Governance Factors Influencing Foreign Direct Investment Inflow In Tanzania: Case Study Iringa Region In Tanzania.

Leonard, Daniel (2025) Governance Factors Influencing Foreign Direct Investment Inflow In Tanzania: Case Study Iringa Region In Tanzania. Masters thesis, The Open University of Tanzania.

PDF - Submitted Version Available under License Creative Commons Attribution. Download (4MB)

Abstract

This study examined governance factors influencing Foreign Direct Investment (FDI) inflows in Tanzania, Iringa Region as a case study. The study focused on three key factors namely policy environment, stable security and transformational leadership. While these factors are widely acknowledged as crucial for attracting FDI, Iringa has consistently underperformed compared to other Tanzanian regions, such as Dar es Salaam, Arusha and Mwanza, in securing substantial foreign investments inlows (Government of Tanzania, 2021). The research problem arises from the lack of empirical studies that assess the specific influence of these factors on FDI inflows in Iringa, despite the availability of the region’s untapped investment potential. The study aimed to bridge this gap by evaluating how these determinants influence FDI inflows, offering a deeper understanding of the regional dynamics that shape investor decisions. The study employed Securitization Theory, Transformational Leadership Theory and Policy Feedback Theory. A quantitative research approach was employed, utilizing a stratified random sampling technique to select a sample of 153 respondents. Data were collected through structured questionnaires to gather insights on the policy environment, security, leadership and their perceived impact on investment decisions. The data were then analyzed using descriptive statistics and correlation analysis. The findings revealed that statistically there is a significant and positive relationship between Transformational Leadership (TL) and Foreign Direct Investment (FDI), with a correlation coefficient of (r = .383, p < 0.05), suggesting that visionary, inspiring, and proactive leadership positively influences FDI inflows. Descriptive data supports this, with 57.0% of respondents affirming the positive role of TL in attracting FDI. Stable Security (SS) plays a vital role in enhancing investor confidence with (r = .424, p < 0.05). A secure environment was also acknowledged by 53.1% of respondents as crucial to attracting foreign investments. Furthermore, the Policy Environment (PE) demonstrated the strongest relationship with (r = .509, p < 0.05). This was echoed by 64.9% of respondents who recognized the importance of a favorable policy environment in driving FDI. These findings highlight the need for policymakers to prioritize strengthening the policy environment and ensuring stable security to enhance FDI inflows in Iringa. Transformational leadership was also found influence FDI. The study concluded that improving policy enviroments, security stability and transformational leadership is essential to create a more attractive investment climate. By improving these factors, Iringa region is likely become a more competitive destination for foreign investment, potentially driving regional economic growth and development. The implications of these findings is the need for local and national policymakers to focus on creating a stable, secure and conducive policy environment in order to encourage foreign investment in Iringa in particular and in the whole country. This will lead to long term economic benefits, including job creation, infrastructure development and increased economic diversification in the region and in the country as a whole. Keywords: Transformational Leadership, Stable Security, Policy Environment and Foreign Direct Investment Inflows (FDI)

Actions (login required)

View Item