Thesis (MSc) - Cyprus International University. Institute of Graduate Studies and Research Accounting and Finance Department

Includes bibliography (sheets 55-63)

ABSTRACT
The level of uncertainty in African country economies has been a matter of concern in
the market and business world. Most countries and firms report the detrimental effect
of uncertainty on their investment, employment, and business decisions. Some firms
and countries consider the option to wait when there is a high uncertainty rate and restrategize on the best option and time to make investments. This challenge has become
a norm in most economies and has been ascertained by different scholars. These
scholars found that uncertainty possesses a detrimental effect on investments and
investment decisions both domestic and foreign. To add to this body of knowledge,
this study conducted research to ascertain the impact of economic uncertainty on
corporate investments in Africa. The study also aims to find out how inflation rate and
GDP per capita moderates the relationship amongst economic uncertainty and
corporate investment. The study used economic uncertainty (calculated by the annual
% GDP growth rate) as the independent variable and corporate investment (measured
by the gross fixed capital formation – %GDP and LOG_CAP) as the dependent
variable. The control variables were inflation rate and GDP per capita of each of the
sample countries. Data was collected using secondary source, using the WUI (created
by Ahir et al., 2018) of 2 African countries (Nigeria and South Africa). The study also
collected the financial report of 269 firms within the period 2003 to 2021 as a sample,
the study conducted a panel data regression analysis with fixed effect model to
measure the relationship between the variables. Findings from the panel data
regression result revealed that inflation rate and GDP per capita are negative
moderators of the connection amongst dependent and the independent variable. The
study generally found that economic uncertainty has a negative impact on corporate
investments. It was concluded based on results and reviewed literatures that when there
is high inflation rate, political uncertainty, economic policy uncertainty, exchange rate
uncertainty, the investment decisions are affected thereby discouraging investors from
making any future investment. From findings, the study recommended that investors
should wait and study the trend of uncertainty to make proper investment decisions.
Keywords: Africa, Corporate Investment, Economic Uncertainty, Exchange Rate,
Inflation, Macroeconomics, Political Uncertainty, Uncertainty Shock, Unemployment