FOREIGN DIRECT INVESTMENT IN SUB SAHARAN AFRICA: DRIVERS AND THE CHALLENGE OF THE LAND-ENERGY NEXUS

Africa's biofuel potential over the last ten years has increasingly attracted foreign investors’ attention. Based on a recently upgraded global dataset on large scale land deals, we estimate the determinants of foreign investors land demand for biofuel production in SSA, using Poisson specifications of the gravity model. Our estimates suggest that abundance of water resources and land tenure insecurity are significant determinants of large-scale land acquisitions for biofuel production. This in turn suggests that this type of investment is mainly resource-seeking and investors might see land governance weaknesses as a way to access land and water resources at very favorable conditions. Results are robust to different specifications.