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Development in an African Context

MNCs, foreign direct investment and offshoring

  • 3 things to know
  • Component 3 Section B

Overview

Foreign direct investment, two multinational companies operating in Nigeria's oil industry and enclave economy.

What you need to know

Answer each one before you reveal it.

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Key term

Define foreign direct investment.

Key term

Name two multinational companies operating in Nigeria's oil industry.

Key term

Which company developed Ghana's Jubilee oil field?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Define foreign direct investment.

    Model answer

    Foreign direct investment is spending by a firm to acquire or build productive assets in another country. The investor takes a lasting management interest rather than simply buying shares.

  2. 2

    Name two multinational companies operating in Nigeria's oil industry.

    Model answer

    Shell operated onshore in the Niger Delta through the Shell Petroleum Development Company until selling it to Renaissance in March 2025, and keeps its deepwater interests. TotalEnergies and ExxonMobil also hold major Nigerian offshore interests.

  3. 3

    Which company developed Ghana's Jubilee oil field?

    Model answer

    Tullow Oil led the development of the Jubilee field off Ghana's coast. The Ghana National Petroleum Corporation holds a state share in the licence.

  4. 4

    Give one benefit a multinational can bring to a host African economy.

    Model answer

    A large investor brings capital and technology the host country could not fund itself. Employment, training and tax revenue follow where the operation buys from local suppliers.

  5. 5

    Give two costs of multinational investment for a host country.

    Model answer

    Profits are usually repatriated to the parent company rather than reinvested locally. Transfer pricing can also shift declared profit to low-tax countries and cut the host's tax take.

  6. 6

    What is an enclave economy?

    Model answer

    An enclave economy is an investment that operates with few links to the country around it. Offshore oil platforms import their equipment and export their output, so little value stays ashore.

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