nep-afr New Economics Papers
on Africa
Issue of 2007‒05‒26
twelve papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Teenage Motherhood and Long-run Outcomes in South Africa By Siv Gustafsson; Seble Worku
  2. Poverty and Inequality Impacts of Trade Policy Reforms in South Africa By Ramos Mabugu; Margaret Chitiga
  3. Old Curses, New Approaches? Fiscal Benchmarks for Oil-Producing Countries in Sub-Saharan Africa By Jan-Peter Olters
  4. Aid, Conflict and Human Development By Mark McGillivray; Farhad Noorbakhsh
  5. Transient and Chronic Rural Household Poverty: Evidence from Kenya By Milu Muyanga; Miltone Ayieko; Mary Bundi
  6. Le noyau dur de la pauvreté au Sénégal By Oumar Diop Diagne; Ousmane Faye; Salimata Faye
  7. The Impacts of Trade Liberalization on Poverty in Nigeria: Dynamic Simulations in a CGE Model By Manson Nwafor; Adeola Adenikinju; Kanayo Ogujiuba
  8. Aid Effectiveness: The Role of the Local Elite By Luis Angeles; Kyriakos C Neanidis
  9. Distortions to Agricultural Incentives in Egypt By James Cassing; Saad Nassar; Gamal Siam; Hoda Moussa
  10. Interest Rate Spreads in English-Speaking African Countries By Joe Crowley
  11. Lessons from High Inflation Epidsodes for Stabilizing the Economy in Zimbabwe By Norbert Funke; Jens R. Clausen; Sonia Munoz; Bakar Ould-Abdallah; Sharmini Coorey
  12. Central Bank Quasi-Fiscal Losses and High Inflation in Zimbabwe: A Note By Sonia Munoz

  1. By: Siv Gustafsson (Universiteit van Amsterdam); Seble Worku (Universiteit van Amsterdam)
    Abstract: Teenage motherhood is very high in South Africa. In 2001, 55 per thousand African South African women and 82 per thousand Coloured South African women were teenage mothers as compared to 8 among Indian South Africans and 3 among White South African women. In this paper we use the South African General Household Survey data of 2002 with complete retrospective fertility history to study teenage childbearing and a number of outcomes in 2002 such as completed high school and satisfaction with life. Our main findings are that teenage childbearing is negatively correlated with completing high school, but most other outcome measures do not show the negative effects from teenage motherhood as has been found in many previous US and UK studies. We estimate a bivariate probit model on the joint determination of the probability of teenage motherhood and completing high school, identifying by abortion rates and the numbers of doctors and nurses by region.
    Keywords: Teenage motherhood; high school completion; endogeneity; bivariate probit; South Africa
    JEL: D1 J1
    Date: 2007–02–15
  2. By: Ramos Mabugu; Margaret Chitiga
    Abstract: South Africa has undergone significant trade liberalization since the end of apartheid. Average protection has fallen while openness has increased. However, economic growth has been insufficient to make inroads into the high unemployment levels. Poverty levels have also risen. The country's experience presents an interesting challenge for many economists that argue that trade liberalization is pro-poor and pro-growth. This study investigates the short and long term effects of trade liberalization using a dynamic microsimulation computable general equilibrium approach. Trade liberalization has been simulated by a complete removal of all tariffs on imported goods and services, and by a combination of tariff removal and an increase of total factor productivity. The main findings are that a complete tariff removal on imports has negative welfare and poverty reduction impacts in the short run which turns positive in the long term due to the accumulation effects. When the tariff removal simulation is combined with an increase of total factor productivity, the short and long run effects are both positive in terms of welfare and poverty reduction. The mining sector (highest export orientation) is the biggest winner from the reforms while the textiles sector (highest initial tariff rate) is the biggest loser. African and Colored households gain the most in terms of welfare and numbers being pulled out of absolute poverty by trade liberalization.
    Keywords: Sequential dynamic CGE, microsimulation, trade liberalization, total factor productivity, poverty, welfare, growth, South Africa
    JEL: D58 E27 F17 I32 O15 O55
    Date: 2007
  3. By: Jan-Peter Olters
    Abstract: Buoyant oil prices have allowed oil-producing countries in sub-Saharan Africa (SSA OPCs) to increase oil exports and fiscal revenues, providing them with resources necessary to address the pressing social needs. To preclude another boom-bust cycle, this paper advocates the definition of a fiscal benchmark anchored in sustainability grounds, following Leigh- Olters (2006). The difference between current primary deficits and those that could be maintained after oil reserves are exhausted represent an indication of the degree to which fiscal positions will have to be adjusted-either gradually, while the overall balances remain in surplus, or abruptly, once oil revenues begin to dwindle.
    Date: 2007–05–04
  4. By: Mark McGillivray; Farhad Noorbakhsh
    Abstract: A large and growing literature addresses the impact of foreign aid on the growth of per capita incomes in recipient countries. While this link is important, given its implications for poverty reduction, an arguably more important link is that between aid and human development, broadly defined. This paper looks at the impact of aid on the Human Development Index (HDI), the best known and most widely used composite measure of national human development achievement. The paper is particularly interested in the impact of conflict on human development and in links between conflict, aid and human development. These relationships are examined in an econometric analysis of 2001 HDI levels in a sample of 94 developing countries. Twenty-six of these countries are conflict-affected. A number of interesting results emerge, many of which are in stark contrast with those reported in the aid-growth literature. The main findings of this analysis are that conflict and aid are negatively associated with HDI levels, and therefore, that aid does not offset the negative impact of conflict on human development. The second of these findings is puzzling, to the extent that it is inconsistent with most findings in the aid effectiveness literature. The paper also finds that aid is neither more nor less effective, in terms of its impact on human development, in conflict scenarios
    Keywords: Aid, Conflict, Human Development, Human Development Index.
    JEL: I31 F35 C21 C43
  5. By: Milu Muyanga; Miltone Ayieko; Mary Bundi
    Abstract: Most of the earlier studies of poverty in Kenya have basically been static in nature. They have attempted to measure household welfare -- incidence, gap and severity -- at a point in time. Such studies are undeniably vital. However, they do not necessarily provide a good indication of welfare stability over time. This study makes an empirical contribution to poverty analysis in Kenya by incorporating poverty dynamics dimension. We first examine poverty dynamics using economic transition matrices. Next, we decompose total poverty into transient and chronic poverty components using transient poverty as censored fluctuation and equally-distributed equivalent poverty gaps approaches for comparison. The latter approach introduces inequality into poverty decomposition. Finally, we establish important correlates of poverty components using quantile-censored and non-parametric regressions. Given the high rural household poverty incidences and the country's limited resources, this study has critical implications for economic policy in Kenya.
    Keywords: Poverty dynamics, chronic poverty, transient poverty, transition matrices, panel data, inequality, Kenya
    JEL: C23 D31 D63 I30 I32
    Date: 2007
  6. By: Oumar Diop Diagne; Ousmane Faye; Salimata Faye
    Abstract: Partant des limites des instruments classiques dans la mesure de la pauvreté, l'étude introduit le concept de noyau dur pour contourner le problème d'inclusion-exclusion factice, en vue d'un meilleur ciblage des pauvres au Sénégal. Elle s'appuie sur une combinaison d'indicateurs de pauvreté monétaire avec ceux de patrimoine et de privation relative. L'analyse du noyau dur fait ressortir que deux ménages sur 11 manquent de moyens pour faire face à leurs besoins immédiats et éprouvent des difficultés à accéder à des conditions de vie adéquates. Pire, ces ménages n'ont aucune perspective de sortir de la précarité en raison de la faiblesse de leur capital tant humain que physique. Par ailleurs, contrairement aux travaux antérieurs, l'étude montre une pauvreté sévit plus importante dans les ménages dirigés par des femmes (notamment les divorcées et veuves) ou par des personnes de faible qualification professionnelle.
    Keywords: Pauvreté, indicateur monétaire, pauvreté relative, patrimoine, noyau dur, Sénégal
    JEL: I31 I32 O55
    Date: 2007
  7. By: Manson Nwafor; Adeola Adenikinju; Kanayo Ogujiuba
    Abstract: The study examines the effects that trade liberalization will have on poverty in Nigeria. Previous studies have been limited by static and partial equilibrium analysis. We use a Dynamic Computable General Equilibrium Model to analyze this issue. The more favorably affected sectors are capital intensive; therefore, capital income improves over time while land and labor income reduce. This has positive implications for urban households and negative implications for rural households due to the dependence of the latter on mostly land and labor income. As a result, urban poverty decreases in the short and long run while rural poverty increases in both periods. Policies to improve the agricultural sector will thus have to be implemented before or concurrently with trade liberalization in order for it to have a pro-poor effect. In this way, the rural areas which obtain most of their income from this sector will respond more positively to trade liberalization.
    Keywords: CGE Model, Trade liberalisation, Nigeria, Poverty, Dynamic, ECOWAS, Import tariffs
    JEL: D58 F13 I32 C68
    Date: 2007
  8. By: Luis Angeles; Kyriakos C Neanidis
    Abstract: We study the importance of the local elite as a determinant of the effectiveness of foreign aid in developing countries. An "extractive" elite will misuse aid flows, an issue that is probably as old as foreign aid itself. We proxy for the existence of an "extractive" elite by using an historically determined variable: the percentage of European settlers in colonial times. Our econometric results clearly show the importance of this factor and its robustness to a wide set of alternative aid-growth relationships advanced in the literature.
    Keywords: Foreign aid; Elite; Economic growth
    JEL: C23 F35 F43 O11
  9. By: James Cassing; Saad Nassar; Gamal Siam; Hoda Moussa
    Abstract: . . .
    Date: 2007–05
  10. By: Joe Crowley
    Abstract: This paper examines interest rate spreads in English-speaking African countries. Higher spreads were found to be associated with lower inflation, a greater number of banks, and greater public ownership of banks. Higher deposit interest rates were found to be associated with lower interest rate spreads, but higher net interest margins. A large increase in spreads in the late 1980s and 1990s may be explained by a strengthening of financial sector supervision. Limited data suggested that poor governance, weak regulatory frameworks and property rights, and higher required reserve ratios are associated with higher spreads.
    Date: 2007–05–01
  11. By: Norbert Funke; Jens R. Clausen; Sonia Munoz; Bakar Ould-Abdallah; Sharmini Coorey
    Abstract: Zimbabwe has currently the highest rate of inflation in the world (an annual rate of 1,730 percent in February, 2007). The high rates of inflation have contributed to the contraction of the economy, which has declined by about 30 percent since 1999. This paper examines the stabilization experience of countries that experienced similar rates of inflation (above 1,000 percent) during 1980-2005 and draws lessons for Zimbabwe. First, with appropriate stabilization policies, the fall in inflation can be very rapid and output normally recovers within the first year or two of stabilization. Second, while reforms need to be comprehensive, a strong upfront fiscal consolidation, including elimination of quasi-fiscal activities, is a critical element of a successful stabilization program. Third, although stabilization itself can be done without significant external financing in the first year, most countries benefited from external policy advice and technical support, including from the IMF, during stabilization and from an increase in financial assistance in subsequent years.
    Date: 2007–05–01
  12. By: Sonia Munoz
    Abstract: Zimbabwe's failure to address continuing central bank quasi-fiscal losses has interfered with both monetary management and the independence and credibility of the Reserve Bank of Zimbabwe (RBZ). Realized quasi-fiscal losses are estimated to have amounted to about 75 percent of GDP in 2006. Because they were financed by creating money creation or issuing RBZ securities, they contributed to the four-digit inflation reached in 2006. The remedy for the current situation is clearly to eliminate the causes of losses by implementing measures to improve the cash-flow of the bank and restore its financial position.
    Date: 2007–04–27

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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