nep-afr New Economics Papers
on Africa
Issue of 2011‒02‒26
twelve papers chosen by
Quentin Wodon
World Bank

  1. Selective Secondary Education and School Participation in Sub-Saharan Africa: Evidence from Malawi By Jacobus de Hoop
  2. China in Africa: A Macroeconomic Perspective - Working Paper 230 By Benedicte Vibe Christensen
  3. A Labor Market Approach to the Crisis of Health Care Professionals in Africa By Andalón, Mabel; Fields, Gary
  4. The Returns to the Brain Drain and Brain Circulation in Sub-Saharan Africa: Some Computations Using Data from Ghana By Yaw Nyarko
  5. Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa By Simplice A, Asongu
  6. How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa. By Simplice A, Asongu
  7. Effects of Land Holding on School Enrollment in Rural Kenya By Kazuya Wada
  8. The Economics of Politics vs the Politics of Economics: Nigerian case By Nwaobi, Godwin
  9. Marrying Up: Forced Displacement and Youth Employment in the Aftermath of the Congo War: From making a living to making a life By Timothy Raeymaekers
  10. How Does the Institutional Setting for Creditor Rights Affect Bank Lending and Risk-Taking? By Mlambo, Kupukile; Murinde, Victor; Zhao, Tianshu
  11. Risk Attitudes and Profits among Small Enterprises in Nigeria By Judith Lammers; Daan Willebrands; Joop Hartog
  12. Estimating Demand for Nutrients in Nigeria: A Vector Error Correction Model By Ogundari, Kolawole

  1. By: Jacobus de Hoop (VU University Amsterdam)
    Abstract: Large scale tracking policies, allowing academically apt pupils to enter a select group of secondary schools, can be found in many Sub-Saharan countries. However, evidence on the impact of these policies on school outcomes, especially school participation, is limited. This paper fills this gap by providing regression discontinuity evidence on the impact of Malawi's tracking program. The analysis is based on unique institutional data covering an entire cohort of pupils. Estimates show that Malawi's tracking program raises school participation of top students without a reduction in pupil learning. These findings have implications for education policy in Sub-Saharan Africa.
    Keywords: education; Malawi; regression discontinuity; Sub-Saharan Africa; tracking
    JEL: I21 O15
    Date: 2010–04–15
  2. By: Benedicte Vibe Christensen
    Abstract: In recent years, China has dramatically expanded its financing and foreign direct investment to Africa. This expansion has served the political and economic interests of China while providing Africa with much-needed technology and financial resources. This paper looks at China's role in Africa from the Chinese perspective. the main conclusion is that China, as an emerging global player and one of Africa's largest trading and financial partners, can no longer ignore the macroeconomic impact of its operations on African economies. Indeed, it is in China's interest that its engagement leads to sustainable economic development on the contnent. Trade, financing, and technology transfer must continue at a pace that African economies can absorb without running up against institutional constraints, the capacity to service the costs to future budgets, or the balance of payments. A key corollary is that China should show good governance in its own operations in Africa. Finally, macroeconomic analysis needs to be supported by better analytical data and organization of decision making to support China's engagement in Africa.
    Keywords: China and Africa, Foreign Direct Investment
    Date: 2010–11
  3. By: Andalón, Mabel (University of Melbourne); Fields, Gary (Cornell University)
    Abstract: This paper adopts a labor market economics perspective to understanding the crisis of health care professionals in Africa. Five challenges resulting from this crisis are identified: a production challenge, an underutilization challenge, a distributional challenge, a performance challenge, and a financing challenge. Differences between the labor market approach and others used in the health field are noted. We conclude that more empirical data, a full labor market analysis, and the use of social benefit-cost criteria are all needed before policy recommendations to address any of these challenges can be confidently offered.
    Keywords: labor market, health care, Africa
    JEL: I11 J01 J08
    Date: 2011–02
  4. By: Yaw Nyarko
    Abstract: We look at the decision of the government or "central planner" in the allocation of scarce governmental resources for tertiary education, as well as that for the individual. We provide estimates of the net present values, or cost and benefits. These include costs of tertiary education; the benefits of improved skills of those who remain in the country; and also takes into account the flows of the skilled out of the country (the brain drain) as well as the remittances they bring into the country. Our results are positive for the net benefits relative to costs. Our results suggest that (i) there may be room for creative thinking about the possibility that the brain drain could provide mechanisms for dramatic increases in education levels within African nations; and (ii) by at least one metric, spending by African nations on higher education in this period yielded positive returns on the investment. Our results on the individual decision problem resolve a paradox in the returns to education literature which finds low returns to tertiary education.
    JEL: F35 F43 O0 O55
    Date: 2011–02
  5. By: Simplice A, Asongu
    Abstract: The role of Africa in world demographic change is primary and consequences on future investment dynamics could provide some insight on how unemployment, economic migration and other issues resulting there-from could be addressed. Using Johansen and Granger-causality models on data from 1977 to 2007, we investigate long-term effects of population growth on investment. Our study reinforces the lack of consensus over the impact of demographic change on economic growth. Main findings are, in the long-run, population growth will: (1) decrease foreign and public investments in Ivory Coast; (2) increase public and private investments in Swaziland; (3) deplete public investment but augment domestic investment in Zambia; (4) diminish private investment and improve domestic investment in the Congo Republic and Sudan respectively. For policy implications, the positive linkage of population growth to investment growth in the long-term should be treated with extreme caution, unless investment measures are adopted to utilize accruing work force. Family planning and birth control policies could also be considered in countries with little future investment avenues.
    Keywords: Productivity; investment; human capital; causality; Africa.
    JEL: O10 J00 C30 O40
    Date: 2011–01–15
  6. By: Simplice A, Asongu
    Abstract: Our generation is experiencing the greatest demographic transition and Africa is at the center of it. There is mounting concern over rising unemployment and depleting per capita income accruing there-from. We look at the issue in this paper from in a long run perspective by examining the nature of the relationship between population growth and a plethora of investment indicators: public, private, foreign and domestic investments. Using asymmetric panels on data spanning from 1977 to 2007, we investigate effects of population growth on investment from Granger causality models. Our findings reveal a long-run positive causal linkage from population growth to only public investment. But for domestic investment, permanent fluctuations in human capital affect changes in other forms of investments. Not unexpected, no significant short-run causal relationship is found. For economic implications, sampled countries should take family planning and birth control policies seriously. Though growth in population may appear not to have an impact on investment in the short spell, in the distant future, it strangles public finances. Therefore measures should be adopted such that, rising unemployment rate resulting from population growth be accommodated by private sector investments. Seemingly, structural adjustments policies implemented by sampled countries have not had the desired investment effects.
    Keywords: Productivity; investment; human capital; asymmetric panel; causality; Africa
    JEL: O10 J00 C33 O40
    Date: 2011–02–14
  7. By: Kazuya Wada
    Date: 2010–07
  8. By: Nwaobi, Godwin
    Abstract: Indeed, the recent emphasis on eco-political governance in Nigeria is unique in that it was initiated by external donors (international organizations) and not by domestic leaders under pressure from their own constituencies. Thus, while Nigeria have embraced the market economy and liberalized their policies; issues related to political participation, democracy and institution building have proven harder to tackle. This paper therefore argued that government must devote resources and political will to overcoming the harsh poverty experienced by the majority of Nigerians. In this regard, the emerging participatory e-development and traditional development strategies should not be seen as mutually exclusive but rather complementary (so as to avert the status of a failed state).
    Keywords: politics;economics;corruption;economy;Nigeria; e-development;ICT;participation;governance;policies; development;resources;new economy;financialcrisis;poverty; economicmanagement;electoralprocess;technology
    JEL: O38 O30 O33 P26 P16
    Date: 2011–02–05
  9. By: Timothy Raeymaekers
    Abstract: This paper tries to offer an indication of what it means to be young, displaced and looking for a job in a war-affected town of the Democratic Republic of Congo. Starting off as a sociological survey into the livelihoods of young displaced migrants in the city of Butembo, it subsequently integrates more critical views on the life making perspectives of these African youngsters, who appear to be affected as much by problems of daily survival as by a lack of access to decent jobs. The high entry gates these youngsters face in their quest for a decent living not only illustrates the explicitly political nature of Butembo’s job market in the aftermath of war, but also supports the claim that stories of daily survival and political categorization/marginalization remain inherently connected. The fact that this connection is often explicitly made in these youngsters’ imagination about a better life forces us to rethink critically the relationship between armed violence, livelihoods and economic markets in the aftermath of protracted conflicts.
    Date: 2011
  10. By: Mlambo, Kupukile; Murinde, Victor; Zhao, Tianshu
    Abstract: This paper investigates how the institutional setting for protection of creditor rights affects bank lending and risk-taking. An analytical model is specified to underpin banks‟ portfolio decisions, between loans and other earning assets such as government securities. The model is augmented with various metrics, which proxy the institutional setting for creditor rights, and is estimated and tested on an unbalanced three-dimensional dataset of commercial banks in 20 African countries for 1995-2008. It is found that three specific metrics induce banks to allocate a high proportion of their earning assets to loans: legal creditor rights; the efficient enforcement of creditor rights; and availability of information sharing mechanisms among banks. However, the three metrics appear to work through different channels. The enforceability of legal rights works not only through mitigating credit risks, but also through a composite effect of market competition and lower costs of information acquisition and contract enforcement. The legal rights metric and information sharing metric exclusively rely on the composite effect.
    Keywords: Africa; Bank risk-taking; Bank lending; Information sharing; Law enforcement; Creditor rights
    Date: 2011–02
  11. By: Judith Lammers (University of Amsterdam); Daan Willebrands (SEO Economic Research); Joop Hartog (University of Amsterdam)
    Abstract: This paper analyses the effect of risk attitudes of firm owners on profits among micro and small enterprises (MSEs) in Lagos, Nigeria. Higher risk perceptions are shown to have a significant positive effect on profits, whereas risk propensity has a negative or no effect. Education, age, being male, and firm size are all positively related to profit, while young firms earn lower profits. Overall, the results suggest that being aware and dealing cautiously with risk leads to higher profitability.
    Keywords: entrepreneurship; risk perception; risk behavior; profit; MSEs
    JEL: D12 L25 L26
    Date: 2010–05–19
  12. By: Ogundari, Kolawole
    Abstract: This article is designed to investigate the existence of relationship between daily per capita demand for nutrients (calorie, protein, and animal fat intake) and economic growth indicator measured by per capita real Gross Domestic Products (GDP). Using annual time series data covering 1961-2007 from Nigeria, the study employed vector error correction model (VECM). The daily per capita demands for nutrients are analyzed as endogenous variables while real per capita GDP was taken as exogenous variable. These series are defined in logarithm. Preliminary investigation revealed that the series were found to be I (1) process at initial level while the series become I (0) after first differences. The trace statistics test shows that the pear of the series on the daily per capita demand for nutrients and per capita real GDP are co-integrated. Hence, the results of VECM shows that in the long-run, per capita real GDP positively and significantly impact per capita demand for nutrients in Nigeria over the years. Specifically, we observed that 1% increase in real GDP significantly increases the demand for calorie, protein and animal fat by 0.073%, 0.068%, and 0.059%, respectively. Also, the result of the short-run dynamics indicated that the speed of adjustment of the demand for calorie, protein and animal fat intake towards long-run equilibrium relationship associated with the shocks in the real GDP from the previous period is about 29%, 41% and 26%, respectively in the current period. Furthermore, we noted that the result of the impulse response function lend support to the observation that real per capita GDP increases the demand for calorie, protein, and fat intake in Nigeria. Our findings provide no support for the hypothesis that growth in real GDP is constrained by the nutrient intake in the same period.
    Keywords: Real per capita GDP; calorie; protein; fat; long-run relationship; short-run dynamics; Nigeria
    JEL: O11 C32 P44
    Date: 2011–02–15

This nep-afr issue is ©2011 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.