nep-afr New Economics Papers
on Africa
Issue of 2011‒04‒02
thirteen papers chosen by
Quentin Wodon
World Bank

  1. A Preliminary Analysis of SACMEQ III South Africa By Nic Spaull
  2. Quantitative and qualitative aspects of education in South Africa: An analysis using the National Income Dynamic Study By Mia de Vos
  3. African Regional Integration: Implications for Food Security By Van Dijk, Michiel
  4. Growth in Africa Under Peace and Market Reforms By Gonzalo Salinas; Cheikh A. Gueye; Olessia Korbut
  5. Inflation Uncertainty and Relative Price Variability in WAEMU Countries By Kerstin Gerling; Carlos Fernandez Valdovinos
  6. Multi-membership and the effectiveness of regional trade agreements in Western and Southern Africa. A comparative study of ECOWAS and SADC By Afesorgbor, S.K.; Bergeijk, P.A.G. van
  7. Understanding Adoption of Soil and Water Conservation Techniques: The role of new owners By Remco H. Oostendorp; Fred Zaal
  8. Does Abolishing Fees Reduce School Quality? Evidence from Kenya By Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Justin Sandefur
  9. Envy and agricultural innovation: An Experimental Case Study from Ethiopia By Bereket Kebede; Daniel John Zizzo
  10. Combating chronic poverty in Uganda: towards a new strategy By Ssewanyana, Sarah
  11. Macroeconomic Variables and South African Stock Return Predictability By Rangan Gupta; Mampho P. Modise
  12. Farm Modelling for Interactive Multidisciplinary Planning of Small Grain Production Systems in the Western Cape, South Africa By Hoffman, Willem; Kleynhans, Theo
  13. Modeling Inflation in Chad By Tidiane Kinda

  1. By: Nic Spaull (Department of Economics, University of Stellenbosch)
    Abstract: The many and varied links between student socio-economic status and educational outcomes have been well documented in the South African economics of education literature. The strong legacy of apartheid and the consequent correlation between education and wealth have meant that, generally speaking, poorer students perform worse academically. The present study uses the recent Southern and East African Consortium for Monitoring Educational Quality (SACMEQ III) dataset for South Africa to identify those factors that have a significant effect on student maths and reading performance in Grade 6. The research confirms previous findings that socio-economic status, and particularly school socioeconomic status, is important when understanding student success or failure. Other factors which contribute significantly to student performance are homework frequency, preschool education, and the availability of reading textbooks. In contrast, teacher-subject knowledge was found to have only a modest impact on Grade 6 student performance. Policy interventions are also highlighted. The study concludes that South Africa is still a tale of two schools: one which is wealthy, functional and able to educate students, while the other is poor, dysfunctional, and unable to equip students with the necessary numeracy and literacy skills they should be acquiring in primary school. Nevertheless, it suggests that there are some options available to policy-makers which are expected to have a positive effect on student performance.
    Keywords: SACMEQ, South Africa, primary education, education, education production function, education policy, economics of education
    JEL: I20 I21 I28
    Date: 2011
  2. By: Mia de Vos (Department of Economics, University of Stellenbosch)
    Abstract: Based on a graphical and statistical analysis of the National Income Dynamic Study (NIDS), this paper provides a comprehensive picture of the educational context in South Africa. The main question under consideration is whether quantitative and qualitative educational attainment differs significantly along racial lines. The data shows that the government has been largely successful in reducing the race-based educational gap in terms of school enrolment and years of education successfully completed. Matriculation results and numeracy test scores unfortunately suggest that higher levels of educational attainment do not necessarily reflect positively on educational outcomes. This implies that the South African educational system is still characterized by large differentials in the quality of education.
    Keywords: Education quality, Cognitive skills, South Africa, Racial differential
    JEL: I21
    Date: 2011
  3. By: Van Dijk, Michiel
    Abstract: This report looks at the African regional trade, regional integration agreements (RIAs) and the implications for food security.An overview is presented on the present state of African regional integration and the determinants of regional trade in agriculture and food commodities. In particular the study focuses on eight target countries, related RIAs and a set of strategic food commodities. The evidence presented in this study shows that African countries have made progress in opening up agriculture and food trade with partner countries. With, the exception of Ghana, Tanzania and Mozambique, the effective applied tariff rates for regional trade partners are substantially lower than the (MFN) rates applied to world trade partners. Nonetheless, regional trade in agriculture and food only increased marginally between 1990 and 2009, and is relatively low in comparison with other developing regions. The weak state of soft and hard infrastructure, rather than high trade tariffs, seem to be the cause of this.
    Keywords: Regional integration agreements, Africa, Food security., Agricultural and Food Policy, Food Security and Poverty, International Development, International Relations/Trade,
    Date: 2011–03–08
  4. By: Gonzalo Salinas; Cheikh A. Gueye; Olessia Korbut
    Abstract: Economic stagnation in Sub-Saharan Africa (SSA) has led several economists to question the region’s ability to attain sustained economic growth, some of them arguing for the need to shift away from natural resource - based exports. Yet, we find that low growth has not been common to all SSA countries and that those that achieved political stability and significantly liberalized their economies experienced high growth in income per capita, as high as ASEAN-5 countries. This group of SSA countries attained high growth while maintaining their specialization in natural resource exports. Our analysis also rejects the hypothesis of reverse causality: that good growth performance allowed countries to attain political stability or liberalize their economies.
    Keywords: Cross country analysis , Economic growth , Economic reforms , Economic stabilization , Exports , Natural resources , Political economy , Sub-Saharan Africa , Trade liberalization ,
    Date: 2011–02–23
  5. By: Kerstin Gerling; Carlos Fernandez Valdovinos
    Abstract: Using a consistent dataset and methodology for all eight member countries of the West African Economic and Monetary Union (WAEMU) from 1994 to 2009, this paper provides evidence of the two major channels for real effects of inflation: inflation uncertainty and relative price variability. In line with theory and most evidence for advanced and emerging market economies, higher inflation increases inflation uncertainty and relative price variability in all WAEMU countries. However, the pattern, magnitude and timing of these two channels vary considerably by country. The findings raise several policy issues for future research.
    Keywords: Central banks , Cross country analysis , Economic models , Inflation , Inflation targeting , Monetary policy , Price elasticity , Prices , West Africa , West African Economic and Monetary Union ,
    Date: 2011–03–16
  6. By: Afesorgbor, S.K.; Bergeijk, P.A.G. van
    Abstract: Using a gravity model for 35 countries and the years 1995-2006 we estimate the impact of regional trade agreements in Africa (in particular ECOWAS and SADC) and compare this to the a benchmark of North South trade integration (Europe’s preferential trade agreement). We find that • ECOWAS and SADC membership significantly increases bilateral trade flows (and by more than for example preferential trade agreements with the EU do), • SADC membership has a stronger impact compared to ECOWAS and • that the impact of multi-membership critically depends on the characteristics of the overlapping RTA. We find a positive impact if an additional membership complements the integration process of the original RTA: overlapping memberships had a significant positive effect on bilateral trade within the ECOWAS bloc but it is insignificant for SADC.
    Keywords: Sub Sahara Africa;regional economic integration;South-South trade;North-South trade;intra-regional trade;gravity model;international trade;multi-membership
    Date: 2011–03–18
  7. By: Remco H. Oostendorp; Fred Zaal
    Abstract: This paper analyzes the adoption behavior of small holder farmers using comparable plot-level duration data for Kenya and The Philippines. We find that adoption behavior is strongly linked to the process of land ownership transfer. This relationship is found both for data from Kenya and The Philippines and is robust to the inclusion of unobserved village, household, plot and time effects. While previous studies on adoption using duration or panel data have focused on the role of various changing village- and household-level factors, no previous adoption study has emphasized the crucial role of land ownership changes.
    Keywords: Soil and water conservation; Land ownership; Duration analysis; Kenya; Philippines
    Date: 2011
  8. By: Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Justin Sandefur
    Abstract: In 2003 Kenya abolished user fees in all government primary schools. We find that this Free Primary Education (FPE) policy resulted in a decline in public school quality and increased demand for private schooling. However, the former did not reflect a decline in value added by public schools - as anticipated if fees contribute to local accountability - but rather the selection of weaker pupils into free education. In contrast, affluent children who exited to the private sector in response to FPE benefited from a strong, causal effect on their exam performance which is robust to selection on unobserved ability.
    Keywords: user fees; school quality; private schools
    JEL: H52 I22 O15
    Date: 2011
  9. By: Bereket Kebede; Daniel John Zizzo
    Abstract: The underlying motivations for envy or related social preferences and their impact on agricultural innovations are examined by combining data from money burning experimental game and household survey from Ethiopia. In the first stage of the money burning experimental game, income inequality is induced by providing different endowments and playing a lottery. In the second, people are allowed to decrease (‘burn’) other players’ money at their own expense. Conditional on individual behaviour, experimentally measured envious preferences from others have a negative effect on real life agricultural innovation.
    Keywords: envy; social preferences; money burning games; agricultural innovations; Ethiopia
    JEL: C93 O12 O55
    Date: 2011
  10. By: Ssewanyana, Sarah
    Abstract: Using a panel of 3,572 households in the Northern Uganda Social Action Fund (NUSAF) region interviewed in 2004 and in 2008, the paper provides new evidence on chronic poverty in Uganda. While progress in reducing poverty rates has been impressive from 64.6 percent to 52.2 percent, the levels remain high with a significant number of persistently poor households. Four in every ten households are chronically poor of which 44.9 percent are living in extreme chronic poverty. About 37.8 percent of the households are living in transient poverty of which 67.4 percent escaped poverty during the panel period. The substantial movements out of poverty can perhaps be explained largely by the relative return of peace in the region that enabled households to engage in agricultural activities. While at the aggregate level chronic poverty is significantly more prevalent than transient poverty, a mixed picture is observed at disaggregated level. The picture at aggregate level mirrors itself in the sub-regions of West Nile and Karamoja; but the reverse is observed in Lango sub-region. Chronic poverty is as equally prevalent as transient poverty in Acholi and Teso sub-regions. Overall, chronic poverty is disproportionately high among the Karamajongs. This calls for different kinds of anti-poverty interventions and public support. The paper further demonstrates that the characteristics and determinants of chronic and transient poverty are not always the same. The chronically poor households suffer from multidimensional deprivation including low incomes, low human capital development, inadequate access to infrastructure (especially input markets, trunk roads etc), and inability to access non-agricultural employment. On the other hand, the findings have demonstrated that ensuring peace in this part of the country is necessary for sustainable poverty reduction. The key policy messages: first, the on-going anti-poverty interventions such the Peace, Recovery and Development Plan (PRDP) and NUSAF II, among others, need to be refocused and targeted to ensure that the dynamic nature of poverty in this part of the country is taken into account. This will go a long way in improving the effectiveness of these interventions. Second, agriculture, whose productivity is low, remains the main source of income and employment to the households especially the chronically poor households. With the return of peace in the region, addressing the low agricultural productivity is likely to play a key role in the fight against chronic poverty. On the other hand, creation of employment outside the agricultural sector should be supported. There should be a deliberate strategy for investment in the poorest through asset accumulation â e.g. livestock re-stocking programme. The paper makes a case that chronic poverty should be recognized as a distinct dimension of poverty in governmentâs strategy against poverty if Uganda is to achieve MDG 1 by 2015.
    Keywords: chronic poverty, poverty dynamics, panel data, Uganda, Northern Uganda, EPRC, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Food Security and Poverty,
    Date: 2010–06
  11. By: Rangan Gupta (Department of Economics, University of Pretoria); Mampho P. Modise (Department of Economics, University of Pretoria and South African Treasury, Pretoria, South Africa)
    Abstract: We examine both in-sample and out-of-sample predictability of South African stock return using macroeconomic variables. We base our analysis on a predictive regression framework, using monthly data covering the in-sample period between 1990:01 and 1996:12, and the out-of sample period commencing from 1997:01 to 2010:06. For the insample test, we use the t-statistic corresponding to the slope coefficient of the predictive regression model, and for the out-of-sample tests we employ the MSE-F and the ENCNEW test statistics. When using multiple variables in a predictive regression model, the results become susceptible to data mining. To guard against this, we employ a bootstrap procedure to construct critical values that account for data mining. Further, we use a procedure that combines the in-sample general-to-specific model selection with tests of out-of-sample forecasting ability to examine the significance of each macro variable in explaining the stock returns behaviour. For the in-sample tests, our results show that different interest rate variables, world oil production growth, as well as, money supply have some predictive power at certain short-horizons. For the out-of-sample forecasts, only interest rates and money supply show short-horizon predictability. Further, the inflation rate shows very strong out-of-sample predictive power from 6-months-ahead horizons. When accounting for data mining, both the in-sample and the out-of-sample test statistics become insignificant at all horizons. The general-to-specific model confirms the importance of different interest rate variables in explaining the behaviour of stock returns, despite their inability to predict stock returns, when accounting for data mining.
    Keywords: Stock return predictability, Macro variables, In-sample tests, Out-of-sample tests, Data mining, General-to-specific model
    JEL: C22 C52 C53 G12 G14
    Date: 2011–03
  12. By: Hoffman, Willem; Kleynhans, Theo
    Abstract: Subject matter research has made many contributions to small grain production in the Western Cape province of South Africa, but much of this focuses on single commodities and is undertaken within conventional disciplinary boundaries (e.g. soil science, genetics, economics). The result is that the solutions offered often have knock-on effects that are not properly accounted for by researchers. Expert group discussions, as a research method, are suitable, firstly, for gathering information in a meaningful manner and, secondly, to stimulate individual creativity by presenting alternative perspectives provided by various participating experts. In support of expert group discussions, multi-period wholefarm simulation models were developed. This type of modelling supports the accurate financial simulation of farms, while the user-friendliness and adaptability thereof can accurately accommodate typical farm interrelationships, and quickly measure the financial impact of suggested changes to parameters. Suggestions made by experts during the group discussions can thus be quickly introduced into the model. The financial implications are instantly available to prevent further exploration of nonviable plans and to fine-tune the viable plans. In this study, for each relatively homogeneous production area of the Western Cape, a typical farm budget model was developed, which served as the basis for the group discussions. The budget models measure profitability in terms of IRR (internal rate of return on capital investment) and affordability in terms of expected cash flow. The homogeneous areas identified were Koeberg/Wellington, the Middle Swartland and the Rooi Karoo, the Goue Rûens, Middle Rûens and Heidelberg Vlakte. For each area, the expected impact of climate change, fluctuating product and input prices, and the possible impact of partial conversion to bio-fuel production were evaluated in terms of expected impact on profitability. Various area-specific strategies were identified that could enhance the profitability of grain production: most of the strategies focused on optimising machinery usage and expanding or intensifying the livestock enterprise.
    Keywords: whole-farm modelling, expert group discussions, Farm Management,
    Date: 2011
  13. By: Tidiane Kinda
    Abstract: This paper examines the determinants of inflation in Chad using quarterly data from 1983:Q1 to 2009:Q3. The analysis is based on a single-equation model, completed by a structural vector auto regression model to capture inflation persistence. The results show that the main determinants of inflation in Chad are rainfall, foreign prices, exchange rate movements, and public spending. The effects of rainfall shocks and changes in foreign prices on inflation persist during six quarters. Changes in public spending and the nominal exchange rate affect inflation during three and four quarters, respectively.
    Keywords: Chad , Consumer price indexes , Demand , Demand for money , Economic models , Government expenditures , Inflation ,
    Date: 2011–03–14

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