nep-afr New Economics Papers
on Africa
Issue of 2011‒11‒07
twenty-two papers chosen by
Quentin Wodon
World Bank

  1. What is the Scope for Horticulture to Drive Smallholder Poverty Reduction in Africa? By Tschirley, David L.
  2. The Rise of China in Sub-Saharan Africa: its Ambiguous Economic Impacts By Nicole Alice Sindzingre
  3. Zambian Farmersâ Access to Maize Markets By Chapoto, Antony; Jayne, T.S.
  4. Border effects on spatial price transmission between fresh tomato markets in Ghana and Burkina-Faso: Any case for promoting trans-border trade in West Africa? By Amikuzuno, Joseph
  5. The Impact of Weather Anomalies on Migration in sub-Saharan Africa By Luca MARCHIORI; Jean-François MAYSTADT; Ingmar SCHUMACHER
  6. Strengthening Staple Food Markets in Eastern And Southern Africa: Toward An Integrated Approach for CAADP Investment Plans By Jayne, T.S.; Chapoto, Antony; Chamberlin, Jordan
  7. Determinants of smallholder maize supply to private traders and profitability: evidence from lilongwe district in central Malawi By Maganga, Assa M.
  8. Africa and Global Economic Trends Quarterly Review - Third Quarter 2011 By AfDB
  9. Price Distortions and Economic Growth in Sub-Saharan Africa By Kym Anderson; Markus Bruckner
  10. Foreign Direct Investment, Black Economic Empowerment and Labour Productivity in South Africa By Mebratie, Anagaw Derseh; Bedi, Arjun S.
  11. The Contribution of Chinese FDI to Africa’s Pre Crisis Growth Surge By Aaron Weisbrod; John Whalley
  12. Another Perspective on Gender Specific Access to Credit in Africa By Henrik Hansen; John Rand
  13. Agricultural Trade and Employment in South Africa By Ron Sandrey; Cecilia Punt; Hans Grinsted Jensen; Nick Vink
  14. Contribution of Non-Timber Forest Products to Rural Household Income in Zambia By Mulenga, Brian P.; Richardson, Robert B.; Mapemba, Lawrence; Tembo, Gelson
  15. How applicable are the New Keynesian DSGE models to a typical Low-Income Economy? By Regassa Senbeta S.
  16. Disease and Development: The Role of Human Capital By Rodolfo Manuelli
  17. Income shocks and social unrest: theory and evidence By Almer, Christian; Laurent-Lucchetti, Jérémy; oechslin, Manuel
  18. The Impact of Mobile Telephone Use on Economic Development of Households in Uganda By Sanne Lise Blauw; Philip Hans Franses
  19. The Cost of Fear: The Welfare Effects of the Risk of Violence in Northern Uganda By Marc Rockmore
  20. Trends in Maize Grain, Roller and Breakfast Meal Prices In Zambia By Kuteya, Auckland N.; Jayne, T.S.
  21. The Rich or the Poor: Who Gains from Public Education Spending in Ghana? By Mawuli Gaddah; Alistair Munro
  22. Intrahousehold Distribution and Child Poverty: Theory and Evidence from Côte d'Ivoire By Olivier Bargain; Olivier Donni; Prudence Kwenda

  1. By: Tschirley, David L.
    Abstract: Rising urban populations and per capita income growth in Sub-Saharan Africa (SSA) are creating major opportunities for local farmers by driving growth of 5%-6% per year in domestic and regional market demand for food â implying a doubling of demand in little more than 10 years. Fresh fruits and vegetables stand to be an important winner in this growth, due to their high income elasticity of demand and multiple opportunities to add value.
    Keywords: Horticulture, Africa, Poverty, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2011–06
  2. By: Nicole Alice Sindzingre (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre)
    Abstract: The paper analyses the economic relationships between China and Sub-Saharan African countries, including original contractual relationships that link exports from Sub-Saharan Africa to China and investment by Chinese firms in Sub-Saharan Africa. Unlike the 'traditional' partners of Sub-Saharan African economies (European countries, USA), these relations inextricably combine trade, aid and investment, which may create 'lock-in' effects. China's trade and investment focus on the commodities that are produced by African countries, which are crucial inputs in China's growth, with the risk of a growing dependence of African economies on the exports of raw materials and the negative effects that are associated with such dependence, especially in oil-exporting countries. Chinese investment, however, increasingly involves other sectors, such as the manufacturing sector. In addition, Chinese investment and aid have positive effects, such as the improvement of infrastructure, the lack of which being one of the key factors of the stagnation of African economies. The rise of China in Sub-Saharan Africa also implies significant additional resources and a welcome increase in the number of 'players'. The article thus shows the ambivalence of the impacts of China, which moreover substantially vary according to countries' export structure and the nature of their political institutions.
    Keywords: Sub-Saharan Africa; China; trade; investment; aid
    Date: 2011–09–14
  3. By: Chapoto, Antony; Jayne, T.S.
    Abstract: Smallholder farmersâ access to markets and agricultural support services has been a major concern of Zambian policy makers. As with many governments in Sub-Saharan Africa, the Zambian governmentâs agricultural policies, particularly for maize, have fundamentally been conceived of as a response to perceived market failure and weak access to markets for rural smallholder farmers. However, the conventional wisdom of poor market access is based on extremely limited empirical evidence. This study is motivated by the need to overcome this paucity of empirical evidence and provide policy makers with an up-to-date assessment of smallholder farmersâ market access conditions for maize, the primary food grain in Zambia.
    Keywords: Zambia, Maize Markets, Agricultural and Food Policy, Marketing,
    Date: 2011–09
  4. By: Amikuzuno, Joseph
    Abstract: Cross-border trade in food commodities within sub-regional economic blocks in Sub-Sahara Africa (SSA) is believed to be faster, cheaper, more convenient and welfare-enhancing than overseas trade between SSA countries and the USA, EU and the BRIC countries. The difficulty of commodity arbitrage across international borders SSA is however a fundamental constraint to price transmission, market integration and the realisation of the welfare enhancing role of cross-border trade in Africa. This study examines the impact of border and distance on price transmission between tomato markets in Ghana and Burkina-Faso. Theanalysis applies a regime-switching vector error correction model to estimate semi-weekly, wholesale prices of tomato in four tomato markets in Ghana and a production centre in Burkina-Faso. Estimated parameters of price transmission contain evidence of border and distance effects. This is expected since high transfer costs, including cross-border tariffs are incurred by traders in moving tomato across the border. Moreover, the perishable nature of tomato, and the poor quality of roads and transportation facilities may imply additional costs of risks to arbitrageurs. The findings have both theoretical relevance and practical implications for facilitating cross-border trade in West Africa, especially for trade between landlocked countries like Burkina-Faso and coastal ones like Ghana. --
    Keywords: Price Transmission,Border,Tomato,Ghana,Burkina-Faso
    JEL: C32 Q11 Q13 Q17 Q18
    Date: 2011
  5. By: Luca MARCHIORI (Central Bank of Luxembourg, Luxembourg, and IRES, Université catholique de Louvain); Jean-François MAYSTADT (International Food Policy Research Institute (IFPRI), Washington); Ingmar SCHUMACHER (Central Bank of Luxembourg, Luxembourg, and Department of Economics, École Polytechnique, Paris)
    Abstract: This paper analyzes the effects of weather anomalies on migration in sub-Saharan Africa. Theoretically, we show how weather anomalies induce rural-urban migration that subsequently triggers international migration. We distinguish two transmission channels, an amenity and an economic geography channel. Empirically, based on annual, cross-country panel data for sub-Saharan Africa, our results suggest that weather anomalies increased internal and international migration through both channels. We estimate that temperature and rainfall anomalies caused a total displacement of 5 million people in net terms during the period 1960-2000, i.e. a minimum of 130’000 people every year. Further weather anomalies, based on IPCC projections on climate change, could lead to an additional annual displacement of 11 million people by the end of the 21st century.
    Keywords: International migration, urbanization, rural-urban migration, weather anomalies, sub-Saharan Africa.
    JEL: F22 Q54 R13
    Date: 2011–10–10
  6. By: Jayne, T.S.; Chapoto, Antony; Chamberlin, Jordan
    Abstract: This note highlights the major challenges facing governments and international agencies in their efforts to strengthen the performance of staple food markets in Eastern and Southern Africa. The analysis synthesizes recent analyses by Michigan State Universityâs Food Security Group.** Our analyses highlight the fact that even in countries that have achieved impressive grain production growth in recent years, such as Malawi and Zambia, this growth has been heavily concentrated among a small proportion of farmers. In most of the countries for which nationwide farm survey data is available, about 75% of the marketed maize output comes from 10% of the farms (Jayne et al 2010). The value of these farmsâ crop and animal product sales is almost as much as the other 90% of farms. Because most poor smallholder farms have limited land and other productive assets, over half of the smallholder population is bypassed by this production growth and remain staple food buyers. For these and other reasons, rural poverty rates have remained stubbornly high even where aggregate grain production has risen dramatically.
    Keywords: Africa, Food Market, CAADP, Agricultural and Food Policy, Food Security and Poverty, Marketing,
    Date: 2011–09
  7. By: Maganga, Assa M.
    Abstract: This study was devoted to estimate profitability and various determinants of quantities of maize sold to private traders by smallholder farmers in Lilongwe district. Multiple Regression analysis was employed to test various determinants of quantities of maize sold to private traders. Gross margin analysis was used to estimate economic returns realized by the smallholder maize farmers supplying their produce to exporting traders. The findings of the study revealed that income level of the household, household size, access to extension service, education level of household head, size of land under maize production and price of maize were important determinants of quantities of maize that a given household sold to private traders. The gross margin per Malawi Kwacha invested was MK2.98.
    Keywords: Determinants; gross margin; selling maize; smallholder farmers; private traders
    JEL: D00
    Date: 2010–12–07
  8. By: AfDB
    Date: 2011–10–20
  9. By: Kym Anderson (School of Economics, University of Adelaide); Markus Bruckner (School of Economics, University of Adelaide)
    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: Economic growth, Trade restrictions, Agricultural incentives
    JEL: F14 F43 N17 O13 O55 Q18
    Date: 2011–09
  10. By: Mebratie, Anagaw Derseh (ISS, Erasmus University Rotterdam); Bedi, Arjun S. (ISS, Erasmus University Rotterdam)
    Abstract: The impact of foreign direct investment (FDI) on domestically owned firms in developing countries has been widely debated in the literature. It has been argued that FDI provides access to advanced technologies and other intangible assets which may spill over to the host country and allow domestic firms to improve their performance. While there is a substantial literature on this issue, for obvious reasons, little is known about the effect of FDI on domestic firms in the African context. Noting this gap, this paper uses two-period (2003 and 2007) firm level panel data from South Africa to examine the impact of foreign direct investment on the labour productivity of domestic firms. A key policy change during this time period was the passage of the broad-based black economic empowerment act (BB-BEE) and we also examine the effect of the interaction between foreign firm ownership and BEE on labour productivity. Regardless of the empirical specification we find no spill over effects and no evidence that a greater degree of BEE compliance by foreign firms influences labour productivity.
    Keywords: FDI, spillover, labour productivity, black economic empowerment, firm, South Africa
    JEL: J24
    Date: 2011–10
  11. By: Aaron Weisbrod; John Whalley
    Abstract: In the 3 years before the 2008 Financial Crisis, GDP growth in sub Saharan Africa (averaged over individual economies) was around 6%, or 2 percentage points above mean growth rates for the preceding 10 years. This period also coincided with significant Chinese FDI flows into these countries, accounting for up to 10% of total inward FDI flows for certain countries in these years. We use growth accounting methods to assess what portion of this elevated growth can be attributed to Chinese inward FDI. We follow Solow (1957), Dennison (1962), and others and use data for individual economies between 1990 and 2008 to calculate Solow residuals for these years for individual economies. We use capital stock data, workforce, and factor share data by country. Capital stock data is unavailable directly, and so we use perpetual inventory methods to construct the data. Factor shares come from UN National Accounts data. We then run counterfactual growth accounting experiments for thirteen Sub-Saharan African countries excluding Chinese FDI inflows for 2005-2007 and also 2003-2009. Our individual results vary by year and country, but there are several year/country combinations where Chinese FDI contributed to an additional one half of a percentage point or above to GDP growth. These results suggest that a significant, even if in some cases small, portion of the elevated growth in sub Saharan Africa in the three years before the Financial Crisis and also in the two years afterwards (2008-2009) can be attributed to Chinese inward investment.
    JEL: F21 F43 O4 O47 O55
    Date: 2011–10
  12. By: Henrik Hansen (Institute of Food and Resource Economics, University of Copenhagen); John Rand (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Using firm level data from eight Sub-Saharan Africa countries we examine credit constraint differentials between male and female manufacturing entrepreneurs. Enterprises owned by female entrepreneurs are less likely to be credit constrained compared to their male counterparts. The magnitude of this credit constraint gap varies with constraint and ownership definitions but the direction of the gap does not. Using a generalized Blinder-Oaxaca decomposition, we investigate if the gap is due to differences in observable characteristics or to unexplained variations in the returns to these characteristics. We find the gap to be associated with the unexplained component. We argue that the finding is mainly due to female gender favoritism in loans to micro and small firms because (i) the gap is reversed for medium size enterprises and, (ii) we find no sign of superior female entrepreneurial performance in terms of capacity utilization, labor productivity or firm size growth.
    Keywords: Credit, Entrepreneurship, Gender, Private Sector, SMEs
    JEL: G21 J16 L25
    Date: 2011–10
  13. By: Ron Sandrey; Cecilia Punt; Hans Grinsted Jensen; Nick Vink
    Abstract: This report provides an overview of policy changes in South African agriculture over the past three decades, and of some of the associated impacts on output, trade patterns and employment. In agriculture, the story is one of widespread substitution of labour for capital. While the sector has shed more than a million jobs over the past four decades, the paper highlights its continuing role as an employment creator in rural areas, albeit mainly in low-wage occupations. As for its principal analytical contribution, this paper considers future trade liberalisation in the agricultural sector. Using two different economic models, we find a remarkably consistent pattern whereby agricultural trade liberalisation in the region is predicted to increase agricultural employment.
    Keywords: trade, employment, wages, inclusive growth
    JEL: F16
    Date: 2011–10–19
  14. By: Mulenga, Brian P.; Richardson, Robert B.; Mapemba, Lawrence; Tembo, Gelson
    Abstract: Non-timber forest products (NTFPs) play an important role in supporting rural livelihoods and food security in Zambia. NTFP-dependent households are poorer, have younger household heads with lower levels of education, and are located closer to district towns than other rural households are. NTFPs are a particularly important source of income in Luapula, Northwestern and Western provinces. ⢠Income from woodfuel represented the greatest share of income for households that participated in NTFPs, and it was the most commonly reported business activity, with 68% of NTFP households reporting income from charcoal and firewood. NTFPs contribute an average of 32% to total household income among participants, with the poorest being more dependent on these sources. ⢠Given the widespread demand for woodfuel and other forest products, it is likely that rural households will continue to engage in the extraction and trade of NTFPs as a business activity. However, charcoal production, if left unchecked, could compromise the integrity of forests and adversely affect the availability of other NTFPs. In order to reduce householdsâ reliance on charcoal/firewood as an income source, outreach efforts could promote other NTFPs such as wild honey, ants, and mushrooms as business activities. Mushrooms, ants, and caterpillars may particularly be important activities for femaleheaded households, as more female-headed households derived income from these sources.
    Keywords: NON-TIMBER FOREST, ZAMBIA, Agricultural and Food Policy, Consumer/Household Economics,
    Date: 2011–09
  15. By: Regassa Senbeta S.
    Abstract: This paper assesses the applicability of new Keynesian DSGE models to low income economies similar to those in Sub Saharan Africa. To this e¤ect, we ?rst review the development, criticisms and recent advances in DSGE modeling. Then we assess the implications that emanate from the assumptions of the standard small open economy New Keynesian DSGE model within the context of the economic environment of a typical low income economy. Our assessment shows the following two points. First, though there are many criticisms to these models, most recent advances seem to have addressed most of them. However, there are still some outstanding criticisms that seriously challenge not only the DSGE models but also all conventional economic models. Second, the current tendency of applying these models to explain or predict economic phenomena in low income countries without incorporating the structural speci?cities of these countries cannot be justi?ed. Instead, for these models to be helpful to understand the economic events in low income countries, most of their components must be changed or modi?ed. In this study we identify some of these components and suggest the possible changes or modi?cations.
    Date: 2011–10
  16. By: Rodolfo Manuelli (Department of Economics, Washington University in St. Louis and Federal Reserve Bank of St. Louis)
    Abstract: This paper presents a model of human capital accumulation that allows for feedback effects between the consequences and the likelihood of suffering from particular diseases and the decisions to invest in knowledge, both in the form of schooling and on-the-job training. I use a calibrated version of the model to estimate the long run impact of eradicating HIV/AIDS and malaria for a number of Sub- Saharan African countries. I find that the effect on output per worker can be substantial.
    Date: 2011–06
  17. By: Almer, Christian; Laurent-Lucchetti, Jérémy; oechslin, Manuel
    Abstract: Combining theoretical and empirical work, this paper explores the impact of economic shocks on the incidence of social unrest (i.e., mass demonstrations and violent riots) in autocracies. Our theory predicts negative economic shocks to boost unrest since-in bad times-fighting the regime to reduce the level of resource diversion becomes cheaper. Using a new dataset on political instability in Africa, our empirical analysis confirms this prediction. The instrumental variables estimates-which take into account the potential endogeneity of economic shocks-suggest a significant increase in the level of social unrest as a response to a decline in real per capita GDP.
    Keywords: Conflict; social unrest; economic shocks
    JEL: O17 D74 Q54
    Date: 2011–10
  18. By: Sanne Lise Blauw (Erasmus University Rotterdam); Philip Hans Franses (Erasmus University Rotterdam)
    Abstract: We examine the impact of mobile telephone use on economic development of individual households. Unique cross-sectional data were collected in personal interviews with heads of households (N=196) in Uganda. Economic development is measured at the household level by the Progress out of Poverty Index. We find strong support that mobile phone use positively impacts economic development.
    Keywords: Economic development; Progress out of poverty index; mobile telephone; mobile banking; mobile search
    JEL: I3
    Date: 2011–10–31
  19. By: Marc Rockmore (Cornell University)
    Abstract: The micro-conflict literature focuses almost exclusively on direct exposure to violence and post-conflict outcomes. By focusing only on directly exposed households, the literature ignores the effects of risk on households in surrounding areas. This paper presents the first estimates of the economic costs of the risk of violence separate from the costs of the actual experience of violence, and finds that it is a significant mechanism by which conflict influences development. Using representative community and household data from Northern Uganda, I estimate measures of objective and subjective risk using geo-spatial variation in the distribution of violence over time. On average, the risk of violence lowers per capita household expenditure by 2 to 6 percent. Even within households that are attacked, risk alone accounts for a significant share, between 17 and 38 percent, of their losses. On aggregate, half of conflict-related losses are due to risk as opposed to direct exposure to violence, with much of these risk-related losses in households that are not directly attacked. Compounding these losses over the duration of the conflict, the risk of violence has reduced per capita expenditure in the affected region by roughly 70 percent and national GDP by 4.6 to 8.2 percent. Lastly, I find that food aid reduces risk-related losses by 17 to 30 percent.
    Date: 2011–10
  20. By: Kuteya, Auckland N.; Jayne, T.S.
    Abstract: 1. Compared to the general price of goods and services as measured by the consumer price index, the prices of retail roller and breakfast maize meal have declined by between 34 and 51% in the major urban markets of Zambia between 1994 and 2010. 2. Inflation-adjusted wholesale maize grain prices have also declined over this period but by a smaller amount. 3. Inflation-adjusted marketing margins between the wholesale price of maize grain and the retail prices of roller and breakfast meal have declined from 41% to 64% since the early 1990s when the market liberalization process began. Since the early 1990s, there has been substantial new investment in commercial maize milling as well as by the informal hammer milling industry. Enhanced competition at this stage in the maize value chain appears to have conferred important food security benefits to urban consumers.
    Keywords: Zambia, maize, grain prices, Agricultural and Food Policy, Demand and Price Analysis,
    Date: 2011–09
  21. By: Mawuli Gaddah; Alistair Munro (National Graduate Institute for Policy Studies)
    Abstract: This paper examines the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognised human capital as a cornerstone to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have been introduced in higher education while basic education is being made progressively free. The question then is, whether these spending increases have been effective in reaching the poor and to what extent? What factors influence the poor’s participation in the public school system? We attempt to address these issues, employing the standard benefit incidence methods and the willingness-to-pay method using a nested multinomial logit model. The results give a clear evidence of progressivity with consistent ordering: pre- schooling and primary schooling are the most progressive, followed by secondary, and then tertiary. The poorest quintile gains 14.8% of total education benefts in 2005 compared to the richest quintile benefit of 26.3%. Own price and income elasticities are higher for private schools than public schools and for secondary than basic schools.
    Date: 2011–10
  22. By: Olivier Bargain (Aix-Marseille Université and IZA); Olivier Donni (Université de Cergy-Pontoise); Prudence Kwenda (University College Dublin)
    Abstract: Poverty measures in developing countries often ignore the distribution of resources within families and the gains from joint consumption. In this paper, we extend the collective model of household consumption to recover mother's, father's and children's shares together with economies of scale, using the observation of adult-specific goods and an extended version of the Rothbarth method. The application on data from Côte d'Ivoire shows that children command a reasonable fraction of household resources, though not enough to avoid a very large extent of child poverty compared to what is found in traditional measures based on per capita expenditure. We find no significant evidence of discrimination against girls, and educated mothers have more command over household resources. Baseline results on children's shares are robust to using alternative identifying assumptions, which consolidates a general approach grounded on a flexible version of the Rothbarth method. Individual measures of poverty show that parents are highly compensated by the scale economies due to joint consumption.
    Keywords: Collective Model, Consumer Demand, Engel Curves, Rothbarth Method, Cost of Children, Bargaining Power, Sharing rule, Scale Economies, Equivalence Scales, Indifference Scales
    JEL: D11 D12 D31 I31 J12
    Date: 2011–09

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