NAME: NTOKOZO
STUDENT NUMBER: 57672377
MODULE CODE: APC2602
DUE DATE: 15TH MAY 2021
TOPIC: MULTINATIONAL CORPORATIONS AS DRIVING FORCE OF ECONOMY IN
AFRICAN STATES.
, 1. INTRODUCTION
The MNC- Africa relationship is often regarded with mixed, if not opposing, views. Against this
background, what are factors both historical and political, as well as contemporary issues must
be considered when assessing MNCs in Africa. Without doubt, MNCs have played a significant
role in developing economies of African states. The changes brought by the MNCs were
unprecedented in Africa which manifested in economic growth, reducing poverty, creating jobs
that utilized local labour force, raise employment standards by paying better wages than local
firm pay. The essay will discuss how the advent of MNCs in Africa, particularly, in South Africa
has brought new technologies coupled with positive economic growth conversely, shed light
on Vodafone as an example of an MNC that operates globally and in Africa that has distinctly
contributed to South Africa’s, communication development and infrastructure development in
tandem with the economy however, some hold cynical views about MNCs operations in
African states.
2. WHAT ARE MULTINATIONAL CORPORATIONS (MNCS)?
Stopford (1998) defines Multinational Corporation as firms that own and control production
facilities in two or more countries. Whilst, Gilpin (1975:9) defines a MNC as “a corporation that
invests in other countries for a variety of reasons, to have access to foreign market, to secure
foreign sources of supply, or to have the benefit of lower-cost production or lower taxes. One
might add that ownership and control is an essential element that is often overlooked when
defining multinational corporations. Multinational corporations produce and distribute goods
and services across national boundaries; they disseminate ideas, technology throughout the
world additionally, their operations are planned on the global scale. They have offices and
factories in different countries and normally have a centralized head office where global
management is co-ordinated. MNCs finance some portion of their overseas operations by
transferring funds from parent firm in the home country to the branch or affiliate in the host
country. This transfer of funds is referred to as foreign direct investment (FDI) because it
involves engagement in directly productive activities overseas with the purpose of owning or
controlling overseas assets moreover, foreign direct investment is a key feature of MNCs
(Zhang 2001:347).
3. MULTINATIONAL CORPORATIONS IN AFRICA
The presence of multinational corporations operating in Africa is unparalleled with other
developing countries, they contribute immensely to the development of the African states in
addition, and the human capital required by MNCs to operate is largely available since chronic
unemployment has engulfed myriad of Africa states. (Jacquinet and Bussotti, 2019) notes that
increasingly, the multinational companies have shifted production operations to host countries
moreover, the shift of operations especially manufacturing to host countries involves
enormous capita; goods transfer and setting up of industries. Taking the South African
example, through the operations of multinationals like Unilever, general motors and British
American tobacco, South Africa boasts of industries that have put it ahead of other southern
African countries, this illustrates how MNCs can become key economic drivers in Africa with
longevity overtime. The significant growth in some economies. Africa is an emerging market
for many industries, from to technology to transportation and, as of recently, e-commerce
(Momin and Hossain, 2011). However, some believe that MNCs are sources of economic
