nep-afr New Economics Papers
on Africa
Issue of 2013‒09‒24
twenty-two papers chosen by
Quentin Wodon
World Bank

  1. National Institutions and Subnational Development in Africa By Michalopoulos, Stelios; Papaioannou, Elias
  2. Is there a Diffusion of Military Regimes in Sub-Saharan Africa? Empirical Evidence in the Period 1972-2007 By Caruso, Raul; Petrarca , Ilaria; Ricciuti, Roberto
  3. The Long-Run Effects of the Scramble for Africa By Michalopoulos, Stelios; Papaioannou, Elias
  4. Mali: Poverty Reduction Strategy Paper-Joint Staff Advisory Note By International Monetary Fund. African Dept.
  5. The Private Sector as Culprit and Victim of Corruption in Africa By Léonce Ndikumana
  6. Guinea: Poverty Reduction Strategy Paper By International Monetary Fund. African Dept.
  7. Improving access to banking : evidence from Kenya By Allen, Franklin; Carletti, Elena; Cull, Robert; Qian, Jun; Senbet, Lemma; Valenzuela, Patricio
  8. Senegal: Poverty Reduction Strategy Paper By International Monetary Fund. African Dept.
  9. Nigeria: 2012 Article IV Consultation By International Monetary Fund. African Dept.
  10. Inflation and Economic Growth in the SADC: Some Panel Time-Series Evidence By Manoel Bittencourt; Renee van Eyden; Monaheng Seleteng
  11. Guinea: Poverty Reduction Strategy Paper—Joint Staff Advisory Note By International Monetary Fund. African Dept.
  12. Construction of a database for a dynamic CGE model for South Africa By Louise Roos
  13. United Republic of Tanzania: Sixth Review Under the Policy Support Instrument, Second Review Under the Standby Credit Facility Arrangement, and Request for Modification of Performance Criteria—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Tanzania By International Monetary Fund. African Dept.
  14. South African Sector Return Correlations: using DCC and ADCC Multivariate GARCH techniques to uncover the underlying dynamics. By Nico Katzke
  15. Smallholder Farmers Participation in Livestock Market in Zambia By Lubungu, Mary; Chapoto, Antony; Tembo, Gelson
  16. Tax Coordination, Tax Competition, and Revenue Mobilization in the West African Economic and Monetary Union By Mario Mansour; Gregoire Rota Graziosi
  17. Burundi: Second Review Under the Extended Credit Facility—Staff Report; Staff Supplement; Press Release on the Executive Board Discussion By International Monetary Fund. African Dept.
  18. (VF)Économétrie spatiale et données spatiales empilées dans le temps : Proposition d'une modélisation adaptée.(VA)Spatial Econometric and Spatial Data Pooled over Time: Towards an adapted modelling approach By Jean Dubé; Diègo Legros
  19. Guinea-Bissau: Staff Report for the 2013 Article IV Consultation; Debt Sustainability Analysis; Informational Annex; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Guinea-Bissau By International Monetary Fund. African Dept.
  20. Behavioral economics and public sector reform : an accidental experiment and lessons from Cameroon By Raballand, Gael; Rajaram, Anand
  21. Directed Giving: Evidence from an Inter-Household Transfer Experiment By Catia Batista; Dan Silverman; Dean Yang
  22. Solutions Pratiques au Problème de Financement des PME au Cameroun By NGUENA, Christian L.

  1. By: Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR)
    Abstract: We investigate the role of national institutions on subnational African development in a novel framework that accounts both for local geography and cultural-genetic traits. We exploit the fact that the political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a spatial 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 images of light density. The average non-effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities.
    Keywords: Africa, Borders, Ethnicities, Development, National Institutions, Regression Discontinuity
    Date: 2013
  2. By: Caruso, Raul (Catholic University of the Sacred Hearth); Petrarca , Ilaria (University of Verona); Ricciuti, Roberto (University of Verona)
    Abstract: We show the existence of a diffusion process of military dictatorships in Sub-Saharan Africa from 1972 through 2007, using panel data probit estimation and a Markov chain transition model. This process is shortly-lived, since we observe an overall trend that reduces the number of military regimes. With regard to economic correlates, we also find that Manufacturing share of GDP, Primary share of GDP positively affect the probability of military dictatorship, and Openness to trade, whereas the British colonial origin are negatively associated.
    Keywords: Military rule; Africa; Diffusion of government institutions.
    JEL: D74 F50 H11
    Date: 2013–09–11
  3. By: Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR)
    Abstract: We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, utilizing information on the spatial distribution of African ethnicities before colonization, we show that apart from the land mass and water area of an ethnicity’s historical homeland, no other geographic, economic, and historical trait, including proxies of pre-colonial conflict, predicts partitioning by the national borders. Second, we exploit a detailed geo-referenced database that records various types of conflict across African regions and show that civil conflict is concentrated in the historical homeland of partitioned ethnicities. We also document that violence against civilians (child soldiering, village burning, abductions, rapes) and territorial changes between rebel groups, militias, and government forces are more prevalent in the homelands of split groups. These results are robust to a rich set of local controls, the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence brings in the foreground the violent repercussions of an important aspect of European colonization, that of ethnic partitioning.
    Keywords: Africa, Borders, Ethnicities, Conflict, Development,
    Date: 2013
  4. By: International Monetary Fund. African Dept.
    Keywords: Poverty Reduction Strategy Papers;Political economy;Economic growth;Budgets;Government expenditures;Health care;HIV and AIDS;Education;Gender equality;Governance;Mali;
    Date: 2013–05–08
  5. By: Léonce Ndikumana
    Abstract: Corruption causes severe waste and misallocation of financial, human, and natural resources, thus retarding growth and social development. It suffocates private sector activity and entrepreneurship, perpetuating the dominance of an inefficient public sector, and undermining economic diversification and structural transformation. While traditionally corruption has been seen as a public sector phenomenon, private sector corruption deserves as much attention as public sector corruption due to its equally debilitating effects on economic activity. In fact private sector operators can be both culprits and victims of corruption. This paper examines the symptoms and impacts of private sector corruption in Africa, from the perspective that corruption arises from both relations between the private sector and the public sector as well as transactions falling strictly within the private sector domain. The paper documents key channels of corporate sector corruption, especially anti-competitive and speculative behavior in key sectors such as banking and services; capital flight and trade misinvoicing; transfer pricing especially in the natural resource industry and the manufacturing sector; and tax evasion by multinational corporations operating in Africa. The consequences of private sector corruption and synergies between private sector corruption and public sector corruption are reviewed. The paper stresses that in their fight against corruption, African countries need to leverage the existing initiatives at regional and international level aimed at tackling the problem of corruption, and it highlights major innovations in these anti-corruption instruments that may serve well the anti-corruption agenda on the continent.
    Keywords: corruption; Africa; private sector; public sector
    JEL: O1 O55 O17 H2 H11
    Date: 2013
  6. By: International Monetary Fund. African Dept.
    Keywords: Poverty Reduction Strategy Papers;Governance;Agricultural sector;Mining sector;Infrastructure;Electric power;Transport;Education;Health care;HIV and AIDS;Gender equality;Guinea;
    Date: 2013–07–03
  7. By: Allen, Franklin; Carletti, Elena; Cull, Robert; Qian, Jun; Senbet, Lemma; Valenzuela, Patricio
    Abstract: Using household surveys and bank penetration data at the district-level in 2006 and 2009, this paper examines the impact of Equity Bank -- a leading private commercial bank focusing on microfinance -- on access to banking in Kenya. Unlike other commercial banks in Kenya, Equity Bank pursues distinct branching strategies that target underserved areas and less-privileged households. Equity Bank presence has a positive and significant impact on households'use of bank accounts and bank credit, especially for Kenyans with low income, no salaried job, and less education and those who do not own their own home. The findings are robust to using the district-level proportion of people speaking a minority language as an instrument for Equity Bank presence. It appears that Equity Bank's business model -- providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process -- can be a solution to the financial access problem that has hindered the development of inclusive financial sectors in many African countries.
    Keywords: Banks&Banking Reform,Access to Finance,Public Sector Corruption&Anticorruption Measures,Corporate Law,Debt Markets
    Date: 2013–09–01
  8. By: International Monetary Fund. African Dept.
    Keywords: Poverty Reduction Strategy Papers;Economic growth;Private sector;Agricultural sector;Public investment;Infrastructure;Energy sector;Transport;Human capital;Education;Health care;Gender equality;Governance;Senegal;
    Date: 2013–07–03
  9. By: International Monetary Fund. African Dept.
    Keywords: Article IV consultation reports;Economic growth;Fiscal policy;Government expenditures;Nonoil sector;Monetary policy;Reserves;Sovereign wealth funds;Millennium Development Goals;Economic indicators;Debt sustainability analysis;Staff Reports;Public information notices;Nigeria;
    Date: 2013–05–10
  10. By: Manoel Bittencourt (Department of Economics, University of Pretoria); Renee van Eyden (Department of Economics, University of Pretoria); Monaheng Seleteng (Department of Economics, University of Pretoria)
    Abstract: In this paper we investigate the role of inflation rates in determining economic growth in fifteen sub-Saharan African countries, which are all members of the Southern African Development Community (SADC), between 1980 and 2009. The results, based on panel time-series data and analysis, suggest that inflation has had a detrimental effect to growth in the region. All in all, we highlight not only the fact that inflation has offset the Mundell-Tobin effect and consequently reduced, the much needed, economic activity in the region, but also the importance of an institutional framework conducive to a stable macroeconomic environment as a precondition for development and prosperity in the community.
    Keywords: In?ation, Growth, SADC
    JEL: E31 O11 O42 O55
    Date: 2013–09
  11. By: International Monetary Fund. African Dept.
    Keywords: Poverty Reduction Strategy Papers;Economic growth;Private sector;Agricultural sector;Mining sector;Infrastructure;Education;Gender equality;Health care;Guinea;
    Date: 2013–07–03
  12. By: Louise Roos
    Abstract: This paper describes the construction of database constructed for a dynamic CGE model for South Africa (hereafter SAGE). The starting point for creating a database for a CGE model are official data from an Input/output (IO) table, or from a Supply Use Table (SUT), or from a Social Accounting Matrix (SAM). Often the structure of the published data is not in the required format of a CGE database, and so a major task is to transform the official data into a form required by a CGE database. Four characteristics of the SAGE database are noted: 1. It contains information regarding the structure of the South African economy in the base year (2002). 2. It is the initial solution to the SAGE model. 3. It has the same basic structure as the ORANIG and MONASH databases. 4. The basic database is supplemented by additional data relating to dynamics. The database is organised in four parts. The first includes data on the coefficients that are computed from the input-output (IO) table. These coefficients represent the basic flows of commodities between users, commodity taxes paid by users, margin flows that facilitate the flow of commodities and valued added matrices. The second part of the SAGE database contains information on behavioural parameters. The elasticities influence the degree to which economic agents change their behaviour when relative prices change. The third part of the database contains information on government accounts, accounts with the rest of the world and industry-specific capital stocks and depreciation rates. The fourth part of this paper describes the tests undertaken to test for model validity. This paper is set out as follows: Section 1 describes the structure of the IO database. Section 2 reviews the official data sources used to create the IO database. Section 3 describes the steps taken to transform the official data into the correct format. Section 4 describes the elasticities and parameters adopted in for SAGE. Section 5 describes additional information regarding industry-specific capital stocks and government accounts. Section 6 describes various tests that were conducted to ensure that the database is balanced. The paper ends with a conclusion.
    Keywords: Computable general equilibrium (CGE), Database, Africa, Supply Use Tables
    JEL: C81 C68 O55
    Date: 2013–05
  13. By: International Monetary Fund. African Dept.
    Keywords: Policy Support Instrument;Economic growth;Fiscal policy;Fiscal consolidation;Fiscal reforms;Monetary policy;Economic indicators;Staff Reports;Press releases;Performance criteria modifications;Standby Credit Facility;Tanzania;
    Date: 2013–06–19
  14. By: Nico Katzke (Department of Economics, University of Stellenbosch)
    Abstract: This paper explores the dynamics of return co-movements between the largest economic sectors in South Africa, specifically with a view to shed light on the inter-sector diversification potential of domestic investors over time. It has been widely documented that investors have a home-bias when it comes to investing, and as such may be exposed to periods of increased co-movement between assets held locally across different sectors in their portfolios. Such periods of increased homogeneity in the movement of asset prices negate the benefits from diversification within the domestic financial market. The paper utilizes Dynamic Conditional Correlation (DCC) and Asymmetric-DCC Multivariate Generalized Autoregressive Conditional Heteroskedasticity (MV-GARCH) techniques to isolate the time-varying conditional correlations from the conditional variance component. These series are then used to study whether changes in market conditions and overall sentiment influence the dynamics and aggregate level of co-movement between sectors. The results firstly suggest that using static measures of historic co-movement between asset returns across sectors in order to evaluate a portfolio’s diversification potential are inaccurate. Significant leverage effects are also found in the dynamics of co-movement between the sector pairs, with negative shocks being followed in all cases by higher aggregate levels of co-movement. The results also suggest that periods of heightened global- and domestic market uncertainty magnifies the co-movements between sectors and in so doing undermines the ability of investors to diversify across local sectors.
    Keywords: Conditional Variance, Multivariate GARCH, Dynamic Conditional Correlation, Sector Indices
    JEL: C32 C51 C58 G11 G17
    Date: 2013
  15. By: Lubungu, Mary; Chapoto, Antony; Tembo, Gelson
    Abstract: This study uses longitudinal household data collected in 2001, 2004, and 2008 to identify factors that influence Zambian smallholder farmers' participation in livestock markets. Although livestock ownership increased during the study period, not all provinces experienced the upward trend. While livestock populations increased in Southern and Central Provinces, they remained stagnant in Eastern, North western and Lusaka Provinces and reduced in Western Province. Not only has herd size remained stagnant over the years, but the level of participation of smallholder farmers in the livestock markets has also remained largely the same. Crop commercialization and participation in off-farm activities reduces the likelihood of participation in cattle markets but not in the markets for small livestock.
    Keywords: Livestock Production/Industries,
    Date: 2013–08
  16. By: Mario Mansour; Gregoire Rota Graziosi
    Abstract: We review the current state of the West African Economic and Monetary Union’s tax coordination framework, against the main objectives of the WAEMU Treaty of 1994: reduce distortions to intra-community trade, and mobilize domestic tax revenue. The process of tax coordination in WAEMU is one of the most advanced in the world—de jure at least—, but remains in many areas ineffective de facto. Nevertheless, the framework has, to some extent, succeeded in converging tax systems, particularly statutory tax rates, and may have contributed to improving revenue mobilisation. Important lessons can be drawn from the WAEMU experience, particularly in terms of whether coordination should take the form of harmonization through a top-down approach, or a softer approach of sharing best practice and limiting certain types of tax competition.
    Keywords: Tax policy;West African Economic and Monetary Union;Revenue mobilization;Tax revenues;tax coordination; tax harmonization; tax competition.
    Date: 2013–07–09
  17. By: International Monetary Fund. African Dept.
    Keywords: Extended Credit Facility;Monetary policy;Economic growth;Financial management;Debt management;Debt sustainability;Inflation;Financial soundness indicators;Economic reforms;Revenue mobilization;Exchange rate policy;Fiscal policy;Staff Reports;Burundi;
    Date: 2013–03–11
  18. By: Jean Dubé (Université du Québec à Rimouski); Diègo Legros (LEG/AMIE - CNRS FRE 3496 - Université de Bourgogne)
    Abstract: (VF)L'article s'attache à présenter la particularité des données spatiales empilées et montre pourquoi il peut être contre-indiqué d'utiliser les approches spatiales développées pour les données en coupe transversale empilées dans le temps. La dimension temps implique des relations unidirectionnelles, par opposition aux relations multidirectionnelles spatiales. La construction d'une matrice de pondérations spatio-temporelles unique, à partir de matrices de pondérations spatiales et temporelles, permet d'utiliser les modèles et les tests développés pour les données spatiales tout en tenant compte des deux dimensions simultanément. Une série d'applications empiriques montre que la non prise en compte de la dimension temporelle dans les analyses a pour conséquence de surévaluer les mesures de la dépendance spatiale en plus de surévaluer les coefficients autorégressifs spatiaux estimés. Finalement, la prise en compte des deux dimensions, spatiales et temporelles, permet de générer de nouvelles variables explicatives dynamiques, comparables à des effets de pairs, qui s'avèrent significatives dans l’explication des prix de vente immobiliers. (VA)This paper presents the characteristics of spatial data pooled over time and show why these data bases cannot be considered as the same way as spatial panel data or strictly spatial data. The temporal dimension implies a unidirectionality of relations, while spatial relations are multidirectional. The construction of spatio-temporal weights matrix, lying on spatial and temporal weights matrices, allow to use usual statistic models and tests developed for spatial analysis while accounting simultaneously for temporal and spatial dimensions. Empirical examples established the impact of neglecting the temporal dimension in spatial analysis and show how such approach overestimate the pattern of spatial dependence as well as overestimate the spatial autoregressive coefficient estimated. Finally, accounting for both dimensions, spatial and temporal, allow to generate additional independent variables, considering dynamic effect, that appear to play a significant role on determination of real estate prices.
    Keywords: (VF)Effets frontières ; Blocs régionaux ; Autocorrélation spatiale ; Afrique Sub-Saharienne. (VA)Border effects; Regional blocs; Spatial Autocorrelation; Sub-Saharan Africa.
    Date: 2013
  19. By: International Monetary Fund. African Dept.
    Keywords: Article IV consultation reports;Political economy;Economic conditions;Fiscal policy;Tax revenues;Revenue mobilization;Fiscal reforms;Banking sector;Economic indicators;Debt sustainability analysis;Staff Reports;Public information notices;Guinea-Bissau;
    Date: 2013–07–03
  20. By: Raballand, Gael; Rajaram, Anand
    Abstract: Starting with the hypothesis that behaviors are the critical (and often overlooked) factor in public sector performance, this paper explores the notion of how behavioral change (and thus institutional change) might be better motivated in the public sector. The basis for this study is"an accidental experiment"resulting from the World Bank's operational engagement in Cameroon. In 2008, World Bank staff successfully concluded preparation on a project to support the Government of Cameroon to improve transparency, efficiency, and accountability of public finance management. The US$15 million project supported a number of ministries to strengthen a broad range of management systems and capacities. Independently and concurrently, other Bank staff initiated a low-profile, technical assistance project to improve performance in Cameroon's Customs, supported by a small trade facilitation grant of approximately US$300,000. One approach appears to have succeeded in initiating change while the other has signally failed. The two projects of different scale, scope and design in the same governance environment offer a very interesting natural experiment (unplanned but accidental for that reason) that allows insights into the nature of institutional change and the role of behavior and incentives and approaches that offer greater prospects for making reform possible. The paper confirms the value of using ideas from behavioral economics, both to design institutional reforms and to critically assess the approach to institutional reform taken by development agencies such as the World Bank.
    Keywords: Environmental Economics&Policies,Cultural Policy,National Governance,E-Business,Public Sector Economics
    Date: 2013–09–01
  21. By: Catia Batista (Faculdade de Economia, Universidade Nova de Lisboa and IZA); Dan Silverman (Arizona State University and NBER); Dean Yang (Department of Economics and Gerald R. Ford School of Public Policy, University of Michigan, NBER, and BREAD)
    Abstract: We investigate the determinants of giving in a lab-in-the-field experiment with large stakes. Study participants in urban Mozambique play dictator games where their counterpart is the closest person to them outside their household. Dictators share more with counterparts when they have the option of giving in kind (in the form of goods), compared to giving that must be in cash. Qualitative post-experiment responses suggest that this effect is driven by a desire to control how recipients use gifted resources. Standard economic determinants such as the rate of return to giving and the size of the endowment also affect giving, but the effects of even large changes in these determinants are significantly smaller than the effect of the in-kind option. Our results support theories of giving where the utility of givers depends on the composition (not just the level) of gift-recipient expenditures, and givers thus seek control over transferred resources.
    Keywords: sharing, altruism, giving, dictator game, inter-household transfers, Mozambique
    JEL: C92 C93 D01 D03 D64 O17
    Date: 2013–09
  22. By: NGUENA, Christian L.
    Abstract: The role of small and medium enterprises (SMEs) in the fight against unemployment and economic activity stimulation is well established. Until today and due to lack of funding, Cameroon suffers of an unsustainable private sector constituted by SMEs at more than 90%; A situation which tends to increase with the advent of financial crisis. The survival of SMEs therefore commands the implementation of an effective funding mechanism, which is the cornerstone of their health and development. With this framework and based on a study we undertaken, this policy brief proposes different actions policy maker can take to solve the problem of funding deficit that suffered Cameroonian SMEs. As resume: • The state should develop and maintain cleansing policy and facilitating SMEs financing mechanisms; • The promoters of SMEs and entrepreneurs should challenge and correct their behavior detrimental to the search for funding; • And finally, the financial institutions should, as the state, facilitating the process of SMEs financing.
    Keywords: SMEs, Financial institution, Investment climate, Financial deficit, Asymmetric information.
    JEL: G21 G28 M2
    Date: 2013–02–28

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