nep-afr New Economics Papers
on Africa
Issue of 2007‒11‒03
fourteen papers chosen by
Suzanne McCoskey
George Washington University

  1. The role of agriculture in development: implications for Sub-Saharan Africa By Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
  2. China-Africa’s Emerging Economic Links: A review under the Core-Periphery perspective By Maswana, Jean-Claude
  3. FDI and Economic Growth: Evidence from Nigeria By Adeolu B. Ayanwale
  4. Implications of Rainfall Shocks for Household Income and Consumption in Uganda By John Bosco Asiimwe; Paul Mpuga
  5. Monetary Policy Operations of Debtor Central Banks in MENA Countries By Schnabl, Gunther; Schobert, Franziska
  6. Fiscal Management of Scaled-Up Aid By Richard Allen; Isabell Adenauer; Kevin Fletcher; Sanjeev Gupta; Duncan Last; Gerd Schwartz; Shamsuddin Tareq
  7. International support for the realisation of children's rights: aid modalities and accountability in reporting, and a review of aid for basic social services By Eva Jespersen; Julia Benn
  8. The Economic Impact of Medical Migration: an Overview of the Literature By Martine Rutten
  9. Extent and Determinants of Child Labour in Uganda By Tom Mwebaze
  10. Analysis of factors affecting the technical efficiency of arabica coffee producers in Cameroon By Amadou Nchare
  11. Fiscal policy and poverty alleviation: Some policy options for Nigeria By Benneth O. Obi
  12. Macroeconomic and distributional consequences of energy supply shocks in Nigeria By Adeola F. Adenikinju; Niyi Falobi
  13. Family Networks and Orphan Caretaking in Tanzania By Christopher Ksoll
  14. The distribution of expenditure tax burden before and after tax reform: The case of Cameroon By Tabi Atemnkeng Johannes; Atabongawung Joseph Nju; Afeanyi Azia Theresia

  1. By: Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
    Abstract: "This report provides a nuanced perspective on debates about the potential for Africa's smallholder agriculture to stimulate growth and alleviate poverty in an increasingly integrated world. In particular, the paper synthesizes both the traditional theoretical literature on agriculture's role in the development process and discusses more recent literature that remains skeptical about agriculture's development potential for Africa. In order to examine in greater detail the relevance for Africa of both the “old” and “new” literatures on agriculture, the paper provides a typology of African countries based on their stage of development, agricultural conditions, natural resources, and geographic location... More broadly, the paper demonstrates that conventional theory on the role of agriculture in the early stage of development remains relevant to Africa. While the continent does face new and different challenges than those encountered by Asian and Latin American countries during their successful transformations, most African countries cannot significantly reduce poverty, increase per capita incomes, and transform into modern economies without focusing on agricultural development." from Authors' Abstract
    Keywords: Growth-poverty linkages, Smallholders, Poverty alleviation, Agricultural development Africa, Agriculture Economic aspects, Ethiopia, Ghana, Rwanda, Uganda, Zambia,
    Date: 2007
  2. By: Maswana, Jean-Claude
    Abstract: This essay has explored the validity of Marxist dependency theories in the context of the emerging China-Africa trade and economic relations. Whereas dependency theory assumes that economic domination runs across north-south geoeconomic patterns, this discussion has shown that the China-Africa economic links represent a distinct south-south dialectic occurring in an emerging new global economic configuration marked by a technology gap. Therefore, the discussion fails to support the idea that China’s involvement in Africa is of a conventional center-periphery type; which suggests the existence of nonexploitative, tough dependent, trade features. This dependence implies that external factors and decisions (included those related to China) also determine the real level of development in the Africa. Also worth mentioning is that for the first time Africa is drastically shifting its trade pattern away from its colonial framework: it too is becoming linked to a rapidly changing economy. Such a shift means that China’s own constant economic and social structural changes make it easy for Africa to adjust to the emerging new global economic order. At the same time, the China-Africa relationship is marked by unavoidable dialectic tensions like labor and competition issues. Even though synergies can be created by considering China’s legitimate interests in Africa and Africa’s own legitimate rights, no matter how well-intentioned China is, Africa must still generate its own technological capacities and rid itself of its legendary rampant corruption. Thus, both sides must admit that there will be no long-run benefit unless each contributes to the emergence of a new economic configuration that is deeply rooted not in mutual but in common or joint interests.
    Keywords: China; Africa; Dependency theories; Economic Development; Globalization
    JEL: O19 F59
    Date: 2007–10–28
  3. By: Adeolu B. Ayanwale
    Abstract: Most countries strive to attract foreign direct investment (FDI) because of its acknowledged advantages as a tool of economic development. Africa – and Nigeria in particular – joined the rest of the world in seeking FDI as evidenced by the formation of the New Partnership for Africa’s Development (NEPAD), which has the attraction of foreign investment to Africa as a major component. This study investigated the empirical relationship between non-extractive FDI and economic growth in Nigeria and examined the determinants of FDI into the Nigerian economy. Secondary data were sourced from the Central Bank of Nigeria, International Monetary Fund and the Federal Office of Statistics. The period of analysis was 1970–2002. An augmented growth model was estimated via the ordinary least squares and the 2SLS method to ascertain the relationship between the FDI, its components and economic growth. Results suggest that the determinants of FDI in Nigeria are market size, infrastructure development and stable macroeconomic policy. Openness to trade and available human capital, however, are not FDI inducing. FDI in Nigeria contributes positively to economic growth. Although the overall effect of FDI on economic growth may not be significant, the components of FDI do have a positive impact. The FDI in the communication sector has the highest potential to grow the economy and is in multiples of that of the oil sector. The manufacturing sector FDI negatively affects the economy, reflecting the poor business environment in the country. The level of available human capital is low and there is need for more emphasis on training to enhance its potential to contribute to economic growth.
    Date: 2007–04
  4. By: John Bosco Asiimwe; Paul Mpuga
    Abstract: Much of Uganda’s agricultural production activities are rain-fed, meaning that changes in weather conditions have important implications for households’ total agricultural production and wellbeing. This study uses a basic model of household production to assess the impact of rainfall shocks (using rainfall variability) on farm income and consumption expenditure and the response of households to such shocks. Pooled cross sectional data of farm households are derived from the Uganda National Household Surveys for 1992/93, 1999/2000 and 2002/03, which provide a rich source of information on individual and household characteristics (size, age, sex, education, employment, etc.), household income, expenditure, and exposure to risk/shocks. Rainfall statistics are obtained from various issues of the Statistical Abstracts and the Background to the Budget. We show that rainfall shocks have important implications for both income and consumption of households, with strong policy implications towards cushioning agricultural households. Higher than average rainfall in the first planting and first harvest seasons is found to result in lower incomes and consumption. Given that about 40% of Uganda’s total output is obtained from rain-fed agriculture, the impact of rainfall variability on household welfare has important implications for national income. It is also noted that other factors such as ownership of land, education of the household head and household size are important in the determination of household welfare. Community characteristics such as access to electricity, markets and infrastructure in general play a very important role in the welfare of agricultural households. Programmes to protect households against rainfall shocks such as irrigation schemes, storage facilities for dry produce, staggered planting and crop diversification can provide helpful avenues to reduce income variability among agricultural households. In order to reduce welfare variability and poverty in general, it is necessary to continue the focus on education and targeting of poor and vulnerable households in terms of access to education, health care and other welfare programmes. Access to land has strong implications for both income and consumption - households with access to larger land areas are likely to have higher incomes and higher consumption expenditures - suggesting that land policies to improve access are needed so as to enhance incomes of agricultural households.
    Date: 2007–07
  5. By: Schnabl, Gunther; Schobert, Franziska
    Abstract: The paper analyses the monetary policy operations of central banks in the Middle East and North Africa (MENA). We distinguish the pattern of monetary policy operations of the liquidity providing central banks of the large industrialized countries (creditor central banks) and the liquidity absorb-ing central banks of emerging market economies (debtor central banks). Many debtor central banks provide liquidity through foreign exchange intervention in reaction to foreign exchange inflows. If the respective liquidity expansion is regarded as a threat to domestic price and financial stability, liquidity is partly absorbed through sterilization operations. The paper finds that most MENA coun-tries are debtor central banks due to a general pattern of excessive liquidity creation as well as due to country specific reasons.
    Keywords: Emerging Markets; Debtor Central Banks; Foreign Exchange Inflows; Sterilization.
    JEL: F31
    Date: 2007–10
  6. By: Richard Allen; Isabell Adenauer; Kevin Fletcher; Sanjeev Gupta; Duncan Last; Gerd Schwartz; Shamsuddin Tareq
    Abstract: This paper discusses the role of fiscal policy and fiscal institutions in managing scaled-up aid. In an environment of volatile scaled-up aid, fiscal policy formulation should be anchored in medium-term frameworks, incorporating a longer-term view of potential resource availability and spending plans. There is merit in smoothing expenditures over time so that all programs are adequately funded. The paper argues that wage-bill ceilings should be used in Fund-supported programs only in exceptional cases. The paper also discusses basic reforms for strengthening public financial management systems for effective utilization of scaled-up aid flows.
    Keywords: Working Paper , Development assistance , Fiscal policy , Public finance , Government expenditures , Fund policies ,
    Date: 2007–09–19
  7. By: Eva Jespersen; Julia Benn
    Abstract: The paper reflects on the potential of the OECD DAC creditor reporting system to systematically capture flows of official development assistance (ODA) in support of realising children’s rights. The growth in modalities for delivering aid, including sector programmes, SWAP’s, dedicated funds which encompass public-private partnerships such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, as well as the OECD-DAC commitment to promote harmonization and simplification in provision of ODA and promote government ownership through general budget support raises challenges to assessing ODA for children. The question also needs asking whether singling out and measuring direct assistance to children is meaningful. The paper goes on to analyse ODA trends for basic social services. It shows that ODA to basic social services as a proportion of total ODA has been on an upward trend during the 1995-2004 period, particularly since 2000, the year in which the Millennium Summit set out the Millennium Agenda including the Millennium Development Goals (MDGs) and further boosted by the Monterrey Conference on financing for Development. It shows that ODA to combat HIV and address AIDS infections has increased rapidly since 2000, but does not alone explain the overall increased aid share for basic social services. The analysis further confirms that social sector programmes and sector wide approaches (SWAP’s) are on the rise but still account only form a small portion of total ODA to basic social services although a number of such programmes are targeted specifically to basic services.
    Keywords: basic services; children's rights; development assistance; reporting obligations;; OECD Countries;
    JEL: F35
    Date: 2007
  8. By: Martine Rutten (Netherlands Ministry of Finance and Erasmus University)
    Abstract: Despite rapid economic and social development of the Maldives, the vulnerability of the island population in terms of poverty remains high. Using household panel data for the period 1997/98 Ð 2004 we show that, although the majority of the poor manages to escape from poverty, a substantial part of the non-poor falls back into poverty at the same time. Using Logit regression analysis, the most influential determinants of escaping household poverty are shown to be: the level of education, participation in community activities, and the proportion of adults employed. Factors that have the largest impact on impeding a poverty escape are: the proportion of household members not working due to bad health, living in the North, and the proportion of female household members. The former two factors, in addition to household size, are also most influential on the odds of falling into poverty. Working in tourism, or the public sector, and taking out a loan to invest are important factors that prevent households from falling into poverty. Policy implications of these results are not only relevant at government level but also at household level. The government may consider paying more attention to the development of the two Northern regions, improve access to good quality education and health care, and further develop (private sector) tourism across the country. Household coping strategies involve investing in education, entering the labour market (especially in tourism and the public sector) and family planning.
    Keywords: medical migration, brain drain, doctor migration, nurse migration
    JEL: F22 I1
    Date: 2007–08
  9. By: Tom Mwebaze
    Abstract: Despite the prevalence and the many dangers associated with child labour, the phenomenon has received the attention of researchers, academicians and policy makers only recently, and not until International Labour Organization (ILO) estimates showed a large and increasing number of working children worldwide. It is now recognized that in order to combat child labour effectively, policies should be grounded in an informed understanding of its causes, roles and implications. This study uses data from the 1992, 1999 and 2002 Uganda National Household Surveys to explore the extent, determinants and forms of child labour in a poor but growing economy. Of note here is that over this period Uganda introduced universal and compulsory primary education. The study highlights the extent, characteristics and determinants of child labour in Uganda and their evolution over the decade. The theoretical framework is a standard household production model that analyses the allocation of time within the household. Using probit and tobit models, we estimate the determinants of child labour for the individual child worker. The results indicate that child labour is still common, widespread and starts at an early age in Uganda, although it has reduced significantly over the years. Education and formal employment of the household head significantly decrease the probability that a child will work. Household welfare is another indicator of child labour, as poor households are more likely to have working children. A comparison of the three data sets reveals an increase in the percentage of children combining work and study over time. Nevertheless, the likelihood of child labour increases with the age of the child. The findings provide important results for informing policies to reduce, and possibly eliminate, child labour in the country.
    Date: 2007–06
  10. By: Amadou Nchare
    Abstract: This study analyses the factors influencing the technical efficiency of arabica coffee farmers in Cameroon. To carry out this analysis, a translog stochastic production frontier function, in which technical inefficiency effects are specified to be functions of socioeconomic variables, is estimated using the maximum-likelihood method. The data used were collected from a sample of 140 farmers during the 2004 crop year. The results obtained show some increasing returns to scale in coffee production. The mean technical efficiency index is estimated at 0.896, and 32% of the farmers surveyed have technical efficiency indexes of less than 0.91. The analysis also reveals that the educational level of the farmer and access to credit are the major socioeconomic variables influencing the farmers’ technical efficiency. Finally, the findings prove that further productivity gains linked to the improvement of technical efficiency may still be realized in coffee production in Cameroon.
    Keywords: Technical efficiency, stochastic production frontier, arabica coffee, Cameroon
    JEL: O13 Q18 C21 R30
    Date: 2007–01
  11. By: Benneth O. Obi
    Abstract: The rise in fiscal policy as a tool of macroeconomic management and the pervasive and widespread inequality in terms of income disparity has renewed interest in the use of fiscal policy in the alleviation of poverty and the reduction of income disparity. This study sets out to examine the potency of fiscal policy as a tool for poverty alleviation. The study uses a static real-side computable general equilibrium model as the framework. Three counterfactual scenarios were examined. These are transfers to the poor household, targeting of government expenditure and import tariff adjustment. The study observed that targeting of government expenditure seems to be the most potent tool for effective poverty reduction. Moreover, tariff adjustment tends to aggravate income disparity/poverty amongst households. In this light, the study proposes that in the quest for poverty reduction in Nigeria, fiscal policy should be designed so that government expenditure is properly focused to ensure that goods required by poor households are provided through public means.
    Date: 2007–02
  12. By: Adeola F. Adenikinju; Niyi Falobi
    Abstract: In spite of its vast oil endowments, Nigeria continues to experience sporadic domestic oil supply shortages. These oil shortages manifest in regular queues at fuel stations that are often empty and in thriving parallel markets that sprout all over the country. The shortages have resulted in huge economic and non-economic costs to the economy. This study investigates the causes of the shortages and provides quantitative estimates of the economic costs to the Nigerian economy using a survey and a computable general equilibrium (CGE) model. The findings from this study show very clearly that oil sector supply shocks are costly both directly and indirectly. Oil supply shocks result in lower real GDP, higher average prices and greater balance of payment deficits. Other macroeconomic variables such as private consumption, investment, government revenue and employment also decline. In addition, the distributional impact of the quantitative energy supply shocks is higher for poor households than rich households. We also find that the sectoral impacts are mixed, often depending on the oil intensity of the sector. Finally, our survey results show that many economic agents on the demand side are willing to pay higher prices if that will guarantee a stable oil supply. Few players in the market chain benefit from supply disruptions, while consumers and the poor bear the main burden of these shocks.
    Date: 2006–12
  13. By: Christopher Ksoll
    Abstract: This paper studies the effects of orphanhood on health and education outcomes of children in Tanzania. Using an original dataset on members of the extended family networks of orphaned children, I assess by how much the effects of orphanhood are reduced due to a systematic placement of the orphans within the family network. I find that orphanhood has significant negative impacts on female orphans` welfare in terms of health and education, not however for male orphans. I then provide evidence that the selection of caretakers reduces the negative impact of orphanhood on years of education by one year relative to caretaking by the average family within the family network.
    Keywords: Orphans, Extended Family, Caregiving, Tanzania
    JEL: O15 D10 I3 J12
    Date: 2007
  14. By: Tabi Atemnkeng Johannes; Atabongawung Joseph Nju; Afeanyi Azia Theresia
    Abstract: This paper examines the incidence of indirect taxation in Cameroon in 1983, 1996 and 2001. Using household surveys for these three years, the paper looks into which consumption taxes are progressive and determines if changes in tax policy influenced the welfare of the poor. The paper suggests that the incidence of expenditure taxes changes with the changing economic environment and reveals that the indirect tax reforms of 1994 and 1999 have been generally pro-poor. In the aggregate, consumption taxes became more progressive than before, partly due to changing consumption patterns following the introduction of new taxes or replacement of old ones.
    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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