Interest Rate, Insecurity and Foreign Investment in West Africa: Impact Analysis

Owing to the incessant occurrence of insecurity and the prevalent outrageous interest rates in the region, foreign direct investment has been decreasing over and over, since investors are at risk of losing their investments in regions like these. This research aimed to address the issue of low foreign investment in West Africa by examining the impact of interest rates and insecurity on foreign direct investment, while inflation and environmental sustainability, among others, are controlled for. Ten countries in West Africa were selected for this study. After analysing data from 2007 to 2022 using static panel data analysis. The findings revealed that interest rates had a significant negative effect on foreign direct investment, while the level of insecurity, inflation rate and environmental sustainability had no significant impact on foreign investment in the sub-region. Additionally, while population and total output had a significant positive impact, exchange rates (depreciation) had a significant inverse impact on foreign direct investment. The study suggests that interest rates be reduced, and West African governments should work together to develop and strengthen regional security measures to combat the importation of arms from war-torn nations in Central and North Africa.