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on Africa |
| By: | Simplice A., Asongu |
| Abstract: | This paper assesses how legal-origin influences financial development through regulation quality and the rule of law. It uses data collected after pioneering works on the law-finance nexus to assess hypotheses resulting there-from in the context of Africa. Distinctions are made between English, French, French sub-Saharan, Portuguese and North African countries in how their legal origins affect financial intermediary dynamics of depth, efficiency, size and activity. In terms of policy implications results support the benefits of law channels to financial development in the continent. |
| Keywords: | Law; finance; banks; Africa |
| JEL: | O1 K2 G2 P5 K4 |
| Date: | 2011–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34080&r=afr |
| By: | AfDB |
| Date: | 2011–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbpbr:337&r=afr |
| By: | Tengeh, Robertson Khan /RKT; Ballard, Harry / HB; Slabbert, Andre /AS |
| Abstract: | Using a triangulation of three methods, we devise a framework for the acquisition of the resources vital for the start-up of a business in South Africa. Against the backdrop of the fact that numerous challenges prohibit African immigrants from starting a business, let alone growing the business, we set out to investigate how those who succeed acquired the necessary resources. Within the quantitative paradigm, the survey questionnaire was used to collect and analyze the data. To compliment the quantitative approach, personal interviews and focus groups were utilised as the methods within the qualitative approach paradigm. The research revealed that an African immigrant entrepreneur is most likely to be a male between the ages of 19 and 41 who has been forced to immigrate by political circumstances. Once in South Africa, limited job opportunities forced these immigrants into starting-up a business. In order of importance, financial, informational, human and physical, resources were identified as being critical for the start-up a business. With respect to the acquisition of resources, African immigrant entrepreneurs unwillingly made use of personal savings to finance their businesses during the start-up phase of the business. Financial resource played a double role in that it determined the main sources of physical resources used. From a human resource perspective, African immigrant entrepreneurs preferred employing South Africans during the start-up phase of the business, and the reverse was true during the growth phase. To a limited extent family labour was involved at both the start-up as well as the operation phases of the business; with formal education and prior experience playing an indirect role as far as the human resources mixed were concerned. In terms of information, African immigrant entrepreneurs made use of two primary sources of information namely; their ethnic networks and friends from somewhere else. |
| Keywords: | South Africa; African immigrants; business start-up resources; SMMEs;framework; self employment |
| JEL: | A23 A11 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34211&r=afr |
| By: | Nara F. Monkam (Department of Economics, University of Pretoria) |
| Abstract: | The paper assesses the technical efficiency of 231 local municipalities in South Africa for 2007 and investigates the potential determinants of efficiency gaps among local municipalities in the country using the nonparametric Data Envelopment Analysis (DEA) and the parametric Stochastic Frontier Analysis (SFA) techniques. In relation to the DEA technique, efficiency scores are subsequently explained in a second stage regression model with potential explanatory factors using a Tobit regression model. The results show that on average, B1 and B3 municipalities could have theoretically achieved the same level of basic services with about 16% and 80% fewer resources respectively; the difference between the most efficient and the least efficient municipalities being quite substantial. The results also show that B4 municipalities could have theoretically achieved the same level of basic services with about 62% fewer operating expenditures. Furthermore, fiscal autonomy and the number and skill levels of the top management of a municipality’s administration were found to influence the productive efficiency of municipalities in South Africa. The paper findings raise concerns over the future of local municipalities in South Africa, especially B3 and B4 municipalities, about their capability to efficiently deliver on expected outcomes on a sustainable basis. |
| Keywords: | Municipalities, spending efficiency, sub-national government finance, fiscal decentralization; DEA analysis, Tobit, SFA |
| JEL: | H11 H71 H72 H77 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201120&r=afr |
| By: | Nicita, Alessandro; Olarreaga, Marcelo; Porto, Guido |
| Abstract: | The objective of this paper is to estimate the potential pro-poor bias in the existing structure of protection in six countries in Sub-Saharan Africa (SSA) (i.e., whether it redistributes income from rich to poor households). We also explore the extent to which the barriers faced by SSA exporters to the rest of the world are biased in favor of poor or rich households. To this end, we start with a simple agricultural household production model and propose an extension to include adjustments in labor income associated with changes in unskilled and skilled wages. We then build indicators that capture the differences in welfare changes across income levels associated with the elimination of SSA's own trade protection, as well as trade protection on SSA's export bundle by the rest of the world. Results suggest that SSA's own trade policy is biased in favor of poor households. In contrast, the trade policies of SSA's trading partners tend to be biased in favor of SSA's rich households, especially when ad-valorem equivalents of non tariff measures (NTMs) are taken into account. |
| Keywords: | Poverty; Sub-Saharan Africa; Trade policy; Wage elasticities |
| JEL: | F13 F16 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8594&r=afr |
| By: | Mustafa Yavuz Çakir; Alain Kabundi |
| Abstract: | This paper studies the trade linkages between South Africa and the BRIC (Brazil, Russia, India, and China) countries. We apply a global vector autoregressive model (global VAR) to investigate the degree of trade linkages and shock transmission between South Africa and the BRIC countries over the period 1995Q1-2009Q4. The model contains 32 countries and has two different estimations: the first one consists of 24 countries and one region, with the 8 countries in the euroarea treated as a single economy; and the second estimation contains 20 countries and two regions, with the BRIC and the euro area countries respectively treated as a single economy. The results suggest that trade linkages exist between our focus economies; however the magnitude differs between countries. Shocks from each BRIC country are shown to have considerable impact on South African real imports and output. |
| Keywords: | BRICS, Trade Linkages, Global VAR |
| JEL: | C32 C51 F14 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:250&r=afr |
| By: | Goodness C. Aye (Department of Agricultural Economics, University of Agriculture, Makurdi, Nigeria); Rangan Gupta (Department of Economics, University of Pretoria) |
| Abstract: | This study provides empirical evidence of aggregate, anticipated and unanticipated and asymmetric (positive and negative) effects of monetary policy on real agricultural prices in South Africa over the monthly period of 1970:01-2010:12. For this purpose, we use the Vector Autoregressive (VAR) model coupled with the monetary misperception model to distinguish between anticipated and unanticipated monetary policy shocks. Results show that the actual, anticipated and unanticipated monetary policy had significant effect on real farm prices. These findings are robust when the shocks are modelled as recursive residuals. Moreover, the positive monetary policy was consistently significant either at specific lags or jointly. With exception of the recursive anticipated monetary policy, the negative components were consistently insignificant. Further, the hypothesis of asymmetric effect was supported for the recursive anticipated monetary policy only. The effects observed in this study are quantitatively small and accounts for only a very small percentage (1.5 percent - 6.5 percent) of the variation in real farm prices. |
| Keywords: | Monetary policy, real farm price, asymmetric effects, recursive residuals |
| JEL: | C12 E52 Q11 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201119&r=afr |
| By: | Erlend Berg |
| Abstract: | Funeral insurance has existed at least since antiquity, and it remains popular in many parts of Africa today. Yet the study of funeral insurance as a distinct form of insurance has hitherto been neglected. This paper presents a model in which funeral insurance combines regular life insurance with a restriction on how the payout is spent. The model predicts that there is an intermediate range of income and wealth where funeral insurance is demanded. The prediction is tested on a nationally representative sample of black South African households, a setting where both life and funeral insurance are widely available. The model also gives conditions under which funeral insurance is not demanded at any level of income and wealth. This may explain why funeral insurance is less popular in developed countries, even among the relatively poor. |
| JEL: | D81 G22 O12 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-16&r=afr |
| By: | Erick Gong |
| Abstract: | Using data from a study that randomly assigns offers of HIV testing in two urban centers in East Africa, I examine the effects of testing, taking into account people's beliefs of their HIV status prior to testing. I objectively measure risky sexual behavior using sexually transmitted infections (ÒSTIsÓ) contracted during the 6 month study as proxies. Individuals surprised by an HIV-positive test are over nine times more likely to contract an STI indicating an increase in risky sexual behavior. Individuals surprised by an HIV-negative test are 84% less likely to contract an STI indicating a decrease in risky sexual behavior. Using these estimates, I simulate the effects of testing on new HIV infections. I find the overall number of HIV infections increases by 30% when people are tested compared to when they are unaware of their status - an unintended consequence of testing. |
| Keywords: | HIV/AIDS; risk behavior; information; beliefs |
| JEL: | D84 I18 O12 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:1101&r=afr |
| By: | Tadesse, Tasew |
| Abstract: | Abstract The study has examined the impact of foreign aid on investment and economic growth in Ethiopia over the period 1970 to 2009 using multivariate cointegration analysis. The empirical result from the investment equation shows that aid has a significant positive impact on investment in the long run. On the other hand, volatility of aid by creating uncertainty in the flow of aid has a negative influence on domestic capital formation activity. Foreign aid is effective in enhancing growth. However, the aid-policy interaction term has produced a significant negative effect on growth implying that bad policies can constrain aid effectiveness. The growth equation further revealed that rainfall variability has a significant negative impact on economic growth as the economy. This study indicated also that the country has no problem of capacity constraint as to the flow of foreign aid. |
| Keywords: | foreign aid; policy; economic growth; cointegration; VECM; Ethiopia |
| JEL: | F35 C22 F43 |
| Date: | 2011–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33953&r=afr |
| By: | Justin Visagie; Dorrit Posel |
| Abstract: | In this paper, we revisit 'what and who' is middle class in South Africa using data collected in the 2008 National Income Dynamics Study. First we consider how to identify the middle class based on two broad definitions adopted in the international literature: a middle class defined by the middle share of the national income distribution; and a middle class defined by an absolute level of affluence and lifestyle. We explore alternative ways of capturing the ‘middle strata’ of the national income distribution; and we suggest an approach for identifying threshold levels of income associated with middle-class affluence. Second, we show that both the size and the composition of the middle class in South Africa are very sensitive to how the middle class is defined. In particular, we demonstrate that there is very little overlap between the two broad definitions, a finding which reflects very high levels of poverty and inequality in the country. Lastly, both definitions of the middle class are shown to be robust to two common issues of measurement, namely the inclusion of implied rental income, and the use of expenditure as opposed to income as the basis for measuring class status. |
| Keywords: | middle class; income strata; middle-class affluence; income distribution |
| JEL: | D31 D63 I31 Z13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:249&r=afr |
| By: | Mekonnen Beyene, Berhe (Dept. of Economics, University of Oslo) |
| Abstract: | I studied the determinants of migration from urban Ethiopia to other countries, to rural areas and to other urban areas. In general, the result differs by migration type. For international migration, wealth and network variables are found to be important. It is mainly those households who have the network and/or the capacity to finance migration who send household members abroad. Human capital variables like age and education matter only for the two internal migrations. While the social capital theory has strong explanatory power for international migration, the human capital theory is important for internal migration. The NELM is important for all migration types underscoring the importance of the family as a decision unit. |
| Keywords: | urban; rural; international; migration; Ethiopia |
| JEL: | F22 O15 R23 |
| Date: | 2011–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2011_024&r=afr |
| By: | Stefan Dercon; John Hoddinott; Tassew Woldehanna |
| Abstract: | What keeps some people persistently poor, even in the context of relative high growth? In this paper, we explore this question using a 15-year longitudinal data set from Ethiopia. We compare the findings of an empirical growth model with those derived from a model of the determinants of chronic poverty. We ask whether the chronically poor are simply not benefiting in the same way from the same factors that allowed others to escape poverty, or whether there are latent factors that leave them behind? We find that this chronic poverty is associated with several initial characteristics: lack of physical assets, education, and ‘remoteness’ in terms of distance to towns or poor roads. The chronically poor appear to benefit from some of the drivers of growth, such as better roads or extension services in much the same way that the non-chronically poor benefit. However, they appear to have lower growth in this period, related to time-invariant characteristics, and this suggests that they face a considerable growth and standard of living handicap. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-18&r=afr |
| By: | Joshua Blumenstock; Nathan Eagle; Marcel Fafchamps |
| Abstract: | A large literature describes how local risk sharing networks can help individuals smooth consumption in the face of idiosyncratic economic shocks. However, when an entire community faces a large covariate shock, and when the transaction costs of transfers are high, these risk sharing networks are likely to be less effective. In this paper, we document how a new technology – mobile phones – reduces transaction costs and enables Rwandans to share risk quickly over long distances. We examine a comprehensive database of person-to-person transfers of mobile airtime and find that individuals send this rudimentary form of “mobile money” to friends and family affected by natural disasters. Using the Lake Kivu earthquake of 2008 to identify the effect of a large covariate shock on interpersonal transfers, we estimate that a current-day earthquake would result in the transfer of between $22,000 and $30,000 to individuals living near the epicenter. We further show that the pattern of transfers is most consistent with a model of reciprocal risk sharing, where transfers are determined by past reciprocity and geographical proximity, rather than one of pure charity or altruism, in which transfers would be expected to be increasing in the wealth of the sender and decreasing in the wealth of the recipient. |
| Keywords: | Risk Sharing; Mobile Phones; Mobile Money; Information and communications technologies; Development; Earthquakes; Rwanda; Africa. |
| JEL: | O16 O17 O33 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-19&r=afr |
| By: | Mndzebele, Samuel |
| Abstract: | Background: Evidence suggests that growth in a country’s Gross National Products does improve life expectancy only when substantial funds are directed towards healthcare and poverty eradication in society. The economic crisis currently faced by Swaziland has a potential of impacting negatively on her healthcare system, hence the need for drawing-up mitigation strategies. Purpose: To examine the healthcare system in the face of the economic crisis in Swaziland with the aim of drawing-up appropriate socio-economic mitigation strategies in response to the current challenges. Approach: The exercise engaged a descriptive approach through a three-level conceptual model that first examined the current health systems, leading to the analysis of possible health implications. The last phase involved drawing-up appropriate socio-economic mitigation strategies. Health challenges and implications: The Ministry of Health in Swaziland is already struggling to make significant strides in implementing key projects through her primary healthcare strategies as enshrined in the National Health policy of 2007. Of paramount importance is the impact on the comprehensive implementation of her annual action plan and the national health sector strategic plan (2008 -2013). Envisaged implications include the current threat on the capacity surrounding the management of HIVAIDS in the country. Conclusion (mitigation strategies): There is a strong need for the government of Swaziland and the Ministry of Health to act decisively in ensuring that health financing policies are reviewed and re-strategized to mitigate the economic impact on critical services within the department. |
| Keywords: | gross domestic product; healthcare resource allocation; health systems implications |
| JEL: | I10 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34017&r=afr |
| By: | Gary S. Shea |
| Abstract: | In 1720, subscription finance and its attendant financial policies were highly successful for the Royal African Company. The values of subscription shares are easily understandable using standard elements of derivative security pricing theory. Sophisticated provision for protection of shareholder wealth made subscription finance successful; its parallels with modern innovated securities are demonstrated. A majority of Company shareholders participated in the re-financing, but could provide only a small portion of the new equity required. The re-financing attracted to the subscription an investment class that was strongly composed of parliamentary and aristocratic elements, but appeared to be only weakly attractive to persons who had already invested in the East India Company and was not attractive at all to Bank of England investors or to those persons who were investing in newly created marine insurance companies. Subsequent trade in subscription shares was more intense than was other share trading during the South Sea Bubble, but the trade was only lightly served by financial intermediaries. Professional financial intermediaries did not form densely connected networks of trade that were the hallmarks of Bank of England and East India Company share trading. The re-financing launched an only briefly successful revival of the Company¡¯s slave trade. |
| Keywords: | South Sea Company; South Sea Bubble; goldsmith bankers; subscription shares; call options; derivatives; installment receipts; innovated securities; networks. |
| JEL: | N23 G13 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:1114&r=afr |
| By: | Alimatou Cisse |
| Abstract: | Health constitutes a sufficiently solid entrance to reduce poverty and promote economic growth. Yet, in most African countries and particularly in Côte d’Ivoire, the populations’ state of health has seen a real deterioration over the last decade. This study seeks to explain this decline by determining the explanatory factors of recourse to health care providers. To this end, the multinomial logit model is used. The theoretical basis for this analysis is the maximization of a utility function to produce health. The data to test the study’s hypotheses came from the survey of the National Institute of Statistics, entitled Social Dimension of Structural Adjustment, carried out in April 1993. The results show that the education level of the household head, the household’s income, the price of medication, and the time to reach the health care provider (as a proxy for the distance to a health care provider) determine the choice for a specific health care provider. The level of education and the income positively influence this choice, while the cost of medication and the time to provider (time to reach the health provider) negatively influence the choice of health care provider. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_201&r=afr |
| By: | Kaminski, Jonathan; Serra, Renata |
| Abstract: | This paper explores the case for believing endogenous reforms to be more developmental than externally-imposed reforms, by drawing on the recent unorthodox experience of cotton sector reform in Burkina Faso. We address questions about reform emergence, feasibility, developmental impact, and sustainability. Our analysis, which carefully incorporates local social and political realities, suggests that the urban elites dominating the Burkinabè state favoured a particular cotton reform process, because it provided them with higher rents; while allowing for some rent distribution to the rural world which secured national consensus around reform. Endogenous reforms, though more feasible, are not necessarily more sustainable over time. In Burkina Faso, the initial reform benefits were eroded after 2006. We interpret this as due to the inability of the new institutional equilibrium to win over the ressure from changed stakeholder incentives, as well as to a loss of responsiveness of the rural leadership to its base. |
| Keywords: | Cotton, Cotton policy-making, Reforms, Burkina Faso, Agricultural Finance, Environmental Economics and Policy, Financial Economics, International Development, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:huaedp:116227&r=afr |
| By: | Antonio Estache; Emili Griffel-Tatjé |
| Abstract: | This paper offers a quantitative evaluation of the distribution of the welfare of a water privatization experience in Mali among the key economic agents. The assessment is based on an index number inspired by Bennet (1920). The main results are as follows. First, taxpayers are the main losers as residual subsidies are much higher than expected at the time of privatization. Second and contrary to what is often claimed, users benefited through lower real water prices. Third, labor, intermediate suppliers and investors have also benefited. Fourth, foreign actors benefited. However, they did so much more than the domestic actors and this is probably what explains best the unhappiness of the Malians. Ultimately, it is the regulator’s decision to improve the relative distribution of gains that explains the departure of the private operator and the widespread sense of the failure of an experience that has generated welfare gains for users and workers, at least in the short run. |
| Keywords: | privatization; regulation; efficiency; equity; distributional effects |
| JEL: | C60 D24 D33 L32 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/98987&r=afr |