nep-afr New Economics Papers
on Africa
Issue of 2007‒03‒31
ten papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Problems of Categorizing and Explaining Party Systems in Africa By Gero Erdmann; Matthias Basedau
  2. L’East African Currency Board e la genesi dell’attività bancaria nell’Africa Orientale Britannica By Arnaldo MAURI
  3. Returns to Investment in Agriculture By Steven Haggblade
  4. Ethnicity, Voter Alignment and Political Party Affiliation – an African Case: Zambia By Gero Erdmann
  5. De fortes baisses des prix des céréales sèches en perspectives By Salifou B DIARRA
  6. Monetary Policies for an MDG-Related Scaling-up of ODA to Combat HIV/AIDS: Avoiding Dutch Disease versus Supporting Fiscal Expansion By Matias Vernengo
  8. Crafting Political Institutions in Africa. Electoral Systems and Systems of Government in Rwanda and Zambia Compared By Alexander Stroh
  9. The Role of Southern Actors in Global Governance: The Fight against HIV/AIDS By Sonja Bartsch; Lars Kohlmorgen
  10. Securing Household Income among Small-scale Farmers in Kakamega District: Possibilities and Limitations of Diversification By Henriette Dose

  1. By: Gero Erdmann (GIGA Institute of African Affairs); Matthias Basedau (GIGA Institute of African Affairs)
    Abstract: Starting from controversial findings about the relationship between party systems and the prospects of democratic consolidation, this article argues that problems can only be properly addressed on the basis of a differentiated typology of party systems. Contradictory research results do not pose an ‘African puzzle’ but can be explained by different and inadequate approaches. We argue that a modified version of Sartori's typology of party systems provides an appropriate method for classifying African party systems. Based on Sartori's framework, a preponderance of predominant and dominant party systems is identified. This can partly be explained by the prevailing authoritarian nature of many multiparty regimes in Africa as well as by the ethnic plurality of African societies. High ethnic fragmentation is not transformed into highly fragmented party systems. This phenomenon can be attributed to the most frequent ‘ethnic congress party’ which is based on an ethnic elite coalition.
    Keywords: Africa, South of Sahara, party systems, conceptual analysis, democratisation,electoral system, social cleavage, ethnicity
  2. By: Arnaldo MAURI
    Abstract: THE CURRENCY BOARD AND THE RISE OF BANKING IN EAST AFRICA. The East Africa region consists today of three independent countries, Kenya, Tanzania (formerly Tanganyika) and Uganda, which, from the early 1920’s to the achievement of independence, formed an administrative unit under British rule: the British East Africa. The paper presents an historical synthesis of the basic problems and developments of the monetary and banking system in British East Africa. The research covers the period included between the beginning of European colonisation and the attainment of independence by the three above mentioned countries and focuses on the experience with a currency board arrangement in this context. A survey on commercial banking in the region, reveals that this industry, since its rise, carried the imprinting of the British banking tradition. In the first stage of monetary evolution, owing to the influence of Indian trade and settlement in East Africa, the currency most in use was undoubtedly the Indian rupee. In that period banking industry landed in East Africa, brought in by European colonial powers. The second stage in monetary evolution began when a currency board was established, in 1919, in the British colonial possessions of East Africa, just after the acquisition, as loot, of Tanganyika, a colony previously under German rule. Originally the area of Board’s operations, i.e. the East African shilling monetary area, consisted of the three mentioned territories. Zanzibar was added in 1936. During World War II were included, temporarily, in the area also Aden and British Somaliland and eventually the former Italian colonies of Eritrea, Ethiopia and Somalia. The start of activity by the E.A. Currency Board was not easy. In 1925, when the conversion of circulating rupees was completed, because of overvaluation of silver coins in the exchange rate adopted, the EA Currency Board suffered substantial losses and the reserve ratio was 43.6 per cent. Yet the situation worsened with the crisis of the colonial economy during the depression of the 30’s, which caused a sharp decline in money supply in East Africa because of heavy redemption of local currency. In 1932 the lowest point was reached with the reserve ratio at only 9.9 per cent. Circulation of EA shillings increased rapidly after 1940 because of war economy and of a favourable balance of payments of the colonies. In addition, a great enlargement of the original currency area was achieved following British military conquests in the Horn of Africa. In 1950 the circulation was fully covered by reserves, but during the previous decades the colonial currency was mainly based on government credit. However, it was not until 1956, that the fiduciary issue was officially introduced and, by this event, reasonable opportunities for monetary policy were offered. This innovation was introduced to free part of the external reserves held in London. Prior to that act the role of the Currency Board was just passive because the automatic exchange of currency did not allow any kind of money management. It represented a simple and inexpensive mechanism directed to issue currency. A long period of British rule came to an end when the colonial territories of East Africa obtained political independence and this dramatic change marked the epilogue of the story of the colonial monetary institution. The new emerging states would not accept to renounce monetary sovereignty. Therefore the liquidation of East African Currency Board was decided and the establishment of three national central banks was officially announced simultaneously in June 1965 by the governments of Kenya, Tanzania and Uganda. The East African Currency Board ceased operations one year later.
    Keywords: Currency Board, East Africa, Colonial Monetary System, African Banking History
    JEL: G21 N27
    Date: 2007–03
  3. By: Steven Haggblade (Department of Agricultural Economics, Michigan State University)
    Abstract: Investment in agriculture is necessary for ensuring rapid economic growth and poverty reduction in Zambia, as elsewhere in Africa. Yet many of the key investments required to accelerate agricultural growth – technological research, rural infrastructure and market standards, organization and enforcement -- are public goods. Because the private sector cannot capture gains from these investments, they will not invest in amounts sufficient to ensure broad-based agricultural growth. Therefore, the public sector needs to provide the necessary research, transport and market infrastructure necessary to stimulate agricultural growth. Zambia currently allocates 6% of government outlays for agriculture. This is less that the 10% commitment Zambia has made under the CAADP agreement and far less than the 15% spent by Asian countries at the launch of their Green Revolution. In allocating these funds, Zambia spends the majority of its discretionary agricultural budget on recurrent subsidies for private farm inputs, primarily fertilizer, while spending far less on rural infrastructure and technology development. Yet international evidence suggests that returns to private input subsidies are typically lower than returns to investments in public goods, in part because private input subsidies are prone to rent-seeking and in part because public input subsidies substitute for private financing of these private inputs. Investment in public goods such as agricultural research and extension, rural roads and irrigation typically produce returns two to six times greater than spending devoted to input subsidies. Therefore, a reorientation of public spending, away from private input subsidies and towards increased investment in public goods, would likely accelerate agricultural growth in Zambia.
    Keywords: food security, food policy, Zambia, agriculture growth, public investment
    JEL: Q19
    Date: 2007
  4. By: Gero Erdmann (GIGA Institute of African Affairs)
    Abstract: Conventional wisdom holds that ethnicity provides the social cleavage for voting behav-iour and party affiliation in Africa. Because this is usually inferred from aggregate data of national election results, it might prove to be an ecological fallacy. The evidence based on individual data from an opinion survey in Zambia suggests that ethnicity matters for voter alignment and even more so for party affiliation, but it is certainly not the only factor. The analysis also points to a number of qualifications which are partly methodology-related. One is that the degree of ethnic voting can differ from one ethno-political group to the other depending on various degrees of ethnic mobilisation. Another is that if smaller eth-nic groups or subgroups do not identify with one particular party, it is difficult to find a significant statistical correlation between party affiliation and ethnicity – but that does not prove that they do not affiliate along ethnic lines.
    Keywords: Social cleavages, ethnicity, voting behaviour, political party identification, political party affiliation, Zambia
  5. By: Salifou B DIARRA
    Keywords: food security, food policy, Mali
    JEL: Q18
    Date: 2006
  6. By: Matias Vernengo (Assistant Professor, Department of Economics, University of Utah)
    Abstract: This Conference Paper by Matias Vernengo was presented at the “Global Conference on Gearing Macroeconomic Policies to Reverse the HIV/AIDS Epidemic”, jointly organized by UNDP’s HIV/AIDS Group and IPC and held in Brasilia, November 2006. It is part of an IPC-supported Research Programme on “Macroeconomic Policies to Combat HIV/AIDS”. The paper maintains that the monetary policies best suited to manage the macroeconomic effects of an MDG-related scaling up of HIV/AIDS financing are those that support the needed expansion of public spending - namely, monetary policies that maintain low rates of interest, increase overall liquidity in the economy and try to achieve a relatively depreciated currency.
    Keywords: Poverty, MDG, HIV/AIDS, Monetary Policies
    JEL: B41
    Date: 2007–03
  7. By: Salifou B DIARRA; Niama Nango Dembélé (Department of Agricultural Economics, Michigan State University)
    Keywords: food security, food policy, Mali
    JEL: Q18
    Date: 2006
  8. By: Alexander Stroh (GIGA Institute of African Affairs)
    Abstract: Scholars of institutional design attribute large importance to the choice of new institutions. The comparative analysis of how Rwanda and Zambia crafted their new electoral systems and the systems of government regards procedural, structural and rational choice variables which may influence the option for particular solutions. External influences and the type of transition are determinants that can decide which actors make their interests prevail. The degree of innovation or conservatism of new institutions is mainly a result of the speed of the process and the kind of actors involved. However, rational reflections on how to produce legitimacy and minimize personal risks which take into consideration the state of conflict in the country decide on the speed and on innovative outcomes. The structured analysis of only two cases uncovers already that it is rather difficult to realise the transfer of design recommendations into reality.
    Keywords: institutions, institutional design, transition, electoral system, Rwanda, Zambia
  9. By: Sonja Bartsch (GIGA German Institute of Global and Area Studies); Lars Kohlmorgen (GIGA German Institute of Global and Area Studies)
    Abstract: This paper analyses the role of actors from developing countries in global processes of pol-icy making and governance. To systematically examine the channels of influence of South-ern actors and the interactions in global governance it develops the concept of interfaces. It differentiates between organisational, discoursive, legal and resource-transfer interfaces in global governance. This approach is exemplified in the analysis of a specific field of global governance, the global fight against HIV/AIDS. The paper examines the role of Southern governments and non-state actors in the central organisations of global health, their influ-ence in debates and discourses on strategies to fight HIV/AIDS, and the financing mecha-nisms that were introduced to fight HIV/AIDS in the developing world. It shows that al-beit actors from Northern countries dominate global governance in general, in particular areas the current institutional setting of global governance provides significant opportuni-ties for rather weak actors such as civil society organisations and governments from the South to influence strategies and policies.
    Keywords: North-South relations, global governance, HIV/AIDS, global health, civil society, power relations, interfaces
  10. By: Henriette Dose (Institute of African Studies, University of Leipzig)
    Abstract: In the debate of sustainable rural livelihoods, diversification is seen as a way to secure incomes and to increase food security. On the basis of a data set on income security, this paper analyses to what extent this applies to small-scale farmers in Kakamega District, Kenya. Using the sustainable rural livelihoods approach, this paper draws the conclusion, that (1) diversification in agricultural production is not sufficient for securing rural livelihoods in Kakamega District; (2) a sufficient income diversification depends heavily on requirements like access to education, infrastructure, as well as investment capital; and (3) small-scale farmers in Kakamega District in most cases lack these requirements, therefore not being able to achieve secure household incomes or increased food security.
    Keywords: agriculture, income security, small-scale farmers, Kenya, sustainable rural livelihoods (SRL), diversification

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