nep-afr New Economics Papers
on Africa
Issue of 2015‒01‒03
fifteen papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Aid, political business cycles and growth in Africa By Chiripanhura, Blessing M.; Nino-Zarazua, Miguel
  2. An integrated approach to modelling energy policy in South Africa: Evaluating carbon taxes and electricity import restrictions By Arndt, Channing; Davies, Rob; Gabriel, Sherwin; Makrelov, Konstantin; Merven, Bruno
  3. Poverty and ethnicity among black South Africans By Gradin, Carlos
  4. Assessing the inclusiveness of growth in Africa: Evidence from Cameroon, Senegal, and Tanzania By Houngbonon, Georges Vivien; Bauer, Arthur; Ndiaye, Abdoulaye; Champagne, Clara; Yokossi, Tite
  5. Economic Integration in Africa – Overview, Progress and Challenges By Marinov, Eduard
  6. On Forecasting Conflict in Sudan: 2009-2012 By Bessler, David; Kibriya, Shahriar; Chen, Junyi; Price, Ed
  7. Rethinking the politics of development in Africa? How the 'political settlement' shapes resource allocation in Ghana By Abdul-Gafaru Abdulai; Sam Hickey
  8. The questionable economics of development assistance in Africa: hot-fresh evidence, 1996-2010 By Asongu Simplice
  9. Middle class in Africa: Determinants and Consequences By Oasis Kodila-Tedika; Simplice Asongu; Julio Mukendi Kayembe
  10. Seasonal Credit Constraints and Agricultural Labor Supply: Evidence from Zambia By Fink, Günther; Jack, Kelsey; Masiye, Felix
  11. From Europe to Africa: Return migration to Senegal and the DRC By Marie-Laurence Flahaux; Cris Beauchemin; Bruno Schoumaker
  12. Saving for a (not so) Rainy Day: A Randomized Evaluation of Savings Groups in Mali By Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram
  13. Estimating the impact of microcredit on those who take it up: Evidence from a randomized experiment in Morocco By Crépon, Bruno; Devoto, Florencia; Duflo, Esther; Parienté, William
  14. Knowledge Economy Gaps, Policy Syndromes and Catch-up Strategies: Fresh South Korean Lessons to Africa By Simplice Anutechia Asongu
  15. Monetary Integration in SADC: Assessment of Policy Coordination and Real Effective Exchange Rate Stability By Mulatu F. Zehirun; Marthinus C. Breitenbach; Francis Kemegue

  1. By: Chiripanhura, Blessing M.; Nino-Zarazua, Miguel
    Abstract: This paper develops a model of opportunistic behaviour in which an incumbent government resort to expansionary fiscal and/or monetary stimuli to foster economic growth and thus, maximize the probability of re-election. Using a panel dataset of 51 African
    Keywords: aid, growth, institutional quality, political business cycles, Africa
    Date: 2014
  2. By: Arndt, Channing; Davies, Rob; Gabriel, Sherwin; Makrelov, Konstantin; Merven, Bruno
    Abstract: We link a bottom-up energy sector model to a recursive dynamic computable general equilibrium model of South Africa in order to examine two of the country.s main energy policy considerations: (i) the introduction of a carbon tax and (ii) liberalization of
    Keywords: integrated bottom-up model, the integrated MARKAL-EFOM system, computable general equilibrium, carbon tax, South Africa
    Date: 2014
  3. By: Gradin, Carlos
    Abstract: This paper investigates inequalities across the major black ethnic groups in South Africa, accounting for 80 per cent of the country.s population. We demonstrate that there is an important ethnic gap in the poverty levels of the Xhosa and the Zulu with re
    Keywords: poverty, ethnicity, South Africa, Xhosa, Zulu, Sotho/Tswana
    Date: 2014
  4. By: Houngbonon, Georges Vivien; Bauer, Arthur; Ndiaye, Abdoulaye; Champagne, Clara; Yokossi, Tite
    Abstract: In this study, we assess the inclusiveness of growth by tracking the yearly percentage change in the household consumption of individuals over different growth spells in Cameroon, Senegal, and Tanzania. With cross-sectional data, we track the consumption
    Keywords: inclusive growth, Africa, poverty, inequality
    Date: 2014
  5. By: Marinov, Eduard
    Abstract: State and government leaders of the African Union adopt and implement efforts for regional integration as a common strategy for the development of the continent. The objective at continental level is the establishment of the African Economic Community as the last of six consecutive stages, including the strengthening of inter-sectorial cooperation and the establishment of regional free trade areas, monetary union, common market, monetary and economic union, covering the entire continent. Currently there are 16 Regional economic communities in Africa and 8 of them are officially recognized as the foundation for the development of the African economic community. Reviewed are their goals, their main achievements and issues. The study analyses the progress made in the integration process as well as the challenges it faces.
    Keywords: Economic integration, Regional economic communities, African economy
    JEL: F15 F54 F55 N77
    Date: 2014
  6. By: Bessler, David; Kibriya, Shahriar; Chen, Junyi; Price, Ed
    Abstract: The paper considers univariate and multivariate models to forecast monthly conflict events in the Sudan over the out-of-sample period 2009 – 2012. The models used to generate these forecasts were based on a specification from a machine learning algorithm fit to 2000 – 2008 monthly data. The idea here is that for policy purposes we need models that can forecast conflict events before they occur. The model that includes previous month’s wheat price performs better than a similar model which does not include past wheat prices (the univariate model). Both models did not perform well in forecasting conflict in a neighborhood of the 2012 “Heglig Crisis”. Such a result is generic, as “outlier or unusual events” are hard for models and policy experts to forecast.
    Keywords: Machine learning algorithm; Commodity prices
    JEL: C53 C54 O1
    Date: 2014–08
  7. By: Abdul-Gafaru Abdulai; Sam Hickey
    Abstract: Debates over whether democratic or neopatrimonial forms of politics are driving the politics of development in Africa have increasingly given way to more nuanced readings which seek to capture the dynamic interplay of these forms of politics. However, most current analyses fail to identify the specific causal mechanisms through which this politics shapes the actual distribution of resources. A political settlements approach which emphasises the distribution of 'holding power' within ruling coalitions and how this shapes institutional functioning can bring greater clarity to these debates. Our analysis shows that patterns of resource allocation within Ghana's education sector during 1993-2008 were closely shaped by the incentives and norms generated by Ghana's competitive 'clientelistic political settlement', which overrode rhetorical concerns with national unity and inclusive development. This had particularly negative implications for the poorest Northern regions, which have lacked holding power within successive ruling coalitions.
    Date: 2014
  8. By: Asongu Simplice (Yaoundé/Cameroun)
    Abstract: This paper assesses the aid-development nexus in 52 African countries using updated data (1996-2010) and a new indicator of human development (adjusted for inequality). The effects of Total Net Official Development Assistance (NODA), NODA from the Development Assistance Committee (DAC) and NODA from Multilateral donors on economic prosperity (at national and per capita levels) are also examined. The findings broadly indicate that development assistance is detrimental to GDP growth, GDP per capita growth and inequality adjusted human development. The magnitude of negativity (which is consistent across specifications and development dynamics) is highest for NODA from Multilateral donors, followed by NODA from DAC countries. Given concerns on the achievement of the MDGs, the relevance of these results point to the deficiency of foreign aid as a sustainable cure to poverty in Africa. Though the stated intents or purposes of aid are socio-economic, the actual impact from the findings negates this. It is a momentous epoque to solve the second tragedy of foreign aid; it is high time economists and policy makers start rethinking the models and theories on which foreign aid is based. In the meantime, it is up to people who care about the poor to hold aid agencies accountable for piecemeal results. Policy implications and caveats are discussed.
    Keywords: Foreign Aid; Political Economy; Development; Africa
    JEL: B20 F35 F50 O10 O55
    Date: 2014–08
  9. By: Oasis Kodila-Tedika (Université de Kinshasa Département d’Eco); Simplice Asongu (Yaoundé/Cameroun); Julio Mukendi Kayembe (Economiste, Rawbank)
    Abstract: This study complements the inclusive growth literature by examining the determinants and consequences of the middle class in a continent where economic growth has been relatively high. The empirical evidence is based on a sample of 33 African countries for a 2010 cross-sectional study. OLS, 2SLS, 3SLS and SUR estimation techniques are employed to regress a plethora of middle class indicators, notably, the: floating, middle-class with floating, middle-class without floating, lower-middle-income and upper-middle-income categories. Results can be classified into two main strands. First, results on determinants broadly show that GDP per capita and education positively affect all middle class dependent variables. However, we have seen a negative nexus for the effect of ethnic fragmentation, political stability in general and partially for economic vulnerability. Simple positive correlations have been observed for: the size of the informal sector, openness and democracy. Second, on the consequences, the middle class enables the accumulation of human and infrastructural capital, while its effect is null on political stability and democracy in the short-run but positive for governance and modernisation. Policy implications are discussed.
    Keywords: D31; O1, O4, O55, I32
    Date: 2014–12
  10. By: Fink, Günther (Harvard School of Public Health); Jack, Kelsey (Tufts University); Masiye, Felix (University of Zambia)
    Abstract: Small-scale farming remains the primary source of income for a majority of the population in developing countries. While most farmers primarily work on their own fields, off-farm labor is common among small-scale farmers. A growing literature suggests that off-farm labor is not the result of optimal labor allocation, but is instead driven by households' inability to cover short-term consumption needs with savings or credit. We conduct a field experiment in rural Zambia to investigate the relationship between credit availability and rural labor supply. We find that providing households with access to credit during the growing season substantially alters the allocation of household labor, with households in villages randomly selected for a loan program selling on average 25 percent less off-farm labor. We also find that increased credit availability is associated with higher consumption and increases in local farming wages. Our results suggest that a substantial fraction of rural labor supply is driven by short-term constraints, and that access to credit markets may improve the efficiency of labor allocation overall.
    Keywords: agriculture, credit, seasonality, income smoothing
    JEL: J43 O13 O16
    Date: 2014–11
  11. By: Marie-Laurence Flahaux; Cris Beauchemin; Bruno Schoumaker
    Abstract: The MAFE surveys (Migrations between Africa and Europe) reveal a downtrend in return migrations, notably among migrants from the Democratic Republic of Congo (DR Congo). A large majority of returns are spontaneous, rather than forced or encouraged by the host country. Only 16% of Senegalese migrants and 15% of Congolese reported returning home because of difficulties in Europe, including “problems with residence status”. Decisions to return home are strongly dependent on the prospects of reintegration in the home country. Moreover, the barriers to immigration set in place by European countries tend to lower migrants’ propensity to return home.
    Date: 2014
  12. By: Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram
    Abstract: High transaction and contracting costs are often thought to create credit and savings market failures in developing countries. The microfinance movement grew largely out of business process innovations and subsidies that reduced these costs. We examine an alternative approach, one that infuses no external capital and introduces no change to formal contracts: an improved “technology” for managing informal, collaborative village-based savings groups. Such groups allow, in theory, for more efficient and lower-cost loans and informal savings, and in practice have been scaled up by international non-profit organizations to millions of members. Individuals save together and then lend the accumulated funds back out to themselves. In a randomized evaluation in Mali, we find improvements in food security, consumption smoothing, and buffer stock savings. Although we do find suggestive evidence of higher agricultural output, we do not find overall higher income or expenditure. We also do not find downstream impacts on health, education, social capital, and female decision-making power. Could this have happened before, without any external intervention? Yes. That is what makes the result striking, that indeed there were no resources provided nor legal institutional changes, yet the NGO-guided, improved informal processes led to important changes for households.
    Keywords: micro-savings; savings groups impact
    JEL: D12 D91 O12
    Date: 2014–10
  13. By: Crépon, Bruno; Devoto, Florencia; Duflo, Esther; Parienté, William
    Abstract: This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country’s largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout.
    Keywords: Microcredit; Microfinance
    JEL: D21 G21 O16
    Date: 2014–05
  14. By: Simplice Anutechia Asongu (Association of African Young Economists)
    Abstract: Africa’s overall knowledge index fell between 2000 and 2009. South Korea’s economic miracle is largely due to a knowledge-based development strategy that holds valuable lessons for African countries in their current pursuit towards knowledge economies. Using updated data (1996-2010), this paper presents fresh South Korean lessons to Africa by assessing the knowledge economy (KE) gaps, deriving policy syndromes and providing catch-up strategies. The 53 African frontier countries are decomposed into fundamental characteristics of wealth, legal origins, regional proximity, oil-exporting, political stability and landlockedness. The World Bank’s four KE components are used: education, innovation, information & communication technology (ICT) and economic incentives & institutional regime. Absolute beta and sigma convergence techniques are employed as empirical strategies. With the exception of ICT for which catch-up is not very apparent, in increasing order it is visible in: innovation, economic incentives, education and institutional regime. The speed of catch-up varies between 8.66% and 30.00% per annum with respective time to full or 100% catch-up of 34.64 years and 10 years. Based on the trends and dynamics in the KE gaps, policy syndromes and compelling catch-up strategies are discussed. Issues standing on the way to KE in Africa are dissected with great acuteness before South Korean relevant solutions are provided. The paper is original in its provision of practical policy initiatives drawn from the Korean experience to African countries embarking on a transition to KE.
    Keywords: Knowledge economy, Catch-up, South Korea, Africa
    JEL: O10 O30 O38 O55 O57
    Date: 2014–11
  15. By: Mulatu F. Zehirun (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa.); Marthinus C. Breitenbach (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa.); Francis Kemegue (Farmingham State University and University of Pretoria, Pretoria 0002)
    Abstract: This paper evaluates the strength of policy coordination in Southern African Development Community (SADC) as well as real effective exchange rate stability as indicative of sensible monetary integration. The underlying hypothesis goes with the assertion that countries meeting OCA conditions face more stable exchange rates. The quantitative analysis encompasses 12 SADC member states over the period 1995-2012. Correlation matrixes, dynamic pooled mean group (PMG) and mean group (MG) estimators, and real effective exchange rate (REER) equilibrium and misalignment analysis are carried out to arrive at the conclusions. The PMG model shows that there are common policy variables that influence REERs in the region. However, the REER equilibrium misalignment analysis reveals that SADC economies are characterised by persistent overvaluation at least in the short term. This calls for further improvement of policy coordination in the region. The findings in this paper have important policy implications for economic stability and policy coordination as SADC proceeds with monetary integration.
    Keywords: Real Effective Exchange Rate, Monetary Integration, Policy Coordination, SADC
    JEL: C23 E63 F15 F31
    Date: 2014–11

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