nep-afr New Economics Papers
on Africa
Issue of 2008‒11‒25
thirteen papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Effect of Income Diversification Strategies on food Insecurity Status of Farming Households in Africa: Result of Analysis from Nigeria By Agbola, P.O.; Awotide, D.O.; IKPI, A.E.; Kormawa, P.; Okoruwa, V.O.; Babalola, D.A.
  2. Determinants of small scale farmers' participation in restructured food markets in South Africa: The case of the Tomato sector By Chikazunga, Davison; Bienabe, Estelle; Louw, Andre
  3. A new methodology for assessing the impact of water-pricing scenarios: case study of small-scale irrigation schemes in South Africa By Speelman, Stijn; Frija, Aymen; Farolfi, Stefano; Buysse, Jeroen; D'Haese, Marijke; D'Haese, Luc
  4. On the Real Exchange Rate Effects of Higher Electricity Prices in South Africa By Jan van Heerden; James Blignaut; Andre Jordaan
  5. The Effect of Market Development On-farm Conservation of Diversity of African Leafy Vegetables around Nairobi By Irungu, C.; Mburu, J.; Maundu, P.; Grum, M.; Hoeschle-Zeledon, I.
  7. Quantifying non-tariff measures in international agricultural trade: a tariff equivalent of technical barriers to trade on African horticultural exports to the European markets By Nimenya, N.; Henry de Franhan, B.; Ndimira, P.F.
  8. EU private agrifood standards in African high-value crops: pesticide use and farm-level productivity By Asfaw, S.; Mithofer, D.; Waibel, H.
  9. The impact of unstable aids on consumption volatility in developing countries By Kodama, Masahiro
  10. Matrix Governance, Cruciform Sovereignty and the Poverty Regime in Africa By Pádraig Carmody
  11. Migration impact on Moroccan unemployment : a static computable general equilibrium analysis. By Fida Karam; Bernard Decaluwé
  12. Consumption Growth and Agricultural Shocks in Rural Madagascar By Thomas, A.-C.; Gubert, F.; de Franhan B., Henry

  1. By: Agbola, P.O.; Awotide, D.O.; IKPI, A.E.; Kormawa, P.; Okoruwa, V.O.; Babalola, D.A.
    Abstract: This study links food insecurity status of farming households in the study area to their income diversification strategies. Data for the study were collected from 400 farming households in Osun State of the southwestern Nigeria. Households were classified into four categories based on how they obtain a living. Descriptive statistics, Cost of Calorie Function (COC) and Analysis of Variance (ANOVA) were used to analyze the data. Income diversification strategies of the households involved €Ӡcombinations of crop production with livestock enterprises; crop production with off farm activities; off farm activities with livestock enterprises and crop production only; at 60.0%, 10.0%, 8.0%, and 22.0% of households respectively. Income diversification strategies have significant influence on food insecurity at x2<0.001. Households that depend more on off farm income ranked the best, having the highest surplus index of 0.71 and the least shortfall index of 0.21 which indicate that the food secure households exceed the calorie requirement by 71% while the food insecure households fell short of the recommended calorie intake by 21%. The head count ratio shows that 82% of individuals in this group are food secure while 18% are food insecure. Households that rely solely on crop production ranked the least. A shortfall index of 0.41 and a surplus index of 0.62 indicate that food insecure households in this group fell short of the recommended calorie intake by 41% while food secure households exceed the calorie requirement by 62%. Head count ratio reveals that 79% of the individuals are food secure while 21% are food insecure. Results have shown that food insecurity among farming households in the study area was influenced by Income diversification strategies.
    Keywords: Diversification, Food, Insecurity, Consumer/Household Economics,
    Date: 2008
  2. By: Chikazunga, Davison; Bienabe, Estelle; Louw, Andre
    Abstract: This paper discusses the effects of markets restructuring on small-scale farmers in South Africa by analysing the determinants of small-scale farmers€٠market choices in the tomato sector in two Provinces. South Africa has a very dualistic agricultural sector with a highly performing large-scale capital intensive agriculture on one hand and a traditional, semi subsistence small-scale communal sector on the other. Small farmers€٠participation in modern markets (i.e. supermarkets, agro-processors and national fresh produce markets) is thus very low. Furthermore, results from our survey indicate that small-scale tomato growers in Limpopo and Mpumalanga provinces prefer supplying informal markets than modern markets. The econometric analysis of household level data indicates that access to land is a key determinant of their participation in modern markets. As confirmed by our survey, smallscale farming systems in South Africa are still very poorly capitalised. While still not being widely used, the key non-land asset variable is whether they can produce under greenhouses, thus supplying consistent quality demanded by the modern local channels. Other factors such as education and location in a good tomato producing area are also significant determinants of participation in modern markets. Interestingly, ownership of a cell phone as well as the number of market channels to which the farmers are connected are significant in determining market choices but they are negatively related to modern markets choice, which is to be related to the different natures of the transactions. Modern markets propose fixed prices or at least very stable prices under some forms of contractual arrangements while informal markets offer relatively flexible prices, price discovery and price risk management (through multiple marketing strategies) thus being much more important. The econometric analysis also shows that supplying modern markets does not improve small-scale farmers€٠income whereas the access to a cell phone does, which supports the importance of the cell phone in price management as well as the preference for informal markets.
    Keywords: Marketing, Restructuring markets, small-scale farmers, market channel choice,
    Date: 2008
  3. By: Speelman, Stijn; Frija, Aymen; Farolfi, Stefano; Buysse, Jeroen; D'Haese, Marijke; D'Haese, Luc
    Abstract: Worldwide growing water scarcity has increased the call for economic instruments to stimulate rational water use in agriculture. In addition costrecovery is now widely accepted as a cornerstone of sustainable water management. As a consequence now in developing countries, where currently agricultural water use is often still heavily subsidized, a tendency exists of introducing water-pricing as a policy to achieve more sustainable water use. The exact impact of water pricing policies on irrigation water use or on the farmers€٠production system is however mostly unknown. A new two-stage methodology that allows estimating at the farm level the effects of introducing or raising a water price on the agricultural production process and water demand is introduced in this study. The first stage comprises the construction of a technical efficiency frontier and the calculation of the technical and allocative efficiency levels of each farm. This representation of the technology is used in the second stage in a profit maximization model. As an example the method is applied to the case of small-scale irrigators in South Africa. It is shown that water demand of farmers is quite responsive even to small changes in the water price. Moreover, the introduction of a water price is shown to significantly decrease farm profit. This appears to be mainly a problem for the poorer farmers.
    Keywords: water-pricing, water savings, irrigation, data envelopment analysis, South Africa, Resource /Energy Economics and Policy,
    Date: 2008
  4. By: Jan van Heerden (Department of Economics, University of Pretoria); James Blignaut (Department of Economics and Econometrics, University of Johannesburg); Andre Jordaan (Department of Economics, University of Pretoria)
    Abstract: The paper uses a static Computable General Equilibrium (CGE) model of South Africa and simulates various shocks to the price of electricity. We attempt di¤erent closures to the model and compare their respective e¤ects on the Consumer Price Index. In a CGE model, this is measuring the real appreciation of the exchange rate, or international trade competitiveness. In general, we conclude that electricity prices per se does not signi?cantly in?uence the real exchange rate, regardless of which closure is used.
    JEL: D5 E3 H2
    Date: 2008–11
  5. By: Irungu, C.; Mburu, J.; Maundu, P.; Grum, M.; Hoeschle-Zeledon, I.
    Abstract: Production and marketing of African Leafy Vegetables (ALVs) has increasingly become important in areas surrounding Nairobi. This is mainly due to Nairobians’ realization of their nutritional value. ALVs are particularly rich in mineral nutrients and vitamins that are useful in the management of ailments including HIV/AIDS. In addition, these vegetables remain extremely important for overcoming food insecurity and alleviating poverty among the rural and urban populations as they are relatively affordable. Alongside these private uses, ALVs also have a public value which includes maintenance of traditions and culture, and contribution to sustainable development, specifically in the conservation of biodiversity alongside other ecosystem benefits. Despite this importance, little economic analysis has been conducted to assess how onfarm conservation of ALV biodiversity (intra and inter specific) in areas around Nairobi is affected by market development. It is against this background that this paper addresses the following research questions: 1) which varieties are demanded by the market in Nairobi and for what reasons, and 2) what is the effect of market development on on-farm biodiversity of ALVs around Nairobi? To address these research questions, the study uses empirical data derived using both qualitative and quantitative methods. An econometric model was specified to estimate effect of market development and other determinants of ALV biodiversity levels. Results indicate consumers demand only certain ALVs due to the nutritive aspects associated with them. However, the effect of market development on on-farm diversity of intra and inter-specific ALVs species is mixed. While market development in terms of gross sales has no significant effect, spatial dimension of market development reduces intra-diversity of ALVs. The paper concludes by deriving policy implications on conservation of ALVs on farms surrounding Nairobi and its peri-urban areas.
    Keywords: underutilized species, biodiversity, Kenya, Crop Production/Industries, Resource /Energy Economics and Policy,
    Date: 2008
  6. By: Lovo, Stefania
    Abstract: Land and market imperfections shape the organization of agricultural production and lead to different production regimes within rural farm households in South Africa. This paper presents a theoretical model to explain the presence of three main households groups (classes) determined on the basis of the labor regime adopted: small peasants (working both on and off farm), self cultivators (autarkic in labor) and hiring in households. Membership in the three categories is determined by the endogenous shadow wage and the effective market wages. A generalized ordered logit model is used to test the main predictions of the model. Market imperfections, which prevent household from accessing markets, are expected to have different impacts on heterogenous households; in this study, a Brant test on coefficient constancy helps to identify the household specific factors affecting market participation.
    Keywords: farm households, market imperfections, liquidity constraint, Farm Management, Industrial Organization, International Development,
    Date: 2008
  7. By: Nimenya, N.; Henry de Franhan, B.; Ndimira, P.F.
    Abstract: Fresh food and agricultural products from sub- Saharan Africa meet few tariff barriers because of preferential market access granted to ACP countries through Lomé and Cotonou Act. However, non-tariff barriers are still serious impediments to trade. This paper focuses more specifically on technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS) on horticultural exports from Kenya and Zambia to France, Germany, the Netherlands and United-Kingdom. Using an extension of price-wedge method that takes into account imperfect substitution (on demand side) and differences in factor endowments (on supply side), we provide a tariff-equivalent of a wide range of TBT. Preliminary results show that the tariff-equivalent of TBT is very high for Kenyan green beans exports (more than 56%) while it is low for Kenya€ٳ exports of peas and avocados and Zambian exports of peas (less than 10%). However, there are no large differences between EU importing countries.
    Keywords: Armington elasticity of substitution, price-wedge method, tariff-equivalent, International Relations/Trade,
    Date: 2008
  8. By: Asfaw, S.; Mithofer, D.; Waibel, H.
    Abstract: In parallel with changes in official standards, supermarket chains in Europe have developed prescriptive, production-oriented standards, e.g. the European Union Retailers Produce Working Group for Good Agricultural Practices (GlobalGAP), and are asking their suppliers for produce to be certified according to food-safety and quality standards. There are concerns that the proliferation and enhanced stringency of standards that are imposed by highincome countries can negatively affect the competitiveness of producers in developing countries and impede actors from entering or even remaining in high-value food markets. Yet, in some cases, others argue that such standards can play a positive role, providing the catalyst and incentives for the modernization of export supply and regulatory systems and the adoption of safer and more sustainable production practices. This article provides an empirical analysis of EU private food-safety standards impact on pesticide use and farm-level productivity among smallholder export vegetable producers in Kenya. We apply an extended three-stage damage control production framework that accounts for multiple endogeneity problems to farmlevel data collected from a random cross-section sample of 439 small-scale vegetable producers. Estimation results show that export producers complying with private standards significantly use less toxic pesticides; however there is no significant difference on the total quantity of pesticides used. Contrary to findings elsewhere, the econometric evidences here show that export vegetable farmers in Kenya use pesticide below the economic optimum. The third stage structural revenue model results demonstrate a positive and significant impact of standards adoption on revenue of vegetable production. While food safety and quality standards can be a barrier for resource poor smallholders to maintain their position in the lucrative export markets, they can also induce positive changes in production systems of smallscale farmers who adopt it as shown by the results presented. Generally this article partly supports the notion that adoption of emerging food-safety standards can serve as a catalyst in transforming the production systems of developing countries towards safer and more sustainable production.
    Keywords: High-value crops, food-safety standards, productivity, Crop Production/Industries,
    Date: 2008
  9. By: Kodama, Masahiro
    Abstract: In recent years, a large and expanding literature has examined the properties of developing economies with regard to the macroeconomic cycle.1 One such property that is characteristic of developing economies is large fluctuations in consumption. Meanwhile, aid for the low income countries is extremely volatile, and under certain circumstances, the volatile aid amplifies the consumption volatility. This document examines whether it is possible that the volatile aid yields high consumption volatility in African countries that constitute the majority of the low income countries. Our numerical analysis reveals that the strongly influential aid disbursements yield a considerably large fluctuation in consumption.
    Keywords: Africa, Consumption, Economic assistance, Econometric model, Aid, Consumption Volatility, International Macroeconomics
    JEL: E21 E32 F35
    Date: 2008–10
  10. By: Pádraig Carmody
    Abstract: Uneven development and globalization are associated with problems of poverty, resource scarcity, competition and conflict. The solution to these problems often presented by donors is better national, and also global governance: the creation of a governance matrix, prescribing and proscribing sets of actions by particular actors. Matrix governance attempts to regularize social interactions to achieve poverty reduction, but ultimately manages, normalizes and thereby arguably reproduces it without substantively addressing its causes. Structurally, matrix governance represents a horizontal sharing of Northern countries’ sovereignty and power, which is then projected southwards to ensure vertical sovereignty sharing and continued resource extraction; giving sovereignty a global cruciform structure. This undemocratic structure of global governance, and the transnational contract of extroversion between corporations and state elites which underpins it, paradoxically, helps to produce conditions conducive to conflict and corruption, recreating the conditions for its own perpetuation. The paper explores these issues through case studies of the new geopolitical fracture zone in the Chadian-Sudanese borderlands, which is partly the result of competition between Western powers and China for oil, and Equatorial Guinea as a space of exception, deception and occlusion to neoliberal normalization.
    Date: 2008–11–14
  11. By: Fida Karam (Centre d'Economie de la Sorbonne - Paris School of Economics); Bernard Decaluwé (Laval University)
    Abstract: Recently, much research interest is directed towards the impact of migration on the sending country. However, we think that this literature does not successfully analyse the effects of migration on unemployment and wage rates especially in urban areas. It studies the effect of one king of migration flow, mainly international migration, on labour market in the country of origin and shows that international migration is able to reduce the unemployment rate and/or raise the wage rates. However, it is common to find labour markets affected simultaneously by inflows and outflows of workers. Using a detailed CGE model applied to the Moroccan economy, we show that if we take simultaneously into account Moroccan emigration to the European Union, immigration from Sub-Saharan Africa into Moroccan urban areas and rural-urban migration, the impact on Moroccan urban labour market disaggregated by professional categories is ambiguous.
    Keywords: Imperfect labor market, migration, computable general equilibrium model.
    JEL: D24 F14 F0 D92
    Date: 2008–04
  12. By: Thomas, A.-C.; Gubert, F.; de Franhan B., Henry
    Abstract: The aim of this paper is to evaluate the effect of rainfall and agricultural shocks on consumption growth in Madagascar. We are also interested in the impact of local endowments in infrastructures and social services on consumption growth. To achieve this goal, a micro model of household consumption growth is estimated thanks to household panel data collected by the Reseau des Observatoires Ruraux (ROR) between 1999 and 2004. Additional data sources include the 2001 communes census organized by the Ilo program of Cornell University. Altogether these different data sources make an unusually rich data set, at least when considered with developing country standards. We use panel data fixed effect estimation technique to remove unobserved household and community level time invariant heterogeneity. We find that production shocks have a substantial impact on consumption growth and we find sign of persistence of rainfall shocks. Roads and education seems to improve household€ٳ consumption growth and remotness decreases it.
    Keywords: risks, growth, poverty, Food Security and Poverty,
    Date: 2008
  13. By: Speelman, Stijn; Buysse, Jeroen; Frija, Aymen; D'Haese, Marijke; D'Haese, Luc
    Abstract: In South Africa water law has recently changed, adopting the principle of water as an economic good, thus levying charges on its use. For small-scale irrigators this is an important change, because currently their water use is entirely subsidized. In the coming years, subsidies will gradually decrease and an essential expected benefit of this policy change is that water use efficiency will rise, leading to reduced consumption and possible reallocation of the water saved. The exact impact of the water pricing policy on the irrigation water use or on the farmers' production system is however unclear. This study introduces a new methodology, based on data envelopment analysis, that allows estimating the effects on the agricultural production process and water demand of introducing or raising a water price. It is revealed that a large majority of the farmers does not adjust water use. Production costs however were shown to increase significantly.
    Keywords: Production Economics, Resource /Energy Economics and Policy,
    Date: 2008

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