nep-afr New Economics Papers
on Africa
Issue of 2011‒02‒05
ten papers chosen by
Quentin Wodon
World Bank

  1. Risks to Agribusiness Investment in Sub-Saharan Africa By Julie Wrobleski; Hendrik Wolff
  2. What is the Future of Internet in Africa? By Recuero Virto, Laura; Parvati-Goudry, Marianne
  3. Reforming Public Financial Management in Africa By Peterson, Stephen
  4. Transferts de fonds des migrants, pauvreté et inégalités au Mali. Analyse à partir de trois scénarios contrefactuels. By Gubert, Flore; Lassourd, Thomas; Mesplé-Somps, Sandrine
  5. Sub-Saharan Africa and G20 Responses to the Global Financial Crises: First, do not harm By Andreas Freytag; Peter Draper; Matthias Bauer
  6. Civil War, Sexual Violence and HIV Infections: Evidence from the Democratic Republic of the Congo By Isaac Kalonda-Kanyama
  7. Financing Social Protection in the Light of International Spending Targets: A Public Sector Spending Review By Hagen-Zanker, Jessica; McCord, Anna
  8. Local and Personal Networks in Employment and the Development of Labor Markets:Evidence from the Cut Flower Industry in Ethiopia By Yukichi Mano; Takashi Yamano; Aya Suzuki; Tomoya Matsumoto
  9. Child labor, school attendance and access to health care services by children: evidence from Ghana By Vincenzo Atella; Mariacristina Rossi
  10. AGOA Rules: The Intended and Unintended Consequences of Special Fabric Provisions By Edwards, Lawrence; Lawrence, Robert Z.

  1. By: Julie Wrobleski; Hendrik Wolff
    Date: 2010–02
  2. By: Recuero Virto, Laura; Parvati-Goudry, Marianne
    Abstract: In this paper, we present the role of information communications and the Internet, as tools for the deployment of innovative applications for Africa, showing that this is not an African matter since the same phenomenon took place fairly recently in the OECD countries. We then describe the work that remains to go for Africa to achieve full Internet access and usage, emphasizing in particular the role of governments in the use of public funds to create an environment facilitating the deployment of local content. Furthermore, we emphatise that there should be a paradigm shift in donors strategies by integrating broadband into human development but also into economic progress. Finally, we conclude by stressing the urgent need for engagement in peer learning.
    Keywords: Internet; Africa
    JEL: L97
    Date: 2010
  3. By: Peterson, Stephen (Harvard University)
    Abstract: Successful public sector reform is rare in Africa. Over twelve years, Ethiopia transformed its public financial management (PFM) to international standards and now has the third best system in Africa that is managing the largest aid flows to the continent. This article presents a framework for understanding PFM reform based on the Ethiopian experience. Reforms succeed when they are aligned with the four drivers of public sector reform: COPS--context, ownership, purpose and strategy. Public financial management is a core function of the state and its sovereignty and it is not an appropriate arena for foreign aid intervention--governments must fully own it, which was a key to the success of Ethiopia's reform. The purpose of PFM reform should be building stable and sustainable 'plateaus' of PFM that are appropriate to the local context and they should not be about risky and irrelevant 'summits' of international best practice. Plateaus not summits are needed in Africa. Finally, a strategy of reform has four processes: recognize, improve, change, and sustain. Ethiopia succeeded because it implemented a recognize-improve-sustain strategy to support the government policy of rapid decentralization. All too often, much of PFM reform in Africa is about the change task and climbing financial summits.
    Date: 2011–01
  4. By: Gubert, Flore; Lassourd, Thomas; Mesplé-Somps, Sandrine
    Abstract: Cet article examine l’impact distributif des transferts des migrants au Mali, à partir de l’enquête sur les niveaux de vie elim 2006. Nous construisons différents scénarios contrefactuels qui corrigent du biais de sélection des ménages avec migrants. Nous montrons que les transferts des migrants internationaux réduisent la pauvreté de 5 à 11 % au niveau national et l’indice de Gini d’environ 5 %. Les ménages appartenant aux quintiles les plus pauvres apparaissent plus dépendants des transferts pour assurer leur consommation du fait de dotations en capital physique et humain insuffisantes pour leur permettre d’accéder à d’autres sources de revenu.
    Abstract: Using a 2006 household survey in Mali, we compare current poverty rates and inequality levels with counterfactual ones in the absence of migration and remittances. With proper hypotheses on migrants and a selection model, we are able to impute a counterfactual income for households currently receiving remittances. We show that remittances reduce poverty rates by 5% to 11% and the Gini coefficient by about 5%. Households in the bottom quintiles are more dependent on remittances, which are less substitutable by additional workforce.
    Keywords: poverty; Afrique; inégalité; Migration; Remittances; pauvreté; Transferts; inequality; Africa;
    JEL: O55 O15 F24
    Date: 2010
  5. By: Andreas Freytag (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Peter Draper; Matthias Bauer
    Abstract: These days, plenty of cognoscenti in academia and politics share the common concern that the build-up of global macroeconomic imbalances threatens the international economy. While there is broad disagreement on the essence of what an imbalance exactly is, the term is generally associated with perceived macroeconomic disequilibria in balance of payments, but also fiscal and monetary policy. In the aftermath of the financial crisis the G20 leaders addressed these issues in the "Seoul Action Plan" adopted in November 2010. The G20 emphasizes the need for domestic policies directed to increase savings in the deficit countries and to increase absorption in the surplus countries. In this paper we assess the G20's desire, mostly on paper, in the light of its implications for sub-Saharan Africa. We first review how sub-Saharan Africa was hit by the crisis and consider prevailing crisis responses. We then assess whether the G20 is on the right track and whether the G20 is the appropriate "coordination" body to solve the dissonance problem of national economic policies. We conclude that there could be a potential positive impact of the "Seoul Consensus" on Africa, if the rich countries really abstain from trade protection measures and currency wars.
    Keywords: Sub-saharan Africa, Trade, Macro-Coordination, G 20, Crisis Response
    Date: 2011–01–27
  6. By: Isaac Kalonda-Kanyama (Department of Economics, The University of Kansas)
    Abstract: This paper estimates the effect of conflict and conflict-related vulnerability factors, namely sexual violence and economic vulnerability, on HIV prevalence rates. We find that HIV prevalence rates are higher in conflict-affected regions of the Democratic Republic of the Congo (DRC) than in non-conflict regions, and that sexual violence and economic vulnerability significantly affect HIV prevalence rates. Specifically we find that (i) HIV prevalence is 1.64 % higher in war-affected zones than elsewhere in the DRC; (ii) the impact of sexual violence in conflict-affected regions is 55 times greater than on average (1.10 % versus 0.02 %); (iii) Civil war and sexual violence jointly increase HIV infection rates by 1.45 %; (iv) Finally, economic conflict-related vulnerability does not explain HIV infection rates. In contrast, a one percent point decrease in the poverty incidence, that is a reduction in economic vulnerability, increases HIV prevalence rates by 0.048 % regardless of the situation of conflict.
    Keywords: AIDS, HIV, Civil war, sexual violence, DRC, Sub-Saharan Africa.
    Date: 2011–01
  7. By: Hagen-Zanker, Jessica; McCord, Anna
    Abstract: This study explores the ‘affordability’ of development targets in six key sectors (health, education, water and sanitation, agriculture and infrastructure), by means of an empirical study examining sectoral expenditure in five low income case study countries in sub-Saharan Africa (Ethiopia, Kenya, Malawi, Mozambique and Uganda) and comparing them with target levels of expenditure set out in recent international agreements to which sub-Saharan governments are signatories. The study has a particular focus on social protection in response to growing government and donor interest in the affordability of provision in this sector. This approach is taken in order to assess the limitations of the current ‘silo’ approach to sector financing which characterises much of the development financing discourse, and which results in the abstraction of one sector from the broader fiscal whole, to the detriment of overall fiscal coherence and realism. While this study looks at total expenditure per sector, it does not look at efficiency or outcomes of this spending. The report examines expenditure in 2006/ 2007 in relation to sector-specific international targets, assesses the shortfall, and then explores the fiscal feasibility of financing all six sectoral targets. The paper finds that meeting all the six targets simultaneously would require more than 100% of total government expenditure in four of the five case study countries, and 98% in the fifth, and that to meet these targets while retaining current levels of expenditure in other sectors would imply doubling current levels of government expenditure. Often it is claimed that developing country governments lack the political will to allocate resources to some sectors. However, this study suggests that the inadequacy of public expenditure in key sectors is also informed by the inherent impossibility of simultaneously meeting the range of international commitments to which developing counties are signatories. Current funding for basic social protection provision is between 0.1% and 0.7% of GDP in the case study countries, compared to target expenditure levels of 4.5% to achieve the goals of the basic social protection component of the AU Social Policy Framework. This study concludes that the social protection sector is in competition with the five other key development sectors and that not all goals can be met from available resources. While there may be potential to increase financing to this sector through the conventional range of instruments (efficiency savings, reallocation, increased borrowing, increased revenue generation, increased ODA or private sector financing) the social protection sector is in effect in competition with each of the other key development sectors in pursuit of any additional resources, and when considered in aggregate as part of the wider fiscal context, it is clear that meeting all targets is not realistic, and consequently that the development vision which underlies them, is challenged, even compromised by the fiscal reality. Input targets have a role to play in i) motivating greater effort in revenue generation (within the boundaries of sound macroeconomic policy) and ii) encourage governments and donors to prioritise spending by reallocating from low to high-priority sectors within existing budgets. While such targets can serve as useful lobbying mechanisms, spending targets should be taken ‘seriously but not literally’ (Wood, 2004): that is primarily as a guide and motivation for raising and spending public finance. This report does not conclude that such targets should be dropped, but it does caution against the argument that particular sectoral targets are ‘affordable’ in any objective sense. The report highlights the tension faced by governments between the need for good public financial management on the one hand, and the challenge of meeting international commitments on the other, raising the impossibility of meeting the key development spending targets simultaneously. Given the unavoidable overall financing shortfall, the key question becomes prioritisation of the use of existing resources, the opportunity cost of programming outside these sectors and non priority or ineffective use of resources within the sectors.
    Keywords: social protection; affordability; development targets; government budgets; Sub-Saharan Africa
    JEL: H54 E62 H55 H53 P41 F35 H51 O20 F53 H52 E61 H61
    Date: 2010–10
  8. By: Yukichi Mano (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Takashi Yamano (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Aya Suzuki (Foundation for Advanced Studies on International Development; National Graduate Institute for Policy Studies); Tomoya Matsumoto (National Graduate Institute for Policy Studies)
    Abstract: We examine the roles of local and personal networks in the employment process and the emergence and development of the labor market in Ethiopia’s growing cut flower industry. Using primary survey data of 320 workers randomly sampled from all 64 farms, we find that workers who were recruited informally using the social ties were paid less than the formally-recruited workers at hiring. However, these workers quickly increased their productivity, and the effect of social ties on wages disappeared over time. Further, we find that the development of labor market for this newly-emerged industry took place particularly within the industrial clusters (100 words).
    Keywords: Labor, Market, Cluster, Cut Flower, Ethiopia, Africa
    Date: 2011–01
  9. By: Vincenzo Atella; Mariacristina Rossi
    Abstract: The paper develops a simple two-period model relating child labor, child school attendance and child health care access in LDCs showing that child labor is positively correlated to access to health care services. In fact, higher medical expenditure generates better health and, therefore, higher child productivity. Accumulation of human capital, which generates higher future utility, comes at the expense of current productivity and consumption. The optimal choice of child labor is such that the marginal benefit of schooling is equal to the marginal productivity of child labor, which is enhanced by additional medical expenditure. Under this theoretical set-up we expect medical expenditure and child labor to be positively correlated, with parents caring more for their children if they contribute to household income. We explore these relationships using a micro data set from Ghana LSS for the year 1999. Empirical results confirm the model theoretical predictions.
    Keywords: Child labor; Health care demand; Human capital; Latent variables; multivariate Probit; Unobserved heterogeneity; LDCs
    JEL: I12 J13 J22 J28 J43
    Date: 2010
  10. By: Edwards, Lawrence (University of Cape Town); Lawrence, Robert Z. (Harvard Kennedy School)
    Abstract: Lesotho and other least developed African countries responded impressively to the preferences they were granted under the African Growth and Opportunities Act with a rapid increase in their clothing exports to the US. But this performance has not been accompanied by some of the more dynamic growth benefits that might have been hoped for. In this study we develop the theory and present empirical evidence to demonstrate that these outcomes are the predictable consequences of the manner in which the specific preferences might be expected to work. The MFA (Multi-fiber Arrangement) quotas on US imports of textiles created a favorable environment for low value-added, fabric-intensive clothing production in countries with unused quotas by inducing constrained countries to move into higher quality products. By allowing the least developed African countries to use third country fabrics in their clothing exports to the US, AGOA provided additional implicit effective subsidies to clothing that were multiples of the US tariffs on clothing imports. Taken together, these policies help account for the program's success and demonstrate the importance of other rules of origin in preventing poor countries from taking advantage of other preference programs. But the disappointments can also be attributed to the preferences because they discouraged additional value-addition in assembly and stimulated the use of expensive fabrics that were unlikely to be produced locally. When the MFA was removed, constrained countries such as China moved strongly into precisely the markets in which AGOA countries had specialized. Although AGOA helped the least developed countries withstand this shock, they were nonetheless adversely affected. Preference erosion due to MFN reductions in US clothing tariffs could similarly have particularly severe adverse effects on these countries.
    JEL: F00 F14 O00 O24
    Date: 2011–01

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