nep-afr New Economics Papers
on Africa
Issue of 2010‒06‒04
seventeen papers chosen by
Quentin Wodon
World Bank

  1. The African Financial Development Gap By Franklin Allen; Elena Carletti; Robert Cull; Jun "QJ" Qian; Lemma Senbet
  2. Staple Food Trade in the COMESA Region: The Need for a Regional Approach to Stimulate Agricultural Growth and Enhance Food Security By Nijhoff, Jan
  3. Patterns and Trends in Food Staples Markets in Eastern and Southern Africa: Toward the Identification of Priority Investments and Strategies for Developing Markets and Promoting Smallholder Productivity Growth. By Jayne, Thomas; Mason, Nicole; Myers, Bob; Ferris, Jake; Mather, David; Beaver, Margaret; Lenski, Natalie; Chapoto, Antony; Boughton, Duncan
  4. References to Africa in Adam Smith's Wealth of Nations and Some Key Propositions Surrounding Them By Amavilah, Voxi Heinrich
  5. A Case Study of Regulation in Zambiaâs Cotton Sector. By Tschirley, David L; Kabwe, Stephen
  6. On the Role of Government in Food Staples Markets: Perspectives from Recent Research and Implications for Mozambique By Tostão, Emilio; Tschirley, David L.
  7. Land abundance and economic institutions: Egba land and slavery, 1830-1914 By Fenske, James
  8. Low Malnutrition but High Mortality: Explaining the Puzzle of the Lake Victoria Region By Johannes Gräb; Jan Priebe
  9. Malawiâs Maize Marketing System By Jayne, T. S.; Sitko, Nicholas; Ricker-Gilbert, Jacob; Mangisoni, Julius
  10. Defining and measuring informal employment in South Africa: A review of recent approaches By Derek Yu
  11. Loud and clear? Can we hear when the SARB speaks? By Monique Reid; Stan du Plessis
  12. How Far Have Public Financial Management Reforms Come in Africa? By Andrews, Matt
  13. Etude sur la transmission des fluctuations et le calcul des prix de parité à lâimportation: cas pratique du riz et du maïs au Sénégal By Ndiaye, Mouhamadou; Niang, Moussa
  14. The Illusory Leader: Natural Resources, Taxation and Accountability By Eoin F. McGuirk; Eoin F. McGuirk
  15. Deals versus rules : policy implementation uncertainty and why firms hate it By Hallward-Driemeier, Mary; Khun-Jush, Gita; Pritchett, Lant
  16. Shifting trends in higher education funding By Pierre de Villiers; Liezl Nieuwoudt
  17. Export-Led growth hypothesis: Evidence from Cote d’Ivoire By N'GUESSAN BI ZAMBE, SERGE CONSTANT

  1. By: Franklin Allen; Elena Carletti; Robert Cull; Jun "QJ" Qian; Lemma Senbet
    Abstract: Economic growth in Africa has long been disappointing. We document that the financial sectors of most sub-Saharan African countries remain significantly underdeveloped by the standards of other developing countries. We examine the factors that are associated with financial development in Africa and compare them with those in other developing countries. Population density appears to be considerably more important for banking sector development in Africa than elsewhere. Given the high costs of developing viable banking sectors outside metropolitan areas, technology advances, such as mobile banking, could be a promising way to facilitate African financial development. Similarly to other developing countries, natural resources endowment is associated with a lower level of financial development in Africa, but macro policies do not appear to be an important determinant.
    Keywords: Africa, finance and growth, banks, institutions, population density
    JEL: O5 K0 G0
    Date: 2010
  2. By: Nijhoff, Jan
    Abstract: COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA Twenty Fourth Meeting of the Trade and Customs Committee Nairobi, Kenya 2-4 November, 2009
    Keywords: food security, Africa, grain, trade, food policy, Agricultural and Food Policy, Community/Rural/Urban Development, Food Security and Poverty, International Development, International Relations/Trade, q11, q18, q13,
    Date: 2009–11
  3. By: Jayne, Thomas; Mason, Nicole; Myers, Bob; Ferris, Jake; Mather, David; Beaver, Margaret; Lenski, Natalie; Chapoto, Antony; Boughton, Duncan
    Abstract: Accurate information on farmer and consumer behavior is the foundation for Identifying public investments and policies that can effectively promote national food security and income growth objectives. This report synthesizes recent findings on smallholder crop marketing behavior and urban consumption patterns in Eastern and Southern Africa, and their implications for public sector investments and policies to promote smallholder incomes and national food security.
    Keywords: food security, africa, smallholder markets, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, International Development, Marketing, q14, q13, q12, q11,
    Date: 2010–04
  4. By: Amavilah, Voxi Heinrich
    Abstract: Adam Smith sought to illustrate some of his propositions in The Wealth of Nations (WON) with examples from Africa. However, the examples were few, and many were neither profound nor instructive from a principles viewpoint. I find that Africa figures very little in the WON, and nearly every time it appears cursory. With 20/20 hindsight, one may conclude that opinions about Africa have remained invariant with respect to time. Final value-judgment about whether that is a good or bad thing rests with the reader.
    Keywords: Africa in Wealth of Nations; Adam Smith
    JEL: B31 O55 F10 N17 A11
    Date: 2010–05–26
  5. By: Tschirley, David L; Kabwe, Stephen
    Abstract: Cotton is an unquestioned success of Zambiaâs turn towards a market economy. After privatization in late 1994, seed cotton production rose from 32,000 metric tons (mt) to about 180,000 mt a decade later (three-year averages centered on 1994 and 2005). The number of farmers involved in the sector grew similarly, yields trended upwards (though slowly), and the country dramatically improved the quality of its lint, becoming the outstanding performer in Sub-Saharan Africa in this regard by the mid-2000s. Yet the sector has experienced two serious crashes since reform, both involving rampant credit default by farmers supported with seasonal input credit by ginning companies.
    Keywords: Zambia, Cotton, Africa, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Food Security and Poverty, International Development, q10, q11, q12,
    Date: 2010–04
  6. By: Tostão, Emilio; Tschirley, David L.
    Abstract: This brief reviews results of applied research regarding the role of government in staple food markets in East and Southern Africa. The purpose of the brief is to draw lessons for Mozambique as it decides how to use the grain storage silos it has been building since 2009. The authors suggest that: Mozambique is in an unusually strong position to take advantage of private sector activity to stabilize prices over time and space; Additional investment in road and rail infrastructure, incentives, and institutions, would help bring down transaction costs and allow private action to further stabilize prices; Additional stabilization, for those times when Mozambique has to rely on imports from the world market beyond what they normally make, could be obtained in a cost efficient manner using a financial reserve; and If the government chooses also to maintain a public physical reserve, then several conditions (listed in the brief) are necessary for operating this in a manner that improves market performance.
    Keywords: Africa, Mozambique, food security, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, International Development, Marketing, q18, q13, q12,
    Date: 2010–03
  7. By: Fenske, James
    Abstract: The ``land abundance'' view of African history uses sparse population to explain economic institutions. I provide supporting evidence from the Egba of Nigeria. I use early colonial court records to show that Egba institutions fit the theory's predictions. Before 1914, the Egba had poorly defined land rights, practiced extensive agriculture, relied on dependant and forced labor, and used labor to secure loans. There are two major exceptions. First, the Egba sold some land. Second, land disputes existed. These are explained by land scarcity when the Egba initially arrived at Abeokuta and by heterogeneity in the quality of land.
    Keywords: Africa; Nigeria; Property rights; land tenure; slavery; polygyny
    JEL: N17 O12
    Date: 2010–03–15
  8. By: Johannes Gräb; Jan Priebe (Georg-August-University Göttingen)
    Abstract: Comparing DHS data from 235 regions in 29 Sub-Saharan Africa countries, we find that the combination of low levels of malnutrition together with dramatically high rates of mortality, encountered in Kenya’s Lake Victoria territory, is unique for Sub-Saharan Africa. This paper explores the causes of this phenomenon in the Kenyan context. Our identification strategy consists of two parts. First of all, we apply multilevel regression models to control simultaneously for family and community clustering of the observed malnutrition and mortality outcomes. Secondly, to address unobserved but correlated factors, we exploit information from GIS and malaria databases to construct variables that capture additional components of children’s geographic, political and cultural environment. Our analysis reveals that beneficial agricultural conditions and feeding practices lead to the observed sound anthropometric outcomes around Lake Victoria. In contrast, high mortality rates rest upon an adverse disease environment (malaria prevalence, water pollution, HIV rates) and a policy neglect (underprovision of health care services). Even after controlling for these factors, a significant effect of the local ethnic group, the Luo, on mortality remains.
    Keywords: child mortality; undernutrition; multilevel modeling; Kenya
    JEL: I10 I30 O12 R12
    Date: 2010–05–26
  9. By: Jayne, T. S.; Sitko, Nicholas; Ricker-Gilbert, Jacob; Mangisoni, Julius
    Abstract: National food security in Malawi depends on improving the performance of maize markets. Ensuring that grain is consistently available at tolerable prices is crucial for consumersâ food security. At the same time, surplus producing farmers need to receive farm-gate prices consistently above production costs to intensify the use of fertilizer and other productivity enhancing technologies in a sustainable manner. These concerns give rise to the classic food price dilemma for policy makers in Malawi: how to keep prices low enough to ensure low income consumersâ access to food while keeping prices high enough to promote farm production incentives. These tensions cannot be avoided but they can be relieved through reducing food marketing margins, which shrink the wedge between producer and consumer prices. Moreover, Malawi faces major political and economic problems associated with food price instability especially given its dependence on rain fed agriculture in a region prone to drought. These issues show that improving the performance of maize markets is at the core of achieving sustainable food security and poverty reduction in Malawi.
    Keywords: food security, Malawi, maize, marketing, food policy, Agricultural and Food Policy, Community/Rural/Urban Development, Food Security and Poverty, International Development, Marketing, q12, q18,
    Date: 2010–02–06
  10. By: Derek Yu (Department of Economics, University of Stellenbosch and University of the Western Cape)
    Abstract: This paper reviews the Stats SA methodologies to measure informal employment before and after the introduction of the Quarterly Labour Force Survey (QLFS), as well as other recently proposed approaches (e.g., Devey, Skinner and Valodia, Heintz and Posel, etc.), so as to investigate the congruence, if any, between the various measures of the rate of informality. Furthermore, econometric techniques are used to investigate commonalities and differences in the way in which the different measures of informality are associated with demographic and employment characteristics. The results suggest that informal employment is much bigger if the post-2007 Stats SA methodology, which considers employment as informal regardless of whether the activities take place in the informal sector or not, is adopted.
    Keywords: South Africa, Household survey, Labour market trends, Informal employment
    JEL: J00
    Date: 2010
  11. By: Monique Reid (Department of Economics, University of Stellenbosch); Stan du Plessis (Department of Economics, University of Stellenbosch)
    Abstract: Inflation targeting is a forward-looking framework for monetary policy that has brought unprecedented transparency to the process of monetary policy. This paper aims to assess the degree to which the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has, since the introduction of inflation targeting, successfully communicated to the public its policy analysis, and, in particular, the expected future policy changes. This paper follows international literature (Rosa and Verga (2007), Ehrmann and Fratszcher (2005)) in constructing a numerical index that is used to reflect the information content of the SARB’s communications, specifically the monetary policy statements that accompanied each of the MPC meetings since 2000. Relating this index to subsequent policy decisions reveals the informativeness of the index and, by implication, the informativeness of the underlying monetary policy statements. This method allows us to judge, systematically, the degree to which the MPC has communicated successfully, and the evolution of that success over the past nine years. We find evidence that the MPC has succeeded in signalling their likely future policy decision with consistency over this period.
    Keywords: South Africa, Inflation targeting, Central bank communication, Effective monetary policy, forward-looking policy framework
    JEL: E42 E52 E58
    Date: 2010
  12. By: Andrews, Matt (Harvard University)
    Abstract: This paper asks how strong African Public Financial Management (PFM) has become, after a decade and more of reform. How well do African PFM systems in place now facilitate effective public financial management? Where are the next challenges and how can they be met? It analyzes recent PFM assessments in 31 governments to answer these questions, identifying patterns of strengths and weaknesses across the PFM system and across countries. In respect of the former, the study finds that budgets are made better than they are executed, practice lags behind the creation of processes and laws, and processes are stronger where concentrated actors are engaged. In respect of the latter, the study finds that different countries fall into different 'PFM performance leagues' and countries in the different leagues look very different to each other. A range of factors influence which league a country is associated with; including economic growth, stability, reform tenure and colonial heritage. On the basis of this evidence, the paper argues that existing reforms face limits that can only be overcome with adjustments in reform approach; with less focus on pushing reform technicalities and more on creating 'space' in which reform takes place, less concentration of engagements with small sets of actors and more on expanding engagements, and less emphasis on reproducing the same reform models and more on better understanding what context-appropriate reforms look like.
    Date: 2010–05
  13. By: Ndiaye, Mouhamadou; Niang, Moussa
    Abstract: Calculation of maize and rice parity prices in Senegal.
    Keywords: food security, Senegal, markets, parity prices, Agricultural and Food Policy, Community/Rural/Urban Development, Food Security and Poverty, International Development, Marketing, q11, q18,
    Date: 2010–01
  14. By: Eoin F. McGuirk (Institute for International Integration Studies, Trinity College Dublin); Eoin F. McGuirk
    Abstract: This paper proposes and tests a mechanism through which the natural resource curse can operate. I posit that, in the presence of high natural resource rents, leaders lower the burden of taxation on citizens in order to reduce the demand for democratic accountability. The theory is tested using micro-level data from public opinion surveys across 15 sub-Saharan countries, in addition to country-level data on natural resource rents, taxation and election proximity. It is found that an increase in natural resource rents decreases perceived tax enforcement, which in turn reduces the demand for regular, open and honest elections. Results are robust to alternative specifications. A supplementary analysis reveals that, consistent with the two-period model proposed, the effects are more acute closer to national elections. The findings support political-economy explanations of how natural resources affect economies, in which resource rents are purported to influence the decisions of the political elite through increased returns to staying in power.
    Keywords: Democracy; Political Economy; Natural Resources; Curses; Africa
    JEL: D73 O13 O55
    Date: 2010–05
  15. By: Hallward-Driemeier, Mary; Khun-Jush, Gita; Pritchett, Lant
    Abstract: Firms in Africa report"regulatory and economic policy uncertainty"as a top constraint to their growth. This paper argues that often firms in Africa do not cope with policy rules, rather they face deals: firm-specific policy actions that can be influenced by firm actions (such as bribes) and characteristics (such as political connections). Using Enterprise Surveydata, the paper demonstrates huge variability in reported policy actions across firms notionally facing the same policy. The within-country dispersion in firm-specific policy actions is larger than the cross-national differences in average policy. The analysis shows that variability in this policy implementation uncertainty within location-sector-size cells is correlated with firm growth rates. These measures of implementation variability are more strongly related to lower firm employment growth than are measures of"average"policy action. The paper shows that the de jure measures such as Doing Business indicators are virtually uncorrelated with ex-post firm-level responses, further evidence that deals rather than rules prevail in Africa. Strikingly, the gap between de jure and de facto conditions grows with the formal regulatory burden. The evidence also shows more burdensome processes open up more space for making deals; firms may not incur the official costs of compliance, but they still pay to avoid them. Finally, measures of institutional capacity and better governance are closely associated with perceived consistency in implementation.
    Keywords: Environmental Economics&Policies,Microfinance,Public Sector Corruption&Anticorruption Measures,Climate Change Policy and Regulation,Climate Change Economics
    Date: 2010–05–01
  16. By: Pierre de Villiers (Department of Economics, University of Stellenbosch); Liezl Nieuwoudt (Department of Economics, University of Stellenbosch)
    Abstract: The global increase in the demand for tertiary education, with higher education systems expanding in many countries from elite systems to universal access, necessitated changes to the nature of higher education financing. Tuition fees, or other charges (where it was previously free) were introduced, substantial increases in tuition fees (where fees previously did exist) took place and student aid systems moved away from grants towards student loans (to replace or supplement grants). The controversy and debate surrounding these issues were influenced by politics, legal issues, social policy issues and economic reasoning. The paper firstly considers the shift in higher education financing since the 1960s in light of the focus of economic thinking in the 1960s and 1970s (the human capital model, growth accounting, views on elite versus mass systems, the private/public nature of higher education and rates of return) compared to the more recent focus on primary education, private and social rates of return and cost sharing. The global typology of allocation mechanisms is then examined. Although a myriad of allocation systems is operational, a definite shifting trend from direct to indirect funding (to support students) of institutions can be identified. The paper subsequently explores the global workings, conditions and problems of income-contingent student loans (ICL) and then focuses on the South African trend in direct funding (including the current subsidy formula for higher education) and student support systems. The South African allocation system exhibits the global trend towards indirect funding and the South African ICL (NSFAS) is internationally highly commended.
    Keywords: Higher education, Public financing, Income contingent loan, Cost sharing
    JEL: H40 H52 I20
    Date: 2010
    Abstract: This paper re-examine the export-led growth hypothesis for Cote d’Ivoire using the Bounds test analysis: unrestricted error correction model (UECM) for the period 1980-2007. Based on the model, exports, labor force and economic liberalization policies have stimulated economic growth, whereas, imports and exchange rate negatively impacted on economic growth. The results indicate that there exists a long-term relationship between economic growth and its determinants in our model. In addition, the VAR Granger/Block-exogeneity Wald tests reveal an evidence of bi-directional causality between exports and economic growth. Thus findings have important messages for policy makers given that export sector dominance in Cote d’Ivoire economy.
    Keywords: Cote d’Ivoire; Economy growth; Cointegration; Causality test; Exports.
    JEL: C32 O55 F20 F43
    Date: 2010–05–29

This nep-afr issue is ©2010 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.