nep-afr New Economics Papers
on Africa
Issue of 2014‒11‒12
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Bound estimator of HIV prevalence: Application to Malawi By Tomoki Fujii; Denis H.Y. Leung
  2. Democratic Republic of the Congo: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for the Democratic Republic of the Congo By International Monetary Fund. African Dept.
  3. Impact of import liberalisation on poverty: a dynamic computable general equilibrium and microsimulation analysis for Ghana By Obeng, Camara Kwasi
  4. Management of the International Development Aid System Aid System and the Creation of Political Space for China:The Case of Tanzania By Furukawa, Mitsuaki
  5. Monetary Policy Shocks from the EU and US: Implications for Sub-Saharan Africa By Kronick, Jeremy

  1. By: Tomoki Fujii (School of Economics, Singapore Management University, Singapore, 178903); Denis H.Y. Leung (School of Economics, Singapore Management University, Singapore, 178903)
    Abstract: Objective: To find lower and upper bounds of HIV prevalence in Malawi under mild and intuitive assumptions to assess the importance of the refusal issue in the estimation of HIV prevalence. Methods: We derive bounds based on the following two key assumptions: (i) Among those who have never taken an HIV test before, those who refuse to take an HIV test (hereafter “refusers”) have at least as much risk to be HIV positive as those who participate in the HIV test, and (ii) among the refusers, those who have a prior testing experience are at least as likely to be HIV positive as those who have no prior experience. We compute the bounds using the Malawi Demographic and Health Survey and a longitudinal data set with a HIV testing component collected in the Malawi Diffusion and Ideational Change Project disaggregated by the sex, urban/rural areas, and three regions of Malawi. Findings: The bounds of HIV prevalence vary substantially across geographic and demographic groups. In particular, the bounds for males are tighter than those for females and the bounds for the Northern region are also tighter than those for other regions. There is no substantial difference in the width of bounds between the rural and urban populations. Conclusion: Bounds are useful for assessing the influence of refusal bias without the need for strong assumptions. Refusal issue is less of a concern if bounds are tight. However, when bounds are wide, refusal issue may be important.
    Keywords: Bias; Demographic and Health Surveys; Malawi; Missing data; Non-response; Refusals; Surveys
    Date: 2014–10
  2. By: International Monetary Fund. African Dept.
    Abstract: KEY ISSUES Context and outlook: Despite strong macroeconomic performance under the Fund- supported program (2009–12) with economic activity steadily accelerating and inflation declining sharply, poverty remains pervasive and the economy vulnerable, exposing this progress to reversal. Limited fiscal space and shocks to revenues often offset by expenditure adjustments have not supported pro-poor and critical investment spending necessary for inclusive growth, giving rise to mounting social demands to share in the benefits of the accelerating growth. Focus of consultation: The discussions focused on medium-term policy measures to preserve macroeconomic stability while promoting inclusive growth, improve transparency and good governance in the natural resources sector; and foster financial stability and development. Key policy recommendations: • Maintain the fiscal anchor of no (net) central bank financing of the budget while creating fiscal space through enhanced domestic revenue mobilization, and improving the quality of public spending through public financial management (PFM) reforms, and building more robust buffers against external shocks. • Implement measures included in the updated governance matrix agreed with the World Bank and the recommendations of the Extractive Industries Transparency Initiative (EITI) and the National Conference on Mineral Resources Management (NCMRM) to enhance transparency and good governance in the management of natural resources. • Accelerate reforms of the Central Bank of the Congo (BCC) and the financial sector by (i) passing the central bank law to strengthen its independence and governance, (ii) completing its recapitalization, and (iii) strengthening its analytical capacity, (iv) disengaging from non-core activities, and (v) implement FSAP recommendations to promote financial sector stability and development.
    Keywords: Article IV consultation reports;Economic growth;Mining sector;Fiscal policy;Natural resources;Fiscal transparency;Fiscal reforms;Financial stability;Banking sector;Economic indicators;Debt sustainability analysis;Staff Reports;Press releases;Democratic Republic of the Congo;
    Date: 2014–09–30
  3. By: Obeng, Camara Kwasi
    Abstract: Incidence of poverty for Ghana has reduced from about 52% in 1991/92 to 28.5% in 2005/06. This is a remarkable drop in the incidence of poverty, but the current level is still high. Equally high are the levels of the depth and severity of poverty. This means that any policy pursued by the country must aim at further reducing the incidence, depth and severity of poverty. A number of policies and programmes have been implemented to reduce extreme in Ghana. On such policy, liberalisation of import trade has been implemented extensively in the country even though its long run contribution to poverty reduction is not clear in the trade literature. Therefore, this study examined the long run impact of import liberalization on the incidence, depth and severity of poverty at the national and household levels. The investigation was carried out using a recursive dynamic computable general equilibrium and a microsimulation model calibrated to the 2005 Social Accounting Matrix (SAM) of Ghana. In spite of the strong criticism against import liberalisation as being anti-growth and poverty enhancing, the results showed that the net effect of import liberalisation leads to reduction in the incidence, depth and severity of poverty at the national and household levels in the long run. However, the benefits of import liberalisation accrue more to urban households than rural households. This finding is due to the fact that urban households, generally, are net consumers of imported goods and services than rural households. In addition, the urban areas have the necessary economic infrastructure and so are economically vibrant, thereby offering huge opportunities for people to participate in international trading activities. The study recommends that import liberalisation must continue to be part of the poverty alleviation strategy of government for Ghana Post 2015 and that government focuses poverty alleviation policies more in the rural areas.
    Keywords: Import Liberalization, Tariff Revenue, Poverty, SAM, CGE, Microsimulation, Ghana
    JEL: F1 F13 F14 O5
    Date: 2014–08–29
  4. By: Furukawa, Mitsuaki
    Abstract: This paper attempts to assess government behaviors around aid and other development resources in Tanzania where the Poverty Reduction Regime is most advanced, through a deeper analysis of what kind of development aid structures DAC donors and the Tanzanian government have constructed and how the Tanzanian government is taking in development resources not only from DAC donors but also from China through government organizational restructuring. This paper found out that the development aid structure built with precision under poverty reduction regime in Tanzania on the contrary to DAC donors’ intention has led to the Tanzania own initiative for National development plan and created the political space for aid and development finance from China. Furthermore, this paper pointed out that, on the process to creating the international development assistance system, the Tanzanian government has learned to manage aid and been skillfully building beneficiary systems for development not only from DAC donors, but also from China.
    Keywords: poverty reduction regime , China , aid effectiveness , DAC donor
    Date: 2014–10–21
  5. By: Kronick, Jeremy
    Abstract: This paper addresses the debate in the literature on how developing countries are affected by foreign monetary policy shocks. I analyze how contractionary monetary policy shocks originating in different regions, specifically the Euro Area (“EUâ€) and United States (“USâ€), affect a set of rarely investigated sub-Saharan African (“SSAâ€) countries. Foreign monetary policy shocks are identified using changes in central bank futures rates, and are inserted into a domestic structural vector autoregression (“SVARâ€). Results differ depending on which of the EU or US shocks monetary policy and whether or not the recipient SSA country has a floating or fixed exchange rate regime. Specifically, floating exchange rate countries have a mostly negative GDP response following either shock due to a reliance on capital flows and external debt, and the implications these have for domestic interest rate responses. Fixed exchange rate countries have mixed GDP responses following the EU shock, as both trade and the effect of capital control usage on interest rates play an important role, while US shocks produce positive GDP responses as aid from the US dominates both trade and interest rates. The implications of these results for floating exchange rate countries is that diversification of foreign external debt and a reduction in reliance on international capital may be beneficial. For fixed exchange rate countries the implication is that capital controls can be a positive tool in the development process.
    Keywords: Monetary policy, international transmission of shocks, economic growth, sub-Saharan Africa
    JEL: E5 E6 F4 O1 O5
    Date: 2014–10–21

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