goals through targeted sectorial policies, infrastructure improvements, and human capital development. The paper concludes that for SSA to fully harness FDI for employment growth, policymakers must prioritize investment in labor-absorptive sectors, enforce local content policies, and strengthen institutional frameworks that enhance linkages between foreign investors and domestic enterprises.