nep-afr New Economics Papers
on Africa
Issue of 2007‒03‒10
fourteen papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Wage Trends in Post-Apartheid South Africa: Constructing an Earnings Series from Household Survey Data By Rulof Burger; Derek Yu
  2. Ruggedness: The blessing of bad geography in Africa By Nathan Nunn; Diego Puga
  3. A review of migration and fertility theory through the lens of African immigrant fertility in France By Anne Genereux
  4. Poverty and Productivity in Female-Headed Households in Zimbabwe By Sara Horrell; Pramila Krishnan
  5. Aid and Growth: Politics Matters? By Matteo Bobba; Andrew Powell
  6. Women in the South African Labour Market, 1995 - 2005 By Carlene van der Westhuizen; Sumayya Goga; Liberty Ncube; Morné Oosthuizen
  7. Recent Findings on Tax-Related Regulatory Burden on SMMEs in South Africa. Literature Review and Policy Options By Doubell Chamberlain; Anja Smith
  8. Short- and medium-term determinants of current account balances in Middle East and North Africa countries By Aristovnik, Aleksander
  9. Banking Sector Integration and Competition in CEMAC By Saab, Samer; Vacher, Jerome
  10. Migration from Zambia : ensuring temporariness through cooperation By Amin, Mohammad; Mattoo, Aaditya
  11. Lack of opportunities and persistent poverty:income diversification in rural Madagascar (In French) By Claire GONDARD-DELCROIX (GREThA-GRES)
  12. Who Joins Ethnic Militias? A Survey of the Oodua People’s Congress in South western Nigeria By Yvan Guichaoua
  13. Food subsidies and poverty in Egypt: Analysis of program reform using stochastic dominance By Paul Makdissi; Dorothée Boccanfuso; Mathieu Audet
  14. For Public Service or Money: Understanding Geographical Imbalances in the Health Workforce in Ethiopia By Pieter Serneels; Magnus Lindelow; José Garcia Montalvo; Abigail Barr

  1. By: Rulof Burger; Derek Yu (Department Of Economics, Stellenbosch University)
    Abstract: Abstract: This paper examines South African wage earnings trends using all the available post-1994 household survey datasets. This allows us to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series. Taking account of the inconsistencies in questionnaire design and the presence of outliers, we find that it is possible to construct a fairly stable earnings series for formal sector employees. We find that claims that workers have on average experienced a substantial decrease in their real wage earnings in the post-apartheid era is based on choosing datasets on either side of Statistics South Africa’s changeover from October Household Surveys (OHS) to the more consistent Labour Force Surveys (LFS), which caused a discontinuous and inexplicably large drop in average earnings. The data actually show an increase in real wage earnings in the post-transition period for formal sector employees, and does not provide strong evidence of decreasing wages in the informal economy. The paper also investigates changes in the distribution of earnings, as well as mean earnings trends by population group, gender and skill category.
    Keywords: South Africa, Earnings, Wages, Labour market trends
    JEL: J31
    Date: 2007–02
  2. By: Nathan Nunn (University of British Columbia); Diego Puga (Universitat Pompeu Fabra & IMDEA)
    Abstract: There is controversy about whether geography matters mainly because of its contemporaneous impact on economic outcomes or because of its interaction with historical events. Looking at terrain ruggedness, we are able to estimate the importance of these two channels. Because rugged terrain hinders trade and most productive activities, it has a negative direct effect on income. However, in Africa rugged terrain afforded protection to those being raided during the slave trades. Since the slave trades retarded subsequent economic development, in Africa ruggedness also has had a historical indirect positive effect on income. Studying all countries worldwide, we find that both effects are significant statistically and that for Africa the indirect positive effect dominates the direct negative effect. Looking within Africa, we provide evidence that the indirect effect operates through the slave trades. We also show that the slave trades, by encouraging population concentrations in rugged areas, have also amplified the negative direct impact of rugged terrain in Africa.
    Keywords: terrain ruggedness, slave trades, Africa, economic development
    JEL: O11 O13 N50 N40
    Date: 2007–03–01
  3. By: Anne Genereux (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This paper evaluates fertility and migration theory in order to further understand the impact of migration on fertility. I first analyze the fertility and migration literature separately and then look at the burgeoning literature on the impact of migration on fertility. As a result, I propose an integrated framework for analyzing the migration-fertility nexus. Within the fertility context, I use Bongaarts and Watkins concept of social interaction, whereas within the migration context, I draw on Massey’s capitalist transition theory, and Pessar and Mahler’s ‘gendered geometries of power’. This integrated framework considers three major factors: the sending country, the global context of migration systems, and the receiving country. Gender is the key to understanding fertility decisions within all three levels. Migration from Africa to France is considered in order to exemplify these processes. Bozon’s typology of African demographic patterns shows how and why the sending country matters for future childbearing decisions post-migration. To further explore this facet, four countries are used to evaluate the impact of migrating from specific types of countries on fertility post-migration: Senegal, Mali, Cameroon, and Rwanda. The global context of migration is constantly changing, both encouraging and restraining men and women in particular ways, which also affects fertility choices. Finally, the receiving country interacts with migrants in various ways—immigration policies, the economy, and social institutions—playing important roles in fertility outcomes.
    Keywords: Africa, France, fertility, migration
    JEL: J1 Z0
    Date: 2007–02
  4. By: Sara Horrell; Pramila Krishnan
    Abstract: A household survey conducted in rural Zimbabwe in 2001 is used to compare the position of de facto and de jure female-headed households to those with a male head. These households are characterised by different forms of poverty that impinge on their ability to improve agricultural productivity. However, once inputs are accounted for, it is only for growing cotton that female-headed households’ productivity is lower than that found for male-headed households. General poverty alleviation policies will benefit the female-headed household but specific interventions via extension services and access to marketing consortia are also indicated.
    Keywords: Africa, Zimbabwe, gender, poverty, female-headed households, agriculture
    JEL: O12
    Date: 2006–07
  5. By: Matteo Bobba (Inter-American Development Bank); Andrew Powell (Inter-American Development Bank)
    Abstract: The literature on aid effectiveness has focused more on recipient policies than the determinants of aid allocation yet a consistent result is that political allies obtain more aid from donors than non-allies. This paper shows that aid allocated to political allies is ineffective for growth, whereas aid extended to countries that are not allies is highly effective. The result appears to be robust across different specifications and estimation techniques. In particular, new methods are employed to control for endogeneity. The paper suggests that aid allocation should be scrutinized carefully to make aid as effective as possible.
    Keywords: : Aid impact; Economic growth; Instrumental Variables; Generalized method of moments; Panel data
    JEL: O1 O2 O4 C23
    Date: 2007–01
  6. By: Carlene van der Westhuizen; Sumayya Goga; Liberty Ncube; Morné Oosthuizen (Development Policy Research Unit,University of Cape Town)
    Abstract: Abstract: Recent research has found that changing policies and attitudes and improved economic performance have impacted on the labour market dynamics for women and the increased feminisation of the South African labour force since the mid-1990s has been well documented. While employment has increased more rapidly for women than for men over the period, it has been suggested that women are overrepresented in low-income, less secure employment. In addition, insufficient jobs were created to absorb the additional entrants to the labour market and as a result women are also overrepresented amongst the unemployed. The objective of this report is to provide an overview of the changes in the status of women in the South African labour market between 1995 and 2005. The report finds that the feminisation of the South African labour force between 1995 and 2005 has been driven specifically by greater numbers of African women entering the labour force. Women benefited more from the increased demand for labour over the period than men, accounting for more than half of the increase in employment, with the bulk accruing to African women. In line with previous research it is found that the majority of women find jobs as unskilled and low-paid Elementary Workers. Female unemployment rates increased for all covariates, but African women and young women in particular struggled to find employment. When returns to employment are considered, it is clear that discrimination by gender and race remains. When real mean monthly earnings in 2001 and 2005 are compared it is found that women of all race groups earned less than men in both years, with the exception of Coloureds in 2005. African women, specifically, are undoubtedly the most vulnerable participants in the labour force, particularly if they are young and poorly educated. Even those African women who did find employment continue to earn considerably less than their White counterparts, with very large differences especially at the lower skills levels.
    Keywords: South African labour force, discrimination by gender and race, labour market dynamics for women
    JEL: A1
    Date: 2007–02
  7. By: Doubell Chamberlain; Anja Smith (Genesis Analytics)
    Abstract: Abstract: Regulatory compliance costs impose a deadweight burden on firms and therefore should be minimised. In achieving this goal, it is necessary to embrace a process of smart regulation, rather than focus on deregulation. Tax compliance cost is one type of regulatory costs that is often viewed to have a large negative impact on SMMEs. To gauge the impact of this cost on small business in South Africa, this document reviews three available studies on the impact of tax compliance costs on South African SMMEs. The three studies reviewed are: • Counting the Cost of Red Tape for Business in South Africa by SBP (2005); • Measurement of Value Added Tax Act and Regional Services Councils Act-induced Administrative Burdens for South African Small Businesses by Upstart Business Strategies (2004), commissioned by the Department of Trade and Industry (dti); and • SMME Facilitation Program (Report Version) by the South African Revenue Services (SARS) to be released in 2005. South African tax compliance costs cannot be judged in isolation. Available information on South African tax compliance costs and their impact on SMMEs are captured in the three reviewed studies. The SBP (2005) study estimates total regulatory compliance costs for formal firms in South Africa to have been approximately R79 billion in 2004, 6.5 per cent of GDP, and total tax compliance costs to have been roughly R20 billion in the same year. Due to the nature of the report, it makes no tax-specific recommendations and only focuses on broad regulatory compliance recommendations. The Upstart Business Strategies (2004) study focuses on two specific taxes, Value-Added Tax (VAT) and Regional Service Council Levies (not administered by SARS, but by regional service councils). The study employs Mistral®, a proprietary “bottom-up” technique to quantify tax compliance costs. The study finds that the average SMME spends approximately R6 027 on two compliance activities associated with VAT – recordkeeping and completion tax returns. The total VAT compliance cost for an average SMME is estimated to range between R6 000 and R8 000 annually. The recommendations of the study are of a broad practical nature and focused on reducing the time spent on specific tax compliance activities. It does not specify the how of its recommendations, for example, it suggests that the internal reliability of SARS logistics needs to be improved and that queing time spent at SARS needs to be reduced, but does not explain how these outcomes should be achieved. The SARS (2005) study does not generate its own empirical data. It reviews the empirical findings of the above two studies and findings of other studies broadly or specifically focused on SMMEs and the formal/informal economic divide. In addition, it draws on a number of qualitative insights gained during interaction with a range of individuals and organisations aware of small business concerns. A number of recommendations with regards to SARS structures (for example, creation of a Small Business Centre and Small Business help desks), SARS communication channels and SARS products (specifically VAT) are made. Rather than simply focusing on small “cosmetic” tax changes, what is required is intensive co-ordination of SMME policy across different government departments. The narrow focus of the reviewed studies, excluding the SARS report, strengthen the idea that relevant policy considerations do not extend beyond the implementation of technical changes to tax legislation. However, a strong case can be made for a number of other SMME policy-related issues to receive greater emphasis than tax compliance costs. Conclusions relative to tax compliance cost include the fact that a large component of tax compliance costs can be ascribed to firm-level inefficiencies. While a reduction in the tax compliance burden can help to create a more enabling environment for business, a special tax regime for small businesses might not be the best way to achieve lower compliance costs. Far more than simply tax changes will be required to unlock the South African SMME market.
    Keywords: SMMEs, Regulatory compliance costs, tax compliance costs
    JEL: A1
    Date: 2006–03
  8. By: Aristovnik, Aleksander
    Abstract: The main aim of the paper is to examine the short- and medium-term empirical link between current account balances and a broad set of (economic) variables proposed by theoretical and empirical literature. The paper focuses on the Middle East and North Africa (MENA), an economically diverse region, which has so far mainly been neglected in such empirical analyzes. For this purpose, a (dynamic) panel-regression technique is used to characterize the properties of current account variations across selected MENA economies in the 1971-2005 period. The results, which are generally consistent with theoretical and previous empirical analyses, indicate that higher (domestic and foreign) investment, government expenditure and foreign interest rates have a negative effect on the current account balance. On the other hand, a more open economy, higher oil prices and domestic economic growth generate an improvement in the external balance, whereas the latter implies that the domestic growth rate is associated with a larger increase in domestic savings than investment. Finally, the results show a relatively high persistency of current accounts and reject the validity of the stages of development hypothesis as poorer countries in the region reveal a higher current account surplus (or lower deficit).
    Keywords: MENA countries; current account; determinants; dynamic panel data
    JEL: O53 F32
    Date: 2007–02–01
  9. By: Saab, Samer; Vacher, Jerome
    Abstract: This paper considers the extent of retail banking integration in the Communauté Economique et Monétaire d'Afrique Centrale (CEMAC) and the level of bank competition at the regional level. Using a mix of quantitative and qualitative indicators, the paper finds some evidence of price convergence in average interest rate spreads. However, this observed fact is not supported by an increase in cross-border flows in retail loans and deposits, and price convergence may merely reflect excess liquidity in the region. Other data also indicate that bank competition within the CEMAC as a region is limited, complementing the findings on integration. Addressing shortfalls in legal and regulatory frameworks, infrastructure, and markets would facilitate integration.
    Keywords: Central African Economic and Monetary Community; Banks; Competition; Bank soundness; Financial soundness indicators; Monetary unions; Economic cooperation; CEMAC
    JEL: G21 E58
    Date: 2007–01–01
  10. By: Amin, Mohammad; Mattoo, Aaditya
    Abstract: The paper analyzes migration from Zambia in order to understand how migration policy can support development in the least developed countries. Overall emigration from Zambia is not high by regional standards, but the pattern of migration is skewed toward the skilled and away from the unskilled. A development-friendly approach to migration for Zambia would strive to ensure the temporariness of both types of movement. First, industrial countries may be willing to accept a higher level of unskilled immigration if they could be certain that it is temporary. Second, any adverse effects of brain drain would be greatly alleviated if skilled emigration is temporary. The problem is that host countries cannot unilaterally ensure temporariness of unskilled migration because repatriation cannot be accomplished without the help of source countries like Zambia, and source countries today have little incentive to facilitate the return of the unskilled. At the same time, source countries like Zambia cannot unilaterally ensure temporariness of the skilled because repatriation cannot be accomplished without the help of the host countries, and host countries currently have little incentive to send back the skilled. So, there is a strong case and considerable scope for cooperation between source countries like Zambia and destination countries in the design and implementation of migration policy so that unskilled migration becomes feasible and skilled migration takes a more desirable form.
    Keywords: Population Policies,Health Monitoring & Evaluation,Human Migrations & Resettlements,Voluntary and Involuntary Resettlement,Country Strategy & Performance
    Date: 2007–03–01
    Abstract: In Madagascar, the inequalities gap between urban and rural areas implies to draft rural specific policies. Nevertheless, the only focusing on growth might have a limited impact on persistent poverty. All households have not the same capacity to catch new opportunities generated by growth, and those with weakest resources could be durably excluded. Thanks to an applied study on income diversification in rural Madagascar, this paper shows these households are unable to carry out forms of income diversification that protect from poverty. On the contrary, they are forced to choice diversification forms associated with chronic poverty.
    Keywords: Income diversification, risk coping strategies, risk management strategies, persistent poverty, transitory poverty, Madagascar, Rural areas
    JEL: R2 I32
    Date: 2007
  12. By: Yvan Guichaoua (Centre for Research on Inequality, Human Security and Ethnicity, Queen Elizabeth House, University of Oxford)
    Abstract: The economic analysis of conflicts assigns a crucial role to the rebellion making process. However, the existing literature on this issue often rests on unsatisfactory microfoundations. It tends to overemphasize two extreme forms of mobilisation, namely purely greed-driven or, alternatively, purely ideology-driven. It does not fully address the puzzles associated with the leader-followers interaction within violent organisations. The present paper is an empirical account describing how rank and file members of an ethnic militia are mobilised. The survey shows that the purely economic explanation of violent mobilisation does not hold despite the fact the militia levers its own funds. At least two other considerations are at play for members: first, the feeling of danger, the desire of protection against fuzzily identified risks (criminality, unknown future, menace from other ethnic groups etc.); second, the social proximity to militia insiders. In fact, vulnerability (either perceived or real) might be a more decisive factor in enlistment than poverty per se. Additionally, the paper suggests that the militia studied in Nigeria doesn’t fit the usual binary classification of rebel groups (predatory or ideological) as it is simultaneously an economic, social and political actor in the communities where it operates.
    Keywords: civil conflicts, militia, Nigeria, mobilisation
    Date: 2007–01
  13. By: Paul Makdissi (GREDI, Département d'économique, Université de Sherbrooke); Dorothée Boccanfuso (GREDI, Faculte d'administration, Université de Sherbrooke); Mathieu Audet (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: Throughout this article, we utilize consumption dominance curves, a tool developed by Makdissi and Wodon (2002) to analyze the impacts on poverty brought on by changes in the food subsidy system in Egypt. The Egypt Integrated Household Survey (EIHS) of 1997 allows us to conclude that changes brought to these subsidies have not always worked towards alleviating poverty.
    Keywords: Subsidy, Marginal Tax Reforms, Egypt
    JEL: D12 D63 I21 I32
    Date: 2007
  14. By: Pieter Serneels; Magnus Lindelow; José Garcia Montalvo; Abigail Barr
    Abstract: Geographical imbalances in the health workforce have been a consistent feature of nearly all health systems, and especially in developing countries. In this paper we investigate the willingness to work in a rural area among final year nursing and medical students in Ethiopia. Analyzing data obtained from contingent valuation questions, we find that household consumption and the student’s motivation to help the poor, which is our proxy for intrinsic motivation, are the main determinants of willingness to work in a rural area. We investigate whoe is willing to help the poor and find that women are significantly more likely than men. Other variables, including a rich set of psychosocial characteristics, are not significant. Finally, we carry out some simulation on how much it would cost to make the entire cohort of starting nurses and doctors chooseto take up a rural post.
    Keywords: Health care delivery, health workers, labour supply, public service
    JEL: D1 J22 J64
    Date: 2006–11

This nep-afr issue is ©2007 by Suzanne McCoskey. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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