nep-afr New Economics Papers
on Africa
Issue of 2014‒10‒13
eleven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. An Economic Model of the Apartheid State By Anton D. Lowenberg
  2. An Energy Economy Interaction Model for Egypt - Results of alternative Price Reform Policies By Motaz KHORSHID
  3. Are Gap Models Policy Consistent? A Quarterly Prediction Model for Monetary Policy In Nigeria By Fred IKLAGA
  4. Assessing the Benefits of Telecommunications Liberalization to Tunisia By Ari VAN ASSCHE; Denise KONAN
  5. Business Cycles in Oil Exporting Countries: A Declining Role for Oil? By Salman Huseynov; Vugar Ahmadov
  6. Caught between necessity and feasibility By Bedi, A.S.; Pellegrini, L.; Tasciotti, L.
  7. Central African Economic and Monetary Community (CEMAC) - Staff Report; Press Release; and Statement by the Executive Director for the Central African Economic and Monetary Community By International Monetary Fund. African Dept.
  8. Chad: Request for a Three-Year Arrangement Under the Extended Credit Facility-Staff Report; Press Release; and Statement by the Executive Director for Chad By International Monetary Fund. African Dept.
  9. How do countries measure, manage, and monitor fiscal risks generated by public-private partnerships? Chile, Peru, South Africa, Turkey By Aslan, Cigdem; Duarte, David
  10. How Large is Tourism's Impact on the West Africa Economy? An Econometric Investigation By Gbadebo ODULARU
  11. Improving education in two extremely poor regions: triumph and tragedy By Peter Boone

  1. By: Anton D. Lowenberg
    Abstract: Rather than a rigid racial ideology, it is argued that South African apartheid was a pragmatic response of a white oligarchy to changing economic and political constraints. Consequently, the degree to which apartheid principles were applied and enforced by the South African state varied over time. A public choice model is developed to explain apartheid as endogenous policy, the parameters of which are determined by political support-maximizing politicians. The model suggests that the enforcement of apartheid was responsive to changes in such exogenous variables as defence costs, the gold price and the reservation wage of black unskilled labour. Predictions of the model hold implications for the causes of the democratic transition of the 1990s, including the role played by international sanctions.
    Keywords: South Africa, apartheid, public choice
    JEL: N47 O55 P48 D78
    Date: 2014
  2. By: Motaz KHORSHID
  3. By: Fred IKLAGA
  4. By: Ari VAN ASSCHE; Denise KONAN
  5. By: Salman Huseynov; Vugar Ahmadov
    Abstract: In this paper, we investigate business cycle regularities in oil exporting countries. We ask the question whether oil exporting countries are all alike or whether economic fluctuations and the response dynamics of macroeconomic variables are similar. Besides we also test for the possible sources of economic fluctuations and whether the oil is the main culprit behind business cycles in oil exporting countries. In this paper, we use different empirical methodologies to gain insights about the nature of the business cycles in the oil exporting countries. First, we draw on annual data to document stylized facts on economic fluctuations in these economies. Second, we also use principle component analysis and extract principle component of the panel on economic variables of the countries under the study. Third, we invoke to the methodology proposed by Giannone, Lenza and Primiceri (2012) to analyze impulse-response functions of GDP, household consumption, government expenditure, investment and import in 13 oil exporting countries under the study. In this study, we investigate the nature and possible sources of economic fluctuations in oil exporting countries using principle component and impulse-response analysis. The principal component analysis shows that the first two components can be statistically significantly explained by world GDP, but not by oil prices. We further develop our study using impulse-response analysis and find that a global demand shock is as important as oil supply and oil demand shocks in determining the dynamics of macroeconomic variables of interest. Though previous studies in this field underline the importance of institutional factors, we find that rising global political and economic integration can play a critical role in explaining business cycles of these economies. With increasing integration into the world economic system, oil exporting countries have become more susceptible to world business cycles, the sources of economic fluctuations have become more diversified, and consequently, the role of oil has declined over time. These results have crucial policy implications for the role of the fiscal and monetary policy in managing economic fluctuations in these economies.
    Keywords: Oil Exporting Countries (Algeria, Angola, Azerbaijan, Iran, Kazakhstan, Kuwait, Nigeria, Norway, Oman, Russia, Saudi Arabia, United Arab Emirates and Venezuela), Monetary issues, Energy
    Date: 2014–10–01
  6. By: Bedi, A.S.; Pellegrini, L.; Tasciotti, L.
    Abstract: Dependence on biomass, especially wood, to meet domestic energy needs raises several socio-environmental concerns. In contrast, cattle manure, which may be used to generate biogas, is considered a cleaner and cheaper source of energy. Despite the existence of several initiatives to promote biogas, systematic analyses of the effects of such initiatives are limited. This paper provides such an analysis. We use data from rural Rwanda to examine the effects of access to bio digesters on energy-related expenditures and consumption of traditional fuels. We find that participation in Rwanda’s National Domestic Biogas Programme leads to substantial reductions in firewood use and yields large savings. However, a cost-benefit analysis reveals that the attractiveness of participating in the biogas programme is hampered by a long payback period.
    Keywords: Energy policy, renewable energy, biogas, Rwanda
    Date: 2014–07–30
  7. By: International Monetary Fund. African Dept.
    Abstract: Regional growth weakened in 2013 due to a fall in oil production in most countries. GDP growth is expected to pick-up in 2014 due to the recovery of oil production and the continuation of the implementation of public investment plans in most of CEMAC countries. Despite large spending of oil wealth during the last years, poverty, income inequality and unemployment remain high. The business climate is one of the most challenging in Africa. The region’s most pressing challenge is to implement structural reforms to promote sustainable and inclusive growth while adopting macro policies to preserve financial stability, ensure an efficient use of oil revenues and increase resilience to shocks.
    Keywords: Economic growth;Central African Economic and Monetary Community;Economic integration;Fiscal policy;Monetary policy;Financial sector;Bank supervision;Economic indicators;Staff Reports;Press releases;
    Date: 2014–08–26
  8. By: International Monetary Fund. African Dept.
    Abstract: KEY ISSUES Context: Chad is a fragile country with weak institutional capacity that needs to manage volatile and exhaustible oil revenues prudently to tackle its large development needs. Chad is enjoying a period of domestic political stability, but major regional security issues are imposing significant fiscal costs in both the short and medium term. Macroeconomic policy over the last few years has achieved a gradual tightening of the underlying fiscal policy stance together with a sizable increase in public investment. Satisfactory performance under an SMP in 2013 demonstrated the authorities’ commitment to improved macroeconomic management and has set the ground for an upper credit tranche arrangement with the Fund. Policy Framework: The government’s medium-term economic program, anchored by the 2013-2015 National Development Plan (NDP), aims at reinforcing economic growth and making it more inclusive, while maintaining macroeconomic stability and fiscal sustainability. Given the continued heavy dependence on volatile oil revenues that are projected to decline over the long-term and the currently high risk of debt distress, macroeconomic policies target a sustained fiscal adjustment, a buildup of liquidity buffers, and economic diversification. Those objectives will be underpinned by a reform agenda focused on strengthening public financial and debt management and improving the business environment. Request for an Extended Credit Facility arrangement: In the attached letter of intent, the authorities request a three-year arrangement under the Extended Credit Facility (ECF) in the amount of SDR 79.92 million (120 percent of quota) in support of their medium-term economic program. The ECF arrangement is expected to address the country’s protracted balance of payments’ problems resulting from a trend reduction in oil revenues, maintain adequate international reserves’ coverage, and play a catalytic role for bilateral and multilateral assistance to Chad. The accompanying memorandum of economic and financial policies spells out in more detail the objectives of the program and policy actions that the government of Chad envisages to undertake during 2014–17.
    Date: 2014–09–16
  9. By: Aslan, Cigdem; Duarte, David
    Abstract: The topic of managing fiscal risks arising from public-private partnerships is receiving increased attention as more governments turn toward this type of financing for large infrastructure projects. Governments can manage balance sheet exposure to public-private partnerships by quantifying and capturing direct obligations and provisions for potential calls on government guarantees associated with public-private partnership projects in the preparation of the medium term fiscal framework and annual budget. This working paper examines how four countries with active public-private partnership projects manage the costs and risks of financial obligations generated by these investments throughout the lifetime of the contracts. The paper seeks to complement the existing literature with a practitioner's point of view while exploring if and how these countries monitor and evaluate the fiscal risks generated by the portfolio of public-private partnerships (as well as individual projects). The countries covered are Chile, Peru, South Africa, and Turkey, all of which have experience implementing public-private partnership projects. The research finds that countries have tailored fiscal risk management and monitoring frameworks to fit their circumstances and respective budgeting, accounting, and reporting practices. All four countries assess the overall or partial credit exposure to monitor and manage their fiscal commitments from public-private partnerships in a consolidated way. All countries have developed evaluation models to help assess fiscal risks and assess project and portfolio level credit exposure. Further scrutiny could be focused on budgeting and accounting practices, which could be strengthened and brought in line with international standards. Similarly, sharing and standardizing information would improve transparency and accountability.
    Keywords: Debt Markets,Bankruptcy and Resolution of Financial Distress,Public Sector Economics,Access to Finance,Insurance&Risk Mitigation
    Date: 2014–09–01
  10. By: Gbadebo ODULARU
  11. By: Peter Boone
    Abstract: For the past few years, CEP research associate Peter Boone and his colleagues at Effective Intervention have been running primary school education projects in the rural villages of Andhra Pradesh and Guinea-Bissau. Their initial survey of literacy and numeracy in Guinea-Bissau showed that very few children were learning anything anywhere - and their efforts to change that have to date encountered insurmountable obstacles. In contrast, children in Indian villages benefitting from the two years of extra education that the project provides have scored significantly higher on tests.
    Keywords: India, West Africa, education
    Date: 2014–10

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