nep-afr New Economics Papers
on Africa
Issue of 2010‒10‒30
sixteen papers chosen by
Quentin Wodon
World Bank

  1. How to Increase the Growth Rate in South Africa? By Kumar, Saten; Pacheco, Gail; Rossouw, Stephanie
  2. The Role of Primary Commodities in Economic Development: Sub-Saharan Africa versus Rest of the World By Carmignani, Fabrizio; Chowdhury, Abdur
  3. Fiscal Regime Changes and the Sustainability of Fiscal Imbalance in South Africa: A Smooth Transition Error-Correction Approach By Samuel S Jibao; Niek Schoeman; Ruthira Naraidoo
  4. The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa Since 1961 By Steven Block
  5. Second best ? investment climate and performance in Africa's special economic zones By Farole, Thomas
  6. Nigeria: A Prime Example of the Resource Curse? Revisiting the Oil-Violence Link in the Niger Delta By Daniel Flemes; Thorsten Wojczewski
  7. Adapting to Climate Change An Integrated Biophysical and Economic Assessment for Mozambique By Arndt, Channing; Strzepeck, Kenneth; Tarp, Finn; Thurlow, James; Fant, Charles; Wright, Len
  8. Mozambique’s Elite – Finding its Way in a Globalized World and Returning to Old Development Models By Hanlon, Joseph; Mosse,, Marcelo
  9. Tramsission de la politique monétaire: le cas des pays de la CEMAC By MEZUI-MBENG, Pamphile
  10. Effect of Transaction Costs on Seller Decisions among Small-Holder Cassava Farmers in South-Eastern Nigeria By Okoye, B.C; Onyenweaku, C.E; Ukoha, O.O
  11. Free Primary Education in Kenya: An Impact Evaluation Using Propensity Score Methods By Milu Muyanga; John Olwande; Esther Mueni; Stella Wambugu
  12. An Ordered Probit Model Analysis of Transaction Costs and Market Participation by Small-Holder Cassava Farmers in South-Eastern Nigeria. By Okoye, B.C; Onyenweaku, C.E; Ukoha, O.O
  13. "Time and Poverty from a Developing Country Perspective" By Rania Antonopoulos; Emel Memis
  14. Money demand stability: A case study of Nigeria By Kumar, Saten; Webber, Don J.; Fargher, Scott
  15. Analysis of the Determinants of Total Factor Productivity among Small-Holder Cassava Farmers in Ohafia L.G.A of Abia State. By Ukoha, O.O; Okoye, B.C; Emetu, J
  16. Economic Development in Pre-Independence Botswana, 1820-1966: Historical Trends, Contributing and Countervailing Factors By Hlavac, Marek

  1. By: Kumar, Saten; Pacheco, Gail; Rossouw, Stephanie
    Abstract: Given the concern about the low growth rates in African countries, this paper deals with the issue of how to increase the said growth rates by using South Africa as a case study. This paper attempts to answer this question by examining the determinants of total factor productivity (TFP)and productivity growth. We utilise the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992). Our empirical methodology is based on the London School of Economics Hendry’s General to Specific Instrumental Variable method and Gregory and Hansen’s (1996a; 1996b) structural break technique. Our findings imply that variables like human capital, trade openness, foreign direct investment, financial efficiency, democracy and financial reforms improves TFP and productivity growth in South Africa. Importantly, the key determinants appear to be democracy and financial liberalisation.
    Keywords: Solow model; total factor productivity; productivity growth
    JEL: O10 O15
    Date: 2010–09–05
  2. By: Carmignani, Fabrizio (School of Economics The University of Queensland); Chowdhury, Abdur (Department of Economics Marquette University)
    Abstract: We study the nexus between natural resources and growth in Sub-Saharan Africa (SSA) and find that SSA is indeed special: resources dependence retards growth in SSA, but not elsewhere. The natural resources curse is thus specific to SSA. We then show that this specificity does not depend on the type of primary commodities on which SSA specializes. Instead, the SSA specificity appears to arise from the interaction between institutions and natural resources.
    Keywords: primary commodities, growth, institutions, Economics
    JEL: O13 O40 Q00 F43
    Date: 2010–09
  3. By: Samuel S Jibao (Department of Economics, University of Pretoria); Niek Schoeman (Department of Economics, University of Pretoria); Ruthira Naraidoo (Department of Economics, University of Pretoria)
    Abstract: In addition to the conventional linear cointegration test, this paper tests the asymmetry relationship between revenue and expenditure i.e. making a distinction between the adjustment of positive (budget surplus) and negative (budget deficit) deviations from equilibrium using quarterly data on South Africa. The paper reveals that government authorities in South Africa are more likely to react faster when the budget is in deficit than when in surplus and that the stabilisation measures by government are fairly neutral at low deficit levels, that is, at quarterly deficit levels of 4% of GDP and below. We conclude that the attempt to achieve fiscal sustainability via a reduction in expenditure on sectors conducive to economic growth might be prone to social and politically shocks which could render such fiscal policy unsustainable. In South Africa the main fiscal challenge, therefore, is to find ways through which the recent gains in fiscal solvency can be consolidated. The increasing tension amongst local communities complaining about poor service delivery by the government could be a recipe for fiscal unsustainability.
    Keywords: Smooth transition error correction model, Nonlinearity, Government intertemporal budget constraint, Fiscal sustainability
    JEL: C22 C51 H62
    Date: 2010–10
  4. By: Steven Block
    Abstract: Agricultural productivity growth in sub-Saharan Africa has been a qualified success. Total factor productivity growth has increased rapidly since the early 1980s. By the early 2000s, average annual TFP growth was roughly four times faster than it had been 25 years earlier. This period of accelerated growth, however, followed nearly 20 years of declining rates of TFP growth subsequent to independence in the early 1960s. Average agricultural TFP growth for sub-Saharan Africa was 0.14% per year during 1960 – 84, and increased to 1.24% per year from 1985 – 2002. The average over this period was approximately 0.6% per year, which accounts for 36% of the increase in total crop output over this period. These highly aggregated results conceal substantial regional and country-level variation. Expenditures on agricultural R&D, along with the reform of macroeconomic and sectoral policies shaping agricultural incentives, have played a substantial role in explaining both the decline and the rise in agricultural productivity. The case study of Ghana clearly reflects these broader findings.
    JEL: O13 O4 Q16
    Date: 2010–10
  5. By: Farole, Thomas
    Abstract: As an instrument of trade and investment policy, special economic zones have played a catalytic role in processes of industrialization, diversification, and trade integration in many countries, particularly in East Asia. However, in the African context, anecdotal evidence suggests the experience has been disappointing on the whole. Among the reasons why many zones underperform may be that they fail to establish a high quality investment environment -- this is, after all, one of the main promises that economic zones hold for investors. Drawing on original survey research, this paper presents a systematic analysis of the outcomes and the investment climate of economic zones programs in six African countries and four developing countries outside the region. The analysis finds that although performance across zones is mixed -- with Ghana and Lesotho in particular performing well on some measures -- African zones programs on the whole are underperforming in terms of attracting investment, facilitating exports, and creating jobs. Economic zones in Africa offer an improved business environment relative to what is available to firms based outside the zones; however, in comparison with the non-African countries in the survey, both absolute investment climate performance and relative improvements fall well short.
    Keywords: Environmental Economics&Policies,Emerging Markets,Debt Markets,Investment and Investment Climate,ICT Policy and Strategies
    Date: 2010–10–01
  6. By: Daniel Flemes (GIGA German Institute of Global and Area Studies); Thorsten Wojczewski (GIGA German Institute of Global and Area Studies)
    Abstract: Given the importance of the assertion or prevention of regional leadership for the future global order, this paper examines the strategies and resources being used to assert regional leadership as well as the reactions of other states within and outside the respective regions. Secondary powers play a key role in the regional acceptance of a leadership claim. In this article we identify the factors motivating secondary powers to accept or contest this claim. Three regional dyads, marked by different degrees of “contested leadership,” are analyzed: Brazil vs. Venezuela, India vs. Pakistan, and South Africa vs. Nigeria. The research outcomes demonstrate that the strategies of regional powers and the reactions of secondary powers result from the distribution of material capabilities and their application, the regional powers’ ability to project ideational resources, the respective national interests of regional and secondary powers, and the regional impact of external powers.
    Keywords: Brazil, India, South Africa, regional powers, regional and global order, leadership
    Date: 2010–02
  7. By: Arndt, Channing; Strzepeck, Kenneth; Tarp, Finn; Thurlow, James; Fant, Charles; Wright, Len
    Abstract: Mozambique, like many African countries, is already highly susceptible to climate variability and extreme weather events. Climate change threatens to heighten this vulnerability. In order to evaluate potential impacts and adaptation options for Mozambique, we develop an integrated modelling framework that translates atmospheric changes from general circulation model projections into biophysical outcomes via detailed hydrologic, crop, hydropower and infrastructure models. These sector models simulate a historical baseline and four extreme climate change scenarios. Sector results are then passed down to a dynamic computable general equilibrium model, which is used to estimate economy-wide impacts on national welfare, as well as the total cost of damages caused by climate change. Potential damages without changes in policy are significant; our discounted estimates range from US$2.3 to US$7.4 billion during 2003– 50. Our analysis identifies improved road design and agricultural sector investments as key ‘no-regret’ adaptation measures, alongside intensified efforts to develop a more flexible and resilient society. Our findings also support the need for cooperative river basin management and the regional coordination of adaptation strategies.
    Keywords: entrepreneurship, gender, women entrepreneurs, Africa
    Date: 2010
  8. By: Hanlon, Joseph; Mosse,, Marcelo
    Abstract: What makes elites developmental instead of predatory? We argue that Mozambique’s elite was developmental at independence 35 years ago. With pressure and encouragement from international forces, it became predatory. It has now partly returned to its developmental roots and is trying to use the state to promote the creation of business groups that could be large enough and dynamic enough to follow a development model with some similarities to the Asian Tigers, industrial development in Latin America, or Volkskapitalisme in apartheid South Africa. But Mozambique’s elite has also returned to two other traditions – that development is done by the elite and by foreigners. There is little support for development of local SMEs and agricultural development has been left to foreign-owned plantations.
    Keywords: Mozambique, elite, corruption, development, Guebuza, national capital
    Date: 2010
  9. By: MEZUI-MBENG, Pamphile
    Abstract: This article analyzes the process by which the monetary policy influences economies of the six countries of the Economic and Monetary Community of Central Africa (CEMAC) during the period 1980-2008. After having identified the channels of interest rate, credit and currency, we show that the monetary policy ended in differentiated effects on the economies of the sub-region. In particular, extent of the shocks on the variables of the monetary transmission led to important differences between the countries with short and long-term.
    Keywords: monetary tranmission, VAR models, CEMAC
    JEL: E0 C51 E52 B22 E01 C01
    Date: 2010–08–27
  10. By: Okoye, B.C; Onyenweaku, C.E; Ukoha, O.O
    Abstract: A linear probability model (LPM) analysis of seller decisions selling cassava on-farm (farm-gate) or off-farm (market) was derived and estimated consistent with a sample 216 farm households. Variables of proportional transaction costs have different effects on off-farm and on-farm market participation decisions. The seller type decision revealed that coefficients for have a personal means of transport, road conditions to the nearest town and marketing experience were positive and significantly related to increase in off-farm cassava sellers at 5% level of probability. The coefficient for distance from the house to the farm was negatively and significantly related to increase in farmers selling off-farm at 1% level of probability. The coefficients for crop transportation costs, distance to the nearest town, distance from the house to the farm and yield were negative and significant at 5% level of probability. These decisions to participate as an off-farm or on-farm seller were as a result of proportional transaction costs associated with participating in the market. It was found that unexpected transaction costs inhibit farm households from selling off-farm. The results therefore calls for policies aimed at infrastructural development especially on roads and establishment of bulking centers to mitigate transportation costs.
    Keywords: Transaction Costs; Seller Decisions and Cassava Farmers
    JEL: D23 D21 D2
    Date: 2010–08–10
  11. By: Milu Muyanga; John Olwande; Esther Mueni; Stella Wambugu
    Abstract: This paper attempts to evaluate the impact of the free primary education programme in Kenya, which is based on the premise that government intervention can lead to enhanced access to education especially by children from poor parental backgrounds. Primary education system in Kenya has been characterised by high wastage in form of low enrolment, high dropout rates, grade repetition as well as poor transition from primary to secondary schools. This scenario was attributed to high cost of primary education. To reverse these poor trends in educational achievements, the government initiated free primary education programme in January 2003. This paper therefore analyzes the impact of the FPE programme using panel data. Results indicate primary school enrolment rate has improved especially for children hailing from higher income categories; an indication that factors that prevent children from poor backgrounds from attending primary school go beyond the inability to pay school fees. Grade progression in primary schools has slightly dwindled. The results also indicate that there still exist constraints hindering children from poorer households from transiting to secondary school. The free primary education programme was found to be progressive, with the relatively poorer households drawing more benefits from the subsidy.
    Keywords: Primary education, Programme evaluation, Propensity score, benefit incidence analysis, Kenya
    JEL: I20 I21 I22
    Date: 2010
  12. By: Okoye, B.C; Onyenweaku, C.E; Ukoha, O.O
    Abstract: The Ordered Probit model analysis procedure was applied to determine the factors (related to fixed and variable transaction costs) influencing the decision to participate in cassava markets by a sample of 360 smallholder farmers in South-Eastern Nigeria. Participation decisions revealed that membership of cooperatives or social organizations, farming experience and marketing experience had a positive relationship with decision to be autarkic other than buyer and seller other than autarkic and significant at 1.0% level of probability. The coefficients for frequency of extension contacts, age, native of community, road conditions to the nearest town and yield were also positive and significantly related to decision to be autarkic other than buyer and seller other than autarkic at 5% level of probability. The coefficient for access to communication facilities was positive and significantly related to decision to remain autarkic other than buyer and seller other than autarkic. The coefficients for education, distance to the nearest town, distance from the farm to the market and crop transportation were negative and significantly related with the decision to remain autarkic other than a seller and buyer other than autarkic at 1% level of probability. The coefficient for gender was positive and significantly related to decision by female farmers to be autarkic other than buyer and seller other than autarkic. These decisions to participate as a buyer, seller or remain autarkic were as a result of fixed and proportional transaction costs associated with participating in the market.
    Keywords: Ordered Probit; Transaction Costs; Market Participation and Cassava
    JEL: D23 D21 D2
    Date: 2010–08–18
  13. By: Rania Antonopoulos; Emel Memis
    Abstract: This study is concerned with the measurement of poverty in the context of developing countries. We argue that poverty rankings must take into account time use dimensions of paid and unpaid work jointly. Reviewing the current state of the literature on this topic, our methodology introduces a critical but missing analytical distinction between time poverty and time deprivation. On this basis, we proceed to provide empirical evidence by using South African time use survey data compiled in 2000. Our findings show that existing methods that work well for advanced countries require modification when adopted in the case of a developing country. The results identify a group of adults who previously were inadvertently missing, as they were considered "time wealthy."
    Keywords: Time Poverty Measurement; Time Use; Poverty; Policy
    JEL: J22 J16 I32
    Date: 2010–05
  14. By: Kumar, Saten; Webber, Don J.; Fargher, Scott
    Abstract: This paper presents an empirical investigation into the level and stability of money demand (M1) in Nigeria between 1960 and 2008. In addition to estimating the canonical specification, alternative specifications are presented that include additional variables to proxy for the cost of holding money. Results suggest that the canonical specification is well-determined, the money demand relationship went through a regime shift in 1986 which slightly improved the scale economies of money demand, and money demand is stable. These findings imply that Nigeria could effectively use the supply of money as an instrument of monetary policy.
    Keywords: Money demand; Structural breaks; Cointegration; Monetary policy
    JEL: C22 E41
    Date: 2010–09–29
  15. By: Ukoha, O.O; Okoye, B.C; Emetu, J
    Abstract: The study analysed the determinants of total factor productivity by the use of OLS regression technique among small-holder cassava farmers in Ohafia Local Government Area of Abia State. The study data was collected through a multi-stage random sampling technique from 90 farmers in 2009. The coefficients for education and extension were negative and significantly related to total factor productivity (TFP) at 10%level of probability. The coefficients for age, fertilizer and access to credit were positive and significant at 1% level of probability. The coefficients for gender and household size were negative and significant at 1% level of probability. The results calls for policies aimed at provision of inputs especially fertilizer and credit targeted mostly on women farmers. Policies on increased education and extension contacts and birth control should be advocated for
    Keywords: Total Factor Productivity and Cassava
    JEL: D2 D29 D24
    Date: 2010–07–14
  16. By: Hlavac, Marek
    Abstract: This paper examines the trajectory of economic development in Botswana between the years 1820 and 1966, when it achieved independence. First, I review the historical trends in the country’s economic and social development indicators. I then proceed to analyze what factors have encouraged or hindered economic development in Botswana: In particular, I focus on the roles of physical geography, climate, disease ecology, economic and political institutions, geopolitical relations, demographic trends, as well as on ethnic divisions and cultural belief systems. Finally, I discuss how prepared Botswana was for modern economic growth when it gained independence in 1966.
    Keywords: Botswana; economic development; economic history; institutions; economic growth; economic geography
    JEL: N57 N47 O43
    Date: 2010–10–20

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.