nep-afr New Economics Papers
on Africa
Issue of 2010‒04‒04
twelve papers chosen by
Quentin Wodon
World Bank

  1. Suburbanization and Residential Desegregation in South Africa's Cities By Naude, Wim
  2. Conspicuous Consumption and Race: Evidence from South Africa By Wolfhard Kaus
  3. Growth, History, or Institutions? What Explains State Fragility in Sub-Saharan Africa By Bertocchi, Graziella; Guerzoni, Andrea
  4. Supermarkets, farm household income, and poverty: Insights from Kenya By Elizaphan J.O. Rao; Matin Qaim
  5. The marginal propensity to earn, consume and save out of unearned income in South Africa By Bengtsson, Niklas
  6. The strategic implications of black empowerment in South Africa: a case study of boundary choice and client preferences in a small firm By Willem H. Boshoff
  7. A macroeconomic credit risk model for stress testing the South African banking sector By Havrylchyk, Olena
  8. Dar es Salaam as a 'Harbour of Peace' in East Africa: Tracing the Role of Creolized Urban Ethnicity in Nation-State Formation By Fahy Bryceson, Deborah
  9. Pegging the future West African single currency in regard to internal/external competitiveness: a counterfactual analysis By Gilles Duffrenot; Kimiko Sugimoto
  10. Who Wants to Work in a Rural Health Post? The Role of Intrinsic Motivation, Rural Background and Faith-Based Institutions in Rwanda and Ethiopia By Serneels, Pieter; Montalvo, Jose G.; Pettersson, Gunilla; Lievens, Tomas; Butera, Jean Damascene; Kidanu, Aklilu
  11. A counterfactual analysis of the poverty impact of economic growth in Cameroon By Essama-Nssah, B.; Bassole, Leandre
  12. Ghana’s National Health Insurance Scheme in the Context of the Health MDGs – An Empirical Evaluation Using Propensity Score Matching By Joseph Mensah; Joseph R. Oppong; Christoph M. Schmidt

  1. By: Naude, Wim
    Abstract: Population density gradients for South Africa’s cities are quite small in absolute value, indicating a relatively flat population distribution across the cities. In contrast employment is less flatly distributed than the population. The relationship between employment densities and distance across South African cities has remained constant between 1996 and 2001 whilst there has been on average a slight increase in population density further away from the city centres. As per capita income of the population rises, density in the central city areas decreases. Employment growth has no significant impact on suburbanization indicating that population settlement does not necessarily follow jobs. Finally, it is found that there have been decreases in segregation in South Africa’s metropolitan cities since 1996 especially in the former white group areas, which could suggest that the formerly spatially excluded black population is slowly moving into former white areas, which are also closer to where economic activities are located.
    Keywords: suburbanization, segregation, South Africa
    Date: 2010
  2. By: Wolfhard Kaus
    Abstract: A century ago, Thorstein Veblen introduced socially contingent consumption into the economic literature. This paper complements the scarce empirical literature by testing his conjecture on South African household data and finds that Black and Coloured households spend relatively more on visible consumption than comparable White households. In an emerging economy context, this is especially important as it carries implications for spending on future assets. This paper explores whether the differences in visible expenditures can be explained with a signaling model of status seeking. Among Black households, spending on visible consumption is found to change predictably with different reference group incomes.
    Keywords: Conspicuous consumption, Signaling, Status, South Africa Length 22 pages
    JEL: D12 D83 J15 O12
    Date: 2010–03
  3. By: Bertocchi, Graziella (University of Modena and Reggio Emilia); Guerzoni, Andrea (University of Modena and Reggio Emilia)
    Abstract: We explore the determinants of state fragility in sub-Saharan Africa. Controlling for a wide range of economic, demographic, geographic and istitutional regressors, we find that institutions, and in particular the civil liberties index and the number of revolutions, are the main determinants of fragility, even taking into account their potential endogeneity. Economic factors such as income growth and investment display a non robust impact after controlling for omitted variables and reverse causality. Colonial variables reflecting the history of the region display a marginal impact on fragility once institutions are accounted for.
    Keywords: state fragility, Africa, institutions, colonial history
    JEL: O43 H11 N17
    Date: 2010–03
  4. By: Elizaphan J.O. Rao (Georg-August University Goettingen); Matin Qaim (Georg-August University Goettingen)
    Abstract: The expansion of supermarkets in developing countries may have far-reaching consequences for poverty and rural development. While previous studies have compared farm profits between participants and non-participants in supermarket channels, wider household welfare effects have hardly been analyzed. Moreover, structural differences between the two groups have been ignored. We address these issues by using endogenous switching regression and building on a survey of vegetable farmers in Kenya. Participation in supermarket channels is associated with a 50% gain in average household income, leading to significant poverty reduction. To realize these benefits on a larger scale will require institutional and policy support.
    Keywords: supermarkets; household income; sample selection; endogenous switching regression; Kenya; Africa
    Date: 2010–03–24
  5. By: Bengtsson, Niklas (Department of Economics)
    Abstract: We use a rapid introduction of an unconditional cash grant (child support) in South Africa to estimate the marginal propensity to consume and earn out of a permanent change in unearned income. We find that the marginal propensity to earn is about to -0.25 for single-adult households, and somewhat lower for households with more than one adult. A very small fraction of the grant is saved. All in all, the marginal propensities estimated here are all similar to those reported in comparable papers using US data. However, they stand in contrast to some results on conditional cash transfers in other developing countries.
    Keywords: Social policy; Poverty reduction; Labor Supply; Earnings; Savings; Expenditure; Stone-Geary utility
    JEL: H31 J22 O23
    Date: 2010–03–24
  6. By: Willem H. Boshoff (Department of Economics, University of Stellenbosch)
    Abstract: This paper initiates a research programme on the strategic implications of BEE, through an in-depth case study of a small South African services firm. The case involves a meter-reading firm that has adapted flexible boundaries within the value chain to accommodate heterogeneous client preferences shaped by BEE policy. While the case is very specific, the analysis highlights three core features of BEE policy as a strategic variable. Firstly, the case supports an assertion that BEE policy is a demand-based intervention, altering client preferences regarding the value chain. Secondly, the case confirms that BEE is a market-based policy that may be implemented in a variety of ways by different clients. Thirdly, the case shows that firms do not passively respond to BEE policy but explore strategic responses that balance BEE requirements with other organizational goals.
    Keywords: Boundaries, Vertical integration, Demand-side; Black empowerment
    JEL: L22 M14
    Date: 2010
  7. By: Havrylchyk, Olena
    Abstract: In this study a macroeconomic credit risk model for stress testing the South African banking sector was developed. The findings demonstrate that macroeconomic shocks have a large impact on credit losses. However, owing to a high level of current capitalisation, the South African banking sector is resilient to severe economic shocks. At the same time, banks are rather sensitive to changes in real interest rates and property prices due to the high share of mortgages at flexible interest rates in their credit portfolios.
    Keywords: macro stress testing; financial stability; credit risk
    JEL: G18 G21
    Date: 2010–03
  8. By: Fahy Bryceson, Deborah
    Abstract: Dar es Salaam is exceptional in East Africa for having a record of relatively little ethnic tension, and remaining tranquil and true to its name, the ‘harbour of peace’. This paper explores the interface between ethnic and national identities in Tanzania’s capital city, focusing on its ethnic foundations and their malleability with regard to nationalism, asking how nationalist identities were negotiated vis-à-vis existing local ethnic identities. How willing were ethnic groups that were indigenous to the locality to ‘share’ the city, its land, and amenities with newcomer compatriots, given that the city was almost as new as the nation-state? How did their modus operandi affect nation-building?
    Keywords: nation-state, Tanzania, nationalism, urbanization
    Date: 2010
  9. By: Gilles Duffrenot; Kimiko Sugimoto
    Abstract: This paper compares different nominal anchors in the case of a fixed exchange rate regime for the future single regional currency of the Economic Community of the West African States (ECOWAS). We study the anchor choice when the countries focus the exchange rate policy to promote internal and external competitiveness. We consider four foreign anchor currencies: the us dollar, the euro, the yen and the yuan. Using a counterfactual analysis, we find little support for a dominant peg in the ECOWAS zone. In attempting to select an anchor currency, as regards internal and external competitiveness, several aspects need to be taken into consideration: the variability of the commodity prices, adverse downward trend movements, the stability of export revenues and the invoicing currency. A discriminating element is the direction toward which the anchor currency moves, while the world price of commodities evolves in the opposite direction. Our simulations show that the countries would not agree on the same anchor if they pursue several goals: maximizing the export revenues, minimizing their variability, stabilizing them and minimizing the real exchange rate misalignments from its fundamental value.
    Keywords: West Africa, peg, counterfactual analysis, commodity prices
    JEL: F31 O11 O55
    Date: 2010–02–01
  10. By: Serneels, Pieter (University of East Anglia); Montalvo, Jose G. (Universitat Pompeu Fabra); Pettersson, Gunilla (University of Essex); Lievens, Tomas (Oxford Policy Management); Butera, Jean Damascene (Abt Associates, Inc.); Kidanu, Aklilu (Miz-Hasab Research Center)
    Abstract: Most developing countries face shortages of health workers in rural areas. This has profound consequences for health service delivery, and ultimately for health outcomes. To design policies that rectify these geographic imbalances it is vital to understand what factors determine health workers' choice to work in rural areas. But empirical analysis of health worker preferences has remained limited due to the lack of data. Using unique contingent valuation data from a cohort survey of 412 nursing and medical students in Rwanda, this paper examines the determinants of future health workers' willingness to work in rural areas, as measured by rural reservation wages, using regression analysis. These data are also combined with those from an identical survey in Ethiopia to enable a two-country analysis. We find that health workers with higher intrinsic motivation – measured as the importance attached to helping the poor – as well as those who have grown up in a rural area, and Adventists who participate in a local bonding scheme are all significantly more willing to work in a rural area. The main Rwanda result for intrinsic motivation is strikingly similar to that obtained for Ethiopia and Rwanda together. These results suggest that in addition to economic incentives, intrinsic motivation and rural origin play an important role in health workers' decisions to work in a rural area, and that faith-based institutions matter.
    Keywords: health care delivery, health workers, labour supply, public service
    JEL: J22 I11
    Date: 2010–03
  11. By: Essama-Nssah, B.; Bassole, Leandre
    Abstract: The Government of Cameroon has declared poverty reduction through strong and sustainable economic growth the central objective of its socioeconomic policy. This paper uses available household survey data to assess the performance of the economy with respect to this objective over the period 1996-2007. The authors use counterfactual decompositions based on both the Shapley method and the generalized Oaxaca-Blinder framework to identify proximate factors that might explain differences in observed outcomes over time, across regions and households. The concept of pro-poorness provides a basis for a normative evaluation of these outcomes. The analysis of changes in the size distribution of economic welfare reveals that formal sector employment, access to credit, education, and urban residence are characteristics that bring significantly high returns to households. Employment in smallholder agriculture has a negative impact on welfare across quantiles. Economic growth was accompanied by significant poverty reduction between 1996 and 2001. But poverty barely decreased between 2001 and 2007 due to very weak growth. Over the same period, household investment in human capital took a serious hit. Given the additional finding that the pattern of growth is characterized by urban bias and regional disparity, the overall assessment is that economic growth has been weakly pro-poor in Cameroon. There is therefore a need to re-examine and possibly reform the mechanisms governing the allocation of public resources designed to support individuals'efforts to improve their standard of living.
    Keywords: Rural Poverty Reduction,Achieving Shared Growth,Regional Economic Development,Inequality
    Date: 2010–03–01
  12. By: Joseph Mensah; Joseph R. Oppong; Christoph M. Schmidt
    Abstract: In 2003 the Government of Ghana established a National Health Insurance Scheme (NHIS) to improve health care access for Ghanaians and eventually replace the cashand- carry system. This study evaluates the NHIS to determine whether it is fulfi lling its purpose in the context of the Millennium Development Goals #4 and #5 which deal with the health of women and children. We use Propensity Score Matching techniques to balance the relevant background characteristics in our survey data and compare health outcomes of recent mothers who are enrolled in the NHIS with those who are not. Our fi ndings suggest that NHIS women are more likely to receive prenatal care, deliver at a hospital, have their deliveries attended by trained health professionals, and experience less birth complications. We conclude that NHIS is an eff ective tool for increasing health care access, and improving health outcomes.
    Keywords: Health insurance, prenatal care, Millennium Development Goals, Propensity Score Matching
    JEL: I18 O12 C21
    Date: 2009–12

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