nep-afr New Economics Papers
on Africa
Issue of 2014‒06‒28
nineteen papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. Adoption and Impact of Improved Cow Breeds on Household Welfare and Child Nutrition Outcomes: Empirical Evidence from Uganda By Kabunga, Nassul
  2. Does crop diversity contribute to dietary diversity? Evidence from integration of vegetables into maize based farming systems in Tanzania By Rajendran, Srinivasulu; Afari-Sefa, Victor; Bekunda, Mateete; Dominick, Inviolate; Lukumay, Philipo Joseph
  3. Mobile banking and mobile phone penetration: which is more pro-poor in Africa? By Asongu, Simplice
  4. Fresh Patterns of Liberalization, Bank Return and Return Uncertainty in Africa By Asongu, Simplice
  5. On foreign aid distortions to governance By Asongu, Simplice
  6. Agricultural Commodity Price Shocks and their Effect on Growth in Sub-Saharan Africa By Addison, Tony; Ghoshray, Atanu
  7. A note on the long-run neutrality of monetary policy: new empirics By Asongu, Simplice
  8. On the substitution of institutions and finance in investment By Asongu, Simplice
  9. Modelling the Impact of Market Imperfections on Farm Household Investment in Stand-Alone Solar PV. By Abdul-Salam, Yakubu; Phimister, Euan
  10. Determinants of Health Professionals’ Migration in Africa: a WHO based Assessment By Asongu, Simplice
  11. 50 years of urbanization in Africa : examining the role of climate change By Henderson, J. Vernon; Storeygard, Adam; Deichmann, Uwe
  12. Working Paper 203 - Immigrants, Skills and Wages in the Gambian Labor Market By Ousman Gajigo; Audrey Verdier‐Chouchane
  13. Climate Change, farm level adaption measures and Impacts on Crop productivity and market participation: Implications for sustainable synergy between African and European Agriculture By Olarinde, Luke O.; Adepoju, Adebusola A.; Jabaru, Muritala O.
  14. New financial development indicators: with a critical contribution to inequality empirics By Asongu, Simplice
  15. Willingness to pay for Drought Tolerance (DT) in Maize in Communal Areas of Zimbabwe By Kassie, Girma T.; Abdulai, Awudu; MacRobert, John; Abate, Tsedeke; Shiferaw, Bekele; Tarekegne, Amsal; Maleni, Debrah
  16. Determinants of Change and Household Responses to Food Insecurity: Empirical Evidence from Nigeria By Edeh, Hyacinth Onuorah; Gyimah-Brempong, Kwabena
  17. Impact of cocoa agroforests on yield and household income: Evidence from Ghana By Owusu, Victor; Frimpong, Frederick Kwabena
  18. Building farmers’ capacity for innovation generation: what are the determining factors? By Tambo, Justice A.; Wünscher, Tobias
  19. Does Off-farm Income Alleviate Poverty and Income Inequality? Evidence from Rural Nigeria. By Ibrahim, M.K.; Srinivasan, C.S.

  1. By: Kabunga, Nassul
    Abstract: There is increasing evidence that improved agricultural technologies benefit smallholder farmers in sub-Saharan Africa. This evidence is however relatively clearer for innovations in smallholder crop production systems as compared to innovations in livestock production systems. Moreover, it is unclear whether the benefits of technology adoption in livestock systems are uniform across small and relatively large farmers. This study uses a national representative sample of 906 households to rigorously assess the impact of adoption of improved dairy cow breeds on enterprise-, household-, and individual child-level nutrition outcomes in Uganda. We find that adopting improved dairy cows significantly increases milk yield, household’s orientation to milk markets, and food expenditure. Consequently, adoption substantially reduces household poverty and stunting for children younger than age five. Considering heterogeneity, we find that adopting households with small farms increase milk yield, food expenditure and reduce poverty substantially while large farms increase not only ownmilk consumption and commercialization but also nutrition outcomes of children younger than age five.
    Keywords: improved dairy cows, milk productivity, child nutrition outcomes, poverty, propensity score matching, sub-Saharan Africa, Uganda, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Relations/Trade, Livestock Production/Industries, Production Economics, D1, I15, O13, O33, Q12, Q18,
    Date: 2014–04
  2. By: Rajendran, Srinivasulu; Afari-Sefa, Victor; Bekunda, Mateete; Dominick, Inviolate; Lukumay, Philipo Joseph
    Abstract: Maize is one of the most important staple foods that is critical to food security and livelihoods of farmers in sub-Saharan Africa. Although maize is important staple crop for ensuring food security, it cannot ensure nutritional security. To provide and ensure an adequate supply and greater variety of nutritional foods within a farm household, cropping patterns and farming systems must be diversified to include micronutrient-rich vegetables and fruit crops, particularly traditional African species. Vegetables provide nutritional benefits and increase household incomes for smallholders, and are thus an excellent complement to staple crops for addressing food and nutritional security. The objective of this study is to ascertain if an increased diversity of crops in farmers’ fields leads to increased diversified diets or otherwise. This underlying objective is analyzed with a multiple linear regression model from a primary survey of 300 farm households selected from 10 villages in the Babati, Kongwa and Kiteto districts of Tanzania. Results show that farm diversity does not have a positive and significant effect on dietary diversity after controlling for other covariates. However, variables such as households size, level of education, monthly expenditure on food, irrigated area, proportion of vegetables consumed from own household production and control of household income by female decision makers were found to have strong association with dietary diversity.
    Keywords: Farm Diversity, Dietary Diversity, Vegetables, Maize, Agribusiness, Crop Production/Industries, Farm Management, Q10, Q180, I130,
    Date: 2014–04
  3. By: Asongu, Simplice
    Abstract: The contribution of this paper to complement theoretical and qualitative mobile penetration literature with empirical evidence is twofold: firstly, we assess the income-redistributive effect of mobile phone penetration and; secondly, the instrumentality of financial development dynamics in this nexus. Main findings suggest an equalizing income-redistributive effect of ‘mobile phone penetration’ and ‘mobile banking’, with a higher income-equalizing effect in the latter than in the former. Poverty alleviation channels explaining this difference in inequality mitigating propensity are discussed. The empirical evidence is based on 52 African countries and deviates from mainstream country-specific and microeconomic survey-based approaches.
    Keywords: Banking; Mobile Phones; Shadow Economy; Financial Development; Africa
    JEL: E00 G20 L96 O17 O33
    Date: 2013–09–15
  4. By: Asongu, Simplice
    Abstract: This chapter complements exiting African liberalization literature by providing fresh patterns of two main areas. First, it assesses whether African banking institutions have benefited from liberalization policies in terms of bank returns. Second, it models bank return and return uncertainty in the context of openness policies to examine fresh patterns for the feasibility of common policy initiatives. The empirical evidence is based on 28 African countries for the period 1999-2010. Varying non-overlapping intervals and autoregressive orders are employed for robustness purposes. The findings show that, while trade openness has increased bank returns and return uncertainties, financial openness and institutional liberalization have decreased bank returns and reduced return uncertainty respectively. But for some scanty evidence of convergence in return on equity, there is overwhelming absence of catch-up among sampled countries. Implications for regional integration and portfolio diversification are discussed.
    Keywords: Liberalization policies; Capital return; Africa
    JEL: D6 F30 F41 F50 O55
    Date: 2014–01–04
  5. By: Asongu, Simplice
    Abstract: The Kangoye (2013, TDE) findings on the negative nexus between foreign aid unpredictability and governance could seriously affect debates in academic and policy making circles. Using the theoretical underpinnings of the celebrated Eubank (2012, JDS) literature, we first confirm Kangoye’s findings. Then extend the concept of governance from corruption to political, economic, institutional and general versions of the phenomenon. Findings from the extension run counter to those of Kangoye. It follows that in the presence of foreign aid uncertainty, governments could be constrained to improve governance standards in exchange for or anticipation of more dependence on local tax revenues. The empirical evidence is based on 53 African countries for the period 1996-2010. Two direct policy implications result. First, the Kangoye findings for developing countries are relevant for Africa. Second, when the concept of governance is not restricted to corruption, the findings become irrelevant for the continent.
    Keywords: Uncertainty; Foreign aid; Governance; Development; Africa
    JEL: C53 F35 F47 O11 O55
    Date: 2014–01–04
  6. By: Addison, Tony; Ghoshray, Atanu
    Abstract: Commodity price shocks are an important type of external shock and are often cited as a problem for economic growth in Sub-Saharan Africa. This paper quantifies the impact of agricultural commodity price shocks using a near vector autoregressive model. The novel aspect of this model is that we define an auxiliary variable that can potentially capture the definition of a price shock and allows us to determine whether the response of per capita GDP growth in Sub-Saharan Africa to these price shocks is asymmetric. We find that there is evidence of such asymmetric responses to commodity price shocks.
    Keywords: Commodity Prices, External Shocks, Price Shocks, Economic Growth, Demand and Price Analysis, International Relations/Trade, E30, F40, O11,
    Date: 2014–04
  7. By: Asongu, Simplice
    Abstract: Economic theory traditionally suggests that monetary policy can influence the business cycle, but not the long-run potential output. Despite well documented theoretical and empirical consensus on money neutrality in the literature, the role of money as an informational variable for monetary policy decision has remained opened to debate with empirical works providing mixed outcomes. This paper addresses two substantial challenges to this debate: the neglect of developing countries in the literature and the use of new financial dynamic fundamentals that broadly reflect monetary policy. The empirics are based on annual data from 34 African countries for the period 1980 to 2010. Using a battery of tests for integration and long-run equilibrium properties, results offer overall support for the traditional economic theory.
    Keywords: Monetary policy; Credit; Empirics; Africa
    JEL: E51 E52 E58 E59 O55
    Date: 2013–09–15
  8. By: Asongu, Simplice
    Abstract: The Ali (2013, EB) findings on the nexuses among institutions, finance and investment could have an important influence on policy and academic debates. This paper relaxes his hypotheses on the conception, definition and measurement of finance and institutions because they are less realistic to developing countries to which the resulting policy implications are destined. We dissect with great acuteness the contextual underpinnings of financial development dynamics and elucidate why the Acemoglu & Johnson (2005) justification provided for the measurement of property rights institutions (PRI) is lacking in substance. Using updated data (1996-2010) from 53 African countries, we provide more robust evidence on the substitution of institutions and finance in investment. Results under many baseline and augmented scenarios are not consistent with the underlying paper. Justifications for the differences in findings are discussed. As a policy implication, the Ali (2013, EB) findings for countries with poor financial systems may not be relevant for Africa.
    Keywords: Finance; Institutions; Investment: Property Rights; Africa
    JEL: E0 G20 G24 O55 P14
    Date: 2014–01–04
  9. By: Abdul-Salam, Yakubu; Phimister, Euan
    Abstract: In many Sub Saharan Africa countries, access to electricity to electricity is very low in rural areas. For example in Ghana only 27% of rural households have access. However, extending the grid in these countries faces significant technical and financial constraints and many see decentralised systems particularly those using renewable energy as being enormously important. This presupposes the adoption of standalone technologies by a large number of poor farm households who are currently off-grid is likely. However, such households in LDCs typically face a range of market imperfections in credit, product and other markets. This paper explores the potential value of access to electricity for poor agricultural households and the extent to which credit and output market imperfections may inhibit the uptake of stand-alone solar panels using a life cycle farm household simulation model which allows for credit constraints and yield risk.
    Keywords: Agribusiness, Consumer/Household Economics, Research Methods/ Statistical Methods,
    Date: 2014–04
  10. By: Asongu, Simplice
    Abstract: Abstract Purpose – How do economic prosperity, health expenditure, savings, price-stability, demographic change, democracy, corruption-control, press-freedom, government effectiveness, human development, foreign-aid, physical security, trade openness and financial liberalization play-out in the fight against health-worker crisis when existing emigration levels matter? Despite the acute concern of health-worker crisis in Africa owing to emigration, lack of relevant data has made the subject matter empirically void over the last decades. Design/methodology/approach – A quantile regression approach is used to assess the determinants of health-worker emigration throughout the conditional distributions of health-worker emigration. This provides an assessment of the determinants when existing emigrations levels matter. Findings – Findings provide a broad range of tools for the fight against health-worker brain-drain. As a policy implication, blanket emigration-control policies are unlikely to succeed equally across countries with different levels of emigration. Thus to be effective, immigration policies should be contingent on the prevailing levels of the crisis and tailored differently across countries with the best and worst records on fighting health worker emigration. Originality/value – This paper has examined the theoretical postulations of a WHO report on determinants of health-worker migration.
    Keywords: Welfare; Health; Human Capital; Migration; Africa
    JEL: D60 F22 I10 J24 O15
    Date: 2013–09–15
  11. By: Henderson, J. Vernon; Storeygard, Adam; Deichmann, Uwe
    Abstract: This paper documents a significant impact of climate variation on urbanization in Sub-Saharan Africa, primarily in more arid countries. By lowering farm incomes, reduced moisture availability encourages migration to nearby cities, while wetter conditions slow migration. The paper also provides evidence for rural-urban income links. In countries with a larger industrial base, reduced moisture shrinks the agricultural sector and raises total incomes in nearby cities. However, if local cities are entirely dependent on servicing agriculture so their fortunes move with those of agriculture, reduced moisture tends to reduce local urban incomes. Finally, the paper shows that climate induces employment changes within the rural sector itself. Drier conditions induce a shift out of farm activities, especially for women, into non-farm activities, and especially out of the workforce. Overall, these findings imply a strong link between climate and urbanization in Africa.
    Keywords: Science of Climate Change,Climate Change Mitigation and Green House Gases,Population Policies,Climate Change Economics,Water Conservation
    Date: 2014–06–01
  12. By: Ousman Gajigo (African Development Bank); Audrey Verdier‐Chouchane
    Abstract: Using data from the Household Poverty Surveys in 2003 and 2010, this paper analyzes characteristics of immigrants in The Gambian labor market. The analysis indicates that immigrants are relatively young, low-skilled (though with skill levels comparable to Gambians) and mainly come from neighboring West African countries. While immigrants on average earn more than Gambians, this labor market advantage varies significantly depending on workers’ skill level. For instance, unskilled immigrants have a wage advantage but such an advantage does not exist among the skilled immigrants. Given that The Gambia is a country with high skilled emigration rates, these and other findings in this paper have important policy implications.
    Date: 2014–06–25
  13. By: Olarinde, Luke O.; Adepoju, Adebusola A.; Jabaru, Muritala O.
    Abstract: It is widely known that climate change and agriculture are interrelated process, both of which take place on a global scale. In effect, crop and animal farming, fisheries, forestry, with the resultant access to food and fibre in many continents and regions of the world are projected to be severely compromised by climate variability and change. Several strategies aimed at reducing climate variability induced hazards abound. These include cultural and conventional food and farming systems to climate variability and these are aimed at enhancing the adaptive capacity and mitigation. In this study, we are investigating the separate and joint effects/impacts that the use of various climate change adaptation strategies have on crop yields and on the resultant marketed values of crops. We are applying instrumental variables method on a cross-sectional survey data of two states (Osun and Oyo) of south western Nigeria to evaluate these impacts. The findings suggest that the use of climate change adaptation strategies has impacted on expected yield and on marketed crop outcomes. Policy indicative variables suggest that sustainable crop production can be achieved in the face of climate change and this can effectively create a win-win situation from the synergy between African and European agriculture.
    Keywords: Crop Production/Industries, Environmental Economics and Policy, Farm Management, International Relations/Trade,
    Date: 2014–04
  14. By: Asongu, Simplice
    Abstract: The employment of financial development indicators without due consideration to country/regional specific financial development realities remains an issue of substantial policy relevance. Financial depth in the perspective of money supply is not equal to liquid liabilities in every development context. This paper introduces complementary indicators to the existing Financial Development and Structure Database (FDSD). Dynamic panel system GMM estimations are applied. Different specifications, non-overlapping intervals and control variables are used to check the consistency of estimated coefficients. Our results suggest that from an absolute standpoint (GDP base measures), all financial sectors are pro-poor. However, three interesting findings are drawn from measures of sector importance. (1) The expansion of the formal financial sector to the detriment of other financial sectors has a disequalizing income effect. (2) Growth of informal and semi-formal financial sectors at the expense of the formal financial sector has an income equalizing effect. (3) The positive income redistributive effect of semi-formal finance in financial sector competition is higher than the corresponding impact of informal finance. It unites two streams of research by contributing at the same time to the macroeconomic literature on measuring financial development and responding to the growing field of economic development by means of informal financial sector promotion and microfinance. The paper suggests a practicable way to disentangle the effects of the various financial sectors on economic development. The equation of financial depth in the perspective of money supply to liquid liabilities has put on the margin the burgeoning informal financial sector in developing countries. The phenomenon of mobile banking is such an example.
    Keywords: Financial Development; Shadow Economy; Poverty; Inequality; Africa
    JEL: E00 G20 I30 O17 O55
    Date: 2013–09–15
  15. By: Kassie, Girma T.; Abdulai, Awudu; MacRobert, John; Abate, Tsedeke; Shiferaw, Bekele; Tarekegne, Amsal; Maleni, Debrah
    Abstract: This study aimed at estimating the implicit prices farmers are willing to pay (WTP) for maize traits with deliberate focus on drought tolerance. Using choice experiment, we generated 12600 observations from a random sample of 1400 households in communal areas within 14 districts of Zimbabwe. Taste parameters and heterogeneities (scale and residual taste) were estimated using the generalized multinomial logit model (G-MNL) and its different versions. Drought tolerance, grain yield, large grain size, covered cob tip, big cob and semi flint texture were the most preferred traits by rural Zimbabweans. The WTP values were estimated using the WTP space approach. Sample farmers are, for example, willing to pay a premium for drought tolerance that is 1.75 times the amount they are willing to pay for an increase of 1 ton in grain yield per acre, 8.3 times the value they attach for a change from small to big cob size, and 14.7 times the willingness to pay for semi-flint texture over dent texture of maize. The uncertainty that DT might not be appealing to poor farmers as much as some other technologies can only be cleared only if the promotion of DT materials is done in the right manner and to the right farm community. Innovative ways of promoting DT maize vis-à-vis creating awareness in contextual understanding of drought and drought risk shall be employed to enhance adoption of new DT maize varieties by risk prone farming communities. Given the high level of rural literacy and the high rate of adoption of improved maize in Zimbabwe, trait based promotion and marketing of varieties would be the right strategy.
    Keywords: DT maize, choice experiment, WTP space, G-MNL, Zimbabwe, Agribusiness, Crop Production/Industries, Demand and Price Analysis, International Relations/Trade, Research Methods/ Statistical Methods, B41, C25, D03, D12, O13, O33, Q12,
    Date: 2014–04
  16. By: Edeh, Hyacinth Onuorah; Gyimah-Brempong, Kwabena
    Abstract: Limited economic and physical capacities as well as environmental and economic shocks have constrained the ability of many Nigerian households to feed themselves adequately. This has resulted in these households being faced with food shortages; and they have to adopt various consumption-related strategies to mitigate the effect of the shortfalls. Using the 2010/2011 Nigeria LSMS-ISA survey data and the reduced consumption coping strategy index (RCCSI), this paper examines the determinants of change in food (in)security of Nigerian households in the two major farming periods. Results show that there is a significant difference in the food insecurity status of households in the two periods. The likelihood of change in the food security status were determined by sex of the household head, farmland holdings, nature of livelihood, shocks associated with land loss, and climate change events. Coping strategies in the two periods were dietary change strategies and the rationing strategies. However, the frequency of use of these strategies is higher in the post-planting period and more among female-headed households. The use of high-yielding climate-resistant crops and reduction in post-harvest losses through processing and improved storage facilities are advocated.
    Keywords: Food Security, Food Consumption Score, Reduced Consumption Coping Strategy Index, Post-harvest, Post-planting, Consumer/Household Economics, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Research Methods/ Statistical Methods, D120,
    Date: 2014–04
  17. By: Owusu, Victor; Frimpong, Frederick Kwabena
    Abstract: Using a cross-sectional data collected on 400 cocoa farmers from the Ashanti and Western Regions of Ghana, this paper provides empirical evidence on the impacts of cocoa agroforests on yield and household income. The propensity-score matching model was employed. The heterogeneity of high, medium and low shade adopters is statistically addressed. The empirical results generally indicate that adoption of cocoa agroforests has significant positive impacts on yield and household income. The impact on yields for low shade adopters was higher than medium shade and high shade adopters of cocoa agroforests. The paper provides useful policy recommendations based on the empirical magnitudes and directions on sustainable cocoa production and household welfare.
    Keywords: Adoption, Cocoa agroforests, Ghana, Household income, Impact, Yield, Consumer/Household Economics, Environmental Economics and Policy, International Relations/Trade, Production Economics, Q1, Q23,
    Date: 2014–04
  18. By: Tambo, Justice A.; Wünscher, Tobias
    Abstract: Innovation is essential for agricultural and economic development, especially in today’s rapidly changing global environment. While farmers have been recognised as one of the key sources of innovation, many studies on agricultural innovations continue to consider farmers as adopters of externally-driven innovations only. Based on cross-sectional data from 409 farm households, this study, in contrast, analyses the innovation-generating behaviour among rural farmers in northern Ghana. Inspired by two innovation theories – induced innovation and innovation systems – we focus on the determinants of innovation behaviour. Employing recursive bivariate probit and endogenous treatment-regression models which control for selection bias, we find that participation in Farmer Field Fora, a participatory extension approach with elements of the innovation systems perspective, is a key determinant of innovation behaviour in farm households. Other important determinants are education, climate shocks and risk preferences. These results are robust to alternative specifications and estimation techniques. We conclude that policies for the generation of innovations among farmers should focus on education, and on building innovation capacity through institutional arrangements that permit interactions and learning between stakeholders.
    Keywords: Determinants, Farmer Field Fora, farmer innovation, Ghana, induced innovation, innovation systems, Agribusiness, International Development, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty, Q12, Q16,
    Date: 2014–04
  19. By: Ibrahim, M.K.; Srinivasan, C.S.
    Abstract: This study employed Nigeria’s household data from the RIGA database to examine the effect of off-farm income on rural poverty and income distribution. Specifically, the study employs the Foster, Greer and Thorbecke (FGT) poverty measurement indices to examining the effect of off-farm income on rural poverty and Gini decomposition techniques for the effect of off-farm income on rural income distribution. Our findings suggest that offfarm income as a part of total household income significantly contributed towards reducing the incidence, depth and severity of poverty as evident in the outcomes of the poverty measures for the wage and self employment activities. Same cannot be said for rural income inequality, as off-farm income on aggregate level is observed to increase rural income inequality. Results of the decomposition by income sources revealed that with the exception of self-employment income, other off-farm incomes have unequalising effect on income distribution, an outcome attributed to entry barriers which prevents poor households from undertaken the lucrative kind of off-farm work. Programmes of government and nongovernmental organisations aimed at growth and development of the off-farm sector needs to have an aspect well targeted at the poor rural households to assist them in removing the entry barriers, placing them in a better position to maximise the opportunities in the off-farm sector.
    Keywords: Off-farm, Rural Poverty, Income Distribution, Community/Rural/Urban Development, Food Security and Poverty, International Development,
    Date: 2014–04

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