nep-afr New Economics Papers
on Africa
Issue of 2009‒09‒26
eighteen papers chosen by
Quentin Wodon
World Bank

  1. China's growth and the agricultural exports of Southern Africa: By Villoria, Nelson; Hertel, Thomas; Nin-Pratt, Alejandro
  2. Measuring irrigation performance in Africa: By Svendsen, Mark; Ewing, Mandy; Msangi, Siwa
  3. To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa By Alan Gelb; Taye Mengistae; Vijaya Ramachandran; Manju Kedia Shah
  4. Fostering Agricultural Market Development in Zambia. By Gelson Tembo; Antony Chapoto; T.S. Jayne; Michael T. Weber
  5. Factors Influencing the Profitability of Fertilizer Use on Maize in Zambia. By Zhiying Xu; Zhengfei Guan; T.S. Jayne; Roy Black
  6. Does South African Affirmative Action Policy Reduce Poverty? a CGE Analysis By Hélène Maisonnave; Bernard Decaluwé; Margaret Chitiga
  7. Market Labor, Household Work and Schooling in South Africa: Modeling the Effects of Trade on Adults' and Children's Time Allocation By Lulit Mitik; Bernard Decaluwé
  8. Structural Adjustments And Their Effects: Is There A Way Out For Africa? By Ofori, Eunice
  9. Income and Non-Income Inequality in Post-Apartheid South Africa: What are the Drivers and Possible Policy Interventions? By Haroon Bhorat; Carlene van der Westhuizen; Toughedah Jacobs
  10. Fertilizer subsidies in Africa: Are vouchers the answer? By Minot, Nicholas; Benson, Todd
  11. Policy Responses to the Economic Crisis in Africa By Augustin Kwasi Fosu; Naude, Wim
  12. The comparability of Census 1996, Census 2001 and Community Survey 2007 By Derek Yu
  13. Managing future oil revenues in Ghana: An assessment of alternative allocation options By Breisinger, Clemens; Diao, Xinshen; Schweickert, Rainer; Wiebelt, Manfred
  14. Politique éducative et marché du travail en Afrique du Sud. Une analyse en équilibre général calculable dynamique By Hélène Maisonnave; Bernard Decaluwé
  15. Adoption Scale Analysis of Improved Cocoyam Production, Production and Storage Technologies across Gender in Enugu North Agricultural Zone of Enugu State Nigeria By Okoye, B.C; Okoye, A.C; Dimelu, M.U; Agbaeze, C.C; Okoroafor, O.N; Amaefula, A.B
  16. Isomorphism and the Limits to African Public Financial Management Reform By Andrews, Matt
  17. Water use options for regional development. Potentials of new water technologies in Central Northern Namibia By Lux, Alexandra; Janowicz, Cedric
  18. Branding Ghana By Ofori, Eunice

  1. By: Villoria, Nelson; Hertel, Thomas; Nin-Pratt, Alejandro
    Abstract: "The implications of China's growth for the development prospects of Sub-Saharan Africa have been the subject of recent attention. Interest in this topic is motivated by the increasing presence of China in the region and the growing bilateral trade links between China and Africa. Against this background, we herein explore whether China's growth has stimulated agricultural exports in selected countries of Southern Africa, namely, Malawi, Mozambique, Tanzania, the Southern African Custom Union (SACU), and Zambia. We find little complementarity between China's agricultural import demand and the export supply of the focus countries. We also explore whether China affects Southern African agricultural exports through the increases in world agricultural prices associated with China's growing demand for food. We find that although China has moderately increased agricultural prices (in an aggregated sense), Southern African exports do not seem to benefit from these price increases." from authors' abstract
    Keywords: Agriculture, Gravity model, trade, Development strategies,
    Date: 2009
  2. By: Svendsen, Mark; Ewing, Mandy; Msangi, Siwa
    Abstract: "The paper develops indicators to look at the performance of the irrigation sector in Sub-Saharan Africa, where demand for food is high and irrigation has a proven potential to boost levels of agricultural productivity. By looking at six indicator categories—institutional framework, water resource use, irrigation area, irrigation technology, agricultural productivity, and poverty and food security—we assess the potential for improving performance in the agricultural food security sector through increasing irrigation sector investments. The indicators on water resource use indicate ample room for further development of the resource. The share of cultivated area equipped for irrigation in Africa is about a third of the world average and just one-sixth of the value for Asia. The low coverage of irrigation technology and the slow rate of growth in coverage clearly represent a lost opportunity for Africa and a tremendous potential for future investment and policy effort. Finally, African countries produce 38 percent of their crops (by value) from approximately 7 percent of their cultivated land on which water is managed, which again suggests that additional investment in irrigation would pay large benefits. The disproportionate contribution to agricultural production of Africa's small irrigated area suggests that returns on additional investment in irrigation would be high, both in terms of greater food security for the continent and greater production of export-quality agricultural goods." from authors' abstract
    Keywords: Irrigation performance, Agricultural production, Water resources,
    Date: 2009
  3. By: Alan Gelb; Taye Mengistae; Vijaya Ramachandran; Manju Kedia Shah
    Abstract: Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story. Using data from surveys of microenterprises in South Africa, Namibia, Botswana, Kenya, Uganda, Tanzania, and Rwanda, we find that the labor productivity of informal firms is virtually indistinguishable from that of formal firms in East Africa, but very different in Southern Africa. We provide a theoretical model to explain this result, based on the key assumption that firms may evade taxes subject to a cost (or concealment cost) that is increasing and convex in the firm’s employment size. Consequently, the productivity distributions reflect the differences in concealment costs and the opportunity cost of formality. Greater enforcement of laws and better provision of services such as finance and electricity to formally registered firms in Southern Africa means that firms are more likely to register; those that do not are likely to be operating as “survivalist” firms. But in East Africa, weak enforcement of tax payment and no significant difference in access to services between formal and informal firms means that these variables do not explain the allocation of firms across the informal-formal divide. We conclude that in countries with weak business environments, informal firms are just as likely as formal firms to increase their productivity as they grow. Thus, interventions to increase productivity and lower the cost of formality may be helpful. But in countries with strong business environments such as those in Southern Africa, owners of informal firms are likely to be better off entering the labor market as wage labor. In the latter case, investment in education or vocational training is probably more important.
    Keywords: microenterprise; informal sector; Southern Africa; East Africa; formalization; regulations
    Date: 2009–07
  4. By: Gelson Tembo; Antony Chapoto; T.S. Jayne; Michael T. Weber
    Abstract: The availability, access and affordability of food is a highly politicized issue throughout the world. In much of southern Africa, there is a widespread view that governments are responsible for ensuring that their populations have reliable access to food. Zambia, like most countries in Southern Africa, is vigorously pursuing continued direct public sector involvement and protectionist measures in the maize marketing sector. Since 1995, the Food Reserve Agency (FRA) and more recently, subsidies through the Fertilizer Support Program (FSP), have been the major instruments of government policy. While in some respects current operations undertaken by the government are similar to those adopted at independence, there are some noteworthy changes. Specifically, the private sector is no longer barred by statutory measures. In principle, the private sector is now encouraged to perform marketing functions alongside the public sector. However, in practice, the private sector is often prevented from doing so due to government use of discretionary trade policy instruments, such as variable export bans and restrictions, variable import tariff rates, and government import programs.
    Keywords: zambia, food security, agriculture, market development
    JEL: Q13
    Date: 2009–07
  5. By: Zhiying Xu; Zhengfei Guan; T.S. Jayne; Roy Black
    Abstract: Fertilizer use remains very low in most of Africa despite widespread agreement that much higher use rates are required for sustained agricultural productivity growth. This study estimates maize yield response functions in agro-ecological Zone IIA, a relatively high potential zone of Zambia, to determine the profitability of fertilizer use under a range of small farm conditions found within this zone. The theoretical framework used in this study incorporates agronomic principles of the crop growth process. The model distinguishes different roles of inputs and non-input factors in crop production. We estimate the effects of conventional production inputs as well as household characteristics and government programs on maize yield for households in the dominant acrisols soil type. Results indicate that even within this particular soil type within Zone IIA, the maize-fertilizer response rate in the two specific years varied widely across households. The main factors explaining the variability in maize-fertilizer response rates were the rate of application, the timeliness of fertilizer availability, the use of animal draught power during land preparation, and whether the household incurred the death of an adult member in the past three years. These modifying factors, as well as variations in input and output prices due to proximity to roads and markets, substantially affected the profitability of fertilizer use on maize. Fertilizer use on maize tended to be unprofitable at full commercial fertilizer prices for farmers who received fertilizer late and who were located in relatively remote areas.
    Keywords: zambia, maize, fertilizer, profitability
    JEL: Q12
    Date: 2009–06
  6. By: Hélène Maisonnave; Bernard Decaluwé; Margaret Chitiga
    Abstract: This paper presents a computable general equilibrium model (CGEM) able to measure the impacts of the affirmative action policy set up in South Africa. In order to decrease inequalities inherited from the former regime, the government encourages firms to employ Historically Disadvantaged Persons (HDP). Through this study, we evaluate the impact of this policy on employment, poverty and inequality. To evaluate impacts on poverty and inequality, we use a CGE Top Down approach. The paper analyses two scenarios; the first one deals with the impact of affirmative action on skilled jobs. The second scenario adds to the previous by including semi skilled workers in the simulation. Both of these scenarios show a deep decrease in unemployment as well as a fall of poverty for each population groups.
    Keywords: Computable General Equilibrium Model, Top Down Analysis, South Africa, Poverty, Inequality, Labor Market
    JEL: D58 E27 I32 O11 O55
    Date: 2009
  7. By: Lulit Mitik; Bernard Decaluwé
    Abstract: This paper analyzes how economic policies can influence parents’ decisions about their children’s schooling, household work and leisure in South Africa. Using a dynamic computable general equilibrium model that integrates both market and non-market activities, distinguishing male and female workers on the one hand, and adult and child non-market work and leisure on the other, we find that, in the context of trade liberalization, gender inequality is likely to rise between adults and between boys and girls. Furthermore, the paper notes that the increase in adult male and female market labor supply is made possible through the substitution of children for parents in household work, although more so in some groups than others. These effects sustain in the long run.
    Keywords: Household work, market work, child schooling, gender, time-use, trade, CGE model, South Africa
    JEL: C68 D13 F16 J13 J16 J22
    Date: 2009
  8. By: Ofori, Eunice
    Abstract: The IMF and World Bank have over the years gained a stronghold in African economic policies. This is mainly due to the borrowing and lending relationship between the continent and these sister organizations. This paper seeks to address the negative effects that the IMF imposed Structural Adjustment policies have on the struggling economies of African countries and propose a solution to this problem. The paper also seeks to explore possible alternatives to taking IMF, World Bank loans and gives examples of countries who have explored such options successfully.
    Keywords: International Monetary Fund (IMF); the World Bank(WB); Structural Adjustment Programs; loans.
    JEL: F35 F34 H81
    Date: 2009–09–12
  9. By: Haroon Bhorat; Carlene van der Westhuizen; Toughedah Jacobs (Development Policy Research Unit; Director and Professor)
    Abstract: South Africa has historically been ranked as one of the most unequal societies in the world and, while the country has experienced sustained positive economic growth since 1994, the impact of this growth on poverty, and particularly inequality, has been disappointing. Analysis using data from the 1995 and 2000 Income and Expenditure Surveys has found, for example, a significant increase in income inequality over the period and, further, that this increase in inequality eroded any significant poverty-reduction gains from higher economic growth. The release of the Income and Expenditure Survey 2005 enables us to examine changes in inequality over the decade between 1995 and 2005. Some preliminary analysis, however, shows a further increase in inequality over the second half of the period. This new result would possibly suggest that South Africa is now the most consistently unequal economy in the world. Critically, the persistent and increasing levels of inequality have been acting as a constraint ensuring that South Africa’s economic growth results in significant declines in household poverty levels. This study has two main objectives. Firstly, the study aims to identify the drivers of the reproduction of inequality in post-apartheid South Africa. The second objective is to examine what policy levers are available to help mitigate the impact of increased inequality in South Africa. Based on the identification of what is driving the increasing levels of inequality, appropriate policy interventions, including assessing the impact and sustainability of existing policies such as the increased provision of social grants, will be evaluated. We find that not only has income inequality remained high for the period under review, but it has also increased significantly between 1995 and 2005. Throughout the time period wage inequality has been the main contributor to the growing income inequality. For a more holistic representation of inequality, we consider the effect of increased public and private assets on non-income inequality. We find that there has been a universal decrease in non-income inequality in South Africa. We also find that the effect of income inequality has been to dampen growth, specifically pro-poor growth. While we found that social transfers have little effect on income inequality when we decomposed the various sources of income, when grant income is excluded as a source of income from total income we find that it is an extremely important supportive source of income and without it many households would experience negative income growth.
    Keywords: South Africa: income- and non-income inequality,
    JEL: A1
    Date: 2009–08
  10. By: Minot, Nicholas; Benson, Todd
    Abstract: "In the 1970s and 1980s, most African countries sold fertilizer at subsidized prices through state-owned enterprises. In response to the fiscal cost and ineffective implementation of these subsidies, as well as pressure from international financial institutions, almost all of these countries liberalized their fertilizer markets to some degree as part of structural adjustment programs carried out in the late 1980s and early 1990s. Under these reforms, governments eliminated state monopolies on fertilizer distribution and phased out universal subsidies." from text
    Keywords: Fertilizers, subsidies,
    Date: 2009
  11. By: Augustin Kwasi Fosu; Naude, Wim
    Abstract: Africa is the developing region most at risk from the global economic crisis. Its recent strong growth has been interrupted. Already home to the largest number of low-income countries in the world, the region is now likely to experience higher unemployment and poverty; increases in infant mortality; and difficulty coping with longer-lasting effects such as higher school drop-out rates, reductions in health care, environmental degradation and a rise in conflict. Africa therefore needs to recover as quickly as possible. In this policy brief we draw on a number of recent UNU-WIDER studies to discuss the policy options for recovery.
    Keywords: financial crisis, developing countries, development finance, financia
    Date: 2009
  12. By: Derek Yu (Department of Economics, University of Stellenbosch)
    Abstract: Census 1996 and Census 2001 are the only all-inclusive censuses conducted by Statistics South Africa (Stats SA) under the new democratic dispensation, providing information on demographics, educational attainment, migration status, labour market status, economic activities, income, housing, and access to household goods and services. However, when the cabinet took a decision that a census would not be conducted in 2006, a gap in information between Census 2001 and the next Census, which is scheduled to take place in 2011, was created. Later, a decision was taken to conduct the Community Survey (CS) in 2007, which was designed to provide information similar to the two censuses. The aim of this paper is to look at the trends in demographics, educational attainment, labour market status, income and non-income welfare (e.g., housing, access to household goods and services) across the three surveys, using the 10% samples from the 1996 and 2001 censuses as well as the data from the Community Survey 2007. With regard to changes in income welfare, the household income variable was derived differently in each survey. Besides, all three surveys had high proportion of households with zero or unspecified household income, and excluding these households from poverty and inequality analyses would lead to biased results. Hence, sequential regression multiple imputation (SRMI) was applied at both person and household levels to impute values for the households with zero and unspecified income, before the imputed household income values were used to derive per capita income for analyzing poverty and inequality trends across the three surveys. Finally, income welfare and non-income welfare were compared by dividing households into per capita income quintiles.
    Keywords: South Africa, Household survey, poverty, inequality, missing data, imputation
    JEL: J00
    Date: 2009
  13. By: Breisinger, Clemens; Diao, Xinshen; Schweickert, Rainer; Wiebelt, Manfred
    Abstract: "Contemporary policy debates on the macroeconomics of resource booms often concentrate on the short-run Dutch disease effects of public expenditure, ignoring the possible long-term effects of alternative revenue-allocation options and the supply-side impact of royalty-financed public investments. In a simple model applied here, the government decides the level and timing of resource-rent spending. This model also considers productivity spillovers over time, which may exhibit a sector bias toward domestic production or exports. A dynamic computable general equilibrium (DCGE) model is used to simulate the effect of temporary oil revenue inflows to Ghana. The simulations show that beyond the short-run Dutch disease effects, the relationship between windfall profits, growth, and households' welfare is less straightforward than what the simple model of the “resource curse” suggests. The DCGE model results suggest that designing a rule that allocates oil revenues to both productivity-enhancing investments and an oil fund is crucial to achieving shared growth and macroeconomic stability." from authors' abstract
    Keywords: Oil fund, Public expenditures, Growth, Computable general equilibrium (CGE) analysis, Development strategies,
    Date: 2009
  14. By: Hélène Maisonnave; Bernard Decaluwé
    Abstract: Cet article analyse l’impact d’une augmentation des dépenses publiques en éducation sur la performance du système éducatif sud africain et ses conséquences sur le marché du travail en utilisant un Modèle d’Équilibre Général Calculable (MEGC) en dynamique séquentielle. Le système éducatif sud africain porte les stigmates de l’Apartheid et une intervention publique plus accentuée est l’un des moyens envisagés pour corriger les inégalités héritées de l’ancien régime politique. Nos résultats montrent une amélioration des performances des étudiants et des effets positifs à court terme sur l’économie. À long terme, la population sud africaine, et en particulier les African, devient plus qualifiée, mais l’économie ne créant pas suffisamment d’emplois, une partie de ces nouveaux qualifiés se retrouve au chômage.
    Keywords: Modèle d'équilibre général calculable, éducation, Afrique du Sud
    JEL: D58 I28 O11
    Date: 2009
  15. By: Okoye, B.C; Okoye, A.C; Dimelu, M.U; Agbaeze, C.C; Okoroafor, O.N; Amaefula, A.B
    Abstract: This study was undertaken to determine the adoption of improved cocoyam production, processing and storage technologies among small-holder cocoyam farmers in Enugu-North Agricultural Zone in Enugu state. A multi-stage random sampling technique was used to select 120 cocoyam farmers disaggregated into 60 males and 60 female in 2008. Adoption scale analysis was employed to analyze the level of adoption of cocoyam technologies as well as percentages, means and frequency distribution. The results show that most of the technologies were not adopted and unaware by both farmers. Technologies that scored 3.0 and above were adopted but those below 3.0 were rejected. Both farmers adopted technologies like time of planting, use of fertilizer and left un-harvested and heaping on the floor after harvesting. Technologies such as time of planting, May- June(3.0), fertilizer application NPK 20.20.10 (3.3), storage facilities like treating with fungicide (3.1), and left un-harvested (3.08) were adopted by male farmers; while time of planting (3.05), use of mulching material (3), use of fertilizer(3.08), crop mixture with arable crops (3.57) harvesting at 81-12 months after planting (3.25), storage methods like left underground (3) and heaping on the flour (3.38) were adopted by the female farmers. The study calls for policies to ensure women’s entitlement to productive resources and to target women in the extension delivery system.
    Keywords: Adoption Scale; Cocoyam Production; Processing and Storage Technologies and Gender
    JEL: Q1 Q19 Q10
    Date: 2009–07–11
  16. By: Andrews, Matt (Harvard University)
    Abstract: Many reform results fall below expectations in the development arena, especially in the public sector. Do the reforms just need more time to work better, or should we adjust our expectations? In addressing this question, the current article draws from isomorphism to think about potential limits to reform in developing countries. The theory is considered appropriate for thinking about change processes in the developing world. It presents change as motivated more by the need for legitimacy than efficiency and, in identifying the mechanics of change, points to potential limits of such change: to organizational dimensions that are visible, peripheral and involves concentrated sets of professional agents. These limiting factors are applied to a study of public financial management reform in 31 African countries which shows that some dimensions do appear more limited to isomorphic influence than others. Isomorphic change may indeed face natural limits, something the development community should consider in thinking about how it goes about facilitating and motivating reform in its client countries.
    Date: 2009–05
  17. By: Lux, Alexandra; Janowicz, Cedric
    Abstract: The CuveWaters project relates the alignment and implementation of innovative water technologies to an Integrated Water Resources Management (IWRM) in the Cuvelai-Etosha-Basin, which lies in Central Northern Namibia. The aim here is to improve inhabitants’ living conditions by means of appropriate technical schemes and measures – particularly with a view to enhancing water supply and basic sanitation (incl. waste water disposal). A focal part of Cuve-Waters concerns the re-use of water, efficient use of water and utilisation of different water qualities for different purposes (multi-resource mix). With respect to urban conditions and the problems of adequate supply and sanitation, the prospect of a semi-decentralised infrastructure system is under investigation, a concept which includes rainwater utilisation as well as waste water collection and treatment. One major option for such systems, in which waste water is considered a valuable resource, is a washing house combining effective waste water collection (vacuum sewer) with high-tech separation techniques (generation of energy, nutrients and waste water processing). Cleaned waste water – free of bacteria, viruses or pathogens – and fertiliser from an anaerobic waste water treatment plant can be re-used for irrigation in small scale agriculture to enhance food security and/or generate alternative income through the marketing of fresh produce. Energy, in the form of biogas, can be used for cooking or lighting. On the rural sites of the study area, adequate water supply poses a major challenge, for which three technology options are investigated here: rainwater harvesting, solar-coupled desalination of brackish groundwater, and managed aquifer recharge. Suitable technology options are selected for different sites in a participatory process (cf. CuveWaters Project 2008a, CuveWaters Project 2008b). Thus, general aims of the project in terms of providing regional economic impetus and improving livelihoods are: - to link integrated water resources management to land issues, develop the technology needed to build capacity, and achieve better governance; - to bring together supply- and demand-driven approaches in developing the infrastructure; - to consider water as related to other resources (land, energy, nutrients) and other fields of sustainability such as poverty reduction, equality and regional development. From these project objectives arise the key questions driving the surveys documented in this paper: what impetus for regional development can be expected from the implementation of technological options selected for the CuveWaters project? What constraints and obstacles need to be considered here, particularly in terms of incorporating the technologies into strategies of IWRM? What conclusions can be drawn when it comes to the supervision of implementation (training, capacity building, governance)? After an introduction the economic and social situation in the Cuvelai-Etosha Basin along with the conditions for urban agriculture is outlined. This is followed by the discussion of the potentials for water-related activities in the region, taking into account additional water uses and the operation and development of infrastructures, whilst investigating the potentials of urban agriculture for Central Northern Namibia. Finally, these potentials are summarized and conclusions pertaining to flanking measures for technical implementation are drawn.
    Keywords: water use; urban gardening; poverty reduction; development; Integrated Water Resources Management; Namibia; Africa
    JEL: O18 L95 O13 Q24 Q01 E26 Q25 Q1 O17 Q56 R11
    Date: 2009–02
  18. By: Ofori, Eunice
    Abstract: Ghana being a developing nation should embark on a national rebranding campaign to change its image domestically and internationally. This paper focuses on ways in which the Ghanaian government can achieve its goals, where the campaign wouldn’t just be another governmental propaganda, but prove worthy of taxpayers’ money, with the effects witnessed by all.
    Keywords: Ghana; country branding; tourism
    JEL: P41 M31 H11
    Date: 2009–09–12

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