Cross Borders Mergers and Acquisitions: Evidence from Africa

Symbiosis Institute of Business Management, Bengaluru.

Aarti Agrawal

Section: B (17020841041)

ABSTRACT:

Topic: Cross Borders Mergers and Acquisitions: Evidence from Africa.

A lot has been written about the Inward FDI in Africa (i.e. Mergers and acquisitions made by other countries in Africa), but what about the outward FDI? There is only a little FDI stemming from Sub-Saharan Africa ($2.2 billion approx.). According to UNCTAD report, African Investment is only 3% of the total developing country foreign Investment ($35.6 billion approx.)

Usually when the developing countries grows at a fast pace and face shortage of capital, they are more likely to receive foreign investment rather than being foreign investors. But, Africa has grown slowly than other developing countries and has slowest growth in exports among the developing countries. Still it has been attracting FDIs and Outward FDI has been very less.

In this paper we try to bring into picture the outward FDI flows of Africa. 

According to a narrow study done on African markets and the field of Mergers and Acquisitions, we can see that lack of regulatory certainty and stringent regulatory barriers are known to be one of the biggest threats for M&A transactions in Africa. Internal factors such as location specific factors are also important determinants in M&A that takes place. The factors that make the firms indifferent between making a Domestic or a cross-border acquisition will be looked upon.

The effect of cross-border acquisitions on the banking sector as well as on the R&D expenditures of the investing country i.e. Africa will be the key area of the research as no specific research papers have taken this into account. Also, Evidences show that African countries that have worst growth performance have really high outward FDI. So what are the reasons? How does it impact the economy? This will be looked upon in this paper. We will also take into account the growth rates, market size, policy changes in inward and outward investment, etc.