FDI and the Gap of Clean Power Finance

Twin deficits in energy and financing are extensively detrimental in Africa which in turn entails foreign direct investment (FDI) to be effectively promoted. This study intends to examine the determinants of FDI in the clean power industry in Africa over the period 2003-2019. By using a robust model of FDI panel gravity fixed effects Poisson pseudo-maximum likelihood, a range of encouraging and reassuring results are found. Importantly, enhancing the awareness of the importance of renewable energy robustly attracts FDI in Africa. Moreover, as anticipated, geographical distance is not the main factor in influencing the decision made by foreign investors. Moving forward, improving renewable energy education with the timely availability of data promotes awareness in society and thus may facilitate the development of the clean power industry in Africa in the near future.