nep-afr New Economics Papers
on Africa
Issue of 2009‒04‒05
eleven papers chosen by
Quentin Wodon
World Bank

  1. Trends in household coverage of modern infrastructure services in Africa By Banerjee, Sudeshna; Diallo, Amadou; Foster, Vivien; Wodon, Quentin
  2. Local sources of financing for infrastructure in Africa : a cross-country analysis By Irving, Jacqueline; Manroth, Astrid
  3. Micro evidence of the brain gain hypothesis: The case of Cape Verde By Catia Batista; Aitor Lacuesta; Pedro Vicente
  4. The Economic Rationale for Agricultural Regeneration and Rural Infrastructure Investment in South Africa By NG Meyer; MC Breitenbach; TI Fényes; A Jooste
  5. Teacher pay in South Africa: How attractive is the teaching profession? By Paula Armstrong
  6. Is low coverage of modern infrastructure services in African cities due to lack of demand or lack of supply ? By Wodon, Quentin; Banerjee, Sudeshna; Diallo, Amadou Bassirou; Foster, Vivien
  7. Wage subsidy and labor market flexibility in south Africa By Go, Delfin S.; Kearney, Marna; Korman, Vijdan; Robinson, Sherman; Thierfelder, Karen
  9. Participation by men and women in off-farm activities: An empirical analysis in rural northern Ghana By McCarthy, Nancy; Sun, Yan
  10. Small businesses in south Africa : who outsources tax compliance work and why ? By Coolidge, Jacqueline; Ilic, Domagoj; Kisunko, Gregory
  11. Mesure de la performance des banques dans une zone d'ancrage monétaire: cas de la France et des pays de l'UMOA By Sandrine Kablan

  1. By: Banerjee, Sudeshna; Diallo, Amadou; Foster, Vivien; Wodon, Quentin
    Abstract: Household surveys have long been used to estimate poverty and inequality trends, as well as trends in education and health indicators, but they have not been used to the same extent to assess trends in the access to or coverage of modern infrastructure services. In this paper, we use Demographic and Health Surveys from a larger sample of sub-Saharan African countries in order to collect comparable information across countries on coverage of piped water, flush toilets, electricity, and landline telephones over time. The results suggest that coverage rates for electricity, flush toilets have improved slightly over the last decade. Coverage of piped water has declined, at the same time as coverage of landline (as well as cellular) telephone has increased rapidly. The decline has been primarily in the urban areas while the infrastructure coverage has either increased or remained stable in rural Africa. For all four services, among the poorest households coverage remains virtually inexistent. If business as usual continues, it would take a very long time to reach universal or widely shared coverage even in countries where coverage has improved. These results point to the need to increase efforts by governments and international community to progressively increase access to modern infrastructure services in Africa.
    Keywords: Town Water Supply and Sanitation,Population Policies,Urban Water Supply and Sanitation,Urban Slums Upgrading,Urban Services to the Poor
    Date: 2009–03–01
  2. By: Irving, Jacqueline; Manroth, Astrid
    Abstract: With the exception of South Africa, local financial markets in sub-Saharan Africa remain underdeveloped and small, with a particular dearth of financing with maturity terms commensurate with the medium- to long-term horizons of infrastructure projects. But as financial market reforms gather momentum, there is growing awareness of the need to tap local and regional sources. Drawing on a comprehensive new database constructed for the purpose of this research, the paper assesses the actual and potential role of local financial systems for 24 African countries in financing infrastructure. The paper concludes that further development and more appropriate regulation of local institutional investors would help them realize their potential as financing sources, for which they are better suited than local banks because their liabilities would better match the longer terms of infrastructure projects. There are clear signs of positive change: private pension providers are emerging in Africa, there is a shift from defined benefit toward defined contribution plans, and African institutional investors have begun taking a more diversified portfolio approach in asset allocation. Although capital markets remain underdeveloped, new issuers in infrastructure sectors-particularly of corporate bonds-are coming to market in several countries, in some cases constituting the debut issue. More than half of the corporate bonds listed at end-2006 on these countries'markets were by companies in infrastructure sectors. More cross-border listings and investment within the region-in both corporate bonds and equity issues-including by local institutional investors, could help overcome local capital markets'impediments and may hold significant promise for financing cross-country infrastructure projects.
    Keywords: Debt Markets,,Banks&Banking Reform,Access to Finance,Emerging Markets
    Date: 2009–03–01
  3. By: Catia Batista (Trinity College Dublin); Aitor Lacuesta (Banco de España); Pedro Vicente (Trinity College Dublin)
    Abstract: Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey purposely designed and conducted to answer this specific question for the case of Cape Verde. This is allegedly the African country suffering from the largest "brain drain", despite also having a fast-growing stock of human capital. Our micro data enables us to propose a novel, explicit test of "brain gain" arguments according to which the possibility of own future emigration positively impacts educational attainment in the origin country. The innovative empirical strategy we propose hinges on the ideal characteristics of our survey, namely on full histories of migrants and on a new set of exclusion restrictions. Our results point to a very substantial impact of the “brain gain†channel on the educational attainment of those who do not emigrate. Alternative channels (namely remittances, family disruption, and general equilibrium effects at the local level) are also considered, but do not seem to play an important role. Our findings are robust to the choice of instruments and the empirical model.
    Keywords: Brain drain, brain gain, international migration, human capital, effects of emigration in origin countries, household survey, Cape Verde, sub-Saharan Africa
    JEL: F22 J24 O15
    Date: 2009–02
  4. By: NG Meyer (Development Bank of Southern Africa and Department of Economics, University of Pretoria); MC Breitenbach (Department of Economics, University of Pretoria); TI Fényes (Department of Economics, University of Pretoria); A Jooste (Market and Economic Research Centre, National Agricultural Marketing Council (NAMC), Pretoria & Affiliate Professor, Department of Agricultural Economics, University of the Free State, Bloemfontein)
    Abstract: This paper informs government policy insofar as it relates to the agricultural and rural de- velopment sectors and infrastructure investment within these sectors. The paper first quantfies the role of agriculture in the South African economy. This is done within the context of, inter alia, food security, agriculture's contribution to gross domestic product (GDP), economic link- ages and multipliers with respect to the agricultural sector, as well as agriculture's employment creation and external stabilisation capacity. Investment in the agricultural and rural sectors are then analysed with a view of supporting the argument that agriculture's role in the economy is su¢ ciently important to warrant regenerative strategies, including renewed emphasis on agricul- tural and rural infrastructure investment by South African policy makers. The quantification of the agricultural sector in relation to the total economy and that of agricultural and rural infrastructure investment are investigated against the backdrop of declining government sup- port, increasing production risks due to a variety of exogenous events like climate change, and increasing dynamic trade impacts. In this paper, the authors offer both supporting arguments in terms of current economic policy and recommendations for more decisive policy measures aimed at agricultural regeneration and rural infrastructure investment.
    Date: 2009–03
  5. By: Paula Armstrong (Department of Economics, University of Stellenbosch)
    Abstract: Educational quality is a challenged facing the South African schooling system. It is widely acknowledged that teachers play a central role in the quality of education received by students, and that the quality of teachers is largely dependent on the wage they are offered in the teaching profession. This paper investigates the state of teacher pay in the South African labour market by comparing the remuneration received by teachers with that received by their non-teaching counterparts. Remuneration is compared across educational attainment levels, years of experience and across age groups. A Lemieux Decomposition is used to determine what the distribution of teacher wages would look like if teachers were remunerated according to the same structure as non-teachers. It is found that the teaching profession is relatively unattractive to individuals at the top end of the skills distribution in the South African labour market.
    Keywords: Education, Wage differentials by occupations, Wage level and structure
    JEL: I2 J31
    Date: 2009
  6. By: Wodon, Quentin; Banerjee, Sudeshna; Diallo, Amadou Bassirou; Foster, Vivien
    Abstract: A majority of sub-Saharan Africa’s population is not connected to electricity and piped water networks, and even in urban areas coverage is low. Lack of network coverage may be due to demand or supply-side factors. Some households may live in areas where access to piped water and electricity is feasible, but may not be able to pay for those services. Other households may be able to afford the services, but may live too far from the electric line or water pipe to have a choice to be connected to it. Given that the policy options for dealing with demand as opposed to supply-side issues are fairly different, it is important to try to measure the contributions of both types of factors in preventing better coverage of infrastructure services in the population. This paper shows how this can be done empirically using household survey data and provides results on the magnitude of both types of factors in explaining the coverage deficit of piped water and electricity services in urban areas for a large sample of African countries.
    Keywords: Currencies and Exchange Rates,,Economic Theory&Research,Geographical Information Systems,Markets and Market Access
    Date: 2009–03–01
  7. By: Go, Delfin S.; Kearney, Marna; Korman, Vijdan; Robinson, Sherman; Thierfelder, Karen
    Abstract: In this paper, the authors use a highly disaggregate general equilibrium model to analyze the feasibility of a wage subsidy to unskilled workers in South Africa, isolating and estimating its potential employment effects and fiscal cost. They capture the structural characteristics of the labor market with several labor categories and substitution possibilities, linking the economy-wide results on relative prices, wages, and employment to a micro-simulation model with occupational choice probabilities in order to investigate the poverty and distributional consequences of the policy. The impact of a wage subsidy on employment, poverty, and inequality in South Africa depends greatly on the elasticities of substitution of factors of production, being very minimal if unskilled and skilled labor are complements in production. The desired results are attainable only if there is sufficient flexibility in the labor market. Although the impact in a low case scenario can be improved by supporting policies that relax the skill constraint and increase the production capacity of the economy especially towards labor-intensive sectors, the gains from a wage subsidy are still modest if the labor market remains very rigid.
    Keywords: Labor Markets,Labor Policies,,Economic Theory&Research,Access to Finance
    Date: 2009–03–01
  8. By: Cusmano, Lucia; Morrison, Andrea; Rabellotti, Roberta
    Abstract: From a development perspective an investigation of the changes that have occurred in the wine industry is of particular interest because it provides evidence on how emerging economies have been able to acquire significant shares of the international market in a dynamic sector. Based on novel empirical evidence as well as secondary sources, this paper shows that emerging countries with diverse institutional models and innovation strategies, have been driving the process of technological modernization and product standardization. Newcomers in the wine sector have responded particularly effectively to changes in consumption habits, and in aligning emerging scientific approaches with institutional building efforts and successful marketing strategies.
    Keywords: wine, South Africa, Chile, Italy, emerging economies, Agribusiness, Institutional and Behavioral Economics,
    Date: 2009–03
  9. By: McCarthy, Nancy; Sun, Yan
    Abstract: "Using survey data from the Upper East region of Ghana collected in 2005, the paper evaluates the household- and community-level factors influencing women's and men's decisions to participate in off-farm activities, either in the off-farm labor market or in local community groups, and the relationship with on-farm crop returns. Results indicate that crop returns are not affected by increased labor availability over a certain labor-land ratio. Female participation in off-farm labor markets increases at higher levels of labor availability, but participation in women's groups' only increases as labor scarcity is relaxed at lower levels. Alternatively, male participation in off-farm work increases over all levels of labor availability. Results also indicate that male labor is relatively more productive on-farm versus off-farm than female labor, and, though education increases the likelihood that both women and men will work off-farm (with no impact on crop revenues), the impact is greater for women. Finally, participation in off-farm work does not appear to be driven by the need to reduce exposure to risk or to manage risk ex post; wealthier households located in wealthier communities are more likely to participate in off-farm work. Evidence for participation in groups and risk is more complicated; wealthier households in wealthier communities are also more likely to participate, but so too are female-headed households with higher dependency ratios." from authors' abstract
    Keywords: Off-farm labor supply, Participation, Community groups, Gender, Land management, Poverty reduction,
    Date: 2009
  10. By: Coolidge, Jacqueline; Ilic, Domagoj; Kisunko, Gregory
    Abstract: The authors use firm-level survey data on 998 small and medium enterprises registered for tax in South Africa regarding tax compliance costs to investigate the use of outsourcing to complete tax compliance tasks. Overall, about 43 percent of the enterprises do all their tax compliance work in-house, 11 percent outsource all their tax compliance work, and the remaining 46 percent use a combination of both ("partial outsourcing"). The data display an inverted-U shape for outsourcing of tax compliance tasks: the smallest firms (those under R 300,000 turnover or well under US$50,000) tend not to outsource, due to a combination of relatively higher cost-burden and less complexity. Relatively larger firms (those with more than R 14 million turnover or about US$2 million) report that they have sufficient in-house capacity and therefore do not need to outsource. Those in the middle are most likely to outsource at least some of their tax compliance work, mostly because tax is a specialist field and they presumably lack sufficient capacity in-house. The survey data show that the costs of tax compliance are clearly the highest for those who engage in partial outsourcing, as it appears there is likely duplication of effort. Most such firms could reduce their tax compliance costs (and probably minimize the incidence of post-filing problems) by moving from partial to full outsourcing of all tax compliance work.
    Keywords: Taxation&Subsidies,Emerging Markets,Debt Markets,E-Business,Tax Policy and Administration
    Date: 2009–03–01
  11. By: Sandrine Kablan
    Abstract: Our study aims at measuring banking system efficiency for France and WAMU, by isolating environmental specificities to each region. Our results show that the two banking systems have quite close efficiency scores about 80%. As their french counterparts, WAMU banks are efficient; however this assertion is true in regarding the environment in which they evolve. Indeed, those banks transform collected deposits in short term loans or loans to big foreign corporations, that they are sure to recover lent amounts. This situation has the following effect: a significant part of entreprises (smal and medium ones) are under funded. The comparison of the two banking systems lead us to suggest that monetary and financial authorities implement reforms. Those reforms inspired by french ones and adapted to the WAMU specificity and environement, would help the banking system of the zone to effectively play its financial intermediary role.
    Keywords: anchorage monetary zone, banking efficiency, stochastic frontier analysis
    JEL: G21 O16 O18 P17 P52
    Date: 2009

This nep-afr issue is ©2009 by Quentin Wodon. 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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