From Investment to Impact: The Role of European FDI and Corporate Social Responsibility in Africa's Sustainable Growth
From Investment to Impact: The Role of European FDI and Corporate Social Responsibility in Africa's Sustainable Growth

Summary/Abstract: Africa continues to face persistent development challenges, making foreign direct investment (FDI) essential for growth and sustainability. This paper examines the role of the European Union (EU) as Africa's leading investor, with particular emphasis on how European companies employ Corporate Social Responsibility (CSR) to complement their FDI. The study is guided by three research questions. First, what is the overall role of FDI in African development, and to what extent does it influence per capita income and inequality? The underlying hypothesis is that European FDI strengthens productive capacity and supports structural transformation, thereby contributing to higher GDP per capita and reduced inequality. Second, how do CSR initiatives enhance sustainability at the micro level? Here, the hypothesis is that multinational enterprises seek to mitigate externalities, apply European ESG standards in weaker regulatory environments, and counter neo-colonial narratives. Third, do CSR strategies differ across sectors? It is hypothesised that firms adapt CSR to specific social and environmental externalities. Using data from UNCTAD, the World Bank, and the Sustainable Development Goals (SDGs), the study finds that FDI correlates positively with GDP per capita but does not have a significant effect on inequality, while environmental outcomes show clearer improvement. Case studies of European firms confirm sector-specific CSR contributions while also highlighting reputational risks and controversies.

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