The role of remittances and foreign direct investment on food security in Sub-Saharan Africa

Purpose The aim of this paper is to analyse the effects of the interaction between remittances and foreign direct investment (FDI) on food security in SSA. While food security is analysed in a multidimensional way, remittances and FDI are of particular interest to decision-makers with a view to improving food security. Design/methodology/approach We mobilise a panel of 35 sub-Saharan Africa (SSA) countries over the period 2000–2022 and construct an overall composite indicator of food security and four composite indicators for each of its dimensions using principal component analyses. The effects of remittances and FDI on food security are assessed using two stages least squares (2SLS) to correct for various endogeneity problems. Findings The results show that the coefficient associated with the interaction between the remittances and the FDI has a non-significant negative effect on the overall food security index. However, we have a significant negative effect for the availability and stability dimensions and a significant positive effect for the access dimension. Remittances and FDI have positive effects on food security. In addition, the CEMAC, the EAC and the French-speaking countries have the most significant effects. Research limitations/implications As implications, countries that simultaneously receive a large amount of remittances and FDI must limit the country's dependence by directing these funds towards sectors that structure the economy and not just consumption. These countries must also facilitate the entry of remittances and FDI through appropriate regulation and incentives. Originality/value This paper contributes to the literature by examining, on the one hand, the effects of the interaction between remittances and FDI on food security in SSA. This interaction provides a better understanding of their complementary and substitutive effects at the macroeconomic level. Furthermore, using principal component analysis, this study contributes to the development of an overall composite food security indicator as well as four sub-indicators specific to the dimensions of food security.