nep-afr New Economics Papers
on Africa
Issue of 2011‒04‒23
eighteen papers chosen by
Quentin Wodon
World Bank

  1. The marginal propensity to earn and consume out of unearned income: Evidence using an unusually large cash grant reform By Bengtsson, Niklas
  2. Explaining the Growth of Government Spending in South Africa By James Alm; Abel Embaye
  3. Investigating Business Cycle Synchronization in West Africa By Simeon Coleman
  4. How can we learn whether firm policies are working in africa ? challenges (and solutions?) for experiments and structural models By McKenzie, David
  5. Examining the influence of access to improved water and sanitation sources on countries’ economic efficiency By Halkos, George; Tzeremes, Nickolaos
  6. Marginal Benefit Incidence Analysis of Public Spending in Nigeria By Reuben Adeolu Alabi; Oshobugie Ojor Adams; Chinonso Chinyere Chime; Ebehimerem Edith Aiguomudu; Sifawu Omokhefue Abu
  7. Effets de long terme du taux de change réel sur la balance commerciale nominale et réelle en zone Franc africaine By Chassem, Nacisse Palissy
  8. An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA By R. Quentin Grafton; Clay Landry; Gary D. Libecap; Sam McGlennon; Bob O’Brien
  9. Telemedicine and primary health: The virtual doctor project Zambia By Mupela, Evans; Mustarde, Paul; Jones, Huw
  10. Access to water in a Nairobi slum: women’s work and institutional learning By Crow, Ben D; Odaba, Edmond
  11. A la recherche des déterminants du taux de réussite de l'étudiant dans les universités du Cameroun : une analyse empirique By Chassem, Nacisse Palissy
  12. Use of Anthropometric Measures to Analyze How Sources of Water and Sanitation Affect Chidren’s Health in Nigeria By Adewara, Sunday Olabisi; Visser, Martine
  13. Long-term effects of a nutritional shock: the 1980 famine of Karamoja, Uganda By Marcela UmanaAponte
  14. Fiscal policy consistence and implications for macroeconomic aggregates: the case of Uganda By Hisali, Eria
  15. Engel curves, spatial variation in prices and demand for commodities in Côte d'Ivoire By Gbakou, Monnet Benoit Patrick; Sousa-Poza, Alfonso
  16. Assessment of the impacts of oil: Opportunities and challenges for economic development in Sudan By Nour, Samia Satti Osman Mohamed
  17. The network structure of mutual support links: Evidence from rural Tanzania By Margherita Comola
  18. Multi-Poverty in Cameroon: a Dimensional Scores Approach. Multi-pauvreté au Cameroun: Approche par les scores dimensionnels. By Paul Ningaye; Yemedjeu Tiomela; Virginie Takoutio Feudjio

  1. By: Bengtsson, Niklas (Uppsala Center for Labor Studies)
    Abstract: We use a rapid introduction of an unconditional cash grant (child support) in South Africa to estimate the marginal propensity to consume and earn out of unearned income. We find that the marginal propensity to earn is about –0.3 and the marginal propensity to consume about 0.7. Nothing of the grant appears to be saved; if anything, households dissave against future grant payments. The marginal propensities estimated here are similar to those reported in comparable papers using US data. However, they stand in contrast to some results on conditional cash transfers in other developing countries.
    Keywords: Child support; Labor supply; Robust regression; Least absolute deviation; South Africa
    JEL: H31 J22 O23
    Date: 2011–04–18
  2. By: James Alm (Department of Economics, Tulane University); Abel Embaye (Department of Economics, Andrew Young School of Policy Studies, Georgia State University)
    Abstract: What determines government spending in South Africa? The paper estimates the determinants of real per capita government spending in the Republic of South Africa, using annual data for the period 1960 to 2007, a tumultuous period during which South Africa experienced a variety of internally imposed changes (e.g., the abolition of apartheid, changes in political institutions) and externally generated shocks (e.g., war, oil shocks). Using multivariate cointegration techniques, we find that per capita government spending, per capita income, the tax share, and the wage rate are cointegrated, a result that supports the notion that government spending is associated not only with per capita income and the true cost of government service provision as given by the wage rate but also to the fiscal illusion caused by budget deficits. We also find evidence that per capita government spending was positively affected by external shocks. These external shocks seem to play a significant role in explaining the dynamics of government spending growth.
    Keywords: median voter theorem, government spending, cointegration, unit roots, error correction method
    JEL: C22 H50 H60
    Date: 2011–04
  3. By: Simeon Coleman
    Abstract: This paper contributes to the discussion on the long term sustainability of the embryonic second monetary union in Africa, the West African Monetary Zone (WAMZ). We analyse the level of economic and monetary integration in West Africa by analysing the degree of growth cycle synchronisation between five candidate countries over the past thirty years. Our empirical approach improves on the standard Pearson Correlation between trend and cyclical components of GDP by analyzing a measure of co-movement at higher frequencies between computed z-scores for all possible pairings of the candidate countries. Our results indicate a lack of a consistent pattern of synchronized growth cycles, which raises concerns about the economic sustainability of the WAMZ, as it implies that members may face significant stabilisation costs. Some policy implications are discussed.
    Keywords: Business cycles, monetary unions
    JEL: E32 E61 F42
    Date: 2011–04
  4. By: McKenzie, David
    Abstract: Firm productivity is low in African countries, prompting governments to try a number of active policies to improve it. Yet despite the millions of dollars spent on these policies, we are far from a situation where we know whether many of them are yielding the desired payoffs. This paper establishes some basic facts about the number and heterogeneity of firms in different sub-Saharan African countries and discusses their implications for experimental and structural approaches towards trying to estimate firm policy impacts. It shows that the typical firm program such as a matching grant scheme or business training program involves only 100 to 300 firms, which are often very heterogeneous in terms of employment and sales levels. As a result, standard experimental designs will lack any power to detect reasonable sized treatment impacts, while structural models which assume common production technologies and few missing markets will be ill-suited to capture the key constraints firms face. Nevertheless, the author suggests a way forward which involves focusing on a more homogeneous sub-sample of firms and collecting a lot more data on them than is typically collected.
    Keywords: Microfinance,Small Scale Enterprise,E-Business,ICT Policy and Strategies,Banks&Banking Reform
    Date: 2011–04–01
  5. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper evaluates the effect of access to improved water sources and sanitation on 41 sub-Saharan African (SSA) countries’ economic efficiency and growth. For this reason Data Envelopment Analysis (DEA), bootstrap techniques and probabilistic approaches are used. The empirical results indicate that SSA countries’ economic efficiency is positively influenced by the access of population both on improved water sources and sanitation. Finally, when the provision of access to improved water sources is provided to more than 50% of the population, the positive effect on countries’ economic efficiency is much greater compared to the effect of providing sustainable access to improved sanitation to the same proportion of population.
    Keywords: Water and sanitation; Sub-Saharan African countries; economic efficiency; DEA; nonparametric techniques
    JEL: O55 O10 C14 C61
    Date: 2011–04
  6. By: Reuben Adeolu Alabi; Oshobugie Ojor Adams; Chinonso Chinyere Chime; Ebehimerem Edith Aiguomudu; Sifawu Omokhefue Abu
    Abstract: This study estimates the progressivity of benefit, the average benefit incidence and the marginal benefit incidence of public spending on selected public services in Nigeria, using data from the Nigeria Bureau of Statistics (NBS) 2004 Living Standard Household Survey. The analyses were carried out using Distributive Analysis Stata Package (DASP) 2.1. The results of the analyses show that spending on public services in Nigeria is not pro-poor. The marginal benefit incidence of spending on public services in Nigeria indicates that the poorest group only benefits more than the richest group from extra spending on public services which they already have relatively high access to. Finally, we use the findings of this study to formulate policy recommendations to make public spending in Nigeria pro-poor in order to accelerate the speed at which the poor enjoy additional benefits from increased access to public services in the country.
    Keywords: Marginal Benefit, Public Spending, Nigeria
    JEL: H50 H51 H52 H53 H54
    Date: 2011
  7. By: Chassem, Nacisse Palissy
    Abstract: The purpose of this study is to determine the long-run effects of changes in real exchange rate on the nominal (in value) and real (in volume) trade balance for the countries of the African Franc zone. These countries together have a common currency: the CFA franc, whose parity with the euro is fixed. By applying the cointegration bounds testing approach of Pesaran et al. (2001) on annual data from 1970 to 2006, the study shows, for each of the countries studied, the existence of a long-run relationship between the real trade balance, the real national GDP, real world GDP and the real exchange rate. In addition, the study reverses the empirical validity of the Marshall-Lerner condition for almost all countries of the African Franc zone. On the contrary, the depreciation of the real exchange rate deteriorates the nominal trade balance of these countries. This result could be attributed to the value effect of the depreciation of the real exchange rate, but also to the contraction of the volume effect due to the low competitiveness of exports from these countries, coupled with the strong dependence of their economies in relation to imports of capital goods and equipment and certain consumer goods prized by the population. These last statements are confirmed by the effect on the real trade balance of the depreciation of the real exchange rate which is negative or null for at least 10 of the 14 countries of the African Franc zone.
    Keywords: eal exchange rate; Trade balance; Marshall-Lerner condition; Bounds testing approach of cointegration; African Franc zone
    JEL: C32 F32
    Date: 2011–04–09
  8. By: R. Quentin Grafton; Clay Landry; Gary D. Libecap; Sam McGlennon; Bob O’Brien
    Abstract: The paper provides an integrated framework to assess water markets in terms of their institutional underpinnings and the three ‘pillars’ of integrated water resource management: economic efficiency, equity and environmental sustainability. This framework can be used: (1) to benchmark different water markets; (2) to track performance over time; and (3) to identify ways in which water markets might be adjusted by informed policy makers to achieve desired goals. The framework is used to identify strengths and limitations of water markets in: (1) Australia’s Murray-Darling Basin; (2) Chile (in particular the Limarí Valley); (3) China (in particular, the North); (4) South Africa; and (5) the western United States. It identifies what water markets are currently able to contribute to integrated water resource management, what criteria underpin these markets, and which components of their performance may require further development.
    Date: 2010–12
  9. By: Mupela, Evans (UNU-MERIT); Mustarde, Paul (Virtual Development UK); Jones, Huw (Virtual Development UK)
    Abstract: This paper is a commentary on a project application of telemedicine to alleviate primary health care problems in Lundazi district in the Eastern province of Zambia. The project dubbed 'The Virtual Doctor Project' will use hard body vehicles fitted with satellite communication devices and modern medical equipment to deliver primary health care services to some of the neediest areas of the country. The relevance and importance of the project lies in the fact that these areas are hard-to-reach due to rugged natural terrain and have very limited telecommunications infrastructure. The lack of these and other basic services makes it difficult for medical personnel to settle in these areas, which leads to an acute shortage of medical personnel. The paper presents this problem and how it is addressed by 'The Virtual Doctor Project', emphasizing that while the telemedicine concept is not new in sub-Saharan Africa, the combination of mobility and connectivity to service a number of villages 'on the go' is an important variation in the shift back to the 1978 Alma Ata principles of the United Nations World Health Organization (WHO). This overview of the Virtual Doctor Project in Zambia provides insight into both the potential for ICT, and the problems and limitations that any 'real-world' articulation of this technology must confront.
    Keywords: Telemedicine, Satellite, Primary health, Alma Ata
    JEL: O25 O41 O43 O47 F15 F43
    Date: 2011
  10. By: Crow, Ben D; Odaba, Edmond
    Abstract: This paper describes the ways that households, and particularly women, experience water scarcity in a large informal settlement in Nairobi, Kenya, through heavy expenditures of time and money, considerable investments in water storage and routinized sequences of defer red household tasks. It then delineates three phases of adaptive water and social engineering undertaken in several informal settlements by the Nairobi Water Company in an ongoing attempt to construct effective municipal institutions and infrastructure to improve residential access to water and loosen the grip that informal vendors may have on the market for water in these localities.
    Keywords: slums, water supply, water markets, institutions, deliberative democracy, gender, household water storage, Kenya, Inequality and Stratification
    Date: 2010–11–01
  11. By: Chassem, Nacisse Palissy
    Abstract: The socio-economic crisis of the mid-1980s experienced by Cameroon has had multiple consequences including unemployment and deterioration of study and supervision conditions in universities. The current situation of universities in Cameroon is characterized by low success rates. The purpose of this study is to investigate the determinants of the success rate of the student in universities of Cameroon. To achieve this, a survey was conducted with 415 students from universities of the city of Yaoundé. The data show that the living conditions, visiting the university library and the PhD/Doctorate degree as the highest level of certificate the student intends to obtain, have a positive and significant impact on its success rate.
    Keywords: Success rate of the student; Cameroon
    JEL: I23 C21
    Date: 2011–04–13
  12. By: Adewara, Sunday Olabisi; Visser, Martine
    Abstract: We used 2008 DHS data sets to construct child height- and weight-for-age Z-scores and used regression analysis to analyze the effects of different sources of drinking water and sanitation on child health outcomes in Nigeria. We also calculated the probability of a child being stunted or underweight as our measure of malnutrition among children aged 0–59 months. Our results show that both child height and weight Z-scores are positive and significantly related to access to borehole and piped water, and negative and significant for well water. The probabilities of a child being stunted or underweight are both significantly lower for children drinking borehole or piped water, whereas well water has a positive and significant effect on these measures of child health. Children’s access to flush toilets is positive and significantly related to child height- and weight-for-age Z-scores, but the same measures are negatively related to children’s use of pit latrines. In line with this, the probability of a child being stunted or underweight is negative and significantly related to access to flush toilets, but positively related to pit latrines. Our results suggest that increasing access to, or providing, safe drinking water and flush toilets for households will significantly reduce the high incidence of malnutrition and water-borne diseases among children in Nigeria and should be a high priority for policymakers.
    Keywords: water, sanitation, weight-for-age Z-scores, height-for-age Z-scores, stunting, underweight, child, Nigeria
    JEL: D6 I1 I12 I21 Q5
    Date: 2011–04–11
  13. By: Marcela UmanaAponte
    Abstract: This paper uses the 1980 famine in Karamoja, Uganda, as a natural experiment to evaluate its possible long‐lasting cognitive and health effects. Results indicate a strong negative impact on the educational attainment of adults exposed to the famine in utero or infancy. They were less likely to be literate and completed less years of education. These negative effects increase (become more negative) when controlling for family‐level unobservables. The study exploits the Ugandan 1991 and 2002 censuses provided by the Integrated Public Use Microdata Series ‐ International (IPUMS‐I) and conducted by the Uganda Bureau of Statistics. These two unique datasets allow to link the place and date of birth of individuals with the timing and regional variation of the famine.
    Keywords: primary school, secondary school, transition, London, spatial analysis
    JEL: O12 O15 I12 J13 N37 N97
    Date: 2011–04
  14. By: Hisali, Eria
    Abstract: The relationship between growth in monetary aggregates and price changes continues to be a subject of considerable debate both in the academic and policy circles. Whereas the more âconservativeâ policy makers hold that growth in monetary aggregates bear proportionately on prices, âliberalsâ on the other hand suggest a fairly weak relationship and instead mainly attribute sustained price changes to other innovations (including structural weaknesses and poor productive capacity). This study employed vector autoregression techniques (and its variants) to examine both short term as well as long term interactions between selected macroeconomic aggregates with particular focus on the relationship between money growth and price changes. Results from both the reduced form vector autoregression specification and the contemporaneous structural vector autoregression show a weak causation from growth in monetary aggregates to price changes, but the link between changes in monetary aggregates and prices becomes stronger in the long run. The results also point to a strong relationship between price changes on the one hand and exchange rate depreciation, and past inflation outcomes on the other. The results imply a potential for increased revenue from monetisation, at least up to some feasible as well as the need to focus on other possible sources of price variations. In general, whereas it is possible for the relationship between prices and money to weaken, budget deficits beyond âcertain financeable limitsâ will clearly negate the possibility of attaining other objectives of macroeconomic policy. A natural concern that arises in such a context is one of sustainability and compatibility of the budget deficit with other macroeconomic targets. We also employed the government budget accounting framework to analyse sustainability of Ugandaâs current fiscal stance. The results show that the consolidated deficit is consistent with attainment of target outcomes for other macroeconomic variables, most notably the rates of inflation and GDP growth rates. The inflation target has however, been achieved at the cost of an unsustainable domestic debt. From a policy perspective, issuing domestic debt at such a high real interest rates will allow lower money growth but at the cost of future increases in debt service obligations and thus future budget deterioration.
    Keywords: fiscal stance, macroeconomic aggregates, structural vector autogression, budget accounting approach, EPRC, Agricultural Finance, Financial Economics, Labor and Human Capital, Production Economics, Productivity Analysis, H62, H63, H69,
    Date: 2010–06
  15. By: Gbakou, Monnet Benoit Patrick; Sousa-Poza, Alfonso
    Abstract: This paper aims to estimate the price and income elasticities of the demand for essential commodities in Cote d'Ivoire. Using data from the 2002 Cote d'Ivoire Living Standard Survey and a theoretical framework developed by Crawford et al. (2003), we analyse price effects on the demand for groups of commodities by exploiting a relationship between unit values and commodity quantities and deriving Engel curves. Our findings reveal that the own-price elasticity of meat and dairy products is considerably stronger for rich households (those in the 90th percentile of total expenditure) than for poor households (those in the 10th percentile of total expenditure). Although all the modelled groups of commodities are normal goods, the paper shows that starch is more of a necessity for poor households than for rich ones, whereas meat and dairy products are more of a luxury good for poor households than for rich households. --
    Keywords: Consumer demand,Unit values,Developing country
    JEL: D11 D12
    Date: 2011
  16. By: Nour, Samia Satti Osman Mohamed (Faculty of Economic and Social Studies, Khartoum University, and UNU-MERIT)
    Abstract: This paper provides an assessment of the impacts of oil and discusses the opportunities and challenges for enhancing economic development in Sudan. One advantage of our analysis in this paper is that we provide a more comprehensive analysis using the most recent secondary data to discuss the positive and negative impacts of oil for enhancing economic development in Sudan. We explain that the various positive impacts of oil and the opportunities for enhancing development in Sudan's economy include the impacts of oil in satisfying domestic consumption and achievement of self sufficiency, increasing government and public revenues, rapid and impressive economic growth as measured by the growth in the GDP and its composition and structure, increasing foreign direct investment (FDI) and increasing the volume of foreign trade as measured by the volume and structure of exports. We find that while oil has recently contributed to the improvement of economic performance in the country, the recent heavy dependence on it, may lead to negative impacts and serious challenges for the Sudan since oil is an exhaustible resource and because of the instability of oil prices in the international market the revenue from oil is uncertain and volatile and may lead to instability of economic growth. Moreover, the increasing dependence on oil leads to increasing debate for and against the incidence of the Dutch Disease in Sudan economy, the lack of diversification and the challenges related to potential north-south conflict and division of the country.
    Keywords: oil economy, oil impacts, economic development, Sudan
    JEL: O10 O11 Q30 Q32 Q40 Q43
    Date: 2011
  17. By: Margherita Comola (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris)
    Abstract: This paper takes a network perspective t oinvestigate how rural households in developing countries form the links through which they provide and get economic support. I test the hypothesis that indirect contacts (e.g. friends of friends) matter for link formation. An estimation procedure of a network formation model à la Jackson and Wolinsky (1996) is proposed and applied to data on a single village in Tanzania. Results show that when agents evaluate the net advantage of forming a link they also consider the wealth and the position of indirect contacts. The network externalities from indirect contacts are negative, which suggests a mechanism of competition over scarce resources. This paper proposes the first structural estimation of an endogenous network formation model, and also contributes to the development literature by overcoming the dyadic regression approach and providing evidence that village-level network structure has an explanatory value disregarded by all previous studies.
    Keywords: mutual support ; network formation ; structural estimation ; indirect contacts
    Date: 2010–06
  18. By: Paul Ningaye; Yemedjeu Tiomela; Virginie Takoutio Feudjio
    Abstract: The primary objective of this study is to capture multi-poverty with values for welfare dimensions rather than the typical approach of a composite welfare indicator. The method used is multiple indicators multiple causes (MIMIC) modelling, which can be used to explain, measure and calculate the scores for five dimensions of welfare. Poverty analysis methods applied on these scores show that each type of poverty has specific determinants, although some determinants are common to several dimensions of poverty. Similarly, each region is affected by particular types of poverty while no form of poverty is unique to a single region. We thus propose to target multi-poverty via dimensional scores to formulate policy. A comparison with previous approaches shows that dimensional scores are more appropriate for identifying the specific needs of the population in the fight against poverty.
    Keywords: MIMIC, multi-poverty, dimensional scores, capabilities and functionings approach
    JEL: I31 I32
    Date: 2011

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.