nep-afr New Economics Papers
on Africa
Issue of 2009‒10‒31
twelve papers chosen by
Quentin Wodon
World Bank

  1. Determinants and Macroeconomic Impact of Remittances in Sub-Saharan Africa By Kyung-woo Lee; Markus Haacker; Raju Singh
  2. What Determines Bond Market Development in sub-Saharan Africa? By Olatundun Janet Adelegan; Bozena Radzewicz-Bak
  3. Job Satisfaction and Employment Equity in South Africa By Hinks, Timothy
  4. Social Background, Cooperative Behavior, and Norm Enforcement By Kocher, Martin; Martinsson, Peter; Visser, Martine
  5. São Tomé and Príncipe: Domestic Tax System and Tax Revenue Potential By Nisreen H. Farhan
  6. Blind Admission? The ability of NSC maths to signal competence in university commerce courses as compared to the former SC Higher Grade maths By Hunt, Karin; Rankin, Neil A.; Schöer, Volker; Nthuli, Miracle; Sebastiao, Claire
  7. Decomposing Gender and Ethnic Earnings Gaps in Seven West African Cities By Christophe Nordman; Anne-Sophie Robilliard; François Roubaud
  8. Oil Prices and Bank Profitability: Evidence from Major Oil-Exporting Countries in the Middle East and North Africa By Heiko Hesse; Tigran Poghosyan
  9. Gender Disparities in the Malagasy Labour Market By Christophe Nordman; Faly Rakotomanana; Anne-Sophie Robilliard
  10. Does government spending spur economic growth in Nigeria? By Maku, Olukayode E.
  11. Analyzing Fiscal Space Using the MAMS Model: An Application to Burkina Faso By Jan Gottschalk; Vu Manh Le,; Hans Lofgren; Kofi Nouve
  12. Crime and Happiness Amongst Heads of Households in Malawi By Davies, Simon; Hinks, Timothy

  1. By: Kyung-woo Lee; Markus Haacker; Raju Singh
    Abstract: The paper investigates the determinants and the macroeconomic role of remittances in sub-Saharan Africa, assembling the most comprehensive dataset available so far on remittances in the region and incorporating data on the diaspora. It finds that remittances are larger for countries with a larger diaspora or when the diaspora is located in wealthier countries, and that they behave countercyclically, consistent with a role as a shock absorber. Although the effect of remittances in growth regressions is negative, countries with well functioning domestic institutions seem nevertheless to be better at unlocking the potential for remittances to contribute to faster economic growth.
    Keywords: Cross country analysis , Developing countries , Economic growth , Economic models , Sub-Saharan Africa , Workers remittances ,
    Date: 2009–10–02
  2. By: Olatundun Janet Adelegan; Bozena Radzewicz-Bak
    Abstract: This study empirically analyzes the determinants of bond market development in a cross section of 23 sub-Saharan African (SSA) countries between 1990 and 2008. It considers the stage of development and the size of the bond market, as well as the historical, structural, institutional and macroeconomic factors driving bond market development in SSA. The study finds that the savings constraint is a key impediment to domestic bond markets development as well as financial market deepening, as it results in a low level of financial intermediation by the banks. Overall, the results show that a confluence of factors matters for the development of domestic bond markets in SSA; these include structure of the economy, investment profile, law and order, size of the banking sector, the level of economic development, and various macroeconomic factors. Policy implications include increased efforts to strengthen the investment environment and the need for a regional approach to bond market development.
    Keywords: Access to capital markets , Banking sector , Bond markets , Bonds , Capital markets , Cross country analysis , External debt , Financial institutions , Financial systems , Investment , Nonbank financial sector , Public debt , Savings , Sub-Saharan Africa ,
    Date: 2009–09–30
  3. By: Hinks, Timothy
    Abstract: This paper is the first to estimate job satisfaction equations in post-Apartheid South Africa. Earnings and relative earnings are both found to contribute to greater job satisfaction. Racial group is also an important predictor of job satisfaction but when interacted with a proxy for affirmative action legislation it is found that black job satisfaction is positively correlated with this legislation whereas coloured and to a lesser extent white job satisfaction is diminished.
    Keywords: Job satisfaction; Employment Equity; ordered probit; South Africa
    Date: 2009
  4. By: Kocher, Martin (Department of Economics, University of Munich,); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Visser, Martine (School of Economics, University of Cape Town)
    Abstract: Studies have shown that there are differences in cooperative behavior across countries. Furthermore, differences in the use and the reaction on the introduction of a norm enforcement mechansism have been documented in cross-cultural studies, recently. We present data which prove that stark differences in both dimensions can exist even within the same town. For this end, a unique data set was created, based on public goods experiments conducted in South Africa. Most of the group differences can, however, be explained by variables accounting for social capital and social environment, such as trust or household violence.<p>
    Keywords: Cooperation; public goods; punishment; experiment; social capital; South Africa
    JEL: C72 C91 H41 Z13
    Date: 2009–10–19
  5. By: Nisreen H. Farhan
    Abstract: São Tomé and Príncipe is very open and highly depends on imports resulting in high indirect tax revenue. At the same time, the production and export base are very narrow, leaving the authorities with a small domestic tax base. For these reasons, the country compares unfavorably with neighboring economies and other island countries, in terms of domestic revenue in percent of GDP. The paper describes the domestic tax system in São Tomé and Príncipe and uses cross-country empirical analysis to reach a benchmark tax potential for the country. The paper reaches the conclusion that whether São Tomé and Príncipe becomes an oil producer or not, it is more sustainable for it to rely on non-oil domestic revenue-a less volatile and less exhaustible resource-to finance current expenditures. To meet the country's increasing development and social objectives, the authorities need to mobilize sufficient domestic resources. The paper offers a number of fiscal reforms to reach this goal, including implementation of the new tax laws, reduction of exemptions, tax system reforms, and improvement of the tax administration.
    Keywords: Cross country analysis , Fiscal policy , Fiscal reforms , São Tomé and Príncipe , Sub-Saharan Africa , Tax administration , Tax policy , Tax reforms , Tax revenues , Tax systems , Taxation ,
    Date: 2009–10–01
  6. By: Hunt, Karin; Rankin, Neil A.; Schöer, Volker; Nthuli, Miracle; Sebastiao, Claire
    Abstract: Mathematics is an important signal used for admission into commerce courses in South African universities. In 2008 the new National Senior Certificate replaced the former Senior Certificate. This new exam no longer had different grades and thus created a structural break in the ability of the mathematics mark to signal preparedness for university. Although the Department of Education provided a “translation” key between the two Certificates, the University of the Witwatersrand (and other universities) admitted many more students in 2009 that met the entry requirements than previously. However, this cohort has lower average test and exam scores than previous years. This suggests that marks obtained for mathematics in the new National Senior Certificate are inflated when compared to the former Senior Certificate. This paper uses similar tests, for two commerce subjects, written by students in 2008 and 2009 to create a comparison between the mathematics marks under the two different certificates. The results suggest that marks in the range of 40-100% for Higher Grade mathematics for the Senior Certificate are now compressed into the 70-95% range for the new National Senior Certificate. This significantly weakens the ability of the school-leaving mathematics mark to signal the ability of students to cope with first year commerce courses.
    Keywords: Mathematics; National Senior Certificate; Economics 1; first year; Commerce courses; South Africa
    JEL: A22 A20
    Date: 2009–10–22
  7. By: Christophe Nordman (DIAL, IRD, Paris); Anne-Sophie Robilliard (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) In this paper, we analyse the size and determinants of gender and ethnic earnings gaps in seven West African capitals (Abidjan, Bamako, Cotonou, Dakar, Lome, Niamey and Ouagadougou) based on a unique and perfectly comparable dataset coming from the 1-2-3 Surveys conducted in the seven cities from 2001 to 2002. Analysing gender and ethnic earnings gaps in an African context raises a number of important issues that our paper attempts to address, notably by taking into account labour allocation between public, private formal and informal sectors which can be expected to contribute to earnings gaps. Our results show that gender earnings gaps are large in all the cities of our sample and that gender differences in the distribution of characteristics usually explain less than half of the raw gender gap. By contrast, majority ethnic groups do not appear to have a systematic favourable position in the urban labour markets of our sample of countries and observed ethnic gaps are small relative to gender gaps. Whatever the “sign” of the gap, the contribution of differences in the distribution of individual characteristics varies markedly between cities. Taking into account differences in sectoral locations in the decomposition of gender earnings gaps provides evidence that within-sector differences in earnings account for the largest share of the gender gap and that the differences in sectoral locations are always more favorable to men than to women. By contrast, concerning ethnic earnings gaps, the full decomposition indicates that sectoral location sometimes plays a “compensating” role against observed earnings gaps. Looking at finer levels of ethnic disaggregation confirms that ethnic earnings differentials are systematically smaller that gender differentials. _________________________________ (français) Dans cette étude nous analysons le poids et les déterminants des différentiels de rémunérations entre genre et groupes ethniques dans sept métropoles d’Afrique de l’Ouest (Abidjan, Bamako, Cotonou, Dakar, Lomé, Niamey and Ouagadougou), en mobilisant une base de données unique et parfaitement comparable, provenant des enquêtes 1-2-3 réalisées dans les sept villes en 2001 et 2002. Cette question soulève un certain nombre de questions méthodologiques que nous tentons de traiter en détail, notamment en tenant compte des différences de composition ethnique et de genre entre les secteurs public, privé formel et informel qui sont susceptibles de jouer sur les écarts de revenus. Les résultats mettent en évidence l’existence d’un déficit systématique de rémunération pour les femmes, les caractéristiques des emplois expliquant moins de la moitié de ces écarts. A contrario, les groupes ethniques majoritaires ne semblent pas bénéficier d’une situation avantageuse et les écarts de revenus suivant le groupe ethnique sont relativement faibles par rapport à ceux que l’on observe suivant le genre. Quel que soit le signe de ce différentiel (positif ou négatif), la contribution expliquée par les caractéristiques observées de l’emploi varie très sensiblement d’une ville à l’autre. Les estimations montrent qu’une grande partie de l’écart de revenu selon le genre provient de l’allocation sectorielle, et que cette dernière est toujours défavorable aux femmes. En revanche, dans le cas des écarts suivant le groupe ethnique, la distribution par secteur institutionnel joue parfois de façon positive dans le sens d’une réduction des écarts. Finalement, une désagrégation plus fine des groupes ethniques, au-delà de la partition majoritaire/minoritaire, confirme que l’entrée ethnique est systématiquement moins significative sur les revenus du travail que le genre.
    Keywords: earnings equations, gender wage gap, ethnic wage gap, West Africa, Equation de gain, écart de salaire, décomposition, genre, Ethnie, Afrique de l'Ouest.
    JEL: J31 J71 O15 O55
    Date: 2009–10
  8. By: Heiko Hesse; Tigran Poghosyan
    Abstract: This paper analyzes the relationship between oil price shocks and bank profitability. Using data on 145 banks in 11 oil-exporting MENA countries for 1994-2008, we test hypotheses of direct and indirect effects of oil price shocks on bank profitability. Our results indicate that oil price shocks have indirect effect on bank profitability, channeled through country-specific macroeconomic and institutional variables, while the direct effect is insignificant. Investment banks appear to be the most affected ones compared to Islamic and commercial banks. Our findings highlight systemic implications of oil price shocks on bank performance and underscore their importance for macroprudential regulation purposes in MENA countries.
    Keywords: Banks , Commodity price fluctuations , External shocks , Middle East , North Africa , Oil exporting countries , Oil exports , Oil prices , Oil sector , Profit margins , Profits ,
    Date: 2009–10–09
  9. By: Christophe Nordman (DIAL, IRD, Paris); Faly Rakotomanana (INSTAT - DSM, Antananarivo); Anne-Sophie Robilliard (DIAL, IRD, Paris)
    Abstract: (english) In this study, we address the issue of gender differences in labour market performances for Madagascar using data from two national household surveys carried out in 2001 and 2005. The data collected in these surveys allow us to measure the gender pay gap at two points in time, and to analyze the determinants of occupational choices across sectors of employment as well as of wages and earnings. Our results show that the average gender wage gap is relatively small and stable over time. Across wage employment sectors, the gender gap appears to be the lowest in the public sector and the highest in the informal sector. In non-farm self-employment, however, the gender earnings gap is much higher and declined between 2001 and 2005. Using full decomposition techniques, we provide evidence that gender specific sectoral location explains a significant share of the gender wage gap in both years. Augmented earnings equations estimates carried out for the non-farm self-employment sector suggest that the gap in this sector is driven by the very unequal distribution of micro-firm attributes between men and women. This results points to a potential source of earnings differential often ignored in the gender gap literature which is access to physical capital by women. _________________________________ (français) Dans cet article, nous analysons les différences de genre en matière de performances sur le marché du travail de Madagascar à l’aide d’enquêtes ménages menées au niveau national en 2001 et en 2005. Grâce à ces deux points dans le temps, nous examinons la dynamique des déterminants de l’allocation sectorielle et de l’écart de gains entre sexes. Nos résultats montrent que l’écart salarial moyen entre sexes est relativement faible et stable entre ces deux périodes. L’écart salarial est le plus faible dans le secteur public et le plus élevé dans le secteur informel. Pour les travailleurs indépendants horsagriculture, l’écart de gains est beaucoup plus élevé et a décliné entre 2001 et 2005, une période de crise économique. A l’aide de décompositions de ces écarts, nous montrons que les différences de localisation sectorielle selon les sexes expliquent une grande part de l’écart de gains pour les deux années. L’estimation de fonctions de gains augmentées de caractéristiques des micro-entreprises des travailleurs indépendants suggère par ailleurs que l’écart de genre dans ce secteur s’explique en grande partie par une répartition inégale entre sexes des attributs des micro-entreprises, en particulier du capital physique. Ce résultat met en évidence une source potentielle de discrimination souvent ignorée dans la littérature, à savoir l’accès au capital physique par les femmes.
    Keywords: labour force participation, sectoral allocation, earnings equations, gender wage gap, Madagascar, écart de genre, participation au marché du travail, allocation sectorielle, équations de gains, écart salarial de genre.
    JEL: J24 J31 O12
    Date: 2009–10
  10. By: Maku, Olukayode E.
    Abstract: This study examines the link between government spending and economic growth in Nigeria over the last three decades (1977-2006) using time series data to analyze the Ram (1986) model. Three variants of Ram (1986) model were developed-regressing Real GDP on Private investment, Human capital investment, Government investment and Consumption spending at absolute levels, regressing it as a share of real output and regressing the growth rate real output to the explanatory variable as share of real GDP. Result showed that private and public investments have insignificant effect on economic growth during the review period the review period. An attempt to test for presence of stationary using Augmented Dickey Fuller (ADF) unit root test reveals that all variables incorporated in the model were non-stationary at their levels. In an attempt to establish long-run relationship between public expenditure and economic growth, the result reveals that the variables are cointegrated at 5% and 10% critical level. With the use of error correction model to detect short run behaviour of the variables, the result shows that for any distortion in the short-run, the error term restore the relationship back to its original equilibrium by a unit. A number of suggestions were however made on how government spending should be channel in order to influence economic growth significantly and positively in Nigeria.
    Keywords: Government spending; public infrastructure; economic growth; human capital investment; Government investment.
    JEL: E2 H5
    Date: 2009–06–04
  11. By: Jan Gottschalk; Vu Manh Le,; Hans Lofgren; Kofi Nouve
    Abstract: This paper analyses economic implications and the transmission mechanisms of different options for creating and using fiscal space. For creating fiscal space, we consider prioritizing expenditures, raising revenue, and scaled-up aid. Fiscal space is used for increasing health and education spending, infrastructure spending, or both. The analysis takes place within the World Bank's MAMS model, which is a multisectoral real computable general equilibrium model that incorporates the Millennium Development Goals. The model has been calibrated for Burkina Faso, which serves as an illustrative country example. Some of the key results are that absorbing a more educated labor force requires fundamental structural change in the economy; increasing health and education spending can face sizeable capacity constraints; and infrastructure spending has a positive effect on growth as well as education and health outcomes.
    Date: 2009–10–19
  12. By: Davies, Simon; Hinks, Timothy
    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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.