nep-afr New Economics Papers
on Africa
Issue of 2013‒02‒16
twenty-one papers chosen by
Quentin Wodon
World Bank

  1. House Price, Stock Price and Consumption in South Africa: A Structural VAR Approach By Goodness C. Aye; Rangan Gupta; Alain Kaninda; Wendy Nyakabawo; Aarifah Razak
  2. Job Creation and Destruction in South Africa By Andrew Kerr; Martin Wittenberg; Jairo Arrow
  3. Effects of culture on the perception of South African and Tanzanian business students on high performance organizations By André de Waal; Kettie Chipeta
  4. Do the Maths: An Analysis of the Gender Gap in Mathematics in Africa By Dickerson, Andy; McIntosh, Steven; Valente, Christine
  5. Preferential market access design: evidence and lessons from African apparel exports to the us and the EU By de Melo, Jaime; Portugal-Perez, Alberto
  6. Effects of Household Shocks and Poverty on the Timing of Traditional Male Circumcision and HIV Risk in South Africa By Atheendar S. Venkataramani; Brendan Maughan-Brown
  7. Financial markets and the response of monetary policy to uncertainty in South Africa By Ruthira Naraidoo; Leroi Raputsoane
  8. Poverty Outreach in Southern and Northern Ghana By Sheremenko, Ganna; Florkowski, Wojciech J.; Klepacka, Anna M.
  9. Gender Impacts on Adoption of New Technologies: Evidence from Uganda By Tanellari, Eftila; Kostandini, Genti; Bonabana, Jackie
  10. Productivity and Efficiency of Small Scale Agriculture in Ethiopia By Mekonnen, Dawit Kelemework; Dorfman, Jeffrey; Fonsah, Esendugue Greg
  11. The Determinants of Food Expenditures in the Urban Households of Ghana: A Quantile Regression Approach By Meng, Ting; Florkowski, Wojciech J.; Sarpong, Daniel Bruce; Resurreccion, Anna V.A.; Chinnan, Manjeet S.
  12. The Impact of Oil Shocks on the South African Economy By Carolyn Chisadza; Janneke Dlamini; Rangan Gupta; Mampho P. Modise
  13. Macroeconomic Aspects of Ghana's Export Performance By Pujula, Aude Liliana; Zapata, Hector O.
  14. Financial development dynamic thresholds of financial globalization: evidence from Africa By Simplice A, Asongu
  15. How much international variation in child height can sanitation explain ? By Spears, Dean
  16. The Value of Price Stabilization Policy for Cotton Producers in Burkina Faso By Gouzaye, Amadou; Vitale, Jeffrey D.; Epplin, Francis M.; Adam, Brian D.; Stoecker, Arthur L.
  17. Does Microfinance Alleviate the Financing Constraints of Ghanaian Small Businesses? By Quaye, Frederick Murdoch; Hartarska, Valentina M.
  18. Peanut Paste/ Butter Consumption Frequency in the Republic of Uganda: Count Data Model Approach By Madhavan-Nambiar, Padmanand; Florkowski, Wojciech J.
  19. Household Consumption Characteristics of Cookies: The Case of Uganda By Fu, Shengfei; Florkowski, Wojciech J.; Nambiar, Padmanand Madhavan; Resurreccion, Anna V.A.; Chinnan, Manjeet S.
  20. Impact of Market Information System (E-Soko) on Beans Markets Integration: Case of Rwanda By Bizimana, Jean-Claude; Bessler, David A.; Angerer, Jay P.
  21. What Does Variation in Survey Design Reveal About the Nature of Measurement Errors in Household Consumption? By John Gibson; Kathleen Beegle; Joachim De Weerdt; Jed Friedman

  1. By: Goodness C. Aye (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Alain Kaninda (Department of Economics, University of Pretoria); Wendy Nyakabawo (Department of Economics, University of Pretoria); Aarifah Razak (Department of Economics, University of Pretoria)
    Abstract: This paper compares the effects of real house price and real stock price shocks on consumption decisions in South Africa over the period 1966 to 2012 using a Structural Vector Autoregressive (SVAR) approach.The sample comprises quarterly, seasonally adjusted South African data on consumption, inflation, real house price, real stock price and the nominal Treasury bill rate. We find that a positive 1 percent shock in stock prices leads to about 0.05 percent increase in consumption, with the effect being short-lived, and declines after 4 quarters to become statistically insignificant. While, a 1 percent shock in house prices increase consumption by about 0.3 percent at around the 4th quarter, but thereafter declines and becomes negative from the 8th quarter. These results show that in South Africa, house prices play economically, but not statistically, a greater role than stock prices with respect to consumption expenditure.
    Keywords: Consumption, House Price, Stock Prices, Structural Vector Autoregression
    JEL: C32 E21 G12
    Date: 2013–02
  2. By: Andrew Kerr (DataFirst, University of Cape Town); Martin Wittenberg (DataFirst, University of Cape Town); Jairo Arrow
    Abstract: Analysts of the South African labour market have predominantly used household surveys to analyse the labour market. It has been more difficult to explore labour demand from the firm side, as a result of limited data from relatively small cross sectional firm surveys, mainly funded by the World Bank. We use the Quarterly Employment Survey conducted by Statistics South Africa that allows us to explore how South African enterprises create and destroy jobs, shedding light on many of the policy questions that are relevant in a high unemployment society like SouthAfrica. We find job creation and destruction rates are similar to those found in OECD countries. There is little evidence that labour legislation creates rigidities that prevent firms from hiring or firing workers.We also find that larger firms are better net creators of jobs than small firms and that net job creation rates are negative in manufacturing, consistent with work using household surveys. Our research has important policy implications - particularly for the National Planning Commission's suggestion that new jobs will come mainly from small and medium sized firms. Our research suggests this is not likely without changes to policy or legislation. This is a joint SALDRU/DataFirst Working Paper
    Date: 2013
  3. By: André de Waal (Associate Professor of Strategic Management at Maastricht School of Management, the Netherlands); Kettie Chipeta (Lecturer at Iringa University College, Iringa, Tanzania and DBA student at Maastricht School of Management, the Netherlands)
    Abstract: The purpose of this study is to determine whether there are common conceptions of high performance organizations (HPOs) among business students in South Africa and Tanzania, as the perceptions of these students will influence the structure and use of future HPOs. Questionnaire data were collected from a sample (357) of second and third year business students who were asked to rate the 35 items contained in the HPO Framework (Waal, 2012) on a seven-point- Likert-Scale. Factor analysis revealed that three of the five HPO factors in the framework - continuous improvement and renewal, long-term orientation, high quality management –are common for South African and Tanzanian students. A multivariate analysis showed that Tanzanian students scored higher than South African students for two of these factors - continuous improvement and renewal and long-term orientation - whilst South African students scored higher on the high quality management Factor. A bivariate correlation between the HPO factors and Hofstede’s dimensions of cultural values revealed a significant relationship between the HPO factor long-term orientation and three of the cultural dimensions. This study makes a contribution to the literature by empirically investigating whether business students from varying cultures share common conceptions on what constitutes an HPO. Thus, the findings of this study are relevant in the development and structuring of trainings, curricula and consultancies.
    Keywords: high performance organization (HPO), national culture, business students
    JEL: M12 M14
    Date: 2013–02
  4. By: Dickerson, Andy (University of Sheffield); McIntosh, Steven (University of Sheffield); Valente, Christine (University of Bristol)
    Abstract: This paper uses microdata for 19 African countries to examine the gender difference in maths test scores amongst primary school children. There is a significant difference in maths test scores in favour of boys, similar to that previously observed in developed countries. This difference cannot be explained by gender differences in school quality, home environment, or within-school gender discrimination in access to schooling inputs. However, the gender gap varies widely with characteristics of the regions in which the pupils live, and these regional characteristics are more predictive of the gender gap than parental education and school characteristics, including teacher gender. At the cross-country level, differences in fertility rates account for nearly half the variation in the gender gap, and this relationship is not due to the correlation between fertility and GDP nor to gender inequality as measured by the Gender Gap Index.
    Keywords: cognitive maths skills, gender, Africa
    JEL: O15 I20
    Date: 2013–01
  5. By: de Melo, Jaime; Portugal-Perez, Alberto
    Abstract: Least developed countries rely on preferential market access. Proof of sufficient transformation has to be provided to customs in importing countries by meeting Rules of Origin requirements to benefit from these preferences. These Rules of Origin have turned out to be complicated and burdensome for exporters in the least developed countries. Starting around 2001, under the United States Africa Growth Opportunity Act, 22 African countries exporting apparel to the United States can use fabric from any origin (single transformation) and still meet the criterion for preferential access (the so-called Special Rule), while the European Union continued to require yarn to be woven into fabric and then made into apparel in the same country (double transformation). This paper uses panel estimates over 1996-2004 to exploit this quasi-experimental change in the design of preferences. The paper estimates that this simplification contributed to an increase in export volume of about 168 percent for the top seven beneficiaries or approximately four times as much as the 44 percent growth effect from the initial preference access under the Africa Growth Opportunity Act without the single transformation. This change in design also mattered for diversity in apparel exports, as the number of export varieties grew more rapidly under the Africa Growth Opportunity Act special regime.
    Keywords: Free Trade,Markets and Market Access,Trade Policy,Economic Theory&Research,Debt Markets
    Date: 2013–02–01
  6. By: Atheendar S. Venkataramani (Department of Medicine, Massachusetts General Hospital, Harvard University); Brendan Maughan-Brown (SALDRU, School of Economics, University of Cape Town)
    Abstract: Poverty may influence HIV risk by increasing vulnerability to economic shocks and thereby preventing key health investments. We explored this by examining the relationship between household shocks and the timing of traditional male circumcision, a practice associated with considerable expense and whose HIV-prevention benefits are larger when done earlier, even within young adulthood. Using unique data on a sample of Xhosa men, a group that almost universally practice traditional circumcision, we found that respondents in the poorest households delayed circumcision by two years if a household member experienced loss of income or death and/or illness. The impact of these shocks declined with increasing household income. Our findings suggest that interventions that work to mitigate the impact of shocks among the poor may be useful in HIV prevention efforts. More generally, they illustrate that the relationship between HIV and wealth may be more nuanced than assumed in previous work.
    Keywords: Economic shocks, poverty, male circumcision, HIV, South Africa
    Date: 2013
  7. By: Ruthira Naraidoo (Department of Economics, University of Pretoria); Leroi Raputsoane (South African Reserve Bank)
    Abstract: This paper assesses the impact of uncertainty about the true state of the economy on monetary policy in South Africa since the adoption of inflation targeting. The paper also analyses the impact of uncertainty about the conditions in financial markets on the interest rate setting behavior that describes the South African Reserve Bank’s monetary policy decisions over and above using inflation and output as indicator variables. The results indicate that the effect of uncertainty on the interest rates has led to a more cautious monetary policy stance by the monetary authorities consistent with a large body of literature that recognizes that an excessively activist policy can increase economic instability. The results further show that uncertainty about the state of the economy clusters around the financial crisis periods in 2003 and from 2007 to 2009. The uncertainty about inflation was important to the interest rate setting behavior in 2003, while the uncertainty about the conditions in financial markets was important to the interest rate setting behavior between 2007 and 2009.
    Keywords: Monetary policy, Uncertainty, Financial market conditions
    JEL: C51 E43 E44 E58
    Date: 2013–02
  8. By: Sheremenko, Ganna; Florkowski, Wojciech J.; Klepacka, Anna M.
    Abstract: This paper examines financial sustainability and social outreach determinants of microfinance institutions’ (MFIs) performance in the Southern and Northern parts of Ghana using the Seemingly Unrelated Regression (SUR) as the estimation technique. Results suggest that although MFIs in both parts of Ghana are profit-driven, they are expected to improve poverty outreach as they expand their clientele.
    Keywords: Microfinance institution, Ghana, SUR, Financial sustainability, Social (poverty) outreach, Agricultural Finance, Community/Rural/Urban Development, G20, G21,
    Date: 2013
  9. By: Tanellari, Eftila; Kostandini, Genti; Bonabana, Jackie
    Abstract: This paper examines the effects of gender on the adoption of new technologies of peanut production in Eastern Uganda. The findings suggest that females adopt improved varieties at a lower rate compared to males. In addition, females in female-headed households are less likely to adopt.
    Keywords: Adoption, Gender, Uganda, Community/Rural/Urban Development, International Development,
    Date: 2013
  10. By: Mekonnen, Dawit Kelemework; Dorfman, Jeffrey; Fonsah, Esendugue Greg
    Abstract: We estimate a distance function of grains production using generalized method of moments that enables us to accommodate multiple outputs of farmers as well as address the endogeneity issues that are related with the use of distance functions for multi-output production. Using a panel data set of Ethiopian subsistence farmers, we find that the most important factors determining farmers' efficiency in Ethiopia are having access to the public extension system, participation in off-farm activities, participation in labor sharing arrangements, gender of the household head, and the extent to which farmers are forced to produce on marginal and steeply sloped plots. Average farmers in Ethiopia are producing less than 60% of the most efficient farmers. Annual technical change between 1999 and 2004 is about one percent while annual efficiency change during the same period is insignificant.
    Keywords: Distance Function, Productivity, Efficiency, GMM, Ethiopia, Agricultural and Food Policy, Crop Production/Industries, Farm Management, Food Security and Poverty, International Development, Production Economics, Productivity Analysis,
    Date: 2013
  11. By: Meng, Ting; Florkowski, Wojciech J.; Sarpong, Daniel Bruce; Resurreccion, Anna V.A.; Chinnan, Manjeet S.
    Abstract: The study applies quantile regression to identify determinants of the entire distribution of food expenditure, and quantify their effects amongGhana’s urban household subgroups. The results indicate that among the significant factors the largest effect in descending order havelocation, marital status, education, household composition, age, and income.
    Keywords: Food Expenditure, Ghana, Quantile Regression, Urban Households., Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty,
    Date: 2013
  12. By: Carolyn Chisadza (Department of Economics, University of Pretoria); Janneke Dlamini (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Mampho P. Modise (Department of Economics, University of Pretoria)
    Abstract: The recent increases in oil prices have raised the importance of studying the effects of oil supply and demand shocks on an economy. The purpose of this paper is to investigate the impact of the oil supply and demand shocks on the South African economy using a sign restriction-based structural Vector Aautoregressive (VAR) model. Our results show that an oil supply shock has a short-lived significant impact only on the inflation rate, while the impact on the other variables is statistically insignificant. Supply disruptions results in a short-term increase in the domestic inflation rate with no reaction from the monetary policy. An aggregate demand shock results in short- to medium-term improvements in domestic output and the real exchange rate. The effect is statistically insignificant for the inflation rate as well as the monetary policy instrument. The inflation rate and the real exchange rate react negatively to an oil-specific demand shock, while output is positively related to unanticipated changes in oil price due to speculations.
    Keywords: Oil price shocks, macroeconomic variables, vector autoregression, monetary policy
    JEL: E13 E63 E66
    Date: 2013–02
  13. By: Pujula, Aude Liliana; Zapata, Hector O.
    Abstract: This study examines the role of price competitiveness and foreign activity in Ghana’s export performance. Using an augmented VAR model in conjunction with modified Wald tests, causal relationships are tested between real effective exchange rates, foreign GDP and both total and agricultural export volumes. The results show that improvements in price competitiveness have been the principal driver of total export volumes. However, none of the traditional factors of export performance have had a significant effect on agricultural exports. In addition, using a VAR-MGARCH-in-mean model, we found that third-country exchange rates volatility have negatively affected Ghana’s export growth. These results confirm the effectiveness of Ghana’s market-oriented policies that started with the inception of the economic recovery program in 1983 but call for more policy efforts to offset the adverse impact of exchange rates volatility on the export sector.
    Keywords: Ghana, Exports, Competitiveness, Currency Exchange Rates, Volatility, International Development, International Relations/Trade, Risk and Uncertainty, F17, F31, F47, F62, C58,
    Date: 2013
  14. By: Simplice A, Asongu
    Abstract: Purpose – The issue of which financial initial conditions are necessary to materialize the benefits of financial globalization remains open to debate in the literature. In this paper, we try to put some empirical structure on the concept of financial threshold conditions in order to give policymakers guidance on the Kose et al. (2011) and Henry (2007) hypothesis. Its object is to assess if financial benefits of financial globalization are questionable until greater domestic financial development has taken place in African countries. Design/methodology/approach – In framing the financial dimension in a more concrete and tractable manner, we examine the concerns of how domestic financial initial dynamics of depth (economic and financial systems), efficiency (banking and financial systems), activity (banking and financial systems) and size, play out in the financial development benefits of financial globalization. The estimation approach consists of assessing the impact of financial globalization through-out the conditional distributions of domestic financial development dynamics. Findings – The introduction of previously missing financial dimensions into the debate generates a number of important findings. Only financial initial (threshold) conditions of size are necessary to materialize the benefits of financial globalization. While financial depth only partially validates the hypothesis, dynamics of efficiency and activity (credit) do not confirm the hypothesis. Practical implications – Addressing the issue of surplus liquidity in African financial institutions could improve the benefits of financial size and potentially reverse the trends of financial efficiency and activity. Depending on the context of sampled countries, the appropriate role of policy has always been either to stem the tide of capital flows or encourage them. Policymakers who have been viewing their challenges exclusively from the latter perspective for benefits in growth (finance) might be getting the financial dynamics badly wrong. Originality/value – Blanket financial development policies may not reap the financial benefits of financial globalization until domestic financial dynamics of depth, efficiency, activity and size are critically considered. The introduction of the last three previously missing components in the literature sheds more light on the globalization-development nexus.
    Keywords: Banking; International investment; Financial integration; Development
    JEL: F40 F30 O10 F02 F21
    Date: 2012–06–30
  15. By: Spears, Dean
    Abstract: Physical height is an important economic variable reflecting health and human capital. Puzzlingly, however, differences in average height across developing countries are not well explained by differences in wealth. In particular, children in India are shorter, on average, than children in Africa who are poorer, on average, a paradox called"the Asian enigma"which has received much attention from economists. This paper provides the first documentation of a quantitatively important gradient between child height and sanitation that can statistically explain a large fraction of international height differences. This association between sanitation and human capital is robustly stable, even after accounting for other heterogeneity, such as in GDP. The author applies three complementary empirical strategies to identify the association between sanitation and child height: country-level regressions across 140 country-years in 65 developing countries; within-country analysis of differences over time within Indian districts; and econometric decomposition of the India-Africa height differences in child-level data. Open defecation, which is exceptionally widespread in India, can account for much or all of the excess stunting in India.
    Keywords: Population Policies,Early Child and Children's Health,Disease Control&Prevention,Health Monitoring&Evaluation,Youth and Governance
    Date: 2013–01–01
  16. By: Gouzaye, Amadou; Vitale, Jeffrey D.; Epplin, Francis M.; Adam, Brian D.; Stoecker, Arthur L.
    Abstract: Economic returns to Burkina Faso cotton producers from selling to the government parastatal are compared to those that could be obtained by selling on the international spot market. Based on historical prices, for certain levels of risk aversion, the parastatal price would be preferred to the international spot price.
    Keywords: Marketing,
    Date: 2013
  17. By: Quaye, Frederick Murdoch; Hartarska, Valentina M.
    Abstract: The paper examines the impact of MFIs on microenterprises in Ghana. Employing the financing constraints approach and using 2007 BEEPS data, supported with a Propensity Score Matching method, results indicate that unconstrained microenterprises are less sensitive to internal funds and thus MFIs have alleviated financing constraints to an appreciable level.
    Keywords: Microfinance, Financing Constraints, Cash flow sensitivity, Investment, Internal funds, Agricultural Finance, Financial Economics, G21,
    Date: 2013
  18. By: Madhavan-Nambiar, Padmanand; Florkowski, Wojciech J.
    Abstract: Peanut paste/butter consumption frequency in the Republic of Uganda is analyzed using a household survey data. Estimation results from Zero-inflated Binomial regression conclude that education, household location, color of peanut paste, etc. are important. The ordinal logistic results conclude that peanut paste/butter consumption with vegetables is the most preferred option.
    Keywords: Peanut-paste/butter, consumption frequency, Republic of Uganda, Zero-inflated Negative Binomial, Socioeconomic, Vitamin A fortification, household survey, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Development, Public Economics, Research Methods/ Statistical Methods, Q12, Q13,
    Date: 2013
  19. By: Fu, Shengfei; Florkowski, Wojciech J.; Nambiar, Padmanand Madhavan; Resurreccion, Anna V.A.; Chinnan, Manjeet S.
    Abstract: The cookie consumption and purchase characteristics of households were investigated in six cities in Uganda using household survey data. Cookies can be fortified with vitamins to improve child nutrition. The application of a Logit model permitted the identification of factors significantly affecting household decision to eat cookies. They are household food buyer/preparer’s age, employment status, education level, household monthly income, household location, number of children from 4 to 18 years-old and its squared value. The purchase decision was modeled as a two-stage or double-hurdle process. The household purchase decision is shaped by its main food buyer/preparer’s employment status and education level, household location, household monthly income, and the number of children age 4 to 18 years old as well as its squared value. Higher values of these variables, but the squared number of children encourage the purchase decision. However, the decision of purchase counts of cookie boxes is shaped by another set of variables, including the frequency of eating cookies, household location, household monthly income, the number of children age 4 to 18, the type of cookie box purchased (cookie purchase is made as per piece purchase and per packet purchase ), and its price. The findings provide important insights for the local cookie producers and marketers, as the identified characteristics and the directional effects are of direct use in the formulation of the marketing and merchandising decisions. The findings are also valuable for policymakers, who concerned about improving nutrition for school children.
    Keywords: Survey data, nutrition, peanuts, protein, purchase frequency, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Q18, D12,
    Date: 2013–01
  20. By: Bizimana, Jean-Claude; Bessler, David A.; Angerer, Jay P.
    Abstract: The goal of this study was to analyze the impact of a newly introduced market information system “E-Soko”, on beans markets integration by comparing the period before and after the system was implemented in Rwanda. Beans, both bush and climbing, are the most important traded crop in rural areas of Rwanda, and third most important in urban areas in terms of value. Bi-weekly prices on beans were analyzed for the two time periods: one before the introduction of the market information system “E-Soko” (1999 to 2003) and another one after “E-Soko” was introduced (2007-2012) on eight markets across Rwanda for each period. Vector autregression methods were used to analyze the data and assess the level of market integration in both periods. Stationarity tests show that the price series in the period after the introduction of E-Soko (2007-2012) are all (except one) stationary, which raises the question of the market efficiency. Prices in the period before E-Soko (1999-2003) indicate a good level of integration with Musanze market leading the group. No clear conclusions were drawn from this study regarding the impact of the E-Soko market information system. More studies on beans marketing channels, mechanism of price formation (market power?) and price data collection and reporting processes are needed to elucidate some of the unclear behavior of beans prices.
    Keywords: Market information, Vector autoregression, Market integration, Non-stationary, Agricultural and Food Policy, Food Security and Poverty, Research and Development/Tech Change/Emerging Technologies,
    Date: 2013
  21. By: John Gibson (University of Waikato); Kathleen Beegle (World Bank); Joachim De Weerdt (EDI Tanzania); Jed Friedman (World Bank)
    Abstract: We use data from eight different consumption questionnaires randomly assigned to 4,000 households in Tanzania to obtain evidence on the nature of measurement errors in estimates of household consumption. While there are no validation data, the design of one questionnaire and the resources put into its implementation make it likely to be substantially more accurate than the others. Comparing regressions using data from this benchmark design with results from the other questionnaires shows that errors have a negative correlation with the true value of consumption, creating a non-classical measurement error problem for which conventional statistical corrections may be ineffective.
    Keywords: consumption; Engel curves; household surveys; measurement error; Tanzania
    JEL: C21 C81 D12
    Date: 2013–02–11

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