nep-afr New Economics Papers
on Africa
Issue of 2012‒09‒30
twenty papers chosen by
Quentin Wodon
World Bank

  1. Can Cities or Towns Drive African Development? Economy-wide Analysis for Ethiopia and Uganda By Dorosh, Paul; Thurlow, James
  2. Opposition Politics and Urban Service Delivery in Kampala, Uganda By Lambright, Gina M. S.
  3. Donor Assistance and Urban Service Delivery in Africa By Stren, Richard
  4. The Economic Implications of Introducing Carbon Taxes in South Africa By Alton, Theresa; Arndt, Channing; Davies, Rob; Hartley, Faaiqa; Makrelov, Konstantin
  5. Coping with Intra-Household Job Separation in South Africa's Labor Market By McLaren, Zoe
  6. Vertical and Horizontal Decentralization and Ethnic Diversity By Gustav Ranis
  7. The effect of crude oil price change and volatility on Nigerian economy By Demachi, Kazue
  8. Communication costs and trade in Sub-Saharan Africa By Mupela, Evans; Szirmai, Adam
  9. Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable? By Cécile Couharde; Issiaka Coulibaly; David Guerreiro; Valérie Mignon
  10. Comprehension and Risk Elicitation in the Field: Evidence from Rural Senegal By Charness, Gary; Viceisza, Angelino
  11. Transferts de fonds des migrants en Afrique du Sud : les conditions de départ du pays d’origine sont-elles déterminantes?. By Mouhoud, El Mouhoub; Kuhn, Mélanie; Arestoff, Florence
  12. Anatomy of Cashless Banking in Nigeria: What Matters? By Atanda, Akinwande A.; Alimi, Olorunfemi Y.
  13. Financial liberalisation, Banking Crises and Economic Growth in African Countries By Enowbi Batuo, Michael; Mlambo, Kupukile
  14. Education and Fertility: Evidence from a Policy Change in Kenya By Chicoine, Luke E.
  15. 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 Abidin Ozdemir
  16. Migration and the transition to adulthood in contemporary Malawi By Beegle, Kathleen; Poulin, Michelle
  17. Health costs and benefits of ddt use in malaria control and prevention By Blankespoor, Brian; Dasgupta, Susmita; Lagnaoui, Abdelaziz; Roy, Subhendu
  18. La modélisation en équilibre général et stochastique des cycles économiques en Afrique Sub-saharienne : une revue de la littérature By Claude Francis Naoussi; Fabien Tripier
  19. Aid, Employment and Inclusive Growth in Conflict-Affected Countries: Policy Recommendations for Liberia By del Castillo, Graciana
  20. The Negative Consequences of Overambitious Curricula in Developing Countries By Pritchett, Lant; Beatty, Amanda

  1. By: Dorosh, Paul; Thurlow, James
    Abstract: Rapid urbanization is an important characteristic of African development and yet the structural transformation debate focuses on agriculture.s relative merits without also considering the benefits from urban agglomeration. As a result, African governments
    Keywords: urbanization, rural development, growth, poverty, CGE model, Africa
    Date: 2012
  2. By: Lambright, Gina M. S.
    Abstract: Uganda, like other African countries, has implemented reforms to decentralize political authority to local governments and reintroduce multiparty elections. This combination creates opportunities for national partisan struggles to emerge in local arenas a
    Keywords: decentralization; Africa; service delivery; multiparty elections
    Date: 2012
  3. By: Stren, Richard
    Abstract: Sub-Saharan African cities have been growing at historically unprecedented rates. Since the early 1970s, they have welcomed international assistance involving a succession of major thematic objectives. The main agency involved in urban assistance has been
    Keywords: urban assistance, African cities, decentralization, World Bank, local government, urban management
    Date: 2012
  4. By: Alton, Theresa; Arndt, Channing; Davies, Rob; Hartley, Faaiqa; Makrelov, Konstantin
    Abstract: South Africa is considering introducing carbon taxes to reduce greenhouse gas emissions. We evaluate potential impacts using a dynamic economy-wide model linked to an energy sector model. Simulation results indicate that a phased-in carbon tax that reache
    Keywords: carbon tax; growth; employment; income distribution; South Africa
    Date: 2012
  5. By: McLaren, Zoe (University of Michigan)
    Abstract: In the context of South Africa's pervasive poverty and mass unemployment, households provide an important private safety net for the unemployed. Using new South African Labour Force Survey panel data, I investigate how households cope with job separations and the resulting loss of earned income. Unsurprisingly, I find no evidence of an added worker effect among either men or women. Neither increases in employment or labor market attachment in the year following a household job separation. Instead, households rely on remittances and, to a lesser extent, savings in the wake of a job separation. I find some evidence that households are worse off after a job separation: households reduce expenditures (even in the absence of household composition changes), hold fewer financial assets and are more likely to report frequent food insecurity. Households have viable income replacement strategies to cope with the loss of earned income in the short run, but over the long run job separations are likely to strain these strategies. Addressing structural factors in the labor market that constrain an individual's response to a household shock will enable households to respond more quickly to adverse employment events and limit the long term negative repercussions.
    Keywords: employment, participation, added worker effect, pension, South Africa, developing countries
    JEL: J22 O15
    Date: 2012–08
  6. By: Gustav Ranis (Economic Growth Center, Yale University)
    Abstract: Vertical decentralization, either at the deconcentration, delegation or, more rarely, the devolution level, has been instituted in most countries of Sub-Saharan Africa. It usually has the effect of increasing the quantity as well as the quality, in terms of health and education, of public goods. More neglected in the literature is the issue of horizontal decentralization, shifting the decision-making power from the central ministry of finance to the ministries of education and health, as well as strengthening the legislative and judicial branches of government. We examine the relationship between horizontal decentralization with its important ethnic dimension and vertical decentralization. Local governments are accountable to the center under vertical and to democratic forces and civil society under horizontal decentralization. Smaller local units are more likely to be more homogeneous ethnically, leading to a larger quantity and higher quality of public goods.
    Keywords: decentralization, ethnicity, development, Sub-Saharan Africa
    JEL: O11 O17 O18 O55
    Date: 2012–08
  7. By: Demachi, Kazue
    Abstract: This study analyses the effects of changes in the international oil price and price volatility on the macro-economy of an African oil exporter, Nigeria. Applying the five-variable Structural Vector Auto Regression (SVAR) model to monthly data series from January 1970 to May 2011, impulse response functions are calculated to see the influences among the crude oil price, Nigeria’s exchange rate, money supply (M2), domestic price levels (CPI) and the policy interest rate (Discount Rate). The estimation results suggest that Nigeria’s exchange rate is affected not only by the changes in the international oil price but also by its price volatility. M2 increases as a response to an oil price increase, which suggests that as the international oil price rises there is a huge increase in the money supply into the domestic market from the national oil company and international oil companies, which are the largest suppliers of dollars next to the monetary authority itself.
    Keywords: African oil exporter; Crude oil price; Volatility
    JEL: E5
    Date: 2012–07–31
  8. By: Mupela, Evans (WSU, UNU-MERIT/MGSoG); Szirmai, Adam (UNU-MERIT/MGSoG)
    Abstract: This paper investigates the effects of connectivity charges (communication costs) on bilateral exports in Sub Saharan Africa (SSA). Data from 19 exporter countries was used together with communication costs data in a gravity model of trade setup. The export data derive from the IMF Direction of Trade and the COMTRADE databases, while the communication cost data was collated from a variety of sources including direct contact with service providers. We find that communication cost is an important factor in bilateral trade in the region. Communications have a significant negative effect on export intensity. The study also reveals that countries with high communication costs generally have lower export intensity than countries with low communication costs. The results suggest that investment in ICT infrastructure that brings down international communication costs will have a positive effect on regional trade in the long run.
    Keywords: Trade, gravity model, communication cost, connectivity, export
    JEL: O25 O41 O43 O47 F15 F43
    Date: 2012
  9. By: Cécile Couharde; Issiaka Coulibaly; David Guerreiro; Valérie Mignon
    Abstract: This paper aims at explaining why the CFA countries have successfully maintained a currency union for several decades, despite failing to meet many of optimum currency area criteria. We suggest that the CFA zone, while not optimal, has been at least sustainable. We test this sustainability hypothesis by relying on the Behavioral Equilibrium Exchange Rate (BEER) approach. In particular, we assess and compare the convergence process of real exchange rates towards equilibrium for the CFA zone countries and a sample of other sub-Saharan African (SSA) countries. Our findings evidence that internal and external balances have been fostered and adjustments facilitated in the CFA zone as a whole—compared to other SSA countries—as well as in each of its member countries.
    Keywords: Equilibrium exchange rates, CFA zone, Optimum Currency Areas, currency union sustainability
    JEL: F31 F33 C23
    Date: 2012
  10. By: Charness, Gary; Viceisza, Angelino
    Abstract: In the past decade, it has become increasingly common to use simple laboratorygames and decision tasks as a device for measuring both the preferences and understanding ofrural populations in the developing world. In this paper, we report the results observed with threedistinct risk elicitation mechanisms, using samples drawn from the rural population in Senegal,West Africa. We test the understanding of and the level of meaningful responses to the typicalHolt-Laury task, to an adaptation of a simple binary mechanism pioneered by Gneezy andPotters in 1997, and to a non-incentivized willingness-to-risk scale. We find a low level ofunderstanding with the Holt-Laury task and an unlikely-to-be-accurate pattern with thewillingness-to-risk question. Our analysis indicates that the simple binary mechanism hassubstantially more predictive power than does the Holt-Laury mechanism. Our study is acautionary note regarding utilizing either relatively sophisticated risk-elicitation mechanisms ornon-incentivized questions in the rural developing world.
    Keywords: Economics, General, International Economics, Economics, Other, risk elicitation, laboratory experiments in the field, comprehension, rural Senegal
    Date: 2012–07–27
  11. By: Mouhoud, El Mouhoub; Kuhn, Mélanie; Arestoff, Florence
    Abstract: A l’aide d’une enquête menée en 2006 auprès de 639 migrants africains présents à Johannesburg (Afrique du Sud), cet article analyse les déterminants des transferts de fonds dans le cas des migrations Sud-Sud. En plus des variables traditionnelles (revenu, âge, éducation du migrant, etc.), l’impact des conditions de départ du pays d’origine sur les transferts est analysé, ainsi que celui de variables subjectives (perception de richesse et attachement du migrant à son pays d’origine). Les résultats montrent qu’avoir fui son pays pour des raisons de violence réduit significativement la propension à transférer tandis que l’attachement et la perception d’une situation économique meilleure dans le pays d’accueil favorisent les transferts.
    Abstract: This paper looks at the determinants of international remittances in the context of South-South migration. We use a 2006 survey on 639 African migrants living in Johannesburg. In addition to the traditional variables (income, age and education of the migrant, etc.) we consider the impact of departure conditions from the country of origin and subjective variables (perception of relative wealth, attachment to the country of origin) on remittances. The results show that having left the country of origin due to violence has a negative effect on the propensity to remit, whereas the attachment to the country of origin and the perception of a better economic situation in the host country positively influence remittances.
    Keywords: Distribution des revenus; Migration internationale; transferts de fonds;
    JEL: F22 F24 O15 O55
    Date: 2012
  12. By: Atanda, Akinwande A.; Alimi, Olorunfemi Y.
    Abstract: This study discussed in details the structure, importance, challenges and consequences of the newly adopted cashless policy programme in the Nigerian banking sector. The cashless policy is mainly instituted to enhance the effectiveness of flow of financial resources among economic agents in the economy at least cost possible as well as ensuring prompt cash transfers within the system. The Central of Bank of Nigeria (CBN) cashless initiative is geared towards eliminating the continuous use of physical cash in most daily transactions at the business unit of the economy, as well as regulating, controlling, and securing the financial system. A critical analysis at the policy as contained in this report as identified major constraints that can hinder the effectiveness of the cashless banking without prompt attention by the concerned authority.
    Keywords: Cashless Banking; Cashless Economy; Financial System; Electronic payment; Nigeria
    JEL: E0 E02 E42 E58
    Date: 2012–08
  13. By: Enowbi Batuo, Michael; Mlambo, Kupukile
    Abstract: While financial liberalisation is considered to be good for economic growth in that it promotes the development of the financial sector, banking crises on the other hand tend to be inimical for economic growth. Moreover, banking crises tend to be preceded by financial liberalisation, as noted in a number of studies. This is because financial liberalisation tends to induce greater risk-taking behaviour by agents, thus leading to banking crises. In this paper we study the effect of financial liberalisation and banking crises on the economic performance of African countries during the period covering 1985 to 2010. Using a treatment effect, two step methods and a panel probit method, our results show that banking crises have a negative impact on economic growth meanwhile financial liberalisation tends to reduce the likelihood of banking crises in African countries.
    Keywords: O16; O47;G23; O55
    JEL: O16 N17 O4
    Date: 2012–06
  14. By: Chicoine, Luke E. (DePaul University)
    Abstract: This paper investigates the relationship between women's education and fertility by exploiting a 1985 policy change in Kenya that lengthened primary school by one year. An instrumental variables approach measures the exogenous variation in treatment intensity across birth cohorts. The reform led to an increase in education, a delay in marriage, and reduced fertility beginning at the age of 20. The effect on fertility becomes increasingly negative through age 25. The findings suggest that postponement of marriage, reduction in the marital education gap, and increased early use of modern contraceptives contribute to reduced fertility. These results are consistent with women having greater control over their fertility decision.
    Keywords: fertility, education, Kenya
    JEL: O15 J13 I25
    Date: 2012–08
  15. By: Goodness C. Aye (University of Pretoria); Mehmet Balcilar (Eastern Mediterranean University); Rangan Gupta (University of Pretoria); Charl Jooste (University of Pretoria); Stephen M. Miller (University of Nevada, Las Vegas and University of Connecticut); Zeynel Abidin Ozdemir (Gazi University)
    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. JEL Classification: C32, E62, G10, H62 Key words: Bayesian Sign-Restricted VAR, fiscal policy, housing prices, stock prices
    Date: 2012–09
  16. By: Beegle, Kathleen; Poulin, Michelle
    Abstract: In many African countries, the timing of important life events -- such as school-leaving, first marriage, and entry into the labor market -- is thought to be strongly tied to migration. This paper investigates the relationship between major life events, household characteristics, and migration among adolescents and young adults in contemporary Malawi. The specific research questions are twofold. First, what are the socio-economic and demographic determinants of migration? Second, how do school attendance, first marriage, and employment-seeking relate to migration patterns? The study uses panel data collected from a survey designed specifically to explore socioeconomic and demographic aspects of youth transitions to adulthood and which tracked respondents as they moved to new dwellings. Among the sample, they find that moves are not uncommon, and the predominant reasons for moves are non-economic. Although historically ethnic traditions in this area have held that girls and women usually did not move upon marrying, the data show that women were more likely to move between survey rounds than boys and men, and that marriage was the main reason for doing so. Closer ties to the head of the household are associated with less movement for both women and men.
    Keywords: Population Policies,Population&Development,Anthropology,Adolescent Health,Gender and Social Development
    Date: 2012–09–01
  17. By: Blankespoor, Brian; Dasgupta, Susmita; Lagnaoui, Abdelaziz; Roy, Subhendu
    Abstract: The Millennium Development Goal of achieving near-zero malaria deaths by 2015 has led to a re-examination of wider use of DDT (dichloro-diphenyl-trichloro-ethane) in indoor residual spraying as a prevention tool in many countries. However, the use of DDT raises concerns of potential harm to the environment and human health, mainly because of the persistent and bio-accumulative nature of DDT and its potential to magnify through the food chain. This paper quantifies the adverse effects of DDT on human health based on treatment costs and indirect costs caused by illnesses and death in countries that use or are expected to re-introduce DDT in their disease vector control programs. At the global level where the total population exposed to DDT is estimated around 1.25 billion, the findings indicate that while the use of DDT can lead to a significant reduction in the estimated $69 billion in 2010 U.S. dollars economic loss caused by malaria, it can also add more than $28 billion a year in costs from the resulting adverse health effects. At the country level, the results suggest that Sub-Saharan African countries with high malaria incidence rates are likely to see relatively larger net benefits from the use of DDT in malaria control. The net health benefits of reintroducing DDT in malaria control programs could be better understood by weighing the costs and benefits of DDT use based on a country's circumstances.
    Keywords: Disease Control&Prevention,Health Monitoring&Evaluation,Population Policies,Health Systems Development&Reform,Climate Change Mitigation and Green House Gases
    Date: 2012–09–01
  18. By: Claude Francis Naoussi (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Fabien Tripier (CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS : UMR8019 - Université Lille 1 - Sciences et Technologies)
    Abstract: Cet article propose une revue de la littérature sur les modèles d'équilibre général dynamique et stochastique appliqués aux pays d'Afrique Sub-saharienne. Cette littérature a pour double objectif (i) d'identifier les facteurs spécifiques à ces économies susceptibles d'expliquer leur très forte instabilité et (ii) d'évaluer les politiques monétaires et fiscales adéquates face à ces facteurs. Nous présentons les avancées de cette littérature à l'aune de ces deux objectifs et en soulignons les limites.
    Keywords: Développement ; Cycle ; Afrique ; Équilibre général ; DSGE
    Date: 2012–09–18
  19. By: del Castillo, Graciana
    Abstract: The experience and lessons of the last two decades have shown that ignoring the key differences between the economics of peace and the economics of development has been a major reason why countries relapse into conflict. This paper briefly analyses such d
    Keywords: international relations and international political economy, conflict, natural
    Date: 2012
  20. By: Pritchett, Lant (Center for Global Development, Washington, DC and Harvard University); Beatty, Amanda (Innovations for Poverty Action)
    Abstract: Learning profiles that track changes in student skills per year of schooling often find shockingly low learning gains. Using data from three recent studies in South Asia and Africa, we show that a majority of students spend years of instruction with no progress on basics. We argue shallow learning profiles are in part the result of curricular paces moving much faster than the pace of learning. To demonstrate the consequences of a gap between the curriculum and student mastery, we construct a simple, formal model, which portrays learning as the result of a match between student skill and instructional levels, rather than the standard (if implicit) assumption that all children learn the same from the same instruction. A simulation shows that two countries with exactly the same potential learning could have massively divergent learning outcomes, just because of a gap between curricular and actual pace--and the country which goes faster has much lower cumulative learning. We also show that our simple simulation model of curricular gaps can replicate existing experimental findings, many of which are otherwise puzzling. Paradoxically, learning could go faster if curricula and teachers were to slow down.
    JEL: I21 I25 O15
    Date: 2012–08

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