nep-afr New Economics Papers
on Africa
Issue of 2011‒09‒05
seventeen papers chosen by
Quentin Wodon
World Bank

  1. Institution Building for African Regionalism By Khadiagala, Gilbert M.
  2. The Informationalization of Poverty in Africa?Information and Communication Technologies and Economic Structure By Padraig Carmody
  3. Microfinance investment vehicles in Sub-Saharan Africa: constraints and potentials By Moulin, Bertrand
  4. Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya By Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
  5. Are Zambian Farmers Not Harvesting All Their Maize? By Shipekesa, Arthur M.; Jayne, T.S.
  6. The inflation-output nexus:empirical evidence from India, Brazil and South Africa By Paresh Kumar Narayan; Seema Narayan
  7. Non-tariff barriers in EAC customs union: implications for trade between Uganda and other EAC countries By Okumu, Luke; Nyankori, J.C. Okuk
  8. Xenophobic Attacks, Migration Intentions and Networks: Evidence from the South of Africa By Friebel, Guido; Gallego, Juan Miguel; Mendola, Mariapia
  9. Innovation performance and embeddedness in networks: evidence from the Ethiopian footwear cluster By Gebreeyesus, Mulu; Mohnen, Pierre
  10. Articulations entre banques commerciales et institutions de microfinance en Afrique subsaharienne: cas du Cameroun By Moulin, Bertrand; Teuwa N., Hugues M.
  11. Dynamic Pathways into and out of Poverty: A Case of Small Holder Farmers in Zambia By Banda, Diana J.; Hamukwala, Priscilla; Haggblade, Steven; Chapoto, Antony
  12. L’Inégalité de Pauvreté Au Cameroun : Une Analyse Empirique à L’aide de la décomposition en sous-groupes de Dagum By Biloa Essimi, Jean Aristide; Chameni Nembua , Celestin
  13. Economic and institutional efficiency of the National Agricultural Advisory Servicesâ Programme: The case of Iganga District, By Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
  14. Measuring Institutions: Indicators of Political and Economic Institutions in Namibia: 1884 - 2008 By B.P. Zaaruka; J.W. Fedderke
  15. The Rand as a Carry Trade Target: Risk, Returns and Policy Implications By Shakill Hassan; Sean Smith
  16. Revitalizing Zambiaâs Agricultural Marketing Information Centre (Amic) By Gage, Daria
  17. The power of the strong state: A comparative analysis of the diaspora engagement strategies of India and Ethiopia By Kuschminder, Katie; Hercog, Metka

  1. By: Khadiagala, Gilbert M. (Department of International Relations)
    Abstract: Since the 1960s, African states have embraced regional integration as a vital mechanism for political cooperation and for pooling resources to overcome problems of small and fragmented economies. In building meaningful institutions for regionalism, however, Africans have faced the challenges of reconciling the diversities of culture, geography, and politics. As a result, African regional institutions are characterized by multiple and competing mandates and weak institutionalization. This study illustrates these themes by comparing two continental institutions—the African Union and its predecessor, the Organization of African Unity, and the United Nations Economic Commission for Africa and subregional institutions—the Economic Commission of Central African States, the Economic Community of West African States, the Common Market for East and Southern African States, the Community of the Sahel-Saharan States, and the Arab Maghreb Union. By focusing on the institutional structures, mandates, and contributions of these organizations in their geographical domains, the study probes the links between policy articulation and outcomes. The conclusion focuses on lessons that African regionalism can inform Asian integration experiences.
    Keywords: African Regionalism; Regional Integration; Africa; African Union; United Nation’s Economic Commission for Africa
    JEL: F15 N55 O19 O55 R11
    Date: 2011–08–01
  2. By: Padraig Carmody (Trinity College Dublin)
    Date: 2011–08
  3. By: Moulin, Bertrand
    Abstract: This paper sheds the light on the potential and constraints of possible interactions between Microfinance Investment Vehicles (MIVs) and the two main African Microfinance models namely the cooperative model, well developed in West Africa, and the commercial model, found in East Africa. We assess if both parties can gain from those interactions. We argue that given the significant funding needs of Microfinance institutions (MFIs) in that part of the world, in particular with regards to equity investments and capacity building, the African microfinance sector requires resources that can only be provided with the contest of private investors. In this respect, provided some conditions are met, for instance the presence in these vehicles of Development financial institutions (DFIs) that play the role of catalysts by initiating investments and taking risks that private investors would not dare taking; MIVs could be suitable for the financing of the rural and the micro-enterprises segments which are still seen as highly risky investments. Those segments require more volumes and longer term funding, but they have a great potential positive effect on Microfinance recipients and more generally on the economies they live in. In the MIVs’ perspective, due to excessive risks’ perception, the interest for the African microfinance still remains limited to date; however, the increasing demand for socially responsible investments and the needs for Microfinance investment portfolios’ diversification will push those vehicles to commit more and more for investments in that part of the world.
    Keywords: Microfinance; Microfinance investment vehicles; Sub-Saharan Africa
    JEL: G21
    Date: 2011
  4. By: Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
    Abstract: Supermarkets are gaining ground in the agri-food systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on productivity and efficiency have hardly been studied. We use a meta-frontier approach and combine this with propensity score matching to estimate treatment effects among vegetable farmers in Kenya. Participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%. We also find positive and significant impacts on technical efficiency and scale efficiency. Supermarket expansion therefore presents opportunities for agricultural growth in the small farm sector, which is crucial for poverty reduction in Africa.
    Keywords: Supermarkets, technical efficiency, scale efficiency, meta-frontier, meta-technology ratio, sample selection, Kenya, International Development, Marketing, Production Economics, Productivity Analysis, D24, L23, O12, Q12, Q16,
    Date: 2011–08
  5. By: Shipekesa, Arthur M.; Jayne, T.S.
    Abstract: 1. According to nationally representative Crop Forecast Survey data, over the past 10 years farmers have harvested between 55 and 90 percent of the area that they planted to maize. 2. In the 2009/10 and 2010/11 crop years, over 80 percent of the maize area planted by small- and medium-scale farmers was harvested, mainly due to favorable weather. 3. In 2010/11, the ratio of harvested to planted maize area was highest in Luapula, Northern and Eastern (all over 90%), and lowest in Western (56%) and Southern Province (70%). 4. The main reasons provided by Zambian farmers for not harvesting all their area planted to maize are: (i) wilting due to drought (50.6%); (ii) crop failure due to lack of fertilizer (25.6%); and (iii) floods, heavy rains, and water logging (12.2%). 5. More effective extension of moisture conserving and flood protecting agronomic practices to farmers may substantially promote maize production and yields in Zambia.
    Keywords: Zambia, maize, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2011–07
  6. By: Paresh Kumar Narayan; Seema Narayan
    Abstract: In this paper we study the relationship between output and inflation for India, Brazil, and South Africa using the EGARCH model. For India and South Africa, we find evidence for: (1) the Cukierman and Meltzer hypothesis that inflation volatility raises inflation; (2) the Friedman hypothesis that inflation raises inflation volatility; and (3) the Black hypothesis that output volatility raises output growth, and that output volatility reduces inflation. For Brazil, we do not find any evidence of a systematic relationship between inflation and output growth.
    Keywords: Output, inflation, EGARCH model, volatility
    JEL: C22 E31 E32
    Date: 2011–08–29
  7. By: Okumu, Luke; Nyankori, J.C. Okuk
    Abstract: A key objective for the adoption of East African Community (EAC) Customs Union was to enhance economic gains through elimination of tariffs and non-tariff barriers (NTBs) within the member states. This study has established that several NTBs continue to exist, and some have persisted. The NTBs that have persisted for more than three years include a long list of customs documentation requirements, cumbersome formalities, and limited testing and certification arrangements. Other NTBs that still exist include: un-standardized weighbridges; several road blocks; lack of recognition of individual countryâs standards; and the existence of several un-harmonised standards. The simulation results of spatial equilibrium model of maize trade with and without NTBs show that at the EAC level there are positive production, trade and welfare implications attributable to elimination of NTBs in intra-regional maize trade. The gains are greatest in trade and production in Uganda compared to Kenya and Tanzania. To eliminate the existing NTBs and to reduce the possibility of new ones being created, first and foremost, the EAC countries need to design effective mechanisms for identifying and verifying information about NTBs and ensuring their elimination. This will require giving the EAC Secretariat the mandate to compel individual countries to eliminate any identified NTB and to ensure that no new ones are created. Second, policy and legislative decisions made by, for example, Council of Ministers should be communicated in time for effective implementation...
    Keywords: Non-tariff barriers, East African Community, EPRC, Uganda, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Financial Economics, Industrial Organization, Labor and Human Capital, Productivity Analysis, Public Economics,
    Date: 2010–12
  8. By: Friebel, Guido (Goethe University Frankfurt); Gallego, Juan Miguel (University of Toulouse I); Mendola, Mariapia (University of Milan Bicocca)
    Abstract: We investigate how emigration flows from a developing region are affected by xenophobic violence at destination. Our empirical analysis is based on a unique survey among more than 1000 households, collected in Mozambique in summer 2008, a few months after a series of xenophobic attacks in South Africa killed dozens and displaced thousands of immigrants from neighbouring countries. We estimate migration intentions of Mozambicans before and after the attacks, controlling for the characteristics of households and previous migration behaviour. Using a placebo period, we show that other things equal, the migration intention of household heads decreases from 37% to 33%. The sensitivity of migration intentions to violence is larger for household heads with many children younger than 15 years, decreasing the migration intention by 11% points. Most importantly, the sensitivity of migration intentions is highest for those household heads with many young children whose families have no access to social networks. For these household heads, the intention falls by 15% points. Social networks provide insurance against the consequences young children suffer in case the household head would be harmed by xenophobic violence and consequently could not provide for the family.
    Keywords: household behaviour, risk, violence, Mozambique
    JEL: O1 R2 J6 D1
    Date: 2011–08
  9. By: Gebreeyesus, Mulu (UNU-MERIT); Mohnen, Pierre (UNU-MERIT, Maastricht University)
    Abstract: This study focuses on innovation in a cluster of informal shoemaking firms in Ethiopia - namely the Mercato footwear cluster. It examines how differently those firms are embedded in networks and how heterogeneous they are in absorptive capacity, and how this heterogeneity affects their innovation performance. Business interactions with buyers, suppliers and other producers are the major channels through which knowledge flows into the cluster. These business networks are mainly built on trust and long-term relationships and tend to be selective. The study reveals that despite homogeneity in social background the firms in the cluster behave and perform differently. Based on econometric analysis we document a positive and strong effect of local network position and absorptive capacity on innovation performance.
    Keywords: industrial clusters, networks, innovation performance, informal sector, Africa, Ethiopia
    JEL: O17 O31 O33
    Date: 2011
  10. By: Moulin, Bertrand; Teuwa N., Hugues M.
    Abstract: In this article, we evaluate, from the point of view of banks, the potential of articulations between commercial banks and microfinance institutions (MFIs) in Cameroun in terms of financing of the rural and the micro, small and medium enterprises (MSMEs). Furthermore, we seek to define the best form of partnership between the two types of institutions. The results obtained suggest that the articulations between banks and MFIs can potentially be beneficial to all stakeholders (banks, MFIs but also recipients). This study also highlights the fact that these articulations can be even more beneficial if national commercial banks, under the Cameroonian law in our case, participate rather than branches of foreign banking groups. Indeed, our research reveals that through these partnerships, from their cultural proximity and their propensity to take more risks, national commercial banks will more likely offer either directly or indirectly (through MFIs) more adapted financial products and services to both the rural and the MSMEs’ segments. The question of knowing if a better form of partnership between commercial banks and MFIs exists, results suggest that there is no better form of partnership as such; that the best form depends on the MFI’s development stage and that in any case this partnership should privilege a national commercial bank rather than a branch of a foreign bank. Even if the foreign banks’ contest might be necessary at a given stage of the process, the results make it also possible to consider a new model of interactions implying Microfinance investment vehicles and national commercial banks. This model would have the advantage to help mitigate risks that those vehicles perceive when deciding to directly invest in MFIs.
    Keywords: Banks; Microfinance institutions; Microfinance investment vehicles; Sub-Saharan Africa; Cameroon
    JEL: G2
    Date: 2011–02
  11. By: Banda, Diana J.; Hamukwala, Priscilla; Haggblade, Steven; Chapoto, Antony
    Abstract: The study surveyed 127 households from Central, Eastern, Luapula, Northern, and Southern Provinces of Zambia. The primary objective was to explore life-trajectory patterns and key drivers of welfare change. Households were classified based on long term poverty dynamics i.e., how they perceived their welfare compared to that of their parents with the major focus being on households that were better off (BO) than both the parents (parents of head and spouse) and those that were worse off (WO) than both parents were. Poverty was mainly defined from the communities' own perspectives and entailed exploring reasons perceived by participants for decline or improvement in peopleâs well-being in their communities. The hypotheses that factors such as household endowments, key decisions made, household location, and shocks experienced by households have an impact on householdâs welfare dynamics were tested. Several approaches were used including semi-structured interviews at household level and Focus Group Discussions (FGDs).
    Keywords: Zambia, poverty, Small Holder Farmers, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2011–08
  12. By: Biloa Essimi, Jean Aristide; Chameni Nembua , Celestin
    Abstract: From a multidimensional analysis of poverty which enables us, through the use of technique of fuzzy sets, to construct a poverty indicator in this perspective in Cameroon, we analyse the poverty gaps in our country by making use of the Dagum sub-group decomposition (1997) which breaks down the Gini index into three components. Poverty analysis revealed that education and housing contribute more to the national poverty. The Gini poverty index obtained is 0.188736, and its decomposition revealed that intergroup inequalities contribute most to the overall inequality. This indicates that the poverty gap is wider between the groups.
    Keywords: Fuzzy sets; Poverty; Inequality ; Sub-group Decomposition; Cameroon
    JEL: C02 R20 D01 I32
    Date: 2011–08–24
  13. By: Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
    Abstract: This paper examines the technical and institutional efficiency of the National Agricultural Advisory Services (NAADS) programme implementation in Iganga district. The Cost Effective Analysis (CEA) and stochastic frontier analysis methods were used to examine technical efficiency while expenditure tracking and FGD methods were applied to assess institutional efficiency. The analysis demonstrates that NAADS interventions have not had a significant impact on the output, productivity and income of the farmers in Iganga district. Moreover, NAADS programme faces implementation weaknesses such as nepotism that affects the selection of beneficiaries as well as enterprises, to the extent that some farmers are apathetic about the success or failure of NAADS Programme. Other observed weaknesses in NAADS implementation include late disbursement of funds, very low counterpart funding by the local government and the farmers, and poor monitoring and evaluation (M&E) of the programme. Based on the results, we suggest a major review of the implementation process of NAADS programme in general and Iganga district NAADS in particular.
    Keywords: NAADS, Expenditure tracking, EPRC, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Land Economics/Use, Livestock Production/Industries,
    Date: 2011–06
  14. By: B.P. Zaaruka; J.W. Fedderke
    Abstract: This paper presents a database on institutional measures for Namibia for the period 1884 to 2008. Using the techniques of principal components and factor analysis in aggregating these indicators, the study does two things. First, it illustrates a methodology for constructing de jure and de facto institutional measures by means of using pieces of legislation and quantitative data, respectively. Secondly, these indicators are used to assess the nature of political and economic institutional transformation from the colonial legacy to the modern outcome using Namibia as a natural experiment. The new indicators while covering a long time period (1884-2008), correlate fairly well with some of the widely used institutional indices produced by the Freedom House and the Heritage foundation.
    Keywords: Namibia Institutional Indicators Political Freedom Property Rights Judicial Independence Political Instability
    JEL: K00 N4 O1
    Date: 2011
  15. By: Shakill Hassan; Sean Smith
    Abstract: We analyze the returns to targeting the Australian, New Zealand, and South African currencies, through Japanese yen-funded speculation - with a particular focus on the South African rand, for which the carry trade is often seen as a source of exchange rate volatility. Targeting the rand through forward currency speculation produces returns which are as volatile, but with higher mean, and smaller probability of rare but large losses, than a buy-and-hold investment in the stock market - which is stochastically dominated in the second-order sense by the rand-targeting trade; and generates a larger return-to-volatility ratio than the Australian and New Zealand dollars - the two most common carry targets. Speculative positions and debt ‡ows driven by the carry trade cause an exchange rate process characterized by gradual appreciations punctuated by infrequent but potentially large and rapid depreciations. The consequent level of currency instability is a¤ected by whether in‡ows cause overheating, and how the central bank responds to the associated in‡ationary pressure
    Keywords: Currency speculation; carry trade; forward premium; skewness and crash risk; exchange rate instability; capital ‡ows
    JEL: F31 G15 E58
    Date: 2011
  16. By: Gage, Daria
    Abstract: 1. Public sector agricultural market information systems (MIS) can provide useful information to farmers, uninformed traders, and policy makers. While private information networks offer a valuable service to select clients, only a well-functioning public MIS can redress information asymmetries among marketing actors that can inhibit competition. 2. The second core mission of a public MIS should be to organize and manage data in such a way that government decision-makers and civil society organizations can accurately diagnose and even anticipate emerging market problems and respond to them in a timely manner. 3. Zambiaâs AMIC suffers from a range of weaknesses all along the supply chain for price information. Data collection and transmission is irregular and unreliable, data management is unstructured and lacks strategic oversight, and dissemination is entirely supply-driven. 4. The primary reasons for AMICâs weak performance are competing priorities and a misguided incentive structure for staff at the national, provincial, and most importantly at the district level, where the viability of the collection process depends on reciprocity between price collectors and traders. 5. The draft Agricultural Marketing Act, which will be sent to Parliament in the 2012 budget cycle, provides an opportunity to re-establish AMICâs mission and importance.
    Keywords: agricultural market information systems, Zambia, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2011–07
  17. By: Kuschminder, Katie (Maastricht Graduate School of Governance, Maastricht University); Hercog, Metka (Maastricht Graduate School of Governance, Maastricht University)
    Abstract: Migrant-sending countries are increasingly exploring schemes where human capital of expatriates can be used for the benefit of the home country's socioeconomic development. This paper focuses on the mechanisms of emigration management and problematizes the government involvement in diaspora engagement. By exploring the two cases of diaspora engagement policies, namely, that of India and Ethiopia, the paper questions the success of government mechanisms, establishing the conditions under which these mechanisms lead to political and economic benefit from the diaspora. Although countries differ immensely in various aspects, Ethiopia modeled its diaspora policy after the case of India, which provides us with a good case for establishing the necessary conditions. Both countries see diaspora as a key resource in economic development of respective countries and have therefore invested significant resources into developing institutions and policies to engage diaspora. Nevertheless, there are some major differences between the countries, in terms of the countries' resources and capacities to design and implement diaspora engagement policies and also in the composition of migrant communities. While Indian migration has always had an economic component, the Ethiopian Diaspora is primarily characterized by refugee flows. Moreover, India has a long history of migration and one of the largest migrant communities in the world. The paper argues that government resources and capacities to design and implement policies and the composition of migrant communities play a key role in determining the approach governments adopt with their diasporas.
    Keywords: diaspora, migration, diaspora engagement policy, diaspora engagement, institutions, India, Ethiopia
    JEL: J61
    Date: 2011

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