nep-afr New Economics Papers
on Africa
Issue of 2009‒10‒24
nineteen papers chosen by
Quentin Wodon
World Bank

  1. Regional Trade Agreements: An African perspective of Challanges for Customs Policies and Future Strategies By Chiumya, Chiza
  2. Demographic and socioeconomic patterns of HIV/AIDS prevalence in Africa By Beegle, Kathleen; de Walque, Damien
  3. Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa By Augustin Kwasi Fosu
  4. Informal Social Protection in Post-Apartheid Migrant Networks: Vulnerability, Social Networks and Reciprocal Exchange in the Eastern and Western Cape, South Africa By Andries du Toit; David Neves
  5. Strategising Consultation: Government Approaches to Legitimising Land Tenure Reform Policies in Post-apartheid South Africa By Elizabeth Fortin
  6. Saving Ghana from Its Oil: The Case for Direct Cash Distribution By Todd Moss; Lauren Young
  7. Non-governmental Organisations and African Wildlife Conservation: A Preliminary Analysis By Katherine Scholfield; Dan Brockington
  8. Returning and Sharing Memories”. Genesi e sviluppo di un progetto per l’uso del “passato comune” italo-etiope (1935-1941) By Paolo Bertella Farnetti
  9. Trade in financial services : mobile banking in Southern Africa By Stone, Robert; Grossman, Jerry; Breul, Philippe; Carpio, Abigail; Cabello, Mateo
  10. Convergence of Metropolitan House Prices in South Africa: A Re-Examination Using Efficient Unit Root Tests By Sonali Das; Rangan Gupta; Patrick Agu Kaya
  11. Trading on a Grant: Integrating Formal and Informal Social Protection in Post-Apartheid Migrant Networks By Andries du Toit; David Neves
  12. Regional variation in livelihood strategies in Malawi By Magnus Hatlebakk
  14. Targeting the Poor versus Financial Sustainability and External Funding: Evidence of Microfinance Institutions in Ghana By Samuel Kobina Annim
  15. Savings, Credit, and Insurance: Household Demand for Formal Financial Services in Rural Ghana By Mirko Bendig; Lena Giesbert; Susan Steiner
  16. The Role of Microfinance in Asset-Building and Poverty Reduction: The Case of Sinapi Aba Trust of Ghana By Joseph Kimos Adjei; Thankom Arun; Farhad Hossain
  17. Microfinance Programmes and the Poor: Whom Are They Reaching? Evidence from Ghana By Joseph Kimos Adjei; Thankom Arun
  18. A multivariate approach for identification of optimal locations with in Ethiopia’s wheat market to tackle soaring inflation on food price (Extended version) By Mezgebo, Taddese
  19. Development Finance, Private and Public Sectors in Zimbabwe: Sustainability or Odious Debt? By Sarah Bracking; Lloyd Sachikonye

  1. By: Chiumya, Chiza
    Abstract: The proliferation of Regional Trade Agreements (RTAs) has not spared the African Continent. The formation of RTAs in Africa is championed by the Regional Integration agenda under the auspices of the Regional Economic Communities. The challenges that Customs Administrations face when their countries become members of RTAs depend on whether the RTA is Trade Creating or Diverting. It is the trade-creating RTA that presents the Customs Administration with the greater challenges. This paper looks at these challenges and areas where they require Customs Administrations to concentrate their policies and strategies.
    Keywords: Regional Trade Agreements; Customs Administrations
    JEL: F15 F1
    Date: 2009–06–04
  2. By: Beegle, Kathleen; de Walque, Damien
    Abstract: Understanding the demographic and socioeconomic patterns of the prevalence and incidence of HIV/AIDS in Sub-Saharan Africa is crucial for developing programs and policies to combat HIV/AIDS. This paper looks critically at the methods and analytical challenges to study the links between socioeconomic and demographic status and HIV/AIDS. Some of the misconceptions about the HIV/AIDS epidemic are discussed and unusual empirical evidence from the existing body of work is presented. Several important messages emerge from the results. First, the study of the link between socioeconomic status and HIV faces a range of challenges related to definitions, samples, and empirical methods. Second, given the large gaps in evidence and the changing nature of the epidemic, there is a need to continue to improve the evidence base on the link between demographic and socioeconomic status and the prevalence and incidence of HIV/AIDS. Finally, it is difficult to generalize results across countries. As the results presented here and in other studies based on Demographic and Health Survey datasets show, few consistent and significant patterns of prevalence by socioeconomic and demographic status are evident.
    Keywords: Population Policies,Disease Control&Prevention,HIV AIDS,Gender and Health,Health Monitoring&Evaluation
    Date: 2009–10–01
  3. By: Augustin Kwasi Fosu
    Abstract: This study explores the extent to which inequality affects the impact of income growth on the rates of poverty changes in sub-Saharan Africa (SSA) compared to non-SSA, based on a global sample of 1977-2004 unbalanced panel data. For both regions and all three measures of poverty – headcount, gap and squared gap – the paper finds the impact of GDP growth on poverty reduction to be a decreasing function of initial inequality. The impacts are similar in direction for SSA and non-SSA, so that within both regions there are considerable disparities in the responsiveness of poverty to income growth, depending on inequality. Nevertheless, income-growth elasticity is substantially less for SSA, implying relatively low poverty-reduction sensitivity to growth compared with the rest of the developing world. Furthermore, the paper uncovers a considerable variation in the predicted values of income-growth elasticity across a large number of SSA countries. This implies there is a need to understand country-specific inequality attributes for poverty-reduction strategies to be effective.
    Date: 2009
  4. By: Andries du Toit; David Neves
    Abstract: This paper considers the dynamics of informal social protection in the context of chronic poverty and vulnerability in post-apartheid migrant networks. It argues that in poor and marginalised households in South Africa, the indirect impacts of social grants cannot be adequately understood by focusing simply on either individual or household decision making. Instead, the paper concentrates on the central role of the elaborate and spatially extended network of reciprocal exchange within the informal social protection systems. These networks link rural and urban households, and enable hybrid livelihood profiles to evolve that bridge rural and urban as well as formal and informal economic activities. These depend crucially on elaborate and gendered ‘care chains’ involving not only monetary remittances, but also paid and unpaid care work and household reproductive labour. The arrangements help the poor to survive, alleviate poverty and reduce vulnerability by allowing costs and resources, opportunities and shocks to be shared and redistributed. At the same time, these strategies have limitations, and are structured by deeply entrenched power relations pivoting on gender, age, status and other markers of exclusion. They may also increase the vulnerability of some individuals. This highlights the importance of the formal social protection system existing alongside the informal systems.
    Date: 2009
  5. By: Elizabeth Fortin
    Abstract: This paper considers struggles of legitimation by the South African government over the first ten years of the country’s democracy, by focusing on its engagement with policymaking processes in relation to land tenure reform in the former 'homelands' of the country. During such periods of upheaval and change, the achievement of legitimacy by the state will only be achieved through deeply political processes. In exploring the strategies adopted by policy-makers and bureaucrats to legitimise contested political change, it considers how they were influenced by wider ideals of participatory policymaking and consultation. However, in the process, the paper also demonstrates how they were further shaped by the everyday realities determining the practices of governing, as well as the changing extent to which government officials were constrained in their own ability to influence policy. In this context, it is argued, claims of participatory policy-making largely came to constitute strategies of legitimation for policies that had already been formulated.
    Date: 2009
  6. By: Todd Moss; Lauren Young
    Abstract: Ghana can be considered a relative success story in Africa. We cite six variables—peace and stability, democracy and governance, control of corruption, macroeconomic management, poverty reduction, and signs of an emerging social contract—to suggest the country’s admirable political and economic progress. The expected arrival of sizeable oil revenues beginning in 2011–13, however, threatens to undermine that progress. In fact, numerous studies have linked natural resources to negative outcomes such as conflict, authoritarianism, high corruption, economic instability, increased poverty, and the destruction of the social contract. The oil curse thus threatens the very outcomes that we consider signs of Ghana’s success. This paper draws lessons from the experiences of Norway, Botswana, Alaska, Chad, and Nigeria to consider Ghana’s policy options. One common characteristic of the successful models appears to be their ability to encourage an influential constituency with an interest in responsible resource management and the means to hold government accountable. The Alaska model in particular, which was designed explicitly to manufacture citizen oversight and contain oil-induced patronage, seems relevant to Ghana’s current predicament. We propose a modified version of Alaska’s dividend program. Direct cash distribution of oil revenues to citizens is a potentially powerful approach to protect and accelerate Ghana’s political and economic gains, and a way to strengthen the country’s social contract. We show why Ghana is an ideal country to take advantage of this option, and why the timing is fortuitous. We conclude by confronting some of the common objections to this approach and suggest that new technology such as biometric ID cards or private mobile phone networks could be utilized to implement the scheme.
    Keywords: Ghana; resource curse; oil; resource management; direct cash distribution
    Date: 2009–10
  7. By: Katherine Scholfield; Dan Brockington
    Abstract: This paper presents an attempt to provide a first overview of the collective activities of conservation non-government organisations (NGOs) working in Sub-Saharan Africa, presenting findings on the work of over 280 organisations. The number of NGOs in existence grew in the 1980s and blossomed in the 1990s. Their distribution across the continent is patchy. NGOs work in about 14 percent of the continent’s protected areas. Estimated average annual expenditure from 2004 to 2006 was just over US$200 million. This is at most about 40 percent of the lowest predicted needs, and these predictions are themselves likely to be substantial underestimates of the sums required for effective conservation by conservation NGOs. Spending by country matches some declared conservation priorities well, without taking into account cost of doing conservation in different countries. In our concluding discussion we examine the diversity of the conservation NGO sector. We argue that the sector will probably need to scale up its activities by one order of magnitude to achieve its stated goals. We offer reasons why this might not be such an impossible task. But we also note that the possibility of more funding raises a number of awkward questions. These include: is money being spent effectively now? Does scaling-up mean more money to existing organisations or a whole set of new ones? More fundamentally, many studies have noted that there are numerous problems associated with existing levels and patterns of expenditure. Scaling up NGO activity will not deal with these problems, they could make many worse. We argue that the problems will be best addressed by recognising them explicitly.
    Date: 2009
  8. By: Paolo Bertella Farnetti
    Abstract: Abstract. This paper introduces a pilot project aiming at returning Ethiopian people the historical memories about the Italian ephemeral “Empire” in the Horn of Africa (1935-1941). The “conquerors” took away a lot of historical documents and images, taking advantage of their technological superiority. For instance, unlike Ethiopians, many Italian soldiers had cameras, which were popular and affordable back then. Thanks to technology now we can duplicate documents – producing exact copies of originals – without displacing them or changing ownership.Our starting point is to duplicate the visual memories collected in Modena and donate them to Addis Ababa University, making them available to researchers and students. Our aim is approaching colonialist studies in a different way, sharing the historical memories with the former enemies, encouraging a joint study of Ethiopia and Italy’s common past. Our hope is to create a lean working method that can be used by others, able to stimulate similar initiatives not only from private people but also from the Italian public archives and institutions
    Keywords: Italian colonialism; photographic sources; Ethiopia; Modena
    Date: 2009–09
  9. By: Stone, Robert; Grossman, Jerry; Breul, Philippe; Carpio, Abigail; Cabello, Mateo
    Abstract: The report will be discussed at a policy discussion workshop that will being together a select group of policy champions from each of the focus countries to discuss appropriate incentives that encourage innovative bank and non-bank led domestic and international m-banking solutions. In this Introduction, the authors summarize the layout of the report, and then touch upon two over-arching issues that need to be taken into account in reading the report. To set the context for m-banking services in the focus countries, chapter two reviews the demand for m-banking services in Southern Africa, particularly in relation to migrant remittances and cross-border payments of trade-related transactions. This analysis is complemented by some international comparisons set out in annex C. On the supply side, chapter three briefly describes the financial and telecommunications landscape in which the development of m-banking is set. The heart of this study is the country diagnostics set out in annex A, which examine, for each country the regulatory issues that are listed in annex B. For ease of reference, the results of the country diagnostics are summarized in chapter four. The country diagnostics include a number of recommendations to overcome the constraints on the development of accessible m-banking in each country and the region, which are developed further in the draft presentation for the workshop in annex D. The main threads of the key recommendations are brought together and summarized in chapter five.
    Keywords: Banks&Banking Reform,Emerging Markets,Access to Finance,E-Business,Remittances
    Date: 2009–01–01
  10. By: Sonali Das (LQM, CSIR, Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Patrick Agu Kaya (Department of Economics, University of Pretoria)
    Abstract: This paper analyzes whether the Law of One Price (LOOP) holds in the housing market of five metropolitan areas of South Africa, namely Cape Town, Durban, Greater Johannesburg, Port Elizabeth/Uitenhage and Pretoria. We test the existence of LOOP using the efficient unit root tests proposed by Elliott et al. (1996) [DF-GLS] and Elliott (1999) [DF-GLSu] based on monthly data on residential property prices covering the period of 1967:01 to 2009:03 for the large-, medium and small-middle segments of the housing market. Based on the DF-GLSu test, we find overwhelming evidence of the existence of LOOP in twelve of the fifteen possible cases, especially as the sample period becomes more recent. More importantly, our results are in sharp contrast with those obtained by Burger and Van Rensburg (2008) using quarterly data based on the Im, Pesharan and Shin (IPS, 2003) test, which are, in turn, shown to be highly sensitive to frequency of the data and temporal aggregation. With the rejection or the non-rejection of the null hypothesis of unit roots, based on panel data tests, not providing sufficient evidence to conclude that all the series in the panels have a unit root or that they are all stationary, more reliability should be placed on our results obtained from the efficient unit root tests.
    Keywords: Efficient Unit Root Tests, House Prices, Law of One Price, Price Convergence, Single Market
    JEL: C12 C22 C21 D40 L85
    Date: 2009–10
  11. By: Andries du Toit; David Neves
    Abstract: This paper describes the findings of case studies-based research on how poor and marginalised people in post-apartheid migrant networks seek to ameliorate poverty and manage their vulnerability. It argues that the ways in which people make decisions regarding formal social grants and cash transfers, their utilisation and their indirect impacts need to be understood in the context of the pre-existing and underlying systems and practices of informal social protection (Bracking and Sachikonye, 2006). These informal strategies are shaped by two key phenomena (du Toit and Neves, 2008): complex, spatially extended, de-centred social networks; and deeply sedimented and culturally specific practices of reciprocal exchange. This paper shows how social grants are used in this context, and illustrates how cash transfers allow poor and vulnerable people to make ‘investments’ in human, physical and productive capital. The paper argues that a crucial aspect of the impact of cash transfers lies in the way they allow the leveraging of scarce resources within networks of reciprocal exchange. Social grants thus have an impact far beyond the particular groups targeted in official plans, often providing key resources for those who would otherwise be marginalised. At the same time, they have only limited utility in addressing the core dynamics that drive chronic poverty. Reducing structural poverty in South Africa requires measures that address the underlying problems of structural unemployment.
    Date: 2009
  12. By: Magnus Hatlebakk
    Abstract: Livelihood strategies are identified at the household level as a function of assets held, using survey data. Only endowments that are likely to be predetermined are included in the empirical analysis. As expected, land, household size, age and primary education turn out to be important determinants of livelihood strategies. It appears that the relatively equal land-distribution among small-holders in Malawi still allows some wealthier households, and force others, to do non-farm activities. This, in turn, may lead to small-scale development within villages. Furthermore, investment in primary education, taking into account the low initial level of education in Malawi, is probably a good investment for rural development. And, we find it promising that younger people are able to find non-farm livelihoods. It also turns out to be significant regional variation in livelihood strategies, with more diversification in the Southern region, and with regional variation in the role of ethnic and religious identity as determinants of livelihood strategies. It appears that lack of agricultural opportunities in the south imply that households do, maybe more low-status, salaried work and household businesses in this region. For some households this may still be a way out of poverty. The policy implications for the poorer Southern region are not obvious. But, to the extent feasible, the farmers may learn from the more productive farmers in the Central region, where there is more emphasize on cash-crop production.
    Keywords: Livelihoods Non-farm employment Multinomial-logit Malawi
    JEL: D13 O12 Q12
    Date: 2009
  13. By: Ndanga, Leah Z.B.; Louw, Andre; van Rooyen, Johan
    Abstract: Although South Africans are not predominantly wine drinkers, the industry is looking for ways to develop the local market to balance exports. The black middle class, increasingly referred to as the Black Diamonds are the most powerful marketing trend in the last 10 years as they have emerged as the strongest buying influence in the economy and making inroads in understanding this market presents a good opportunity. The study asserts that the key factors influencing the South African consumersâ behavior are age, gender, income, race and wine drinking history. The study also asserts that not only are the black middle class are different from the white middle class but within the Black Diamonds different segments exist. The industry should particularly focus on marketing to the women and the âStart me upâ age group in the group as there is limited consumer knowledge about wines, but a high willingness to experiment. The study also suggests various new brand communication platforms that can be explored to reach this market as well as co-opetition between industry stakeholders.
    Keywords: Black Diamonds, wine consumer behavior, alcoholic beverages, Agribusiness, Demand and Price Analysis,
    Date: 2009–07
  14. By: Samuel Kobina Annim
    Abstract: The creeping effect of financial crisis and economic turmoil on African economies potentially questions the sustainability of microfinance institutions, in view of the heavy investment received both from development partners and government. This study tests the hypotheses that: (i) interacting own-mobilised funds with formal institutions, microfinance organisations reach less poor clients; and (ii) concentrating on the achievement of financial sustainability causes an institution to target non-poor clients. Using data from Ghana, we revisit the microfinance argument of serving poorer clients on a commercial basis, and control for the effect of source of funds and type of institution. Unlike financial self-sufficiency, operational self-sufficiency appeared to facilitate the reaching of poorer clients. The study upholds sceptics’ view of a trade-off. Categorising institutions based on source of funds, this study adds to knowledge on the future of microfinance. Formal institutions dispensing their own funds appeared to target less poor clients. Using instrumental variable estimation, plausible problems of endogeneity emerging via measurement error were observed. We instrument financial and operational self-sufficiency with density of microfinance institutions in a given location and the group-lending mechanism to resolve attenuation bias. This finding alludes to complementary development strategies and a deliberate harmonisation of microfinance intervention, irrespective of the source of funds.
    Date: 2009
  15. By: Mirko Bendig; Lena Giesbert; Susan Steiner
    Abstract: This paper argues that the study of the demand for financial services in developing countries leaves out part of the story if it looks at only one of the three elements of the so-called finance trinity—that is, savings products, loans and insurance—as is largely done in the literature. In contrast to previous research, this study assumes that households’ choices for any of these services are strongly interconnected. Therefore, the paper simultaneously estimates the determinants of household demand for savings, loans and insurance by applying a multivariate probit model to household survey data from rural Ghana. On the one hand, the estimation results confirm the common finding that poorer households are less likely to participate in the formal financial sector than better-off households. On the other hand, there is empirical evidence that the use of savings products, loans and insurance depends not only on the socioeconomic status of households, but also on various other factors, such as households’ risk assessment and past exposure to shocks. In addition, trust in the providing institution and its products appear to play a key role.
    Date: 2009
  16. By: Joseph Kimos Adjei; Thankom Arun; Farhad Hossain
    Abstract: The paper evaluates the extent to which Sinapi Aba Trust has contributed to poverty reduction among rural and urban poor especially women by supporting them with small loans to expand their businesses to generate income to build up their asset base. Using a cross-sectional data from 547 respondents, the study found that participation in the programme has enabled established clients to own savings deposits and subscribe to a client welfare scheme which serves as insurance to pay off debts in times of illness or death. Established clients were also found to be in a better position to contribute towards the education of their children and payment of healthcare for members of their households as well as contribution towards the purchase of household durables. The study noted that programmes that are financially sustainable have greater effects on participants, and that there is the need for clients’ graduation to benefit most from participation in such programmes.
    Date: 2009
  17. By: Joseph Kimos Adjei; Thankom Arun
    Abstract: A key objective of microfinance programmes is to provide financial services to poor people who are excluded from such services by the formal banking system. It is in this perspective that governments, development partners and donor agencies continue to provide support to such institutions, to enable them to deepen their outreach. This paper examines the type of poor people served by one of the leading microfinance institutions in Ghana. By comparing the living standards of clients of Sinapi Aba Trust (SAT) with those of non-clients, representing the general population in its operational areas, the paper concludes that the microfinance institution reaches disproportionately a smaller percentage of very poor people. The study notes that programme placement plays a key role in determining the type of clients reached by SAT, since almost all its branches are located in urban centres. It finds that the objective of financial sustainability being pursued by SAT has eventually caused it to shift the provision of financial services from very poor households to the less poor.
    Date: 2009
  18. By: Mezgebo, Taddese
    Abstract: Using Johansen (1998 and 1991) vector error correction model and related extensions optimal locations where effective stabilization intervention can be done are identified. It is found that producer centers of Shashimiene and Bale Robe and Deficit market of Jimma are the locations where effective stabilization of wheat price can be done with least cost. However the national wheat market seems to have better capacity to process shocks coming from deficit markets and central markets than surplus markets. So targeting surplus markets, though effective in long run, can result on short run increase in volatility. Moreover, even though, distance could be one factor determining the inclusion of additional markets in to the rule of one price, it was not found to be the main factor in Ethiopian wheat markets. This implies that in highly imperfect market cointegration may not be solely related to distance only. Other factors like the level of market failures and the development of complementary institutions may influence the level of cointegration. Fortunately the search procedure for boundary of markets operating under rule of one price followed by earlier papers, though theoretically unsound is observed to work in Ethiopia wheat markets.
    Keywords: cointegration food price inflation ethiopia
    JEL: O55 L70
    Date: 2009–08–18
  19. By: Sarah Bracking; Lloyd Sachikonye
    Abstract: This paper reviews the political economy of development finance in Zimbabwe from the late 1980s to the present day, to see where the current sovereign debt arose from. It disaggregates initial private sector development interventions by type, provider, sector and at the firm level, to see how development finance was extended and spent during the structural adjustment era and after. It notes a number of design flaws and problems in development-financed projects and programmes over the period which undermined their later profitability as productive assets and contributed to debt build-up. The paper also notes the effects of poor domestic governance on the productivity of ventures supported. However, the macroeconomic policies within the structural adjustment programme were also a central trigger to the future unsustainability of debt. Also, in the post-2000 period, the deterioration of the debt position has been exacerbated by the Reserve Bank of Zimbabwe, by means of its extensive foreign exchange denominated loans to parastatal corporations, and by its quasi-fiscal activities. Zimbabwe’s public sovereign debt can be reduced, and future private sector development policy enhanced, if recourse to expensive and unproductive fiscal interventions, either by international financial institutions or by the Reserve Bank, are avoided.
    Date: 2009

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