nep-afr New Economics Papers
on Africa
Issue of 2008‒04‒21
ten papers chosen by
Suzanne McCoskey
George Washington University

  1. Capture and Corruption in Public Utilities: the Cases of Water and Electricity in Sub-Saharan Africa By AURIOL, Emmanuelle; BLANC, Aymeric
  2. Africa: A New Frontier for Emerging Markets? By Javier Santiso
  3. From Old-Donor Debt Relief to Emerging Lenders in Africa By Helmut Reisen
  4. Poverty Dynamics, Violent Conflict and Convergence in Rwanda By Patricia Justino; Philip Verwimp
  5. Prudent versus Imprudent Lending to Africa: From debt relief to emerging lenders By Helmut Reisen; Sokhna Ndoye
  6. A New-Keynesian DSGE Model for Forecasting the South African Economy By Guangling (Dave) Liu; Rangan Gupta; Eric Scaling
  7. Prices, Unit Values and Local Measurement Units in Rural Surveys: an Econometric Approach with an Application to Poverty Measurement in Ethiopia By Bart Capéau; Stefan Dercon
  8. Microfinance in Nigeria and the prospects of introducing its Islamic version there in the light of selected Muslim countries' experience By Mohammed, Aliyu Dahiru; Hasan, Zubair
  9. Changes in Poverty in Rural Ethiopia 1989-1995: Measurement, Robustness Tests and Decomposition By Stefan Dercon; Pramila Krishnan
  10. Health in Rural Tanzania: The Determinants of Health Status, Health Care Demand and Health Care Choice By Ilse Frederickx

  1. By: AURIOL, Emmanuelle; BLANC, Aymeric
    Date: 2008–01
  2. By: Javier Santiso
    Abstract: Fast-growing African countries are attracting private equity and risk capital as never before. The conditions attracting private investors are likely to improve.
    Date: 2007–12
  3. By: Helmut Reisen
    Abstract: China helps growth and debt sustainability in Africa through debt relief, infrastructure investment and higher exports. China and other emerging lenders should engage in a debt transparency initiative that considers such growth effects. This will encourage emerging lenders to co-operate with the ‘international community’ on Africa’s debt sustainability.
    Date: 2008–01
  4. By: Patricia Justino (Institute of Development Studies at Sussex); Philip Verwimp (DIW Berlin)
    Abstract: Civil war and genocide in the 1990-2000 period in Rwanda - a small, landlocked, densely populated country in Central Africa - have had differential economic impacts on the country’s provinces. The reasons for this are the death toll of the genocide, the location of battles, the waves of migration and the local resurgence of war. As a result, the labour/land and labour/capital ratios at the provincial level changed considerably during that period. Using two cross-sections, we find empirical evidence for convergence between provinces following the conflict shocks: previously richer provinces in the east and in the north of the country experienced lower, even negative, economic growth compared to the poorer western and southern provinces. This has in turn affected significantly the dynamics of household poverty in Rwanda in the same period. Using a small but unique panel of households surveyed before and after the conflict period, we find that households whose house was destroyed or who lost land ran a higher risk of falling into poverty. This was particularly the case for households who were land-rich before the genocide. We do not find this for the loss of household labour. In the latter case the effect depends on the violent or non-violent character of the loss.
    Keywords: Conflict, poverty, Africa, panel data
    JEL: C33 I32 O55
    Date: 2008
  5. By: Helmut Reisen; Sokhna Ndoye
    Abstract: Over recent years, a number of emerging creditors have increased their aid and lending to Africa’s Low-Income Countries (LICs). This has fed worries that new official lenders may be undoing years of international efforts to rein in over-indebtedness in Africa, to reduce the continent’s exposure to foreign-currency denominated debt and to encourage good governance by making loans conditional on political and economic reforms. These worries are reflected in the G8 Action Plan for Good Financial Governance in Africa, which attempts to include emerging lenders in the DSF framework — the Joint Bank-Fund Debt Sustainability Framework. The empirical analysis of debt dynamics distinguishes three country groups: African HIPC, HIPC-China (High China Presence), and Resource-rich IDA-only. All groups display marked trends of lower debt ratios (in net present value terms, NPV), in most cases below debtdistress level for even the lowest governance groups. Evidence on links between growth and lending may even suggest that African HIPC are currently under-leveraged. Generally, there is very little evidence of “imprudent lending” to debt relief beneficiaries in the figures up to 2006. The Asian giants lower debt ratios a little through debt relief, but they do this even more through stimulating exports and growth. This holds in particular for those countries towards which their lending is mostly directed: the resource-rich countries, rather than the debt-relief beneficiaries. <BR>Ces dernières années, un certain nombre de créanciers émergents ont accru leurs aides et leurs prêts en faveur des pays d'Afrique à faible revenu (LIC). On s'est dès lors inquiété que ces nouveaux prêteurs officiels puissent défaire des années d'efforts internationaux dans le but de ralentir le surendettement en Afrique, réduire l'exposition du continent aux devises étrangères ainsi qu'à la dette en question et encourager une bonne gouvernance en faisant de sorte que les emprunts dépendent des réformes politiques et économiques. Ces inquiétudes transparaissent dans le plan d'action du G8 qui vise une bonne gouvernance financière et tente d'inclure ces nouveaux prêteurs dans le cadre du CSD : le « Cadre de soutenabilité de la dette du FMI et de la Banque Mondiale ». Malheureusement, la DSF n'a pas exactement le profil pour ce type de situation : elle encourage à indiquer dans une moindre mesure les nouveaux prêts, doit s'attacher à des indicateurs opaques de gouvernances diverses, ne parvient pas à atteindre les déterminants économiques généraux de la viabilité de la dette et n'arrive pas à prendre en considération les versements et les biens publics dans ses analyses sur la viabilité de la dette. L'analyse concrète des dynamiques de la dette distingue trois types de pays : les PPTE africains, les PPTE chinois (pays à forte présence chinoise) et les pays emprunteurs d'IDA uniquement riches en ressources. Tous affichent des tendances claires de faibles taux de dette (en termes de valeur actualisée nette, VAN) et se trouvent dans la plupart des cas, sous un niveau de détresse lié à la dette et cela même pour les pays issus du groupe aux plus faibles gouvernances. Cette indication sur des liens entre la croissance et les prêts semblerait même indiquer que les HIPC africains sont actuellement sous exploités. En général, il y a peu d'indications quant aux « prêts imprudents » sur les bénéficiaires de soulagement de la dette dans les chiffres allant jusqu'en 2006. Les géants asiatiques réduisent légèrement les taux de dette grâce à des soulagements de la dette, mais surtout grâce à une croissance et une exportation stimulée. Ceci vaut en particulier pour tous ces pays dont les prêts sont le plus souvent destinés aux pays riches en ressources que ceux bénéficiaires d'un soulagement de la dette.
    Keywords: debt, dette
    JEL: F21 F34 F35
    Date: 2008–02–22
  6. By: Guangling (Dave) Liu (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Eric Scaling (Department of Economics, University of Pretoria)
    Abstract: This paper develops a New-Keynesian Dynamic Stochastic General Equilibrium (NKDSGE) Model for forecasting the growth rate of output, inflation, and the nominal short-term interest rate (91-days Treasury Bills rate) for the South African economy. The model is estimated via maximum likelihood technique for quarterly data over the period of 1970:1-2000:4. Based on a recursive estimation using the Kalman filter algorithm, the out-of-sample forecasts from the NKDSGE model are then compared with the forecasts generated from the Classical and Bayesian variants of the Vector Autoregression (VAR) models for the period 2001:1-2006:4. The results indicate that in terms of out-of-sample forecasting the NKDSGE model outperforms both the Classical and the Bayesian VARs for inflation, but not for output growth and the nominal short-term interest rate. However, the differences in the RMSEs are not significant across the models.
    Keywords: New-Keynesian DSGE Model; VAR and BVAR Model; Forecast Accuracy
    JEL: E17 E27 E32 E37 E47
    Date: 2008–04
  7. By: Bart Capéau; Stefan Dercon
    Abstract: For many research problems in developing countries, some information on prices faced by households is required, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, and at times they are not easily observed, for example if markets are thin and systematic price information can only be observed from markets some distance away from communities. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data, using data from rural Ethiopia to illustrate the approach. In an application, we show that the conclusions about poverty changes over time are significantly affected by using alternative strategies to convert local units and to value subsistence consumption. We find in our case that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to give slightly lower values than our estimates.
    Keywords: household surveys, unit values, subsistence consumption, local measurement units, poverty
    JEL: D4 I3 R2
    Date: 2008–03
  8. By: Mohammed, Aliyu Dahiru; Hasan, Zubair
    Abstract: Today widespread poverty is one of the major problems of mankind and its alleviation one of her major agendas. In recent years microfinance has emerged as an important instrument to relieve poverty in the developing countries. Today there are more than 7000 micro lending institutions providing loans to more than 25 million poor individuals across the world, their vast majority being the women. However these institutions face some serious challenges, especially in less developed countries where the proportion of people in poverty is high. The existing microfinance in Nigeria serves less than 1 million people out of 40 million being the potential number that need the service. Also, the aggregate micro credit facilities in Nigeria, account for about 0.2 percent of the GDP and is less than one percent of total credit in the economy. Addressing this situation inadequately would further accentuate the problem and slow down growth and development of the country. We find that the microfinance institutions charge interest rate as high as up to 100% for lending and pay as low as 5% on savings. This aggravates the existing inequalities in the distribution of wealth and income in Nigeria. Finally, Nigeria being a country with a Muslims majority, represents a potential for Islamic microfinance especially that most Muslims reject the conventional interest based micro financing, which is not tailored in line with their faith. This might cause failure of government project to combat poverty in the country through micro financing. Under the circumstance Islamic micro financing has potential to serve the country better. The paper has relied on the sources of Shari`ah law, secondary data from journals, periodicals, conference proceedings, text book , internet search and other sources of published data to support the argument.
    Keywords: Microfinance; Islam; Nigeria
    JEL: E51
    Date: 2008
  9. By: Stefan Dercon; Pramila Krishnan
    Abstract: Assessing changes in poverty levels over time is bedevilled by problems in questionnaire design, the choice of the poverty line, the exact timing of the survey and uncertainty about the appropriate cost-of-living deflators. In this paper, we focus on testing the robustness of measured changes in poverty to these common problems, using household panel data collected in rural Ethiopia in 1989, 1994 and 1995: in particular, we implement a simple graphical technique for assessing the impact of uncertainity in measured inflation rates. We find that poverty declined between 1989 and 1994, but remained virtually unchanged between 1994 and 1995. However, the last result disguises substantial seasonal fluctuations in 1994. We also find that households with substantial human and physical capital, and better access to roads and towns have both lower poverty levels and are more likely to get better off over time. Human capital and access to roads and towns also reduce the fluctuations in poverty across the seasons.
    Date: 2008–03
  10. By: Ilse Frederickx
    Abstract: In Tanzania, health statistics have shown slow improvement, although spending on health services in Tanzania is quite high. Defining the determinants of both health status and health use is interesting to point out possibilities for policy. Using household data of the rural Tanzanian mainland, one indicator of health status, the incidence of illness, is examined here and three health demand variables, the incidence of treatment, the level and the provider of treatment. For health outcome as well as health demand, the importance of household income in Tanzania is striking. A positive cross-effect of education on health could not be identified, except for rich Tanzanians. Distance to the nearest health facility does not matter for the poorest patients. Although the measurement of quality is problematic, the quality of the lower level medical care is found to have a positive impact on health status and on health demand, more specifically the nonwage component of quality. These results indicate that the introduction of cost recovery schemes in the Tanzanian health system may have perverse effects, if not combined with a price differentiation according to income and an improvement of quality of health facilities.
    Date: 2008–03

This nep-afr issue is ©2008 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.