|
on Africa |
| By: | Cloete, Philip C.; Idsardi, Ernst |
| Abstract: | The level of food security in South Africa is largely being influenced by income inequalities and food prices with a large part of the population that has access to food but do not have the financial means to obtain it. Despite ever increasing food inflation, South Africa is still adopting policies and strategies which may contribute towards even higher levels of food inflation and consequently food insecurity in the near future. These include amongst others the National Bio-Fuel Industrial Strategy. Previous studies suggest that indigenous and traditional food crops play a substantial role in ensuring food security in several African countries. The question that arises is whether these alternative food crops do not hold the answer towards balancing the trade-off between fuel and food in South Africa. In order to answer that question, a literature review was conducted to understand the inter-linkages between food and bio-fuel as well as to understand the role that indigenous and traditional food crops are currently playing in Africa. To analyse the current status and potential of indigenous and traditional food crops in South Africa, a topical survey amongst 600 African households in the North-West Province was conducted. Contrary to other parts of Sub-Saharan Africa, the survey showed that current production and consumption of indigenous and traditional foods crops in South Africa is modest. This is mainly due to ignorance and unavailability of these specific crops. Despite this, the potential of these crops is evident in the South African context due to affordability, positive perceptions, and land availability near poor rural and peri-urban communities. Hence, indigenous and traditional food crops hold significant opportunities for South Africa to pursue bio-fuel production without compromising food security. To achieve this, specific interventions are needed to stimulate the production and consumption of indigenous and traditional food crops. |
| Keywords: | bio-fuels, food security, indigenous and traditional food crops, South Africa, household consumption, Agricultural and Food Policy, Food Security and Poverty, Resource /Energy Economics and Policy, Q10, Q18, D10, |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:130172&r=afr |
| By: | Mather, David L; Jayne, T.S. |
| Abstract: | Marketing boards and strategic reserves have re-emerged over the last decade as significant actors in grain markets in eastern and southern Africa, yet there is little empirical research regarding how their activities affect smallholder behavior. This paper uses panel survey data from 1997-2007 on Kenyan smallholders to investigate the effect of Kenya’s National Cereal Produce Board activities on farmgate maize price expectations, output supply, and factor demand. Results show that the NCPB pan-territorial price has a positive effect on smallholders’ maize price expectations, and that smallholders respond to higher expected maize prices by increasing maize production through increased fertilizer use. |
| Keywords: | Marketing boards, supply response, Africa, Food Security and Poverty, International Development, Marketing, Q12, Q13, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:131056&r=afr |
| By: | Rabah Arezki; Elena Dumitrescu; Andreas Freytag; Marc Quintyn |
| Abstract: | We examine the relationship between South African Rand and gold price volatility using monthly data for the period 1980-2010. Our main findings is that prior to capital account liberalization the causality runs from South African Rand to gold price volatility but the causality runs the other way around for the post-liberalization period. These findings suggest that gold price volatility plays a key role in explaining both the excessive exchange rate volatility and current disproportionate share of speculative (short-run) inflows that South Africa has been coping with since the opening up of its capital account. |
| Keywords: | Capital account liberalization , Commodity price fluctuations , Commodity prices , Exchange rates , Gold prices , South Africa , |
| Date: | 2012–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/168&r=afr |
| By: | Liverpool-Tasie, Lenis Saweda |
| Abstract: | Farmer groups are considered potentially effective mechanisms to increase farmer livelihood by reducing information asymmetries and transaction costs. In many countries, farmers are coordinated in groups for participation in poverty reduction programs. This is common practice in many input voucher programs in Sub-Saharan Africa. While the effect of farmer groups on certain outcomes such as price received and marketing has been studied, few studies, if any, have examined the effect of intragroup dynamics on farmer experience of input voucher programs. Consequently, this research uses a fertilizer voucher scheme in Nigeria to explore whether different methods of distributing fertilizer through farmer groups can affect an intervention's ability to increase farmer access to agricultural inputs. To receive a fertilizer voucher in a pilot targeted subsidy program in Nigeria, all farmers were required to be members of an organized group. However, for fertilizer distribution among one set of participants, individual farmers were given their allotted share directly, whereas farmers in the other set received their fertilizer indirectly through a group representative. |
| Keywords: | Farmer groups, Farmer organizations, fertilizer, vouchers, Social capital, subsidies, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1197&r=afr |
| By: | Kodila-Tedika, Oasis |
| Abstract: | We analyze the effect of the Statistical Capacity on government effectiveness/efficiency, using a cross-sectional and panel data for a sample of 48 countries African for a period of 2003-2008.The results show that Statistical Capacity positively affects government effectiveness/efficiency. The positive effect of Statistical Capacity is robust to controlling for other determinants of institutional quality and number of estimation techniques.It follows that countries with higher Statistical Capacity levels enjoy institution of better qualitythan countries with low levels of Statistical Capacity. |
| Keywords: | Sub-Saharan Africa; Institution; Statistical Capacity; Information; Government effectiveness |
| JEL: | D73 C43 O17 O15 P48 D8 N17 |
| Date: | 2012–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40674&r=afr |
| By: | Nir Klein; Nombulelo Gumata; Eliphas Ndou |
| Abstract: | The main purpose of this paper is to construct a financial conditions index (FCI) for South Africa. The analysis extracts the index by applying two alternative approaches (principal component analysis and Kalman filter), which identify an unobservable common factor from a group of external and domestic financial indicators. The alternative estimated FCIs, which share a similar trajectory over time, seem to have a powerful predictive information for the near-term GDP growth (up to four quarters), and they outperform the South African Reserve Bank’s (SARB) leading indicator as well as individual financial variables. Their recent dynamics suggest that following a strong recovery in late-2009 and 2010, reflecting in part domestic factors such as systematic reductions in the policy rate, the rebound in real economic activity, and a benign inflationary environment, the financial conditions have deteriorated in recent months, though not as sharply as in end-2008. Given their relatively high predictive power regarding GDP growth, a further deterioration may imply that economic activity is likely to slow in the period ahead. |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/196&r=afr |
| By: | Ariane Manuela AMIN |
| Abstract: | Biodiversity conservation in low-income economies is a vital issue and hence needs to be addressed for development and poverty eradication. A variety of empirical works exist on the subject, but the focus is often limited on the search for possible causes of biodiversity erosion. Research on the "driving forces" that influence biodiversity conservation effort is still largely missing, especially for developing countries. In this study, we seek to address this gap. We test, using different models, the impact of some domestic and external factors on countries' conservation effort measured by the Ecoregion score. We examine specifically whether strategic interactions matter in conservation policymaking at the country level. The model is tested on a data set comprising 48 sub-Saharan African countries spanning over the period 1990-2009. Through the obtained results, we give empirical evidence that, in the context of underdevelopment especially in Sub-Saharan Africa, strengthening governance is an effective mean to support the promotion of biodiversity conservation. In addition, we find that countries in Sub-Saharan Africa are influenced by their contiguous neighbors in environmental policy for biodiversity management. Finally, the results suggest that tourism development is a valuable incentive to raise governments' dedication to conservation in Sub-Saharan Africa. |
| Keywords: | biodiversity, Ecoregion score, Strategic interactions, Spatial econometrics |
| JEL: | C21 Q57 P48 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1378&r=afr |
| By: | Ariane Manuela AMIN (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I) |
| Abstract: | Biodiversity conservation in low-income economies is a vital issue and hence needs to be addressed for development and poverty eradication. A variety of empirical works exist on the subject, but the focus is often limited on the search for possible causes of biodiversity erosion. Research on the "driving forces" that influence biodiversity conservation effort is still largely missing, especially for developing countries. In this study, we seek to address this gap. We test, using different models, the impact of some domestic and external factors on countries' conservation effort measured by the Ecoregion score. We examine specifically whether strategic interactions matter in conservation policymaking at the country level. The model is tested on a data set comprising 48 sub-Saharan African countries spanning over the period 1990-2009. Through the obtained results, we give empirical evidence that, in the context of underdevelopment especially in Sub-Saharan Africa, strengthening governance is an effective mean to support the promotion of biodiversity conservation. In addition, we find that countries in Sub-Saharan Africa are influenced by their contiguous neighbors in environmental policy for biodiversity management. Finally, the results suggest that tourism development is a valuable incentive to raise governments' dedication to conservation in Sub-Saharan Africa. |
| Keywords: | biodiversity;Ecoregion score;Strategic interactions;Spatial econometrics |
| Date: | 2012–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00722081&r=afr |
| By: | Harttgen, Kenneth; Klasen, Stephan; Vollmer, Sebastian |
| Abstract: | Despite recent improvements in economic performance, undernutrition rates in Africa appear to have improved much less and rather inconsistently across the continent. We examine to what extent there is an empirical linkage between income growth and reductions of child undernutrition in Africa. We do this by pooling all DHS surveys for African countries, control for other correlates of undernutrition, and add country-level GDP per capita. We find that increases in GDP per capita are associated with lower individual probabilities of being underweight of about 2.5 percent per one hundred dollars. This association becomes insignificant when time fixed effects are added to the regression. Other explanatory variables such as mother’s education, socioeconomic status, and poor mother’s nutritional status are quantitatively more important than economic growth suggesting that other intervention to affect these correlates of undernutrition are likely to be more promising than relying on improved economic conditions. |
| Keywords: | economic growth, child undernutrition, Africa, economic development, wasting, stunting, underweight, Food Security and Poverty, International Development, I15, O10, |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gagfdp:130164&r=afr |
| By: | Derek Yu; Adél Bosch |
| Abstract: | This paper analyses trends in hours worked from South African household survey data for the period 1997 — 2011. The purpose of the paper is fourfold. First, the paper provides an overview on the trends in hours worked of formal sector employees, by various demographic and work characteristics. Second, the paper aims to establish how mean hours worked corresponded to the business cycle and third, the reliability of the Statistics South Africa hours worked data is assessed by comparing it with the data on hours working in the manufacturing sector by the Bureau of Economic Research (BER). Last, the newly derived hours worked variables are evaluated in terms of their usefulness as leading indicators, and how they can be used in productivity studies in the South African macroeconomic environment. |
| Keywords: | work hours, business cycles, formal sector employees, manufacturing industry, South Africa |
| JEL: | E32 J00 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:302&r=afr |
| By: | Bildirici, Melike |
| Abstract: | Knowledge of the direction of the causality between electricity consumption and economic growth is of primary importance if appropriate energy policies and energy conservation measures are to be devised.This study estimates the causality relationship between electricity consumption and economic growth by Markov Switching Vector Auto Regression (VAR) and Markov Switching Granger Causality methods for some emerging countries; Brunei, Cameron, Côte d'Ivoire, Nigeria, South Africa, Togo and Zimbabwe. The results from MS-VAR models show that in regime one, two and three, Electricity Consumption (EC) is the Granger cause of the Gross Domestic Product (GDP) and GDP is the Granger cause of the EC. In sum, we find some evidence of bidirectional GC between the EC and the GDP. |
| Keywords: | Economic Growth; Electricity Consumption; MS-VAR; MS-Granger Causality |
| JEL: | C0 N7 |
| Date: | 2012–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40515&r=afr |
| By: | Derek Yu (Department of Economics, University of the Western Cape); Adél Bosch (Research Department, South African Reserve Bank) |
| Abstract: | This paper analyses trends in hours worked from South African household survey data for the period 1997 – 2011. The purpose of the paper is fourfold. First, the paper provides an overview on the trends in hours worked of formal sector employees, by various demographic and work characteristics. Second, the paper aims to establish how mean hours worked corresponded to the business cycle and third, the reliability of the Statistics South Africa hours worked data is assessed by comparing it with the data on hours working in the manufacturing sector by the Bureau of Economic Research (BER). Last, the newly derived hours worked variables are evaluated in terms of their usefulness as leading indicators, and how they can be used in productivity studies in the South African macroeconomic environment. |
| Keywords: | Work hours, Business cycles, Formal sector employees, Manufacturing industry, South Africa |
| JEL: | E32 J00 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers167&r=afr |
| By: | Takeshima, Hiroyuki |
| Abstract: | Onset risk, the uncertainty in the onset of rainy season, is an important element of weather risk for African farmers with little access to formal insurance who engage in traditional rainfed farming. A knowledge gap still exists empirically on how onset risk may affect the investment decisions of these farmers. In particular, farm productivity in Africa still depends on substantial labor inputs at the onset of the rainy season, sometimes involving seasonal migration to rural areas. With credit and insurance market failure, poor access to weather-related information, and high labor mobility costs, high and increasing onset risk may affect farmers' demand for farm mechanization. We test this hypothesis by investigating the effect of onset risk on farmers' investment in draft animals in northern and central Nigeria. We use the example of a public project providing farmers with financial support for the acquisition of productive assets. We calculate the onset of the rainy season using daily rainfall data in various locations across Nigeria and identify locations that have experienced increasing, decreasing, or constant onset risk in the past few decades. We then exploit the panel structure of our dataset and employ stratified propensity score matching to estimate the average treatment effect on the treated, differentiated by the onset risk and its change. The results support our hypothesis. Farmers in areas with higher, increasing, or constant onset risk were more likely to invest in draft animals, and such effects are clearer among larger-scale farmers. Linkages are also clearer with onset risk compared to annual rainfall risk. |
| Keywords: | livestock, rainfall, onset risk, Agricultural productivity, Agricultural inputs, Agricultural Investment, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1198&r=afr |
| By: | Rodrigo, Maria F. |
| Keywords: | Poverty trap, Cooperatives, Ethiopia, Agricultural and Food Policy, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea12:130545&r=afr |
| By: | Matheson V.; Peeters Th.; Szymanski S. |
| Abstract: | Hosting a major international sporting event is a costly affair for the organizing country. Growth in tourism is often cited as one of the economic benefits, which should allow the host to earn back these costs. In this paper we use monthly country-by-country arrival data to assess the impact of organizing the FIFA 2010 World Cup on tourism in South Africa. We find that South Africa attracted around 200,000 extra arrivals from non-SADC countries during the event. Participating countries and South Americans contributed most to this increase. These figures are far below most projections made before the event. |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2012015&r=afr |
| By: | Liverpool-Tasie, Lenis Saweda |
| Abstract: | Though input vouchers are being publicized as a mechanism to simultaneously target subsidies and develop demand in private markets, limited empirical evidence of their effect on private input demand exists. Few empirical studies, if any, exist on the effect of targeted subsidies on private input demand in Nigeria or West Africa . Consequently this study begins to fill this gap by estimating the effect of a targeted input subsidy on farmer participation in the private fertilizer market in Nigeria. Using a double hurdle model and a control function approach, this study explores the effect of increasing access to subsidized fertilizer on farmer participation in the private fertilizer market in Kano, Nigeria. The study finds evidence that farmers who received subsidized fertilizer in 2009 tended to have less assets than their counterparts who did not. Within this context, although receiving subsidized fertilizer did not appear to increase the probability of participating in the private fertilizer market, it did increase the quantity of fertilizer purchased from the private market once the decision to participate had been made. It appears that one benefit of the voucher program was that it developed links between rural farmers and input suppliers. Furthermore, where private fertilizer markets are weak, results indicate that there could be significant gains from the temporary use of voucher programs to create links between input suppliers and farmers. |
| Keywords: | subsidies, fertilizer, demand, Market participation, Private sector, vouchers, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1194&r=afr |
| By: | Josué Mbonigaba |
| Abstract: | The cost-effectiveness of intervening with a set of HIV/AIDS interventions in low HIV prevalence areas (LPA) and high HIV prevalence areas (HPA) in South Africa is analysed. The rationale for this analysis is to assess the suspected effect of interaction between the intervention and area of implementation, on cost-effectiveness. The paper used the Markov model, which tracked a cohort of patients over their lifetime in each area. Data on costs and health outcomes were collected from the literature, but the distribution of patients in health states at baseline and over time, were based on the patterns observed in the Actuarial Society of South Africa AIDS model (ASSA2008) projections, to depict these interaction dynamics. The effects of recent changes in guidelines of some interventions under consideration were assessed separately outside of modelling and sensitivity analysis conducted on all model parameters. In terms of efficiency, the study found it more cost-effective to intervene in LPA. However, to align efficiency with equity and ethical principles underlying HIV response, more than proportional resources should go into non-ARV based interventions in LPA, while more than proportional resources should go into non-ARV interventions in HPA. |
| Keywords: | cost-effectiveness, LPA, HPA health outcomes, simulation, HIV/AIDS, interventions, Markov, prevalence, low, high, South Africa. |
| JEL: | I18 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:304&r=afr |
| By: | Tengeh, RK; Ballard, HB; Slabbert, AS |
| Abstract: | Given the fact that numerous challenges prohibit African immigrants from availing financial capital for the purpose of starting a business in South Africa, this paper sets out to investigate whether those that succeeded experienced a significant increment in their financial capital three or more years after start-up. This paper was designed within the quantitative and qualitative research paradigms. A triangulation of three methods was utilised to collect and analyze the data. From a quantitative perspective, the survey questionnaire was used. To complement the quantitative approach, personal interviews and focus groups were utilised as the methods within the qualitative approach paradigm. The primary data collection instrument used was the survey questionnaire which was complemented by personal interviews and focus group debates. The results revealed that the majority (71,1%) African immigrants had an estimated start-up financial in the range of R 1 000 and R 5 000, which tended to vary across the different ethnic groups studied. After three of more years, the estimated financial capital of the majority (39,3%) of the respondents moved to a new range of R 50 001 to R 100 000. Noting a disparity in capital growth exhibited by the different ethnic groups, it was found that all the Ethiopians who started with a capital within the range of R1 000-R5 000 moved into a new capital range (R50 001- R100 000) three or more years after business start-up. Although the absolute migration in terms of capital demonstrated by the Ethiopians is not into the highest capital range, they were nonetheless the only country that experienced this phenomenal growth. In terms of occupying the highest capital range (R250 001- R500 000), 11,1% of Cameroonians moved into that range followed by 7,4% of Somalians. Using an increase in financial capital (generated by ploughing back profits) as a proxy for growth, we were able to prove that these African immigrants owned business grow and the rate of growth varied across the different ethnic groups studied. |
| Keywords: | Immigrant entrepreneurship; immigrant-owned businesses; financial capital; financial growth; African immigrants; business start-up resources and South Africa |
| JEL: | M1 A19 J61 A10 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40610&r=afr |
| By: | Michalopoulos, Stelios; Papaioannou, Elias |
| Abstract: | We investigate the role of deeply-rooted pre-colonial ethnic institutions in shaping comparative regional development within African countries. We combine information on the spatial distribution of ethnicities before colonization with regional variation in contemporary economic performance, as proxied by satellite images of light density at night. We document a strong association between pre-colonial ethnic political centralization and regional development. This pattern is not driven by differences in local geographic features or by other observable ethnic-specific cultural and economic variables. The strong positive association between pre-colonial political complexity and contemporary development also holds within pairs of adjacent ethnic homelands with different legacies of pre-colonial political institutions. |
| Keywords: | Africa; Development; Ethnicities; Institutions |
| JEL: | N17 O10 O40 O43 Z10 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9068&r=afr |
| By: | Clemens Breisinger, Xinshen Diao, Manfred Wiebelt |
| Abstract: | Unlike in Asia, the manufacturing sector has not (yet) become a driver of structural change in Africa. One common explanation is that the natural resource-focus of many African economies leads to Dutch disease effects. To test this argument for the case of newly found oil in Ghana we develop a multi-sector intertemporal general equilibrium model with endogenous savings and investment behavior. Results show that in addition to the well-known short-term Dutch disease effects, long-term structural effects can indeed impede Asian-style economic transformation in Ghana (and other resource rich countries). We also demonstrate how oil wealth may go hand in hand with structural change in the future |
| Keywords: | transformation, growth, structural change, oil revenue, Dutch disease, Ghana, intertemporal general equilibrium |
| JEL: | C68 D58 D90 F43 O11 O41 O55 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1784&r=afr |
| By: | Fofack, Hippolyte |
| Abstract: | This paper draws on an expanded growth accounting framework to estimate the relative contribution of women to growth in Sub-Saharan Africa. Empirical results show a consistently positive contribution of women to growth in gross domestic product in the region, both during economic downturns and growth spurts. This is despite the absence of any valuation of home-produced goods and informal sector production, which accounts for the bulk of womens production, in national product and income accounts. Women's positive contribution is largely attributed to their increased rates of labor force participation in wage employment and the reduction in the gender gap in education in recent years. |
| Keywords: | Economic Growth,Gender and Development,Achieving Shared Growth,Population Policies,Labor Policies |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6153&r=afr |
| By: | Steven F. Koch |
| Abstract: | The impact of the abolition of user fees in South Africa, a policy implemented in 1994 for children under the age of six and the elderly, as well as pregnant and nursing mothers, is examined via regression discontinuity. The analysis focuses on provider choice decisions for curative care treatment, but also examines potential externalities that could arise from the policy. As a result of the policy, curative care demand in the public sector is found to increase by approximately 7%; however, the demand for curative care in the private sector is found to decrease by nearly the same amount, suggesting that the policy led to provider choice substitution. The analysis further supports the hypothesis that the health of young children improved marginally. |
| Keywords: | Free Health Care, Regression Discontinuity |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:301&r=afr |
| By: | KUEPIE Mathias; TENIKUE Michel |
| Abstract: | The objective of this paper is to investigate the effect of the number of siblings on education in urban sub-Saharan Africa. The birth of twins is considered as a natural experiment that affects the number of siblings but has no direct effect on education. This event is used as instrumental variable in a two-stage least-squared estimation approach to investigate the causal effect of the number of siblings on school achievement. Equations are estimated on subsamples of singleton children born before the twins. The results show that an exogenous fertility increase significantly inhibits human capital accumulation. However, the magnitude of the marginal effect seems small: one additional sibling decreases the total number of school grade by nearly one-tenth. In a context of high fertility, the total effect might become very detrimental. |
| Keywords: | education; fertility; twins; sub-Saharan Africa |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2012-28&r=afr |
| By: | Bräutigam, Deborah; Tang, Xiaoyang |
| Abstract: | The recent expansion of Chinese economic engagement in Africa is often poorly documented and not well understood. This paper is the first in an International Food Policy Research Institute-sponsored effort to better understand Chinese engagement in Africa's agricultural sector. A clearer picture of Chinese activities in agriculture is important as a foundation for Africans and their development partners to more fruitfully engage with an increasingly important actor. This overview paper explores China's engagement in rural Ethiopia in historical perspective, focusing on foreign aid, other official engagements, and investment by Chinese firms between 1970 and 2011. We find that Chinese engagement in agriculture and rural development in Ethiopia is longstanding, but at present, Chinese farming investment is far smaller than generally believed. Changes in this engagement reflect the changes in China's engagement in Africa more generally. |
| Keywords: | Foreign aid, Agribusiness, Agriculture, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1185&r=afr |
| By: | Tinashe Harry Dumile Kambadza; Zivanemoyo Chinzara |
| Abstract: | The paper analyses the structure of returns comovements and the volatility spillovers among the African stock markets using daily data for the period 2000-2010. We particularly focus on two issues: whether the stock markets of countries with close trading and financial links are more sychronised, and whether the financial crises influences volatility spillovers. Econometric models used include the Factor Analysis (FA), the Vector Autoregressive (VAR) and the GARCH. Our findings suggest that linkages among the African stock markets only exist along regional blocs. South Africa is found to be both the most dominant and most endogenous stock market. Most of the markets exhibit evidence of asymmetry and persistence in volatility. The results also show that it is important to account for structural change in volatility during financial crises when modelling volatility. We outline the investment and policy implications of the findings. |
| Keywords: | Returns and volatility linkages, Factor Analysis (FA), Vector Autoregressive (VAR), Financial Stability, asymmetric GARCH. |
| JEL: | G15 F36 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:305&r=afr |
| By: | You, Gene J.-Y.; Ringler, Claudia |
| Abstract: | Two factors critical to assuring food security, whether at the local or the global level, are increasing crop productivity and increasing access to sustainable water supplies. These factors are also vital to the economic success of agriculture, which is particuÂlarly important in Ethiopia given that the sector accounts for about 41 percent of the country’s gross domestic product (GDP), produces 80 percent of its exports, employs 80 percent of the labor force, and is a major source of income and subsistence for the nation’s poor. |
| Keywords: | hydro-economic modeling, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:resbrf:15(19)&r=afr |
| By: | Manuk Ghazanchyan; Nils O Maehle; Olumuyiwa Adedeji; Janet Gale Stotsky |
| Abstract: | This study examines the relationship between the foreign exchange regime and macroeconomic performance in Eastern Africa. The study focuses on seven countries, five of which decisively liberalized their foreign exchange regimes. The study assesses the relationship between (i) growth and various determinants, including the exchange regime, the real exchange rate, and current account liberalization; and (ii) inflation and various determinants, including lagged inflation, the nominal exchange rate, the exchange regime, and liberalization. We find that in our sample, for the determinants of growth, investment and the real exchange rate are significant determinants but not the exchange regime or liberalization; and for inflation, the lagged inflation rate, nominal exchange rate, and the de facto regime are significant. Exchange rate pass-through is limited. |
| Keywords: | Economic growth , East Africa , Exchange rate regimes , Foreign exchange , |
| Date: | 2012–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/148&r=afr |
| By: | Michalopoulos, Stelios; Papaioannou, Elias |
| Abstract: | We investigate the role of national institutions on regional development in a novel framework. We exploit the fact that the arbitrary political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across different countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite light density at night. Despite some evidence of heterogeneity, for the overwhelming majority of groups the relationship is economically and statistically insignificant. While our results do not necessarily generalize to areas far from the national borders, close to the capital cities or to other parts of the world, they suggest that the cross-country positive correlation between formal national institutions and economic development has to be carefully interpreted. |
| Keywords: | africa; borders; development; ethnicity; institutions; regression discontinuity |
| JEL: | N17 O10 O40 O43 Z10 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9075&r=afr |
| By: | Beatrice D. Simo - Kengne (Department of Economics, University of Pretoria); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University); Rangan Gupta (Department of Economics, University of Pretoria); Monique Reid (Department of Economics, University of Stellenbosch); Goodness C. Aye (Department of Economics, University of Pretoria) |
| Abstract: | This paper examines asymmetries in the impact of monetary policy on the middle segment of the South African housing market from 1966:M2 to 2011:M12. We use Markov-switching vector autoregressive (MS-VAR) in which parameters change according to the phase of the housing cycle. The results suggest that monetary policy is not neutral as house price growth decreases substantially with a contractionary monetary policy. We find that the impact of monetary policy is larger in bear regime than in bull regime; indicating the role of information asymmetry in reinforcing the financial constraint of economic agents. As expected, monetary policy reaction to a positive house price shock is found to be stronger in the bull regime. This suggests that central banker reacts more in bull regime in order to prevent potential crisis related to the subsequent bust in house prices bubbles which are more prominent in bull markets. These results substantiate important asymmetries in the dynamics of house prices in relation to monetary policy, vindicating the advantages of generating regime dependent impulse response functions. |
| Keywords: | Monetary policy, House prices, Regime switching |
| JEL: | C22 C32 E52 R31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers166&r=afr |
| By: | Kassie, Menale; Jaleta, Moti; Shiferaw, Bekele A.; Mmbando, Frank; de Groote, Hugo |
| Abstract: | This paper analyses the impact of the intensity of improved maize varieties adoption on food security and poverty using data collected in 2010 from maize-legume farming systems in rural Tanzania. We used a continuous treatment approach using generalized propensity score matching and parametric error correction approaches to reduce potential biases stemming from difference in observed characteristics. Estimates of the dose-response functions reveal that average probability of food security, average per capita food expenditure and the average probability of break-even and food surplus increase with the intensity of adoption. On the other hand, the probability of being poor, chronic and transitory food insecurity declines with the intensity of adoption. The results provide strong evidence for heterogeneous food security impacts at different levels of adoption. At low levels of adoption, the average and marginal treatment effects are low while the food security impacts increase substantially at higher level of adoption. |
| Keywords: | Adoption intensity, food security, poverty, Continuous treatment, Dose-response function, Tanzania, Food Security and Poverty, Research Methods/ Statistical Methods, C14, C21, Q12, |
| Date: | 2012–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:128004&r=afr |
| By: | Bernard, Tanguy; Taffesse, Alemayehu Seyoum |
| Keywords: | Poverty, Surveys Methodology, Sampling, microeconomic analysis, microeconomic behavior, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1190&r=afr |
| By: | Nir Klein |
| Abstract: | This paper applies a state-space approach to estimate the implicit inflation target of the South African Reserve Bank (SARB) since the adoption of the Inflation Targeting (IT) framework. The paper's findings are two. First, although the official inflation target range is 3.6 percent, in practice, the SARB seems to have aimed for the upper segment of the band (41.2 .6 percent) for most of the period, despite the substantial variation of the output gap. Second, the estimation results show that the implicit inflation target varied over time, and in recent years it has shifted toward the upper limit of the inflation target range. This perhaps suggests that since the outbreak of the financial crisis in 2008, the SARB's tolerance for higher inflation has somewhat increased to better support economic activity. |
| Keywords: | Central banks , Economic models , Inflation targeting , Monetary policy , |
| Date: | 2012–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/177&r=afr |
| By: | Goodness C. Aye (Department of Economics, University of Pretoria, South Africa); Rangan Gupta (Department of Economics, University of Pretoria); Mampho P. Modise (Department of Economics, University of Pretoria) |
| Abstract: | This paper investigates the existence of spillovers from stock prices onto consumption and the interest rate for South Africa using a time-varying vector autoregressive (TVP-VAR) model with stochastic volatility. In this regard, we estimate a three-variable TVP-VAR model comprising of real consumption growth rate, the nominal three-months Treasury bill rate and the growth rate of real stock prices. We find that the impact of a real stock price shocks on consumption is in general positive, with large and significant effects observed at the one-quarter ahead horizon. However, there is also evidence of significant negative spillovers from the stock market to consumption during the financial crisis, at both short and long-horizons. Monetary policy response to stock price shocks has been persistent, and strong especially post-the financial liberalization in 1985, but became weaker during the financial crisis. Overall, we provide evidence of significant time-varying spillovers on consumption and interest rate from the stock market. |
| Keywords: | Bayesian Inference, Consumption, Stock Price, Markov Chain Monte Carlo, Monetary Policy, Structural Vector Autoregression, Stochastic Volatility, Time-Varying Paremeter |
| JEL: | C11 C15 C32 E31 E32 E44 E52 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201224&r=afr |
| By: | Juma, Calestous (Belfer Center for Science and International Affairs, Harvard University) |
| Abstract: | There is an urgent need to create a new generation of innovation-oriented agricultural that efficiently bring together agricultural research, training, commercialization, and extension. This paper calls for upgrading the training, extension, and commercialization functions of existing national agricultural research institutes (NARIs). This would build on a strong research tradition, ongoing training efforts, connections with the private sector and farmers, and extensive international partnerships. Upgrading NARIs in this manner would also lay the foundation for the emergence of the first generation of research universities in Africa with an initial focus on agriculture. The creation of agricultural innovation universities would serve as a starting point for broader efforts in Africa to strengthen the role of science, technology, and innovation in economic transformation. The paper provides a roadmap that can be used to guide the proposed reform efforts. |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp12-026&r=afr |
| By: | Johannes Fedderke |
| Abstract: | This paper examines the strength of association between the outcomes of National Research Foundation (NRF) peer review based rating mechanisms, and a range of objective measures of performance of researchers. The analysis is conducted on 1932 scholars that have received an NRF rating or an NRF research chair. We find that scholars with higher NRF ratings record higher performance on average against the objective measures of absolute output and the impact of their research, than scholars at lower ratings. In addition, the higher the performance of scholars against all objective measures of absolute output and impact, increases the probability of higher rating. However, we also find that the probability of achieving a B-rating remains higher than that of acheiving an A-rating even at the very highest levels of recorded performance for South African scholars. In addition, scholars who have received the highest ratings record objective levels of research output and impact of their research that are no different from the minimum levels of objective performance at much lower NRF ratings. Moreover, we find strong cross-disciplinary differences in terms of the impact that objective levels of performance have on the probability of achieving different NRF ratings. Finally, we report evidence that NRF peer review is less likely to reward multiauthored research output than single-authored output. |
| Keywords: | Subjective research ratings; objective research ratings; research funding |
| JEL: | H83 I22 I23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:300&r=afr |
| By: | Ephias M. Makaudze |
| Abstract: | Drought constitutes the most dominant source of food insecurity in Zimbabwe and many other countries in Africa. With a majority of smallholder farmers practicing dry-land agriculture, seasonal forecasts hold promise as an effective risk management tool, giving farmers the ability to anticipate rainfall variability early enough to adjust crucial farm decisions and better prepared to handle climatic anomalies in ways that can reduce costly losses (crop, animal and even human). This study demonstrates the potential value of forecasts to smallholder farmers in Zimbabwe, a majority who often suffer severely from the impact of drought. Using crop simulation models to compare yield performances of farmers with and without forecasts, results indicate that for a drought year, farmers with forecasts (WF) record higher yield gains (28%) compared to those without forecasts (WOF); in particular, farmers located in driest regions (NR V) record the highest yield gains (42%). Similar results are observed for a neutral/ average year as farmers WF obtain predominantly higher yield gains (20%) than those WOF. However for a good year, results show a different pattern as no yield gains are observed. In fact farmers WOF perform better; suggesting forecasts in this case may not make much difference. Using gross margin analysis, results show farmers WF obtaining higher returns during a drought (US$0.14ha−1) and neutral year (US$0.43ha−1) but again not for good year as farmers WOF outperform those WF. In sum, forecasts can play an important role as loss-minimization instruments especially if the underlying year is a El Nino (drought) year. In conclusion, to attain full economic value of forecasts, complementary policies (currently missing) such as effective communication, improvement in forecast extension skills and promotion of farmer participatory and outreach activities, all could prove vital in enhancing the value of forecasts to smallholder farmers in general |
| Keywords: | Seasonal forecasts, smallholder farmers, El Nino, economic value, drought risk, with and without forecasts |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:303&r=afr |
| By: | Giscard Assoumou Ella (LEAD - Laboratoire d'Économie Appliquée au Développement - Université Sud Toulon Var) |
| Abstract: | The aim of this study is first, to verify the assumption of decoupling or no decoupling of African economic conjunctures and international economic shocks. We test this assumption in 15 African countries using a SVAR model for the period 1970-2007. The results suggest that there is no decoupling. 12 countries are exposed to OEDC GDP per capita shocks, six to Federal funds effective rate shocks and five to World price of oil shocks. Furthermore, we investigate the viability of an economic and monetary union creation for the African countries and a new unified currency. The impulse response functions of the African economies after an international income, monetary or price shocks tend to be in general more or less similar. According to this indicator, we are optimistic for the possibility and the viability of this project. |
| Keywords: | African economies; international economic shocks; SVAR model |
| Date: | 2012–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00721633&r=afr |
| By: | Koloma, Yaya |
| Abstract: | This study is based on the results of the non-monetary poverty estimation of the beneficiaries of microfinance in Mali (Koloma, 2011). Its aim is to examine the determinants of the "gap" of poverty by gender. The regression model according to the approach of decomposition of Blinder-Oaxaca (1973) was used. First, the results show that the poverty gap is largely explained by differences in the characteristics up to 74.7%. Second, the coefficients – result of characteristics – account for 25.3% of the poverty gap. Thus, this would mean that if the differences in the characteristics of men and women beneficiaries were to disappear, the poverty gap would be reduced by 4.9%. Regarding coefficients, the gap would be further reduced by 1.7% if both groups of members presented the same achievements (coefficients). While this not systematic, access to microfinance program could involve a reduction in the poverty gap between men and women beneficiaries. |
| Keywords: | Microfinance, Pauvreté non monétaire, Modèle de décomposition Blinder Oaxaca, Mali |
| JEL: | I3 J16 C2 G21 |
| Date: | 2012–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40631&r=afr |
| By: | Tomo, Alda A.; Crawford, Eric W.; Donovan, Cynthia; Lloyd, James W.; Udo, Henk; Viets, Theo |
| Abstract: | This paper assesses the impact of chicken vaccination on farmers’ income. A dynamic simulation model, VIPOSIM, combined with benefit-cost techniques, was used ensuring that both, the dynamic aspects of village poultry production system and selection bias are addressed. The findings of this study reveal that, in general, Newcastle Disease (ND) control results in a considerable increase in farmers’ income. Economic profitability is not the underlying factor for low rates of chicken vaccination. To address adequately the adoption of ND control technology, the government should concentrate efforts on the strategies of extension and distribution of the vaccine. |
| Keywords: | benefit-cost analysis, simulation model, Newcastle disease, economic impact, Community/Rural/Urban Development, Food Security and Poverty, Livestock Production/Industries, Production Economics, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae12:130977&r=afr |
| By: | Serneels, Pieter (University of East Anglia); Verpoorten, Marijke (K.U.Leuven) |
| Abstract: | Important gaps remain in the understanding of the economic consequences of civil war. Focusing on the conflict in Rwanda in the early 90s, and using micro data to carry out econometric analysis, this paper finds that households and localities that experienced more intense conflict are lagging behind in terms of consumption six years after the conflict, a finding that is robust to taking into account the endogeneity of violence. Significantly different returns to land and labour are observed between zones that experienced low and high intensity conflict which is consistent with on-going recovery. Distinguishing between civil war and genocide, the findings also provide evidence that these returns, and by implication the process of recovery, depend on the form of violence. |
| Keywords: | civil war, economic growth, Rwanda, human capital, genocide |
| JEL: | O0 E2 O5 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6737&r=afr |
| By: | Stelios Michalopoulos; Elias Papaioannou |
| Abstract: | We investigate the role of national institutions on regional development in a novel framework. We exploit the fact that the arbitrary political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across different countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite light density at night. Despite some evidence of heterogeneity, for the overwhelming majority of groups the relationship is economically and statistically insignificant. While our results do not necessarily generalize to areas far from the national borders, close to the capital cities or to other parts of the world, they suggest that the cross-country positive correlation between formal national institutions and economic development has to be carefully interpreted. |
| JEL: | N17 O10 O4 O43 Z10 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18275&r=afr |
| By: | Chance Mwabutwa; Manoel Bittencourt; Nicola Viegi |
| Abstract: | The purpose of the study is to examine whether financial reforms implemented in the 1980's and 1990's altered the pattern of aggregate consumption behaviour in Malawi. More specifically, the study questions whether financial reforms affected consumption behaviour by reducing the excess sensitivity of changes in consumption to changes in current income using the Permanent income hypothesis (PIH) framework. If it happens that excess sensitivity does not reduce, the paper explores further whether the failure is due to liquidity constraints or myopia. This study is unique from the rest in the sense that new constructed time series of financial reform indices are used in the estimation of the consumption function. The study finds that PIH of aggregate consumption behaviour does not exist in Malawi. Most of the consumers follow the "rule-of-thumb" of consuming their current income partly due to liquidity constraints. Although, we demonstrate that the effects of financial reforms on consumption behaviour are due to both liquidity constraints and myopia, the increase in consumption in Malawi can be explained along other factors than financial liberalisation. The excess sensitivities obtained are larger than what has been obtained in developed countries as well as other less developed countries. Liberalisation was implemented on the background of weak institutions and unstable macroeconomic environment. |
| Keywords: | Financial Liberalisation, Permanent Income Hypothesis, Linear Spline Function, Principal Component Analysis, Rule-of-Thumb. |
| JEL: | C49 D12 D91 E21 E44 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:306&r=afr |
| By: | Sacks, Audrey |
| Abstract: | This paper addresses the conditions under which donor and non-state actor service provision is likely to undermine or strengthen citizens'legitimating beliefs. On the one hand, citizens may be less likely to support their government with quasi-voluntary compliance when they credit non-state actors or donors for service provision. On the other hand, the provision of goods and services by donors and non-state actors might strengthen citizens'confidence in their government and their willingness to defer to governmental laws and regulations if citizens believe that the government is essential to leveraging and managing these resources. The author assesses these competing hypotheses using multi-level analyses of Afrobarometer survey data. The sample, drawn from a continuum of developing societies in Africa, allows for analysis of associations between donor and non-state actor service provision and the sense of obligation to comply with the tax authorities, the police and courts. The findings yield support for the hypothesis that the provision of services by donors and non-state actors is strengthening, rather than undermining, the relationship between citizens and the state. |
| Keywords: | Public Sector Corruption&Anticorruption Measures,Governance Indicators,Public Sector Economics,E-Government,Population Policies |
| Date: | 2012–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6158&r=afr |
| By: | Vincenzo Salvucci; Gianni Betti; Francesca Gagliardi |
| Abstract: | This study provides a step-by-step account of how fuzzy measures of non-monetary deprivation and also monetary poverty may be constructed based on survey data such as those from the Mozambican Household Budget Survey 2008-09 (IOF08). For nonmonetary deprivation, six dimensions are identified using explanatory and confirmatory factor analyses, and a weighting system is applied for the aggregation of individual items into the dimension they represent. An application on Mozambique is conducted using the Household Budget Survey 2008-09 (IOF08) data: estimates are provided at national level and also disaggregated at provincial and urban/rural level. Standard errors are provided using a recent methodology based on Jack-knife Repeated Replication. Our results contrast with previous findings based solely on Head Count statistics and give a more complete mapping of poverty in Mozambique. Monetary and non-monetary deprivation seem to have very different distribution patterns, especially when analysed at sub-national level and by area of residence. Disaggregated Head Count statistics produce rankings of provinces and urban/rural areas that greatly differ from estimates based on non-monetary dimensions. In particular, the Northern and Central provinces suffer from non-monetary deprivation significantly more than the South, and the urban/rural deprivation gap widens in favour of urban areas when non-monetary dimensions are considered. Housing conditions and quality, and possession of less affordable durable goods emerge as the most unequally distributed non-monetary dimensions. |
| Keywords: | well-being, poverty, regional indicators, standard errors, Mozambique |
| JEL: | D63 I32 R13 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:649&r=afr |
| By: | De Luca, Giacomo; Maystadt, Jean-François; Sekeris, Petros G.; Ulimwengu, John M.; Folledo, Renato |
| Keywords: | Natural resources, Conflict, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1193&r=afr |
| By: | Assa, Maganga; Abdi, Edriss K. |
| Abstract: | This study provides an empirical test of the macroeconomic variables that can potentially affect private investment decisions in Malawi in a short and long run perspective using time series data. Both the theory and the empirical literature are reviewed in order to identify a private investment function for the last three decades (1979-2009). The results reveal that investment decisions seem to be determined by public investment, bank credit to the private sector and the real interest rate in the short run. Besides, there is evidence of a crowding-out effect of public investment. In the long run, the capital accumulation path seems to be closely dependent on both GDP growth and real exchange rates. |
| Keywords: | Co-integration; Crowding-out; Error Correction Model; Malawi; Private investment |
| JEL: | E62 |
| Date: | 2012–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:40698&r=afr |
| By: | Catherine SIMONET (Centre d'Etudes et de Recherches sur le Développement International); Stéphanie BRUNELIN; Catherine ARAUJO BONJEAN (Centre d'Etudes et de Recherches sur le Développement International) |
| Abstract: | The aim of this paper is to estimate the impact of weather related income shocks on child health in rural Burkina Faso where rain fed agriculture is the dominant production system. We combine health data originating from the 2008 household survey with meteorological data to define shocks at the child level. We first estimate the marginal effect of rainfall at various ages on the child's health in order to identify the critical period during which deprivation has the most severe consequences. Then we look for a different impact of shocks on girls and boys that would reflect a gender bias in intra household resource allocation. We also assess the household ability to smooth consumption by testing for an asymmetric effect of rainfall shocks according to their size and by testing the impact of shocks according to household endowments. Results evidence a strong relationship between rainfall shocks during the prenatal period and child health. Households are not able to dampen small but negative rainfall shocks. Unexpectedly, girls are less severely affected by shocks than boys. The robustness of results is tested by using the sibling and difference-in-differences estimators as well as placebo regressions. |
| Keywords: | Child health, rainfall shock, burkina faso, sibling estimator, treatment-effect model |
| JEL: | C31 Q54 O15 I10 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1380&r=afr |
| By: | Janvier D. Nkurunziza; Léonce Ndikumana; Prime Nyamoya |
| Abstract: | This study investigates the performance of the financial system in Burundi in mobilizing and allocating resources. Although the study does not presume that finance is the most binding constraint to growth and socio-economic development in Burundi, it takes the view that unlocking the financing constraint could alleviate other impediments to growth and poverty reduction. We use a blend of methodological approaches drawing from: (1) industrial organization in examining the structure of the banking sector, and the behavior and profitability of financial intermediaries; (2) macroeconomic analysis with a focus on the effect of economic performance and policy framework on the performance of the financial sector; and (3) political economy analysis highlighting the role of political governance and political instability, as well as ownership of financial institutions on allocative and distributional inefficiencies. The paper finds that the core of the financial sector that has survived the worst of the economic and political crises of the last decades is highly profitable. Bank profitability, however, hides several weaknesses of the financial sector: a high level of fragmentation; a narrow credit market that favors “insiders” who are mostly affiliated with the political elites, at the expense of “outsiders”; a severe shortage of long-term stable resources; inefficient allocation of resources relative to social returns and risk; and weak supervision and regulation which largely explain the failure of several financial institutions in the past and the fragility of the banking sector today. Access to finance remains an important challenge, especially for the “stranded middle” (middle income households and medium size firms) due to the “missing middle credit market” which is not filled by either banks or microfinance institutions. Recent developments in the financial sector, particularly the increasing penetration of foreign banks, may potentially boost competition, financial innovation, and access to finance with positive effects on growth and poverty reduction. |
| JEL: | E44 G21 O16 O55 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18289&r=afr |