nep-afr New Economics Papers
on Africa
Issue of 2012‒09‒22
twenty-two papers chosen by
Quentin Wodon
World Bank

  1. Working Paper 151 - The Dynamics of Inflation in Ethiopia and Kenya By AfDB
  2. The Status of Financial Education in Africa By Flore-Anne Messy; Chiara Monticone
  3. How has Mobile Phone Penetration Stimulated Financial Development in Africa? By Simplice A , Asongu
  4. Improving credit allocation to sustainable agriculture in Sub-Saharan Africa: Review of bio-based economy benefits By Benjamin, Olatunbosun
  5. Agricultural Transformation in Zambia: Alternative Institutional Models for Accelerating Agricultural Productivity Growth, and Commercialization By Chapoto, Antony; Haggblade, Steven; Hichaambwa, Munguzwe; Kabwe, Stephen; Longabaugh, Steven; Sitko, Nicholas J.; Tschirley, David L.
  7. Is EU Support to Malawi Agriculture Effective? By Wouter Zant
  8. Erasing Class/ (re)Creating Ethnicity: Jobs, Politics, Accumulation and Identity in Kenya By Mwangi wa Githinji
  9. Migration, Congestion Externalities, and the Evaluation of Spatial Investments By Dinkelman, Taryn; Schulhofer-Wohl, Sam
  10. Estimating the Impact of Minimum Wages on Employment, Wages and Non-wage Benefits: The Case of Agriculture in South Africa By Haroon Bhorat; Ravi Kanbur; Benjamin Stanwix
  11. The impact of armed conflict on economic performance. Evidence from Rwanda By Serneels , Pieter; Verpoorten , Marijke
  12. Knowledge Dynamics in Sustainable Standard Setting in Tourism – The case of "Fair Trade in Tourism South Africa (FTTSA)" By Simone Strambach; Annika Surmeier
  13. Fiscal Policy Shocks and the Dynamics of Asset Prices: The South African Experience By Goodness C. Aye; Mehmet Balcilar; Rangan Gupta; Charl Jooste; Stephen M. Miller; Zeynel A. Ozdemir
  14. The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach By Christian K.M. Kingombe
  15. Urban Consumption Patterns of Livestock Products in Zambia and Implications for Policy By Hichaambwa, Munguzwe
  16. External shocks, internal shots - the geography of civil conflicts By Nicolas Berman, Mathieu Couttenier
  17. Working Paper 152 - Dynamics of Inflation in Uganda By AfDB
  18. Dynamic deterrence analysis of factors affecting the management of Sudan Fishery By Sana Abusin
  19. Measuring the Local Opportunity Costs of Conservation: A Provision Point Mechanism for Willingness-to-Accept By Bush, Glenn; Hanley, Nicholas; Moro, Mirko; Rondeau, Daniel
  20. The Long-Term Cognitive Consequences of Early Childhood Malnutrition: The Case of Famine in Ghana By Samuel K. Ampaabeng; Chih Ming Tang
  21. Consumer demand for alcoholic beverages and tobacco in Lesotho: A double-hurdle approach By Ramaele Moshoeshoe
  22. State vs Consumer Regulation: An Evaluation of Two Road Safety Interventions in Kenya By James Habyarimana; William Jack

  1. By: AfDB
    Date: 2012–09–10
  2. By: Flore-Anne Messy; Chiara Monticone
    Abstract: While the African situation displays disparities both within and between countries in terms of economic and human development, on average, many African countries have relatively low school enrolment ratios, highly informal labour markets, high poverty rates, as well as low financial inclusion and financial literacy levels. Against this backdrop, it is desirable to improve the level of financial literacy among the most vulnerable parts of the African population. Well-designed financial education initiatives can reduce demand-side barriers to more effective financial inclusion and can empower vulnerable individuals economically, so that they can better manage household resources and develop income generating activities. This report provides an overview of the status of financial education programmes developed in Africa, discusses their rationale, and offers initial guidance for policy makers. In recent years public authorities, as well as the non-profit and the private sector, engaged in the development of financial education programmes in several African countries. These programmes typically aim at improving financial knowledge and skills, raising awareness of financial issues, and improving financial inclusion. They usually target vulnerable groups, including low-income people, women, and youth, and sometimes deliver financial literacy training in combination with access to financial products.
    Keywords: Africa, financial education, financial literacy, financial inclusion, Afrique, éducation financière, inclusion financière, compétences financières
    JEL: D14 D18 I28 O16
    Date: 2012–07
  3. By: Simplice A , Asongu
    Abstract: In the first macroeconomic empirical assessment of the relationship between mobile phones and finance, this paper examines the correlations between mobile phone penetration and financial development using two conflicting definitions of the financial system in the financial development literature. With the traditional IFS (2008) definition, mobile phone penetration has a negative correlation with traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition, mobile phone penetration has a positive correlation with informal financial development. Three implications result: there is a growing role of informal finance; mobile phone penetration may not be positively assessed at a macroeconomic level by traditional financial development indicators and; it is a wake-up call for scholarly research on informal financial development indicators which will oriented monetary policy.
    Keywords: Banking; Mobile Phones; Shadow Economy; Financial Development; Africa
    JEL: L96 O17 E00 O33 G20
    Date: 2012–09–10
  4. By: Benjamin, Olatunbosun
    Abstract: Financing of agriculture by commercial and non-commercial institutions in rural Sub-Saharan African in recent years has being relatively constant despite remarkable increase in the number of institutions operating within this area. This development may be attributed to how these institutions rate the business of agriculture and the risks involved. However the slow pace of financing sustainable agriculture such as bio-based economy in the presence of internationalization i.e. Clean Development Mechanism CDM and voluntary carbon market needs to be analyzed. Diverse literature are used in exploring the potential of “bio-based economy” with emphasizes not just on carbon sequestration but agricultural value added. The results suggest that if financial and non-financial institution re-evaluate and reassess their stands on sustainable farming, development of sustainable agriculture in rural areas is inevitable. Constraint to agriculture financing due to lack of access to credit may be reduced if innovative and sustainable smallholders are identified.
    Keywords: agricultural credit; carbon (CER);sustainable agriculture; collateral
    JEL: Q14 G21 Q57
    Date: 2012–03–28
  5. By: Chapoto, Antony; Haggblade, Steven; Hichaambwa, Munguzwe; Kabwe, Stephen; Longabaugh, Steven; Sitko, Nicholas J.; Tschirley, David L.
    Abstract: This paper traces the trajectories of successful commercial smallholders operating under differing sets of market institutions. Analysis focuses on maize, cotton, and horticulture, three widely marketed crops with strikingly different market institutions. Maize receives intensive government input and marketing support. In contrast, cotton relies primarily on private contract farming schemes, while horticulture enjoys no large-scale institutional support from either the public or private sectors. Using a mix of quantitative and qualitative methods, the analysis aims to identify personal characteristics and institutional factors that enable smallholder transitions to high-productivity commercial agriculture.
    Keywords: Zambia, Food Security, Marketing, Crop Production, Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, Marketing,
    Date: 2012–06
  6. By: Macharia, Ibrahim; Orr, Alastair; Simtowe, Franklin; Asfaw, Solomon
    Abstract: This study assessed the potential economic and poverty impact of 11 improved chickpea varieties released by the national agricultural research organization of Ethiopia in collaboration with the International Crops Research Institute for the Semi-Arid Tropics. The economic surplus model applied estimated a total benefit of US$ 111 million for 30 years. Consumers are estimated to get 39% of the benefit and producers 61%. The benefit cost ratio was estimated at 5:1 and an internal rate of return of 55%, indicating that the investment is profitable. The generated benefit is expected to lift more than 0.7 million people (both producers and consumers) out of poverty. Thus, further investments in the chickpea and other legume research in Ethiopia is justified as a means of poverty alleviation.
    Keywords: Economic impact, chickpea, improved varieties, Ethiopia, Crop Production/Industries, Food Security and Poverty, Production Economics,
    Date: 2012–06
  7. By: Wouter Zant (VU University Amsterdam)
    Abstract: We measure the impact of the Farmers Income Diversification Program (FIDP), an EU funded program implemented in Malawi from late 2005 onwards, aiming at increasing agricultural productivity, diversification, value addition, commercialization and trade of subsistence farmers. The geographical spread of the implementation of FIDP is exploited to identify its impact. Computations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for the period 2003-04 to 2009-10. The estimations support a statistically significant impact of FIDP on agricultural productivity, with increases reaching 20% to 24% relative to base period levels, with a lag of at least one year after the start of the program and increasing over the years. Evidence on diversification of crop income is less strong but still suggests increases ranging from 5% to 10%. Results are robust for instrumental variables, synthetic controls, clustering of standard errors and inclusion of additional covariates.
    Keywords: agricultural policy; impact evaluation; subsistence farming; Malawi; Africa
    JEL: F35 O13 O55 Q11 Q13
    Date: 2012–09–07
  8. By: Mwangi wa Githinji (University of Massachusetts Amherst)
    Abstract: A large literature on African economies argues that ethnicity plays a role in the politics and economics of African countries. Unfortunately, much of this literature is speculative or anecdotal because of the lack of data, with the exception of a few papers that examine ethnic networking as a business or employment strategy. In many ways Africa’s failure to develop is a failure of nationhood. Creating nation is handicapped by the use of ethnicity. In this paper, I empirically examine the relationship between employment, wages and ethnicity in Africa via a case study of Kenya. I challenge the pervasive view that ethnicity in Africa is related to a primordial instinct and attempt to show empirically that ethnicity is used by politicians as a political strategy to maintain power. In the process of using ethnicity, class solidarity is explicitly down played by politicians as ethnicity is reified. In this paper I specifically examine whether jobs are being used by politicians as both reward and carrot to ensure ethnic allegiances. This is done by testing whether being a member of a dominant group (in terms of population and also politically) has an impact on the possibility of employment and the level of wages. I do this using data from the 1986 Labour Force Survey which due to timing, uniquely allows me to connect ethnicity and income. I group the observation into 5 groups that are ranked based on kind of employment and wage. Of the five sectors the two desirable sectors are Self-employed above median income and Full time employment above median income. I test whether ethnicity has an impact of one being employed in these sectors. By inter-acting the dummy variable for dominant group in population and the ethnic dummy, I am able to separate out what may be returns just due to ethnic networking that comes from common culture, language etc and returns which are due in some sense to being from a politically dominant ethnicity. I am also able to test for the impact in a change in the ethnicity of the president (a further test of ethnic dominance) by using a difference in difference approach. I find that being in a politically dominant group improves one’s chances of obtaining a full time above median wage job. In fact this improvement in chances was highly correlated with political power and a change of ethnicity of the president resulted in a decrease in the probabilities of the past presidents “kinsfolk” being in desired sectors. Being a member of a locally dominant group in terms of population as compared to a politically dominant national group has no effect on likelihood of employment in one of the premium categories. My findings support the view that in a highly centralized state ethnicity can be reproduced via preferential employment to members of an in-group thus diminishing class solidarity that one may expect to occur between workmates. JEL Categories: Z13 N37, O15, P16.
    Keywords: Social Stratification, Discrimination, ethnicity, Kenya, inequality, class, employment.
    Date: 2012–09
  9. By: Dinkelman, Taryn; Schulhofer-Wohl, Sam
    Abstract: Evaluations of new infrastructure in developing countries typically focus on direct effects, such as the impact of an electrification program on household energy use. But if new infrastructure induces people to move into an area, other local publicly provided goods may become congested, offsetting the benefit of the infrastructure. We use a simple model to show how to measure the net benefit of a place-based program without data on land prices -- an indicator that is commonly used to measure congestion in developed countries but that often cannot be used in poor countries because land markets are missing or land prices are badly measured. Our model shows that congestion externalities are especially large when land markets are missing. To illustrate, we estimate the welfare impact of a recent household electrification program in South Africa. Congestion externalities from migration reduced local welfare gains by half.
    Keywords: congestion effects; migration; program evaluation; rural infrastructure; South Africa; welfare
    JEL: H23 H43 H54 O15 O18 R13
    Date: 2012–09
  10. By: Haroon Bhorat; Ravi Kanbur; Benjamin Stanwix (Development Policy Research Unit; Director and Professor)
    Abstract: Assessments of the impact of minimum wages on labour market outcomes in Africa are relatively rare. In part this is because the data available do not permit adequate treatment of econometric issues that arise in such an assessment. This paper attempts to estimate the impact of the introduction of a minimum wage law within the Agriculture sector in South Africa, based on 15 waves of the biannual Labour Force Survey (LFS), starting in September 2000 and ending in September 2007. The chosen sample includes six waves before the legislations effective date (March 2003) and nine afterwards. All 15 waves are pooled and treated as repeated cross sections over time. In order to assess whether the changes experienced by farm workers are unique, we identify a control group that has similar characteristics to the treatment group. Our econometric approach involves using two alternative specifications of a difference-in-differences model. We test whether employers reduced employment, and whether they responded at the intensive margin by reducing hours of work. The law also required non-wage benefits to be implemented, and we track the response here in the form of one such provision, namely that of a written contract. The results suggest a significant reduction in employment in Agriculture from the minimum wage, an increase in wages on average, no significant change in hours worked and a sharp rise in non-wage compliance. Acknowledgements: The research, from which this paper emanates, was funded by the International Development Research Centre (IDRC).
    Keywords: Minimum Wage, Agriculture, South Africa, Wage, Employment, Hours of Work
    JEL: J23 J31 J32 J38 J41 J43
    Date: 2012–07
  11. By: Serneels , Pieter (University of East Anglia); Verpoorten , Marijke (University of Antwerp)
    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
    Date: 2012–09–05
  12. By: Simone Strambach (Department of Geography, Philipps University Marburg); Annika Surmeier (Department of Geography, Philipps University Marburg)
    Abstract: The development of standards and certification programs in global tourism has gained importance in consumption-production nexus. The paper is dealing with “Fair Trade in Tourism South Africa†(FTTSA), one of the first innovative service standards with a focus on the social dimension of sustainability. Until now, there has been little detailed exploration in the evolutionary trajectories of sustainable tourism standards from a knowledge-based perspective. This paper will contribute to a deeper understanding of the standard creation in global-local interaction processes over time and its impacts on the micro level of the firms. Conceptually it builds on two scientific debates - the neo-institutional approaches in organizational theory focussing on institution building and the research on innovation and knowledge dynamics. Empirically, it is based on 32 interviews conducted with different actor groups.
    Keywords: Knowledge Dynamics, Sustainable standards, Institutional theory, South Africa, Tourism
    JEL: D83 L83 O55 P48 Q56
    Date: 2012–09
  13. By: Goodness C. Aye (Department of Economics, University of Pretoria); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria); Charl Jooste (Department of Economics, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada); Zeynel A. Ozdemir (Department of Economics, Gazi University, Besevler, 06500 Ankara, Turkey)
    Abstract: This study assesses how fiscal policy affects the dynamics of asset markets, using Bayesian vector autoregressive models. We use sign restrictions to identify government revenue and government spending shocks, while controlling for generic business cycle and monetary policy shocks. In addition to examining the effects of anticipated and unanticipated revenue and spending shocks, we also analyse three types of fiscal policy scenarios: a deficit-financed spending increase, a balanced budget spending increase (financed with higher taxes), and a deficit-financed tax cut (revenue decreases but government spending stays unchanged). Using South African quarterly data from 1966:Q1 to 2011:Q2, we show that a deficit spending shock does not affect house prices, but temporarily exerts a positive effect on stock prices. With a deficit-financed tax cut shock, house prices increase persistently while stock prices increase quickly, but only temporarily. A balanced budget shock permanently decreases house prices and temporarily reduces stock prices.
    Keywords: Bayesian Sign-Restricted VAR, fiscal policy, housing prices, stock prices
    JEL: C32 E62 G10 H62
    Date: 2012–09
  14. By: Christian K.M. Kingombe (Graduate Institute of International Studies)
    Abstract: This paper tests the linkage between a binary treatment (rural road improvement project) and a continuous outcome (cotton productivity) in Zambia’s agro-based Eastern Province as measured by repeated cross-sections of farm-level data from the Zambian post-harvest survey (PHS). We use this PHS dataset, which covers the period from 1996/1997 to 2001/2002 across two phases, the pre-treatment phase (1996/1998) and the treatment phase when the Eastern Province Feeder Road Project (EPFRP) was being implemented (1998/2002). The identification strategy relies on the implementing of matching estimators for all three treatment parameters: Average Treatment Effect (ATE); Treatment on the Treated (TT) and Treatment on the Untreated (TUT), which is crucial in terms of policy relevance (Arcand, 2012). Matching ensures a sub-set of non-project areas that best represents the counterfactual and is done at the same geographic level of aggregation (van de Walle, 2009). Since treatment participation is not by random asignment we use the propensity score as a method to reduce the bias in the estimation of these treatment effects with observational PHS data sets in order to reduce the dimensionality of the matching problem. We find the ATT estimation results are not the same when implementing various matching using ‘the logarithm of (cotton) yield’ compared to using ‘cotton productivity’ as variable. In the latter case the following matching methods all have negative difference between treated and controls: 1-to-1 propensity score matching; k-nearest neighbours matching; radius matching; and 'spline-smoothing'. However, the Kernel matching has positive difference between treated and controls for the ‘productivity’ variable: Finally, some of the local linear regression and the Mahalanobis matching specifications yields positive difference between treated and controls for the ‘logyield’ variable, but not for the ‘productivity’ variable and not for all specifications either. Through our robustness checks of the Matching Assumpion and Sensitivity of Estimates we find that the matching doesn’t reduce the starting unbalancing. The comparison of the simulated ATT and the baseline ATT tells us that the latter is robust. We conclude that the application of various non-parametric matching methods didn’t enable us to identify a robust linkage, most likely due to the PHS data source and the evaluation design. Future rigorous rural roads impact evaluation requires panel (with pre-intervention) data for project and appropriate non-project areas, which allows for an evaluation design that combines a double difference (DID) with controls for initial conditions either through propensity score matching, regression controls or an IV (van de Walle, 2009). Regression discontinuity designs would offer an alternative method for impact evaluation (ADB, 2011; see Arcand, 2012).
    Keywords: cAverage Treatment Effects; Average Treatment on the Treated; Matching Methods; Poor rural area development project; Impact evaluation of cotton productivity; Africa; Zambia (Eastern Province).
    JEL: C2 C83 D2 O12 O13 Q12 R3
    Date: 2012–08–07
  15. By: Hichaambwa, Munguzwe
    Abstract: Rapid urbanization in Zambia means that increasingly heavy demands are being placed on urban food marketing systems. Investment in these systems has been woefully inadequate for many decades, creating supply bottlenecks and health hazards that work against the interests of both farmers and consumers. Understanding urban food expenditure patterns is a first step in addressing these problems. The Food Security Research Project (FSRP) which is now the Indaba Agricultural Policy Research Institute (IAPRI) has conducted considerable work on urban consumption patterns of stables and fresh produce as part of on-going research and outreach work in the respective value chains1. However, no work has yet been done on livestock products and thus this study seeks to understand urban consumption and purchasing patterns of livestock products and how these vary by income level and across key cities of the country.
    Keywords: Zambia, urbanization, food marketing systems, Food Security, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Marketing,
    Date: 2012–07
  16. By: Nicolas Berman, Mathieu Couttenier (Graduate Institute of International Studies)
    Abstract: This paper uses detailed information on the latitude and longitude of conflict events within a set of Sub-Saharan African countries to study the impact of external income shocks on the likelihood of violence. We consider a number of external demand shocks faced by the country or the regions within countries - changes in the world demand of agricultural commodities, financial crises in the partner countries or changes in foreign trade policy - and combine these with information reflecting the natural level of trade openness of the location. We find that (i) within-country, the incidence, intensity and onset of conflicts are generally negatively and significantly correlated with income shocks within locations; (ii) this relationship is significantly weaker for the most remote locations, i.e those located away from the main seaports, (iii) at country-level, we cannot detect any significant effect of these shock on conflict incidence or onset; but (iv) large and longlasting shocks seem to affect the location of conflict outbreaks. In general, our results suggest that external income shocks are important determinants of the intensity and geography of conflicts within countries. However, conflicts tend to start in remote locations which are naturally less affected by foreign shocks, which might explain why these seem to have little effect on conflict onset at the country-level.
    Keywords: con ict, income shock, civil war
    JEL: D74 F15 O13 Q17
    Date: 2012–09–10
  17. By: AfDB
    Date: 2012–09–10
  18. By: Sana Abusin
    Abstract: This paper adapted the modified dynamic deterrence model to investigate factors affecting compliance with mesh size regulation. the reduced form of this model is tested based on data from the Jebel Aulia Reservoir (JAR) in Khartoum State, Sudan. Factors that determine noncompliance with mesh size regulations were analysed, using the Tobit model. The results showed that the main determinants of noncompliance are poverty and weak and inefficient institutions. This has induced a sudden increase in violation that has led to desperate fishery situations. Young fishers are more likely to violate these regulations, and the study finds that deterrence and social variables are both important determinants of noncompliance with mesh-size regulation. A regime of self enforcement to manage this resource is not possible due to various factors, such as low levels of education, lack of proper knowledge about regulations, and the low skills and lack of ability of administration and of the funding needed to implement such a regime. The study therefore suggests a co-management regime given that co-management increases the awareness of fishing communities about the need for sustainable management of fishery resources and in this turn helps to reduce violation. More than half of the surveyed fishers believed that this regime is suitable for them to achieve sustainable fishery resource.
    Keywords: Fishery regulations, dynamic deterrence model, Sudan, Tobit, management
    Date: 2012
  19. By: Bush, Glenn; Hanley, Nicholas; Moro, Mirko; Rondeau, Daniel
    Abstract: Protected areas are employed world-wide as a means of conserving biodiversity. Unfortunately, restricting access to such areas imposes opportunity costs on local people who have traditionally relied on access to obtain resources such as fuelwood and bushmeat. We use contingent valuation to estimate the local benefits forgone from loss of access to a number of protected area types in Uganda. Methodologically, we innovate by implementing a "provision point" mechanism to estimate Willingness to Accept compensation (WTA) for loss of access to protected areas. We show that the provision point reduces mean WTA by a significant degree.
    Keywords: WTA; Provision point mechanism; Willingness to accept; Uganda; Protected areas; Conservation costs
    Date: 2012–06
  20. By: Samuel K. Ampaabeng (Department of Economics, Clark University, USA); Chih Ming Tang (Department of Economics, Clark University, USA)
    Abstract: We examine the role of early childhood health in human capital accumulation. Using a unique data set from Ghana with comprehensive information on individual, family, community, school quality characteristics and a direct measure of intelligence together with test scores, we examine the long-term cognitive effects of the 1983 famine on survivors. We show that differences in intelligence test scores can be robustly explained by the differential impact of the famine in different parts of the country and the impacts are most severe for children under two years of age during the famine. We also account for model uncertainty by using Bayesian Model Averaging.
    Keywords: cognitive development, early childhood malnutrition, famine, Bayesian model averaging, Ghana
    JEL: C11 C26 C52 I15 I25 O12 O15 O55
    Date: 2012–09
  21. By: Ramaele Moshoeshoe
    Abstract: In this paper, we estimate income elasticities and investigate the determinants of alcohol and tobacco consumption in Lesotho using a Double-Hurdle model on the 2002/03 Lesotho HBS data. The results reveal that both alcohol and tobacco are income inelastic with estimated elasticities of 0.6553 and 0.3561, respectively. Given this, therefore, we argue that differentiated tax hikes, with a relatively higher rate on tobacco, can be more e¤ective both as a consumption deterrent and revenue increasing policy, without much compromise on employment and poverty. Further, we fi…nd evidence that alcoholic beverages and tobacco are complementaries, suggesting the need for a more holistic social policy aimed at curbing consumption of these two goods.
    Keywords: Elasticity, Excise Tax, Double-Hurdle, Lesotho
    JEL: C31 C34 C54 D12
    Date: 2012
  22. By: James Habyarimana; William Jack
    Abstract: This paper compares the relative impact of two road safety interventions in the Kenyan minibus or matatu sector: a top down set of regulatory requirements known as the Michuki Rules and a consumer empowerment intervention. We use very detailed insurance claims data on three classes of vehicles to implement a difference-in-differences estimation strategy to measure the impact of the Michuki Rules. Despite strong political leadership and dedicated resources, we find no statistically significant effect of the Michuki Rules on accident rates. In contrast, the consumer empowerment intervention that didn’t rely on third party enforcement has very large and significant effects on accident rates. Our intent-to-treat estimates suggest reductions in accident rates of at least 50%. Our analysis suggests that in institutionally weak environments, innovative consumer-driven solutions might provide an alternative solution to low quality service provision.
    JEL: D13 I12 O12
    Date: 2012–09

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