Received: February 27, 2020 Accepted: March 05, 2020 Published: March 05, 2020
This study investigates the impact of business environment on foreign direct investment flows in 50 African countries during the period from 2000 to 2018. The study utilizes annual data obtained from World Bank and Mo Ibrahim Foundation. The study uses dynamic system GMM two-step estimator because it take care the endogeneity and country-specific-effect problems that may arise in panel data estimation. The results show that business environment has significant positive impact on foreign direct investment inflows to Africa which means more improved business environment attracts foreign investors to come into African countries. The results also found that financial development in Africa plays important role in attracting foreign direct investment. The results provide empirical evidence for African policy-makers to introduce polices that aim to improve business environment financial system in order to attract foreign direct investment flows to come into the region.