nep-afr New Economics Papers
on Africa
Issue of 2014‒08‒28
eleven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Picks and ploughs: revitalising local economic development in rural sub-Saharan Africa By Hilson, Gavin
  2. KEYNOTE ADDRESS: The roles of agriculture and mining in pro-poor sustainable development in Africa By Mogae, Festus G.
  3. The geographic spillover of armed conflict in sub-Saharan Africa By Fabrizio Carmigani; Parvinder Kler
  4. A Test of the Unraveling Hypothesis: Constitutional Bargaining and the Quality of African Institutions By Congleton, Roger D.; Yoo, Dongwoo
  5. Loan Refusal, Household Income and Savings in Ghana By Koomson, Isaac; Annim, Samuel Kobina; Peprah, James Atta
  6. A Note on the (continued) Ability of the Yield Curve to Forecast Economic Downturns in South Africa By Ferdi Botha & Gavin Keeton
  7. How Wealthy is Mozambique after the Discovery of Coal and Gas? Measuring Wealth in Mozambique Using the Wealth Accounting Framework By Enrique Blanco Armas; Peter Fisker; Esther Naikal
  8. More than Just Words : How the Africa Round Table is Enabling Meaningful Reforms across Africa By Mahesh Uttamchandani; Antonia Menezes
  9. Financial Sector Policy Note : Financing Small and Medium-Sized Businesses in Burkina Faso By Sidiki Soubeiga; Jeremy Strauss
  10. Mobile phone coverage and producer markets : evidence from West Africa By Aker, Jenny C.; Fafchamps, Marcel
  11. The EU Raw Materials Initiative and effects upon resource-based development: Lessons from Africa By Küblböck, Karin

  1. By: Hilson, Gavin
    Abstract: For decades, the rural development and poverty alleviation agenda in sub-Saharan Africa has emphasised support for smallholder farming and little else. Foreign large-scale miners and other industrial operators have complied, establishing agriculture-support services and programs for communities located near their activities. However, these interventions have yielded mixed results, largely because millions of rural African families have, over the course of the past two decades, diversified their income portfolios away from agriculture. One of the more popular destinations has been artisanal and small-scale mining (ASM) — low-tech, labour intensive mineral extraction and processing. This is a rapidly-growing informal sector of industry that provides a range of job opportunities; it has played an important role in nourishing debilitated smallholder farming activities, economically, over the past decade. In this era of globalisation, subsistence farming and rural nonfarm activities such as ASM have taken on very different roles: the latter have become, in most cases, a principal source of income, including in many rural sections of sub-Saharan Africa; increasingly, the former has taken on more of a food security role for the rural household. This paper proposes measures for supporting and formalising ASM in rural sub-Saharan Africa.
    Keywords: Community/Rural/Urban Development, Food Security and Poverty, International Development,
    Date: 2013
  2. By: Mogae, Festus G.
    Abstract: Africa has an abundance of energy and mineral assets and agricultural land. In spite of the variety of outlooks across its numerous countries there is a common understanding that these natural resources need to be used carefully and thoughtfully if there is to be sustainable development across Africa as a whole, especially pro-poor sustainable development. Botswana has poor soils and climate for agricultural production, but it has developed some of its other resources. That development, combined with far-sighted policy, has taken Botswana from being one of the world’s least developed countries in 1966 at independence, to a middle-income economy now. Agriculture makes a small contribution to economic growth, while mining, manufacturing, construction, trade and hotels contribute much more. Botswana currently has mines for diamonds, copper, nickel, coal, gold and various industrial minerals used in the construction industry. Its mineral policies enable many international companies to prospect for and mine these minerals. Competitive mining laws, low sovereign and social risks, relatively good infrastructure and easy access to land, security of tenure, and low levels of corruption, are among reasons for Botswana having a favourable reputation with international investors. Still, the country’s climate and soils make agriculture challenging, and Botswana focuses on food security rather than food self-sufficiency. It remains heavily dependent on mineral revenue.
    Keywords: Agricultural and Food Policy, International Development,
    Date: 2013
  3. By: Fabrizio Carmigani; Parvinder Kler
    JEL: D74 C23 N47
    Date: 2014–02
  4. By: Congleton, Roger D.; Yoo, Dongwoo
    Abstract: This paper focuses on the source of path dependency in institutions. Within a bargaining theory of reform, the domain of bargaining and number of bargains reached determine the path of institutional change. The French and British governments negotiated with their various African independence movements during the 1950s, and produced a relatively large number of relatively liberal independence constitutions. After independence, a series of political and military shocks created natural moments for constitutional reform that unraveled the relatively high-quality political and legal institutions agreed to in the years leading to ndependence, although some unraveled more than others. The African countries that began with the narrowest domain of constitutional bargaining and experienced the fewest political shocks generally have better contemporary institutions than states that began with less restrictive constitutional rules and experienced more constitutional moments.
    Keywords: Decolonization, Independence, Constitutional Negotiations, Constitutional Bargaining, Post-Colonial Reform, Eminent Domain, Takings, Institutions, Africa
    JEL: O43 O55 K11 N47
    Date: 2014–08
  5. By: Koomson, Isaac; Annim, Samuel Kobina; Peprah, James Atta
    Abstract: Loan refusal has been a problem facing many loan applicants at the household level and this problem is not new to loan applicants in Ghana. Despite this knowledge, researchers passively discuss loan refusal and do not consider the intensity of this problem. This study analyses the effect of household income and savings on loan refusal and the intensity of loan refusal in Ghana using the fifth round of the Ghana Living Standards Survey (GLSS-5). The study employs the direct elicitation approach to identifying credit constrained (loan refused) households and makes use of the Logit and Poisson regression to regress the loan refusal variable on other covariates. The Logit model is applied to loan refusal as a binary variable (refused and not refused) while the Poisson is applied to loan refusal as a count variable (number of times of loan refusal). The econometric analysis of 1,600 and 1,591 households for the loan refusal and intensity of loan refusal respectively shows that income and savings inversely relate to loan refusal and the intensity of loan refusal at their respective significance levels. It is also shown that low-income and low-savings households are more likely to be discouraged from loan applications than their counterparts in high-income and savings households. Financial institutions are called upon to generally widen their coverage and to extend their activities more into the rural areas so as to increase the stock of loanable funds available to rural dwellers. This will reduce the vulnerability of rural dwellers when it comes to loan refusal.
    Keywords: Loan Refusal, Credit Rationing, Discouraged Borrowers, Income, Savings
    JEL: D1 D14 D82 G21 O16
    Date: 2014–08–20
  6. By: Ferdi Botha & Gavin Keeton
    Abstract: In 2002/03 the yield spread falsely signalled a downswing that never materialised. This paper provides two reasons for this false signal. Firstly, while the Reserve Bank never actually officially declared the start of a downswing, by other important measures a downswing did actually occur. It is to this slowing in economic activity at that time that the yield curve pointed. Secondly, short-term interest rates in 2003 were higher than they should have been because of a mistake made in measuring consumer price inflation. Because South Africa had recently introduced an inflation targeting regime, policy interest rates were as a result of this error kept too high for too long. This policy mistake was rectified as soon as the error in the Consumer Price Index was discovered. Thus, the yield curve in 2002/03 pointed to the reality that short-term interest rates were too high and risked pushing the economy into recession. This is demonstrated by the fact that it was a fall in long bond interest rates that cause the yield spread to turn negative, indicating expectations that short-term interest rates would need to be cut – as indeed they were.
    Keywords: Yield spread, forecasting, economic downswings, interest rates, South Africa
    JEL: E32 E37 E43
    Date: 2014
  7. By: Enrique Blanco Armas; Peter Fisker; Esther Naikal
    Keywords: Finance and Financial Sector Development - Access to Finance Finance and Financial Sector Development - Debt Markets Economic Theory and Research Public Sector Management and Reform Private Sector Development - Emerging Markets Public Sector Development Macroeconomics and Economic Growth
    Date: 2014–01
  8. By: Mahesh Uttamchandani; Antonia Menezes
    Keywords: Financial Crisis Management and Restructuring Finance and Financial Sector Development - Deposit Insurance Private Sector Development - Emerging Markets Finance and Financial Sector Development - Debt Markets Finance and Financial Sector Development - Bankruptcy and Resolution of Financial Distress
    Date: 2013–10
  9. By: Sidiki Soubeiga; Jeremy Strauss
    Keywords: Finance and Financial Sector Development - Access to Finance Banks and Banking Reform Finance and Financial Sector Development - Bankruptcy and Resolution of Financial Distress Finance and Financial Sector Development - Debt Markets Finance and Financial Sector Development - Financial Literacy
    Date: 2013–11
  10. By: Aker, Jenny C.; Fafchamps, Marcel
    Abstract: Mobile phone coverage has expanded considerably throughout the developing world, particularly within sub-Saharan Africa. Existing evidence suggests that increased access to information technology has improved agricultural market efficiency for consumer markets and certain commodities, but there is less evidence of its impact on producer markets. Building on the work of Aker (2010), this paper estimates the impact of mobile phone coverage on producer price dispersion for three commodities in Niger. The results suggest that mobile phone coverage reduces spatial producer price dispersion by 6 percent for cowpea, a semi-perishable commodity. These effects are strongest for remote markets and during certain periods of the year. The introduction of mobile phone coverage has no effect on producer price dispersion for millet and sorghum, two staple grains that are less perishable and are commonly stored by farmers. There are no impacts of mobile phone coverage on traders'gross margins or producer price levels, but mobile phone coverage is associated witha reduction in the intra-annual price variation for cowpea. These results are potentially explained by the fact that farmers engage in greater storage for storable commodities such as millet and sorghum.
    Keywords: Markets and Market Access,E-Business,Access to Markets,Debt Markets,Emerging Markets
    Date: 2014–07–01
  11. By: Küblböck, Karin
    Abstract: In the context of a global surge in demand for commodities, increasing competition and rising prices, several industrialized countries including the European Union have adopted strategies to secure access to raw materials. At the same time, in resource-rich developing countries the debate has intensified about too little benefits from their mineral wealth and about a necessary greater contribution of the mining sector to economic transformation. Through Article 208 of the Lisbon Treaty the EU has a legal obligation to consider the interests of developing countries in all its policies. The question therefore arises if the policies outlined and implemented in the EU Raw Materials Initiative (RMI) live up to this obligation. This Policy Note first outlines the content and implementation of the EU RMI and second assesses its possible effects on policy space in African countries that aim to pursue resource-based development strategies. --
    Date: 2013

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