nep-afr New Economics Papers
on Africa
Issue of 2010‒01‒16
24 papers chosen by
Quentin Wodon
World Bank

  1. Cyclical Patterns of Government Expenditures in Sub-Saharan Africa: Facts and Factors By Victor Duarte Lledo; Irene Yackovlev; Lucie Gadenne
  2. The Dynamics of Job Creation and Job Destruction: Is Sub-Saharan Africa Different? By Admasu Shiferaw; Arjun Bedi
  3. Aid, Real Exchange Rate Misalignment and Economic Performance in Sub-Saharan Africa By Ibrahim A. Elbadawi; Linda Kaltani; Raimundo Soto
  4. Soil fertility, fertilizer, and the maize green revolution in East Africa By Matsumoto, Tomoya; Yamano, Takashi
  5. Institutional Factors and Financial Sector Development: Evidence from Sub-Saharan Africa By George C. Anayiotos; Hovhannes Toroyan
  6. Sensitivity of welfare effects estimated by equilibrium displacement model: A biological productivity growth for semisubsistence crops in Sub-Sahara African market with high transaction costs By Takeshima, Hiroyuki
  7. Decentralization, agricultural services and determinants of input use in Nigeria: By Akramov, Kamiljon T.
  8. Assessing household vulnerability to climate change: The case of farmers in the Nile Basin of Ethiopia By Deressa, Temesgen T.; Hassan, Rashid M.; Ringler, Claudia
  9. Assessing the impact of infrastructure quality on firm productivity in Africa: Cross-country comparisons based on investment climate surveys from 1999 to 2005 By Alvaro Escribano Saez; J. Luis Guasch; Jorge Pena
  10. International Commodity Prices, Growth, and the Outbreak of Civil War in Sub-Saharan Africa By Markus Brückner; Antonio Ciccone
  11. The Impact of the International Economic Crisis in South Africa By Margaret Chitiga; Ramos Mabugu; Hélène Maisonnave; Véronique Robichaud; Bernard Decaluwé
  12. Economic Inequality and HIV in Malawi By Durevall, Dick; Lindskog, Annika
  13. Youth Unemployment Challenges in Mining Areas of Ghana By P. Sarfo-Mensah; M.K. Adjaloo; P. Donkor
  14. Decentralization and local public services in Ghana: Do geography and ethnic diversity matter? By Akramov, Kamiljon T.; Asante, Felix Ankomah
  15. Improving Surveillance Across the CEMAC Region By Misa Takebe; Robert C. York; Noriaki Kinoshita; Plamen Iossifov; Zaijin Zhan
  16. Employment and Education Discrimination against Disabled Persons in Cape Verde By Échevin, Damien
  17. Economic viability of fertiliser use in Uganda's agriculture By Okoboi, Geofrey
  18. Growth Engines of the South? South Africa’s, Brazil’s and Turkey’s market constellations in comparison By Alper Duman; Arne Heise
  19. Do external grants to district governments discourage own-revenue generation?: A look at local public finance dynamics in Ghana By Mogues, Tewodaj; Benin, Samuel; Cudjoe, Godsway
  20. Economic growth and distribution of income: A growth model to fit Ghanaian data By Nelson, Harumi T.; Roe, Terry L.; Diao, Xinshen
  21. A latent class approach to investigating consumer demand for genetically modified staple food in a developing country: The case of GM bananas in Uganda By Kikulwe, Enoch; Birol, Ekin; Wesseler, Justus; Falck-Zepeda, José
  22. Farmer participation in supermarket channels and technical efficiency: The case of vegetable production in Kenya By Elizaphan J.O. Rao; Matin Qaim
  23. Renewed Growth and Poverty Reduction in Zambia By Bigsten, Arne; Tengstam, Sven
  24. An Assessment of the Effects of the 2002 Food Crisis on Children’s Health in Malawi By Renate Hartwig; Michael Grimm

  1. By: Victor Duarte Lledo; Irene Yackovlev; Lucie Gadenne
    Abstract: This paper documents cyclical patterns of government expenditures in sub-Saharan Africa since 1970 and explains variation between countries and over time. Controlling for endogeneity, it finds government expenditures to be slightly more procyclical in sub-Saharan Africa than in other developing countries and some evidence that procyclicality in Africa has declined in recent years after a period of sharp increase through the 1990s. Greater fiscal space, proxied by lower external debt, and better access to concessional financing, proxied by larger aid flows, seem to be important factors in diminishing procyclicality in the region. The role of institutions is less clear cut: changes in political institutions have no impact on procyclicality.
    Date: 2009–12–16
  2. By: Admasu Shiferaw (University of Göttingen); Arjun Bedi (International Institute of Social Studies, Erasmus University Rotterdam)
    Abstract: This paper analyzes the creation, destruction and reallocation of jobs to better understand the micro-dynamics of aggregate employment change in African manufacturing. The nature and magnitude of gross job flows are examined using a unique panel data of Ethiopian manufacturing establishments over the period 1996-2007. We also assess the relative importance of firm demographics, industry effects and business cycles for job flows. The rates and patterns of job creation and destruction in our sample are comparable to the findings from developed and emerging economies suggesting that African firms adjust their labor force in a manner broadly similar to firms elsewhere and that African labor markets are not uniquely restrictive to undermine job reallocation across firms. We also find, like in many other countries, that job reallocation is relatively higher in industries dominated by small and young establishments. Unlike in other regions, however, job reallocation in our sample is pro-cyclical and its cross-industry variation holds very little similarity with that of developed and emerging economies. Small firms in Africa create jobs mainly at the point of entry to a market with limited contribution to manufacturing employment through post-entry expansion.
    Keywords: Job Creation; Job Destruction; Job Reallocation; Firm Dynamics; Sub-Saharan Africa; Ethiopia
    JEL: J20 J23 J49
    Date: 2010–01–11
  3. By: Ibrahim A. Elbadawi; Linda Kaltani; Raimundo Soto
    Abstract: Generating sustained growth in Sub-Saharan Africa is one of the most pressing challenges in global development. As the region needs foreign assistance to jump start its development, foreign aid becomes crucial. However, aid booms can also lead to exchange rate overvaluation curtailing exports and growth. This paper provides new evidence on the impact of aid and overvaluation on growth and exports using a sample of 83 countries from 1970 to 2004. We find that aid fosters growth (with decreasing returns) but induces overvaluation. Overvaluation reduces growth but the effect is ameliorated by financial development. Finally, we find new evidence on the negative impact of overvaluation on export diversification and sophistication.
    Keywords: Africa, Sub Sahara, real exchange rate, misalignment, exports, growth
    Date: 2009
  4. By: Matsumoto, Tomoya; Yamano, Takashi
    Abstract: This paper investigates the reasons for the low application of external fertilizers on farms in Kenya and Uganda. The analysis uses a large panel of household data with rich soil fertility data at the plot level. The authors control for maize seed selection and household effects by using a fixed-effects semi-parametric endogenous switching model. The results suggest that Kenyan maize farmers have applied inorganic fertilizer at the optimal level, corresponding to the high nitrogen-maize relative price, in one of the two survey years and also responded to the price change over time. In Uganda, even the low application of inorganic fertilizer is not profitable because of its high relative price. The authors conclude that policies that reduce the relative price of fertilizer could be effective in both countries, while the efficacy of policies based on improving farmers'knowledge about fertilizer use will be limited as long as the relative price of fertilizer remains high.
    Keywords: Crops&Crop Management Systems,Climate Change and Agriculture,Climate Change Mitigation and Green House Gases,Fertilizers,Food Security
    Date: 2009–12–01
  5. By: George C. Anayiotos; Hovhannes Toroyan
    Abstract: The paper assesses the effects of certain institutional factors on financial sector development in Sub- Saharan Africa (SSA). Data Envelopment Analysis (DEA) is applied to determine the extent to which these institutions affect the financial sector, and to suggest which institutions play a more critical role in each country. Results suggest that institutional factors affect financial depth and access to financial services more than asset quality and profitability (measured by nonperforming loans (NPL) and return on equity (ROE). The results also suggest that depth of credit information has the strongest influence on the NPL ratio, and political stability affects access the most. Based on model findings, policy implications on prioritizing institutional reforms to enhance financial sector development are suggested for individual countries and for country groups.
    Keywords: Access to capital markets , Cross country analysis , Data analysis , Data quality assessment framework , Development , Economic models , Financial institutions , Financial sector , Governance , Political economy , Sub-Saharan Africa ,
    Date: 2009–11–24
  6. By: Takeshima, Hiroyuki
    Keywords: equilibrium displacement model, pivotal shift, Cassava, semisubsistence, market margins, double buffering, Development strategies,
    Date: 2009
  7. By: Akramov, Kamiljon T.
    Keywords: Decentralization, agricultural services, Input use, household survey data, agricultural services, poor farmers, fertilizer use, government, modern inputs, unobserved heterogeneity,
    Date: 2009
  8. By: Deressa, Temesgen T.; Hassan, Rashid M.; Ringler, Claudia
    Keywords: Vulnerability to climate extremes, Nile Basin of Ethiopia, Minimum daily income, Climate change,
    Date: 2009
  9. By: Alvaro Escribano Saez; J. Luis Guasch; Jorge Pena
    Abstract: This paper provides a systematic, empirical assessment of the impact of infrastructure quality on the total factor productivity (TFP) of African manufacturing firms. This measure is understood to include quality in the provision of customs clearance, energy, water, sanitation, transportation, telecommunications, and information and communications technology (ICT). We apply microeconometric techniques to investment climate surveys (ICSs) of 26 African countries carried out in different years during the period 2002–6, making country-specific evaluations of the impact of investment climate (IC) quality on aggregate TFP, average TFP, and allocative efficiency. For each country we evaluated this impact based on 10 different productivity measures. Results are robust once we control for observable fixed effects (red tape, corruption and crime, finance, innovation and labor skills, etc.) obtained from the ICSs. We ranked African countries according to several indices: per capita income, ease of doing business, firm perceptions of growth bottlenecks, and the concept of demeaned productivity (Olley and Pakes 1996). We divided countries into two blocks: high-incomegrowth and low-income-growth. Infrastructure quality has a low impact on TFP in countries of the first block and a high (negative) impact in countries of the second. We found heterogeneity in the individual infrastructure elements affecting countries from both blocks. Poor-quality electricity provision affects mainly poor countries, whereas problems dealing with customs while importing or exporting affects mainly faster-growing countries. Losses from transport interruptions affect mainly slower-growing countries. Water outages affect mainly slower-growing countries. There is also some heterogeneity among countries in the infrastructure determinants of the allocative efficiency of African firms.
    Keywords: Africa, Infrastructure, Total factor productivity, Investment climate, Competitiveness,
    JEL: D21 D24 D61 L60 O55 O57
    Date: 2009–11
  10. By: Markus Brückner; Antonio Ciccone
    Abstract: To learn more about the effect of economic conditions on civil war, we examine whether Sub-Saharan civil wars are more likely to start following downturns in the international price of countries’ main export commodities. The data show a robust effect of commodity price downturns on the outbreak of civil wars. We also find that Sub-Saharan countries are more likely to see civil wars following economic downturns in their main OECD export destinations.
    Date: 2009–12
  11. By: Margaret Chitiga; Ramos Mabugu; Hélène Maisonnave; Véronique Robichaud; Bernard Decaluwé
    Abstract: A dynamic computable general equilibrium model based on the PEP standard model developed by Decaluwé et al. (2009) is used to evaluate the impacts of the international crisis on the South African economy. However, we have changed some assumptions in order to better represent South African specificities. A major innovation in this regard is the modelling of unemployment and the influence of labour unions on the labour market. Two scenarios encompassing a severe and moderate recession are run. The effects of the crisis on the economy are really quite harsh, even in the moderate recession scenario, both in the short run and the long run. Indeed, the decrease of world prices combined with the drop of world demand lead to a decrease in production for many sectors with consequent laying off of workers. The impact on institutions is also worrying: agents see their income as well as their savings decreasing. The huge drop in firms’ savings has a dire impact on total investment while the huge negative impact on government accounts of protracted slow global growth imply tight public budgets for some time to come. Thus, some gains made by the government prior to the crisis may have been reversed by the economic crisis. It is apparent from the results that the impact of the crisis will drag into the long run with the situation still below what it would have been in the absence of a crisis until 2015.
    Keywords: Dynamic Computable General Equilibrium, Economic Crisis, South Africa
    JEL: D58 O55 F47
    Date: 2009
  12. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study analyzes the relationship between economic inequality and the spread of HIV among young Malawian women. We estimate multi-level logistic models of the individual probability of being HIV infected. Two different community levels are considered; the immediate neighbourhood, and Malawi’s districts. The main finding is a strong positive association between communal inequality and the risk of HIV infection. The relationship between HIV status and income, at the communal and the individual levels, is less clear-cut, but individual absolute poverty does not increase the risk of HIV infection. Further analysis shows that the HIV-inequality relationship is related to riskier sexual behavior, gender violence, and close links to urban areas, measured by return migration. It does not seem to be related to worse health in more unequal communities, or gender gaps in education or women’s market work.<p>
    Keywords: Africa; AIDS; communal; health; multilevel models; poverty; wealth
    JEL: I12
    Date: 2009–12–28
  13. By: P. Sarfo-Mensah (Kwame Nkrumah University of Science and Technology); M.K. Adjaloo (Kwame Nkrumah University of Science and Technology); P. Donkor (Kwame Nkrumah University of Science and Technology)
    Abstract: Ghana, like the rest of West Africa is experiencing tremendous human migration both internally and across international boundaries. Rural-urban migration has assumed uncontrollable dimensions in the sub-region and the social consequences have become major development challenge. In Ghana the mining communities have been at the receiving end for some time now. This study on the Obuasi Municipal Assembly (OMA) in the Ashanti region of Ghana explores the tremendous socioeconomic changes, especially demographic patterns as a result of the inflows of migrants into the Obuasi Township and its catchment area in search of non existing jobs especially in mining. A major outcome is the serious unemployment problem in the township with all the attendant social vices. A three-month socio-economic study of the municipality was carried out to determine the scope of unemployment. The study showed that there is acute unemployment situation in the municipality which is due to the fact that AngloGold Ashanti, a mining giant in Ghana, the major employer, has limited job openings especially for menial workers who flock to the company. Other income generating opportunities are few. Agriculture which has the capacity to employ majority of the unemployed youth does not appeal to them because it is considered not lucrative. The acute unemployment situation has contributed significantly to the high crime rate, prostitution and widespread illegal mining activities with their attendant problems. The study explores options that are feasible for a typical mining setting especially for the youth who are very vulnerable and susceptible to crime and other social vices. Job creation, through the development and implementation of sustainable programmes aimed at training the youth to acquire the necessary employable skills is one of the options considered by the municipal managers and their partners. The study also looks at broader policy implications for the Economic Community of West African States (ECOWAS).
    Keywords: Illegal Mining, Unemployment, AngloGold Ashanti, Social Vices, Agriculture, Mining Communities, Migration
    JEL: J60 J61
    Date: 2009–12
  14. By: Akramov, Kamiljon T.; Asante, Felix Ankomah
    Abstract: "This paper explores disparities in local public service provision between decentralized districts in Ghana using district- and household-level data. The empirical results show that districts' geographic locations play a major role in shaping disparities in access to local public services in Ghana. Most importantly, the findings suggest that ethnic diversity has significant negative impact in determining access to local public services, including drinking water. This negative impact is significantly higher in rural areas. However, the negative impact of ethnic diversity in access to local public services (drinking water) decreases as average literacy level increases. The paper relates the results to literature and discusses policy implications of main findings." from authors' abstract
    Keywords: Decentralization, Access to public services, Ethnic diversity, Geography, Development strategies,
    Date: 2009
  15. By: Misa Takebe; Robert C. York; Noriaki Kinoshita; Plamen Iossifov; Zaijin Zhan
    Abstract: In this paper, we consider the design of the surveillance, and, in particular, the fiscal criteria in the Central African Economic and Monetary Community (CEMAC) with the view to ensuring they are consistent with internal and external sustainability. This consistency is important within a monetary union because fiscal policy is the primary instrument through which national governments can influence macroeconomic performance. We comment on how surveillance might be improved by broadening the region's current criteria through alternative fiscal indicators, some focus on the scope and nature of external shocks, and attention to the consistency of policies in assuring the viability of the union and its fixed exchange rate regime.
    Keywords: Budget deficits , Business cycles , Central African Economic and Monetary Community , External shocks , Fiscal policy , Monetary policy , Monetary unions , Multilateral surveillance , Nonoil sector ,
    Date: 2009–11–25
  16. By: Échevin, Damien
    Abstract: This paper assesses the employment and school enrollment gaps between disabled and non-disabled persons using the last Cape Verdean census. The unexplained part of these gaps accounts for most of them, whatever the age group considered. Furthermore, differences in age structures between disabled and non-disabled persons have almost no effect on these gaps. Taking into account potential misclassification errors in the disability variable seems to change only marginally these results. These findings thus suggest that there is scope for programs to better target and promote employment and education of the disabled in Cape Verde.
    Keywords: disability; economic and social discrimination; misclassification; Cape Verde; Africa.
    JEL: J14 O55 J71
    Date: 2009
  17. By: Okoboi, Geofrey
    Abstract: We examine the viability of inorganic fertiliser use in Uganda, using the 2005/06 Uganda National Household Survey data. We also explore the farmers’ characteristics under which fertiliser use is more profitable. We find that inorganic fertiliser use is more profitable for only a few crops and less profitable or unprofitable for most crops, even when their yield is high. Furthermore, we find that farmer profit with fertiliser use increases with access to extension services and/or use of improved seeds. Thus, blanket promotion of fertiliser use, without a case-by-case consideration of fertiliser-crop profitability is likely to be counter-productive to the drive of increasing agricultural productivity and household income in Uganda. Hence, the drive to increase fertiliser use in Uganda can succeed only if farmers are widely sensitized not about the potential of fertiliser to increase yield but the crops on which fertiliser use is more profitable and the preconditions for its profitability.
    Keywords: Fertiliser use; economic viability; Uganda
    JEL: Q16 Q12
    Date: 2009–12
  18. By: Alper Duman (Department of Economics, Izmir University of Economics); Arne Heise (Department of Socioeconomics, Hamburg University; Department of Economics, Izmir University of Economics)
    Abstract: The world is experiencing its worst recession in 80 years. What started as US sub-prime financial turmoil has developed into the first global recession since the infamous ‘Great Depression’ of the early 1930s. However gloomy the perspectives for the very short term are, there will be a recovery eventually. South Africa, Brazil and Turkey (SABT) are among those countries that may be expected as emerging market economies (EME) not only to continue to converge towards per-capita income levels of highly developed nations but also to be the best candidates – next to China and India – of serving as the locomotives of world GDP- and trade growth after the depression. Of course, whether SABT are not merely potentially in a position to create a brighter future for their people and the world economy but can transform such potentials into reality, depends on economic governance pursued by governments and collective actors in these countries. Therefore, it appears interesting to inquire into the macroeconomic governance structures of SABT in order to assess their capabilities for enhancing growth and employment and to converge to the OECD average in the medium to long run.
    Keywords: Market constellations, policy regimes, institutions, Post Keynesianism, comparative economic systems
    JEL: O11 O17 P51 P52
    Date: 2009–12
  19. By: Mogues, Tewodaj; Benin, Samuel; Cudjoe, Godsway
    Keywords: Decentralization, Inter-governmental transfers, Local government, Internally generated revenues, Development strategies,
    Date: 2009
  20. By: Nelson, Harumi T.; Roe, Terry L.; Diao, Xinshen
    Keywords: Income distribution, economic growth, Development strategies,
    Date: 2009
  21. By: Kikulwe, Enoch; Birol, Ekin; Wesseler, Justus; Falck-Zepeda, José
    Keywords: genetically modified bananas, Consumers, Choice experiment, latent class model, preference heterogeneity, Science and technology, Genetic resources, Genetically engineered crops, Genetically modified crops,
    Date: 2009
  22. By: Elizaphan J.O. Rao (University of Göttingen); Matin Qaim (University of Göttingen)
    Abstract: Supermarkets and high-value exports are currently gaining ground in the agri-food systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on farming efficiency have hardly been studied. Using a survey of Kenyan vegetable growers and a stochastic frontier approach, we show that participation in supermarket channels increases mean technical efficiency by 19%. This gain is bigger at lower levels of efficiency, suggesting the potential for positive income distribution effects. However, disadvantaged farms often have problems in meeting strict supermarket requirements. Innovative market linkage initiatives can increase the probability of participation significantly.
    Keywords: supermarkets; small farms; technical efficiency; stochastic frontier; sample selection; Kenya
    JEL: Q12 O12 O13 D24
    Date: 2009–11–25
  23. By: Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Tengstam, Sven (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The Zambian economy has grown relatively fast over the last decade up to the current global financial crisis. This paper discusses the challenge of using these growing resources effectively to improve the welfare of the population and to reduce poverty. The poverty head count index is found to have declined from 1998 to 2004 by about 5.4 percentage points. This change can be decomposed into a 6.6 percentage point reduction due to growth and a 1.2 percentage point increase due to inequality change. Since poverty is most severe in the rural areas it is important to make agriculture more efficient by improving roads and electricity, extension services and education. Our discussion further highlights the need to improve tax revenue collection and efficiency in realising budget expenditure plans. An important reform to undertake would be to change the budget cycle. The private sector development strategy should make the country a more attractive destination for private investors by creating a better business environment and infrastructure. The country also needs a new trading arrangement with the EU. Poverty relevant social services such as health and education remain vital. The health sector needs to be strengthened both because it has an immediate effect on welfare and because it helps build and protect human capital that is essential for long-term growth. Also social protection might have a role to play. It might be possible to use schools for channelling resources to the poor. Finally, improved governance helps all other measures to become more efficient.<p>
    Keywords: Zambia; poverty estimates; economic policy; budget; private sector; social services
    JEL: O10
    Date: 2009–12–21
  24. By: Renate Hartwig (International Institute of Social Studies, Erasmus University Rotterdam); Michael Grimm (International Institute of Social Studies, Erasmus University Rotterdam)
    Abstract: In 2002 Malawi experienced a serious shortage of cereals due to adverse climatic conditions. The World Food Programme assumed that about 2.1 to 3.2 million people were threatened of starvation at that time. However, not much research has been undertaken to investigate the actual consequences of this crisis. In particular, little is known about how the crisis affected the health status of children. Obviously, quantifying the health impact of such a crisis is a serious task given the lack of data and the more general problem of relating outcomes to specific shocks and policies. In this paper a difference-in-difference estimator is used to quantify the impact of the food crisis on the health status of children. The findings suggest that at least in the short run, there was neither a significant impact on child mortality nor on malnutrition. This would suggest that the shock might have been less severe than initially assumed and that the various policy interventions undertaken at the time have been effective or at least sufficient to counteract the immediate effects of the crisis.
    Keywords: Child Mortality; Malnutrition; Food Crisis; Malawi
    Date: 2009–12–22

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