nep-afr New Economics Papers
on Africa
Issue of 2011‒08‒22
twenty-two papers chosen by
Quentin Wodon
World Bank

  1. Poverty and Inequality in Sub-Saharan Africa: Literature Survey and Empirical Assessment By Delfin Go; Denis Nikitin; Xiongjian Wang; Heng-fu Zou
  2. Working Paper 134 - Inflation Targeting, Exchange Rate Shocks and Output: Evidence from South Africa By AfDB
  3. Does School Education Reduce the Likelihood of Societal Conflict in Africa? By Johannes Fedderke; Robert Klitgaard; Kamil Akramov
  4. Determinants of Foreign Direct Investment of South African Telecommunications Firms into Sub-Saharan Africa By John M. Luiz; Henry Stephan
  5. The Quest for Higher Growth in the WAEMU Region: The Role of Accelerations and Decelerations By Tidiane Kinda; Montfort Mlachila
  6. Risk Aversion: Experimental Evidence from South African Fishing Communities By Kerri Brick; Martine Visser; Justine Burns
  7. 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
  8. Gasoline, diesel fuel and jet fuel demand in South Africa By Willem H. Boshoff
  9. Revenue Administration Reforms in Anglophone Africa Since the Early 1990s By David Kloeden
  10. Fiscal Policy Implementation in Sub-Saharan Africa By Victor Duarte Lledo; Marcos Poplawski-Ribeiro
  11. Factors Affecting Poverty Dynamics in Rural Zambia. By Chapoto, Antony; Banda, Diana; Haggblade, Steven; Hamukwala, Priscilla
  12. Customs Administration Reform and Modernization in Anglophone Africa - Early 1990s to Mid-2010 By Justin O Zake
  13. Price Distortions and Economic Growth in Sub-Saharan Africa By Anderson, Kym; Brückner, Markus
  14. Unpacking the Meaning of âMarket Accessâ By Chamberlin, Jordan; Jayne, Thomas
  15. Bank concentration and the interest rate pass-through in Sub-Saharan African countries By T. Mangwengwende; Z. Chinzara; H. Nel
  16. Finding the benefits: Estimating the impact of the South African child support grant By Marisa Coetzee
  17. Clean Fuel-Saving Technology Adoption in Urban Ethiopia By Abebe Damte; Steven F. Koch
  18. Mavens and their potential role in the diffusion of marketing information By Mailu, Stephen; Rutto, Jamin; Njuguna, Esther
  19. The Contribution of Non-Timber Forest Products to Rural Household Income in Zambia By Mulenga, Brian P.; Richardson, Robert B.; Mapemba, Lawrence; Tembo, Gelson
  20. Effects of climatic conditions and agro-ecological settings on the productive efficiencies of small-holder farmers in Ethopia By Temesgen Tadesse Deressa
  21. Measuring the Impact of Trade Finance on South African Export Flows By Marcel Kohler; Adrian Saville
  22. Constructing Institutional Measures: Indicators of Political and Property Rights in Mozambique, 1900-2005 By John Manuel Luiz; Luis Brites Pereira; Guilherme Oliveira

  1. By: Delfin Go (Africa Department, the World Bank); Denis Nikitin (Development Research Group, the World Bank); Xiongjian Wang (CEMA, Central University); Heng-fu Zou (CEMA, Central University; IAS, Wuhan University; Peking University; Development Research Group, the World Bank)
    Abstract: This paper surveys the literature and assesses the magnitude, persistence, and depth of poverty and inequality in Sub-Saharan Africa using empirical analysis. Our analysis explores linkages between three key facts about development in Sub-Saharan Africa: poor economic growth, poor performance in terms of public health indicators, and resilient high-income inequality. Most of the differential between growth rates in Sub-Saharan Africa and other developing countries can be explained by two measures of human capital-secondary enrolment and infant mortality. We also find that the growth trend in Sub-Saharan Africa does not significantly differ from other developing countries that have fallen into a poverty trap.
    Keywords: Poverty, Inequality, African Economy
    JEL: D41
    Date: 2011
  2. By: AfDB
    Date: 2011–08–11
  3. By: Johannes Fedderke; Robert Klitgaard; Kamil Akramov
    Abstract: Heterogeneity Happens: How Rights Matter in Economic Development
    JEL: O10 D99
    Date: 2011
  4. By: John M. Luiz; Henry Stephan
    Abstract: The study investigates the main factors considered by South African telecommunications firms when making a decision to undertake Foreign Direct Investment (FDI) into Sub-Saharan Africa (SSA). This encompasses the reasons for investing, the methods of entry into the identified market and the factors influencing their decision. The methodology employs a survey questionnaire which was sent to telecommunication firms representing more than 70% of the revenue generated by this sector in SSA. The research reveals that market size, regulatory environment and government policy are the three most important factors influencing the decision to undertake FDI. Furthermore, the main reasons for deciding to enter SSA are for market and profit growth due to saturation in their existing markets, as well as for diversification of risk. Telecommunications firms wishing to enter SSA must be prepared for an unstable and uncertain policy environment and understand that the cost of starting a new venture in SSA is high.
    Keywords: Telecommunications Africa FDI
    JEL: F23 L86 O55
    Date: 2011
  5. By: Tidiane Kinda; Montfort Mlachila
    Abstract: With the exception of Burkina Faso and Mali, the growth experience for WAEMU countries has been disappointing, even when compared to other sub-Saharan African (SSA) countries. The main objective of the paper is to investigate why the quest for a growth takeoff has been more elusive in the WAEMU countries compared to other SSA countries. To do this, the paper focuses on the determinants of growth accelerations and decelerations in SSA and the WAEMU. It finds that the variables most closely associated with growth accelerations and decelerations in SSA are changes in terms of trade, private investment, civil tension, real exchange rates, and inflation. Second, as found elsewhere in the literature, there is a certain asymmetry between accelerations and decelerations, in both frequency and determinants, and that the WAEMU region is quite different from the rest of SSA.
    Keywords: West African Economic and Monetary Union , Economic growth , Sub-Saharan Africa , Terms of trade , Real effective exchange rates , Private investment , Inflation ,
    Date: 2011–07–26
  6. By: Kerri Brick; Martine Visser; Justine Burns
    Abstract: We estimate the risk attitudes of a large sample of small-scale fishers from various fishing communities along the west coast of South Africa, using subjects’ choices over lotteries with real monetary prizes. We find that participants are moderately risk averse and that risk attitudes vary with certain socio-demographic variables. In particular, females are found to be more risk averse than their male counterparts, while quota holders are more risk loving. Logistic regression analysis indicates that risk attitudes have implications for non-compliance with fisheries regulation. Specifically, greater risk aversion translates into a reduction in the odds of catching illegally. Furthermore, in the case of gender, female fishers and female fishers with fishing rights are more likely to comply with fisheries regulation. These findings have important implications for the characterisation of risk attitudes in fisheries policy applications and for the management of marine resources.
    Keywords: risk attitudes risk aversion experiments fishing rights compliance and South Africa
    JEL: D81 Q22
    Date: 2011
  7. By: Samuel S. Jibao; Niek Schoeman; Ruthira Naraidoo
    Abstract: In addition to the conventional linear cointegration test, this paper tests the asymmetry relationship between fiscal revenue and expenditure, by making a distinction between the adjustment of positive (budget surplus) and negative (budget deficit) deviations from equilibrium. The analysis uses quarterly data for South Africa. The paper reveals that government authorities in South Africa are more likely to react fast when the budget is in deficit than when in surplus, and that the stabilisation measures used by government are fairly neutral at low deficit levels; that is, at deficit levels of 4% of GDP and below. We conclude that an attempt to achieve fiscal sustainability via a reduction in expenditure on sectors conducive to economic growth might be prone to create social and political 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.
    Keywords: smooth transition error correction model; nonlinearity; government intertemporal budget constraint; and fiscal sustainability.
    JEL: C22 C51 H62
    Date: 2011
  8. By: Willem H. Boshoff
    Abstract: In recent years, the price and income elasticity of fuel demand in South Africa has featured prominently in energy and competition policy proceedings and in major corporate planning projects. The paper investigates the price and income elasticity of gasoline (petrol), diesel and jet fuel demand in South Africa. Such a study is essential, given the significant structural change in fuel consumption behaviour over the 1990s and the paper builds compare the results of econometric models based on a longer sample period covering 1982Q1 to 2010Q4 and a shorter sample period covering 1998Q1 to 2010Q4. The econometric model is based on an autoregressive distributed lag (ARDL) model, reduced to a parsimonious specification using an automated reduction algorithm.
    Keywords: gasoline petrol diesel jet fuel price elasticity income elasticity South Africa bounds test
    JEL: C22 R41
    Date: 2011
  9. By: David Kloeden
    Abstract: Despite positive but mixed progress over two decades, most lower income African countries need to enhance their low tax-to-GDP ratios by mobilizing domestic resources to complement debt relief, donor aid and to achieve the MDG and poverty reduction objectives. With these goals in mind, most African countries have undertaken revenue administration reforms and from the early 1990s, 16 of 19 Anglophone Africa countries established some form of revenue authority (RA) for greater governance, financing, and workforce autonomy. Changes in governance and HR practices are evident, but has revenue administration improved overall? Capacity limitations and integrity issues persist. The introduction of VAT heralded self-assessment, but in most instances without being integrated with income tax administration. Rather, VAT administration was assigned to a separate department. Special units for large taxpayers are now common following initial challenges, but programs for other taxpayer segments are still emerging.
    Keywords: Africa , Cross country analysis , Customs administration , Fiscal policy , Fiscal reforms , Natural resources , Resource mobilization , Revenue measures , Tax administration , Tax reforms , Value added tax ,
    Date: 2011–07–11
  10. By: Victor Duarte Lledo; Marcos Poplawski-Ribeiro
    Abstract: This paper investigates economic, political, and institutional constraints to fiscal policy implementation in sub-saharan Africa. We find that planned fiscal adjustments or expansions are less likely to be implemented the larger they are, the more inaccurate the growth forecasts they are based on, the more fragile the regulatory system in the country, and the weaker the institutions framing the design, approval, and execution of the budget. The findings support ongoing efforts in the region to improve the quality and timeliness of economic data; enhance forecasting capacity; adopt realistic fiscal plans; and strengthen governance, budgetary institutions, and public financial management procedures.
    Keywords: Budgets , Cross country analysis , Economic models , Fiscal policy , Government expenditures , Revenues , Sub-Saharan Africa ,
    Date: 2011–07–22
  11. By: Chapoto, Antony; Banda, Diana; Haggblade, Steven; Hamukwala, Priscilla
    Abstract: Rural poverty rates in Zambia have remained very high, at 80%, over the past decade and a half, whilst urban poverty rates have declined, from 49% in 1991 to 34% in 2006. Redressing this high rural poverty rate remains a government priority in the National Development Programs. However, solutions have proven elusive. Solid empirically based information on dynamics that have improved the welfare of small-scale farm households in Zambia, combined with an agenda for disseminating this information in public discourse, offer prospects for generating a more transparent and pro-poor policy orientation. Using longitudinal data collected from 4,286 households which participated in three nationwide surveys conducted over seven years, in 2001, 2004, and 2008, we examine the factors associated with chronic and transient poverty and use the results to draw implications for designing policies and programs for alleviating rural poverty and promoting income growth for rural Zambia households.
    Keywords: Poverty Dynamics, Zambia, rural poverty, Africa, Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty,
    Date: 2011–07
  12. By: Justin O Zake
    Abstract: Anglophone African countries have been implementing reform and modernization initiatives in their Customs administrations. This paper outlines the progression of key reform and modernization initiatives in these countries since the early 1990s, and assesses the gap between these reforms and those of more modern Customs agencies. The review suggests that Customs administration reform and modernization initiatives in Anglophone African countries generally lag behind international good practice and it is necessary to speed up implementation if revenue, trade facilitation, and trade chain security objectives are to be achieved. The findings also have implications on the design of reform programs and focus of potential technical assistance for the outstanding reform agenda.
    Date: 2011–08–04
  13. By: Anderson, Kym; Brückner, Markus
    Abstract: To what extent has Sub-Saharan Africa’s slow economic growth over the past five decades been due to price and trade policies that have discouraged production of agricultural relative to non-agricultural tradables? This paper uses a new set of estimates of policy distortions to relative prices to address this question econometrically. We first test if these policy distortions respond to economic growth, using rainfall and international commodity price shocks as instrumental variables. We find that on impact there is no significant response of relative price distortions to changes in real GDP per capita. We then test the reverse proposition and find a statistically significant and sizable negative effect of relative price distortions on the growth rate of Sub-Saharan African countries. Our fixed effects estimates suggest that, during 1960-2005, a one standard deviation increase in distortions to relative prices reduced the region’s real GDP per capita growth rate by about half a percentage point per annum.
    Keywords: Agricultural incentives; Economic growth; Trade restrictions
    JEL: F14 F43 N17 O13 O55 Q18
    Date: 2011–08
  14. By: Chamberlin, Jordan; Jayne, Thomas
    Abstract: Improving farmersâ access to markets is widely recognized as a major development challenge. A review of the literature suggests that indicators of market access may bear little relationship to the specific processes of interest and hence provide misguided evidence of the impacts of improved market access. This paper attempts to âunpackâ the dimensions of market access and, in the process, uses farm survey data from Kenya to investigate changes in multiple indicators during the post-liberalization period. Findings show that market access conditions experienced by rural Kenyans exhibit considerable variation across time, space, and indicator type. We suggest ways in which structured hypothesizing and sensitivity analysis may strengthen empirical treatments of market access issues in applied research.
    Keywords: market access, remoteness, smallholders, Africa, Kenya, Agricultural and Food Policy, Community/Rural/Urban Development, International Development, Marketing, Research Methods/ Statistical Methods, C81, D01, D63, D83, H41, H54, R58, L99,
    Date: 2011–07
  15. By: T. Mangwengwende; Z. Chinzara; H. Nel
    Abstract: This study investigates the link between bank concentration and interest rate pass-through (IRPT) in four sub-Saharan countries. It also analyses whether there is asymmetry in IRPT and whether such asymmetry is related to changes in bank concentration. By applying a number of econometric methods including Asymmetric Error Correction Models, Mean Adjustment Lag (MAL) models and Autoregressive Distributed Lag models on monthly data for the period 1994-2007, the study found some evidence of a relationship between bank concentration and IRPT in all four countries. However, the results reveal that bank concentration has a stronger influence on the magnitude of its adjustment rather than its speed. Of particular note in this investigation is the fact that the findings support both the Structure-Conduct-Performance hypothesis and the competing Efficient-Structure hypothesis in the banking industries of the four countries. While there is some evidence supporting the view that bank lending and deposit rates adjust asymmetrically to changes in policy rates, there is very limited evidence that these asymmetries are a result of bank concentration. The key implication of the result for African countries is that increased bank concentration through bank consolidation programmes designed to strengthen banking industries should not be viewed with cynicism in so far as monetary policy transmission is concerned because concentration does not necessarily undermine the effectiveness of monetary policy.
    Keywords: Bank Concentration Monetary Policy Interest Rate Pass-Through Asymmetric Adjustment Sub-Saharan Africa
    JEL: E52 E58 G28
    Date: 2011
  16. By: Marisa Coetzee
    Abstract: The paper estimates the impact of the South African Child Support Grant (CSG) on child health, nutrition and education. Data from the 2008 South African National Income Dynamics Study (NIDS) are used. Two non-experimental treatment evaluation techniques, both relying on propensity scores, are applied to six different outcome variables. Using propensity score matching with a binary outcome variable, no convincing evidence of improvements on any of the outcome variables is found. A second technique is therefore also applied, using a generalised form of the propensity scores. This follows the approach of Hirano and Imbens (2004) and Agüero et al. (2009). The generalised approach estimates a positive treatment effect for children’s height-for-age and progress through the school system. Although these estimates do provide some evidence of the positive effect of the Child Support Grant on the lives of children, the estimates are small and do not provide clear evidence that the transfers received by caregivers are spent mainly on improving the well-being of beneficiary children. Some potential and plausible explanations for this result are discussed in the paper. Nevertheless, the findings seem to suggest that some of the cash transferred through the Child Support Grant appears to be spent on improving the well-being of children.
    Keywords: Conditional cash transfer child health and nutrition continuous treatment estimator South Africa
    JEL: I38 H53 C21 D13
    Date: 2011
  17. By: Abebe Damte; Steven F. Koch
    Abstract: The heavy dependence and inefficient utilization of biomass resources have contributed to the depletion of forest resources in Ethiopia, while the use of traditional cooking technology, one source of inefficient biomass resource use, has been linked to indoor air pollution and poor health. In response, the government and other institutions have pushed for the adoption of new cooking technologies. This research examines the speed of adoption of Mirt and Lakech cook stoves — two examples of new cooking technologies — in urban Ethiopia. In terms of the duration analysis, adoption has been increasing over time; income and wealth are important contributors to adoption, and substitute technologies tend to hinder adoption. However, it was not possible to consider prices or perceptions related to either the technologies or biomass availability in the duration models, and, therefore, additional research is needed to inform policy further with respect to household technology adoption decisions.
    Keywords: immproved stoves Duration Adoption Urban Ethiopia
    JEL: D12 Q49
    Date: 2011
  18. By: Mailu, Stephen; Rutto, Jamin; Njuguna, Esther
    Abstract: Small ruminants play an important social and economic role in the lives of many pastoralists who inhabit many parts of Northern Kenya. The area is poorly served by modern communication services although things are slowly changing as mobile telephone services are rolled into these areas. This possibility will likewise improve the chances of providing this population with up-to-date market intelligence which in turn should improve the returns from the sale of livestock in distant markets. To operationalise this, the use of the internet as well as SMS delivered market intelligence through the National Livestock Marketing Information System (NLMIS) was launched in 2007. As a novel idea in the region, it was expected that information about its existence would pass through a series of intermediaries such as mavens. Based on a study of 250 pastoral households, this paper attempts to explore the concepts of mavens, opinion leadership and innovativeness in the marketing of small ruminants from the larger Marsabit and Isiolo Districts of Eastern Province, Kenya. It concludes that though the NLMIS is still relatively unknown, the presence of market mavens who in this data are indistinguishable from opinion leaders could catalyze the spread and eventual use of the system.
    Keywords: Market mavens; Opinion leaders; Innovativeness
    JEL: M31 Q13 Z13
    Date: 2011–07
  19. By: Mulenga, Brian P.; Richardson, Robert B.; Mapemba, Lawrence; Tembo, Gelson
    Abstract: Forest products play an important role in supporting rural livelihoods and food security in many developing countries. Pimentel et al. (1997) found that the integrity of forests is vital to world food security, mostly because of the dependence of the poor on forest resources. Studies of the role of forest products in household welfare in Zambia have found that such products are among the top sources of household income in some rural areas. This paper uses statistical analysis to examine the role of non-timber forest products NTFPs) in rural household welfare in Zambia, with two main objectives. First, using rural household survey data, we estimate the share of NTFP income to total household income with the aim of assessing the proportion and distribution of business activities related to NTFPs. Second, we estimate the determinants of rural household participation in the extraction and trade of NTFPs, with an interest in the characteristics of households that are more dependent on forest products for income.
    Keywords: Zambia, Non-Timber Forest Products, Rural Household Income, Agricultural and Food Policy, Consumer/Household Economics, Resource /Energy Economics and Policy,
    Date: 2011–06
  20. By: Temesgen Tadesse Deressa
    Abstract: This study argues that the adaptation measures farmers take to reduce the negative impacts of climate change do affect farmers’ efficiency of production. To support this argument, two steps were followed to understand how climatic factors especially long term average seasonal rainfall and temperature; and agro-ecological settings affect production efficiency in Ethiopian agriculture. In the first step, the stochastic frontier approach was employed to analyze the farm level technical efficiency. In the second step, the tobit regression model was adopted to analyze how climatic and agro-ecological settings affect efficiency scores derived from the first step. Results from the first step indicated that the surveyed farmers have an average technical efficiency of 0.50; with significant output elasticits of labor, draft power and tractor. Results from the tobit regression model showed that soil types, run-off, seasonal climatic conditions and agro-ecological settings affect technical efficiency in Ethiopian agriculture.
    Keywords: Technical efficiency, seasonal climate, agro-ecology, Ethiopia
    JEL: C53 Q25 Q54
    Date: 2011
  21. By: Marcel Kohler; Adrian Saville
    Abstract: Trade finance (or short-term credit) plays a crucial role in facilitating international trade yet is particularly vulnerable to financial crises as banks increase the pricing on all trade finance transactions to cover increased funding costs and higher credit risks. Whereas South Africa’s financial institutions largely managed to strengthen their capital positions during the global financial crisis, the country’s trade flows and access to capital (in particular trade finance and its costs) were hit hard by the crisis. Little is known about the extent of shortages or ‘gaps’ in trade finance and the impact of this on South Africa’s recent trade performance. Whilst our research recognises that access to trade finance is not the main cause of South Africa’s trade contraction, our research suggests that a one percentage point increase in the interbank lending rate of our trade partner could reduce exports by approximately ten percent, all else equal.
    Keywords: exports trade finance crisis
    JEL: F10 F30
    Date: 2011
  22. By: John Manuel Luiz; Luis Brites Pereira; Guilherme Oliveira
    Abstract: In this paper we focus on the role of political and economic institutions in Mozambique’s development. We produce a set of institutional indicators for Mozambique for the period 1900 through to 2005. The first index tracks political freedoms and is unique in its duration and complexity. The second index is a measure of property rights for Mozambique and such a measure has not existed previously and certainly not for this length of time. The construction of these indices is a painstaking process through historical records but it provides us with a richness of institutional data previously not available. The new institutional indices will allow us to explore the role of the institutional environment in determining economic growth and development in Mozambique over time.
    Keywords: Political Rights, Property Rights, Insitutional Indicators, Mozambique
    JEL: N47 K00 O55
    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.
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