Effects of political stability and sector regulations on investments in African mobile markets

- Determinants of investments in the African mobile markets are analyzed for the period 2000-2011.
- The study puts emphasis on the role of regulation and political stability.
- Investors are opportunistic as investments strongly depend on market-determinants.
- As for institutional arrangements, timing of liberalization is more important than political stability.

This study analyses the effects of regulation and political stability on the allocation of mobile telecommunication investments in the African continent between 2001 and 2011. To better understand the dynamics of investment in telecommunications, a framework was developed to assess factors that determine investments in the telecom industry at the country and industry level, particularly institutions, market size/demand level, market structure and investing cost.The results show that investments in the mobile telecommunications industry are dependent on regulation and liberalization; however, no statistical evidence was found for the effect of political stability as measured by the democratic process. Furthermore, the study has shown that market structure factors, especially competition, market size and the cost of investing in a country, are important in determining the allocation of mobile telecommunications investments among African countries.