nep-afr New Economics Papers
on Africa
Issue of 2015‒01‒19
twenty papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Extractive Institutions and Gains From Trade: Evidence from Colonial Africa By Federico Tadei
  2. Determinants of Bank Profitability and Basel Capital Regulation: Empirical Evidence from Nigeria By Ozili, Peterson
  3. Oil price shocks and domestic price investment in Ghana By Wiafe, Emmanuel A.; Barnor, Charles; Quaidoo, Christopher
  4. Aid and Taxation: Evidence from Ethiopia By Giulia Mascagni
  5. Republic of South Sudan: 2014 Article IV Consultation- Staff Report; Staff Statement; and Press Release By International Monetary Fund. African Dept.
  6. Safe Debt and Uncertainty in Emerging Markets: An Application to South Africa By Magnus Saxegaard
  7. The Role of Lifelong Learning in Political Stability and Non-violence: Evidence from Africa By Simplice Asongu; Jacinta Nwachukwu
  8. Growth and Poverty in Africa: Shifting Fortunes and New Perspectives By Shimeles, Abebe
  9. Fertility, agricultural labor supply, and production: Instrumental variable evidence from Uganda: By Van Campenhout, Bjorn
  10. The changing landscape of agriculture in Ghana: Drivers of farm mechanization and its impacts on cropland expansion and intensification: By Houssou, Nazaire; Chapoto, Antony
  11. Loan demand and rationing among small-scale farmers in Nigeria: By Olomola, Aderbigbe; Gyimah-Brempong, Kwabena
  12. Analysis of agricultural public expenditures in Nigeria: Examination at the federal, state, and local government levels: By Olomola, Aderbigbe; Mogues, Tewodaj; Olofinbiyi, Tolulope; Nwoko, Chinedum; Udoh, Edet; Alabi, Reuben Adeolu; Onu, Justice; Woldeyohannes, Sileshi
  13. Beyond agriculture versus nonagriculture: Decomposing sectoral growth–poverty linkages in five African countries: By Dorosh, Paul A.; Thurlow, James
  14. Agricultural production and children’s diets: Evidence from rural Ethiopia: By Hirvonen, Kalle; Hoddinott, John F.
  15. Education, HIV, and Early Fertility: Experimental Evidence from Kenya By Esther Duflo; Pascaline Dupas; Michael Kremer
  16. Basic Agricultural Public Expenditure Diagnostic Review : Republic of Cameroon, 2003-2012 By World Bank
  17. Who remained in poverty, who moved up, and who fell down ? an investigation of poverty dynamics in Senegal in the late 2000s By Dang, Hai-Anh H.; Lanjouw, Peter F.; Swinkels, Rob
  18. Agricultural Supply Chains and Farmers Constraints: Welfare Impacts in ECOWAS Countries By Nicolas Depetris-Chauvin; Guido Porto
  19. The Effects of "Girl-Friendly" Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso (Journal Article) By Harounan Kazianga; Dan Levy; Leigh L. Linden; Matt Sloan
  20. Working Paper - 214 - From Productivity to Exporting or Vice Versa Evidence from Tunisian Manufacturing Sector By AfDB AfDB

  1. By: Federico Tadei
    Abstract: A common explanation for African current underdevelopment is the extractive character of institutions established during the colonial period. Yet, since colonial extraction is hard to quantify, its precise mecha- nisms and magnitude are still unclear. In this paper, I tackle these issues by focusing on colonial trade in French Africa. By using new data on export prices, I show that the colonizers used trade monopsonies and coercive labor institutions to reduce prices to African agricultural producers way below world market prices. As a consequence, during the colonial period, extractive institutions cut African gains from trade by at least one-half. JEL Classification: N17; O43 Keywords: Africa, Development, Institutions, Colonization, Trade, Labor Markets
    Date: 2014
  2. By: Ozili, Peterson
    Abstract: This study, empirically, investigates the determinants of bank profitability. After including the regulatory variable into the model, I find no significant difference in bank profitability during pre-and post-capital regulation regime. Second, after employing NIM and ROA profitability metrics, I find that the determinants of bank profitability, and its significance, depends on the profitability metric employed. Third, I find that asset quality is a strong determinant of bank interest margin, relative to return on asset. Also, I observe that economies of scale and scope enables larger banks to be profitable (ROA) relative to smaller banks. Overall, the insignificant effect of Basel capital regime on bank profitability seems to suggest that such regulation might not be aimed at decreasing bank profits.
    Keywords: Bank Profitabilty, Basel Capital Regulation
    JEL: E5 E58 G2 G21 N2 N20 N27
    Date: 2015–01
  3. By: Wiafe, Emmanuel A.; Barnor, Charles; Quaidoo, Christopher
    Abstract: This study examines the effect of oil prices on domestic investment in Ghana using quarterly time series data from 1984 to 2012. Dynamic Ordinary Least Squares (DOLS) technique was used to estimate the effect of oil price on domestic investment in Ghana. The analysis revealed that there is long run relationship between domestic private investment, oil price shocks, exchange rate, inflation, income and credit to private sector. The study found negative effect of oil price shocks on investment. This indicate that shock in oil prices leads to a reduction in investment. It is therefore recommended that mechanisms be put in place to check or cushion the economy against oil price shocks and variability. This could be done through providing domestic credit to the private sector to boast investment.
    Keywords: Investment, Oil price shocks, Oil price, DOLS, Shocks, Ghana
    JEL: E22 E29 G00 G11
    Date: 2014
  4. By: Giulia Mascagni (Institute of Development Studies, Falmer, United Kingdom; Department of Economics, University of Sussex, Falmer, United Kingdom)
    Abstract: The relation between aid and tax has been largely debated in the literature, given its far-reaching consequences: the presence of a crowding-out effect of aid on domestic revenue would seriously impair the sustainability of the development process. This paper explores this relation by adopting a case-study approach, which overcomes some of the common limits of the cross-country literature. I use time series data for Ethiopia for 1960-2009, a longer time series than most country studies of this kind. The estimation is based on an error correction model that allows separating long-run equilibrium relations and short-run dynamics. The analysis shows that both foreign grants and loans have a positive relation with tax revenue in Ethiopia. This effect seems to be robust to endogeneity and to structural breaks, although clearly establishing causality remains a challenge. The results show that aid has a beneficial effect on tax revenue, which may be due to its role in supporting fiscal reforms and improvements in tax administration.
    Keywords: Foreign Aid, Taxation, Grants, Loans, Ethiopia
    JEL: F35 O23
    Date: 2014–12
  5. By: International Monetary Fund. African Dept.
    Abstract: KEY ISSUES Context: Endowed with significant natural resources, South Sudan faces acute challenges: fractured politics, feeble institutions and capacity, underdevelopment, and corruption. Since the country’s independence in 2011, institution building and development have been hindered by a number of factors, including volatile relations with Sudan, a 15-month shutdown of oil production, and more recently, a civil conflict. Inflation rose following an initial period of economic instability in 2011-12, but has been contained since then owing to fiscal and monetary restraint. However, distortions in the foreign exchange market and extra-budgetary expenditures remain significant, foreign exchange reserves are critically low, and near-term prospects for a durable political settlement are uncertain. Focus of the consultation: This is the first Article IV Consultation with South Sudan since the country became an IMF member in April 2012. The discussions focused on policies to establish economic stability and move forward with reforms to build the legitimacy of the state, improve cooperation with the international community, and attract investment. Key issues and recommendations: The priorities are to ensure political inclusion and lasting peace, reform the foreign exchange market and unify the exchange rate, improve budget execution, overhaul non-oil revenue administration, and foster transparency and accountability in oil, fiscal, and central bank operations. Key medium-term reforms to reduce fragility comprise the implementation of provisions in oil and public financial management legislation and well-prioritized demobilization and public investment plans. The authorities broadly concurred with these recommendations; the extent of progress will depend on commitment to nation building and political will to prevail over vested interests. Exchange rate arrangement: South Sudan has maintained a number of exchange restrictions and multiple currency practices under the transitional arrangements of Article XIV of the IMF’s Articles of Agreement, and introduced a multiple currency practice subject to Fund’s jurisdiction under Article VIII after becoming a member. Capacity building: Technical support and training from the IMF is being coordinated with other stakeholders and delivered through a dedicated five-year capacity building program set up in November 2012. In the coming year, support is expected to focus on the macroeconomic framework, petroleum fiscal management, non-oil revenue administration, foreign reserves management, monetary operations, banking supervision, and macroeconomic statistics.
    Keywords: Article IV consultation reports;Governance;Financial management;Fiscal reforms;Exchange rate regimes;Banking sector;Economic indicators;Tax system reviews;Debt sustainability analysis;Staff Reports;Press releases;South Sudan;
    Date: 2014–12–17
  6. By: Magnus Saxegaard
    Abstract: This paper develops a methodology for estimating a safe public debt level that would allow countries to remain below a maximum sustainable debt limit, taking into account the impact of uncertainty. Our analysis implies that fiscal policy should target a debt level well below the debt ceiling to allow space to absorb shocks that are likely to hit the economy. To illustrate our findings we apply the methodology to estimate a safe debt level for South Africa. Our results suggest that South Africa’s debt ceiling is around 60 percent of GDP, although uncertainty is high. Simulations suggest targeting a debt-to-GDP ratio of 40 percent of GDP would allow South Africa to remain below this debt ceiling over the medium-term with a high degree of confidence.
    Keywords: Public debt;South Africa;Debt ceilings;Fiscal policy;Debt sustainability;Emerging markets;Vector autoregression;Econometric models;Debt sustainability, debt ceilings, South Africa
    Date: 2014–12–19
  7. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta Nwachukwu (Huddersfield/UK)
    Abstract: Purpose – Education as a weapon in the fight against conflict and violence remains widely debated in policy and academic circles. Against the background of growing political instability in Africa and the central role of the knowledge economy in 21st century development, this paper provides three contributions to existing literature. It assesses how political stability/ non-violence is linked to the incremental, synergy and lifelong learning effects of education. Design/methodology/approach – We define lifelong learning as the combined knowledge acquired during primary, secondary and tertiary education. Principal component analysis is used to reduce the dimensions of educational and political indicators. An endogeneity robust dynamic system Generalized Methods of Moments is used for the estimations. Findings – We establish three main findings. First, education is a useful weapon in the fight against political instability. Second, there is an incremental effect of education in the transition from secondary to tertiary schools. Third, lifelong learning also has positive and synergy effects. This means that the impact of lifelong learning is higher than the combined independent effects of various educational levels. The empirical evidence is based on 53 African countries for the period 1996-2010. Practical implications – A plethora of policy implications are discussed, inter alia: how the drive towards increasing the knowledge economy through lifelong learning can be an effective tool in the fight against violence and political insurgency in Africa. Originality/value – As the continent is nursing knowledge economy ambitions, the paper is original in investigating the determinants of political stability/non violence from three dimensions of education attainment: the incremental, the lifelong learning and a synergy effect.
    Keywords: Lifelong learning; Stability; Development; Africa
    JEL: I20 I28 K42 O10 O55
    Date: 2014–08
  8. By: Shimeles, Abebe (African Development Bank)
    Abstract: Growth has been high and widespread in the last decade in Africa. Whether this shift in Africa's fortune has impacted poverty has been a subject of controversy. This paper brings into focus recent evidence on the pace of poverty reduction in Africa and addresses whether or not previously held belief that Africa is too poor to grow is relevant today. The findings suggest that there is credible evidence for poverty to have declined significantly since the 1990s but at a lesser speed than growth in per capita GDP. More importantly, global poverty tends to respond much more strongly to shifts in sector of employment, particularly to increase in employment in the industrial sector, than to increase in mean income. In Africa the co-existence of a large traditional and informal sector with a dynamic modern sector will continue to pose a challenge for achieving a sustained reduction in poverty. Challenges of structural transformation and its attendant benefits are discussed using emerging thinking on industrial policies to achieve inclusive growth in Africa.
    Keywords: economic growth, poverty traps, multidimensional poverty, structural transformation
    JEL: O12
    Date: 2014–12
  9. By: Van Campenhout, Bjorn
    Abstract: Human fertility is likely to affect agricultural production through its effect on the supply of agricultural labor. Using the fact that in traditional, patriarchal societies sons are often preferred to daughters, we isolated exogenous variation in the number of children born to a mother and related it to agricultural labor supply and production outcomes in Uganda—a country that combines a dominant agricultural sector with one of the highest fertility rates in the world. We found that fertility has a sizable negative effect on household labor allocation to subsistence agriculture. Households with lower fertility devote significantly more time to land preparation and weeding, while larger households grow less matooke and sweet potatoes. We found no significant effect on agricultural productivity as measured in terms of yield per land area.
    Keywords: Gender, households, Labor supply, Population growth, Sociology, fertility, instrumental variables, boy preference,
    Date: 2014
  10. By: Houssou, Nazaire; Chapoto, Antony
    Abstract: This study assesses whether the recent public and private efforts to improve farmers’ access to mechanical power in Ghana have had the intended effects on the country’s agricultural sector. Using panel survey data, this paper analyses the drivers of farm mechanization and its net impacts on cropland expansion and farming system intensification in northern Ghana. Several factors explain the use and use intensity of agricultural mechanization, including landholding size, total labor and fertilizer use per hectare, chemical use, and amount of land left fallow. More importantly, the results suggest that farm mechanization did have a positive impact on cropland expansion during the survey period. The results presented here support the existence of a labor substitution effect resulting from tractor use.
    Keywords: mechanization, animal power, Intensification, Agricultural policies, Tractors, Draught animals, farmland, Land use, farm inputs, cropland expansion, draft animals,
    Date: 2014
  11. By: Olomola, Aderbigbe; Gyimah-Brempong, Kwabena
    Abstract: To this end, this study seeks to (1) examine the nature of risks facing small-scale farmer-borrowers in Nigeria, (2) analyze the demand for agricultural credit by farmers and highlight the key determinants of this demand, (3) ascertain the extent to which farmers are credit rationed and the factors influencing the emerging rationing scenarios, and (4) suggest policy measures to address the problem of agricultural credit rationing and enhance the demand for credit. The study employs primary data obtained from 1,200 small-scale farmers through a survey conducted in 2013 across the six geopolitical zones of the country. Methodologically, the study extends the analysis of credit rationing beyond quantity rationing and presents explicit econometric models for analyzing the determinants of three types of credit rationing: quantity rationing, risk rationing, and price rationing.
    Keywords: Finance, Credit, Markets, Investment policies, trade, Smallholders,
    Date: 2014
  12. By: Olomola, Aderbigbe; Mogues, Tewodaj; Olofinbiyi, Tolulope; Nwoko, Chinedum; Udoh, Edet; Alabi, Reuben Adeolu; Onu, Justice; Woldeyohannes, Sileshi
    Abstract: The level of public spending on agriculture in Nigeria remains low regardless of the indicator used. Agricultural spending as a share of total federal spending averaged 4.6 percent between 2008 and 2012 and has been trending downward precipitously. In contrast, Nigeria recorded an annual average agricultural growth rate of more than 6 percent between 2003 and 2010, and agricultural gross domestic product followed an increasing trend between 2008 and 2012. Budgetary allocation to agriculture compared with other key sectors is also low despite the sector’s role in the fight against poverty, hunger, and unemployment and in the pursuit of economic development. Public investment has been stifled by the lopsided manner in which national revenue is being allocated among the three tiers of government that have responsibility for agricultural development.
    Keywords: Agriculture, public expenditure, Agricultural policies,
    Date: 2014
  13. By: Dorosh, Paul A.; Thurlow, James
    Abstract: The development debate in Africa south of the Sahara is often cast as “agriculture versus nonagriculture.†Yet this view overlooks the heterogeneity within these broad sectors and the synergies between them. We estimate sectoral poverty–growth elasticities using economywide models for five African countries. Our detailed treatment of nonagriculture complements an expanding literature disaggregating the growth–poverty relationship in agriculture. Although our estimated elasticities are higher for agriculture given the importance of farm incomes for the poor, the extent to which this is true varies by country. In fact, elasticities for certain nonagricultural sectors are much closer to those in agriculture. Overall, elasticities are typically higher for trade and transport services and manufacturing (agroprocessing).
    Keywords: economic growth, Agriculture, Agricultural policies, agricultural sector, Industrial sector, transportation, economic sectors, Poverty, income, poverty alleviation, economywide model, elasticity, nonagriculture, time allocation,
    Date: 2014
  14. By: Hirvonen, Kalle; Hoddinott, John F.
    Abstract: We study the relationship between pre-school children’s food consumption and household agricultural production. Using a large household survey from rural Ethiopia, we find that increasing household production diversity leads to considerable improvements in children’s diet diversity. However, we also document how this non-separability of consumption and production does not hold for households that have access to food markets. These findings imply that nutrition-sensitive agricultural interventions that push for market-integration are likely to be more effective in reducing undernutrition than those promoting production diversity.
    Keywords: households, Nutrition, Children, Diet, Markets, food consumption, Agricultural policies, child dietary diversity, agricultural household model, count data,
    Date: 2014
  15. By: Esther Duflo; Pascaline Dupas; Michael Kremer
    Abstract: A seven-year randomized evaluation suggests education subsidies reduce adolescent girls' dropout, pregnancy, and marriage but not sexually transmitted infection (STI). The government's HIV curriculum, which stresses abstinence until marriage, does not reduce pregnancy or STI. Both programs combined reduce STI more, but cut dropout and pregnancy less, than education subsidies alone. These results are inconsistent with a model of schooling and sexual behavior in which both pregnancy and STI are determined by one factor (unprotected sex), but consistent with a two-factor model in which choices between committed and casual relationships also affect these outcomes.
    JEL: I12 I25 I38 O12
    Date: 2014–12
  16. By: World Bank
    Keywords: Environmental Economics and Policies Agriculture - Agricultural Research Rural Development Knowledge and Information Systems Finance and Financial Sector Development - Debt Markets Public Sector Expenditure Policy Environment Public Sector Development Rural Development
    Date: 2014–05
  17. By: Dang, Hai-Anh H.; Lanjouw, Peter F.; Swinkels, Rob
    Abstract: Poverty estimates based on cross-section data provide static snapshots of poverty rates. Although a time series of cross-section data can offer some insights into poverty trends, it does not allow for an assessment of dynamics at the household level. Such a dynamic perspective on poverty generally calls for panel data and this kind of analysis can usefully inform poverty reduction policy, notably the design of social protection interventions. Absent actual panel data for Senegal, this paper applies new statistical methods to construct synthetic panel data from two rounds of cross-section household surveys in 2005 and 2011. These data are used to study poverty transitions. The results suggest that, in marked contrast to the picture obtained from cross-section data, there exists a great deal of mobility in and out of poverty during this period. More than half the population experiences changes in its poverty status and more than two-thirds of the extreme (food) poor move up one or two welfare categories. Factors such as rural residence, disability, exposure to some kind of natural disaster, and informality in the labor market are associated with a heightened risk of falling into poverty. Belonging to certain ethnicities and factors such as migration, working in the non-agriculture sector, and having access to social capital are associated with a lower risk of falling into poverty.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Achieving Shared Growth,Services&Transfers to Poor
    Date: 2014–12–01
  18. By: Nicolas Depetris-Chauvin; Guido Porto
    Abstract: We study the interplay between market structure and other domestic factors that affect the production and consumption decisions of agricultural families in Africa. We are interested in modeling the production allocation of factors of production to various cash and food crops and in how this allocation depends on competition along the supply chain and on the constraints faced by different types of farmers. The model describes the behavior of farms, exporters and importers in a simple partial equilibrium setting. In particular, we build three different versions of the model to deal with the three basic scenarios that we face in our empirical work. That is, we build a model to explore the case of cash crop production (mostly for exports). We then adapt this model to deal with the case of a country that is a net exporter of a food crop. Finally, we develop a different version of the model for the case of a country that is a net importer of a food crop. We study changes in market structure and in key parameters of the model that capture various household constraints and institutional access. We analyze the changes in real income of household caused by the hypothetical price changes of cash and food crops predicted by the models’ simulations in Burkina Faso, Ghana, Nigeria and Senegal.
    Keywords: Supply chains;Food crops;Cash crops;Market Structure
    JEL: Q12 Q13
    Date: 2014–12
  19. By: Harounan Kazianga; Dan Levy; Leigh L. Linden; Matt Sloan
    Abstract: This article evaluates a program that constructed high quality “girl-friendly†primary schools in Burkina Faso. After 2.5 years, the program increased enrollment by 19 percentage points and increased test scores by 0.41 standard deviations. Girls’ enrollment increased by 5 percentage points more than boys’ enrollment, but test scores were the same for boys and girls.
    Keywords: BRIGHT, School Construction, Girl-Friendly, Schools, Burkina Faso, International, Education
    JEL: F Z
    Date: 2013–07–30
  20. By: AfDB AfDB
    Date: 2014–12–30

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