nep-afr New Economics Papers
on Africa
Issue of 2015‒10‒25
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa By Simplice Asongu
  2. Rational Asymmetric Development, Piketty and the Spirit of Poverty in Africa By Asongu, Simplice
  3. A Quest for Institutional Foundations Towards Inclusive Development in Sub-Saharan Africa By Nissanke Machiko
  4. Public disclosure for pollution abatement : African decision-makers in a PROPER public good experiment By Akpalu Wisdom; Muchapondwa Edwin; Adidoye Babatunde; Simbanegavi Witness
  5. Wage Dispersion, Job Creation and Development: Evidence from Sub-Saharan Africa By Ija Trapeznikova; Juan Pablo Rud
  6. Oil Contracts, Progressive Taxation and Government Take in the Context of Uncertainty in Crude Oil Prices: The Case of Chad By Bertrand LAPORTE; Guy Dabi GAB-LEYBA

  1. By: Simplice Asongu (Yaoundé/Cameroun)
    Abstract: Using twenty-five policy variables, we investigate determinants of mobile phone/banking in 49 Sub-Saharan African countries with data for the year 2011. The determinants are classified into six policy categories, notably: macroeconomic, business/bank, market-related, knowledge economy, external flows and human development. The empirical evidence is based on contemporary and non-contemporary Quantile regressions. The following implications are relevant to the findings. First, mobile phone penetration is positively correlated with: (i) education, domestic savings, regulation quality and patent applications, especially at low initial levels of mobile penetration; (ii) bank density; (iii) urban population density and (iv) internet penetration. Second, the use of the mobile to pay bills is positively linked with: (i) trade and internet penetration, especially in contemporary specifications and (ii) remittances and patent applications, especially at low initial levels of the dependent variable. Third, using the mobile to send/receive money is positively correlated with: internet penetration and human development, especially in the contemporary specifications. Fourth, mobile banking is positively linked with: (i) trade in contemporary specifications; (ii) remittances and patent applications at low initial levels of the dependent variable and (iii) internet penetration and human development, with contemporary threshold evidence. The policy implications are articulated with incremental policy syndromes.
    Keywords: Mobile phones; Mobile banking; Development; Africa
    JEL: G20 L96 O11 O33 O55
    Date: 2015–10
  2. By: Asongu, Simplice
    Abstract: The study extends the implications of Piketty’s celebrated literature from developed countries to the nexus between developed nations and African countries by building on responses from Rogoff (2014) & Stiglitz (2014), post Washington Consensus paradigms and underpinnings from Solow-Swan & Boyce-Fofack-Ndikumana. The central argument presented is that the inequality problem is at the heart of rational asymmetric development between rich and poor countries. Piketty has shown that inequality increases when the return of capital is higher than the growth rate, because the poor cannot catch-up with the rich. We argue that, when the return of political economy (or capitalism-fuelled illicit capital flight) is higher than the growth rate in African countries, inequality in development increases and African may not catch-up with the developed world. As an ideal solution, Piketty has proposed progressive income taxation based on automatic exchange of bank information. The ideal analogy proposed in tackling the spirit of African poverty is a holistic commitment to fighting illicit capital flight based on automatic exchange of bank information. Hence, contrary to theoretical underpinnings of exogenous growth models, catch-up may not be so apparent. Implications for the corresponding upward bias in endogenous development and catch-up literature are discussed.
    Keywords: Piketty, Inequality, Foreign aid, Capital flight, Development
    JEL: B20 F35 F50 O19 O55
    Date: 2015–03–01
  3. By: Nissanke Machiko
    Abstract: The paper explores the paths towards building institutional foundations for inclusive development in Sub-Saharan Africa. Viewing institutional configurations as a system of multiple equilibria, the concepts of endogenous institutions and institutional cha
    Keywords: Economic development, Institutional economics
    Date: 2015
  4. By: Akpalu Wisdom; Muchapondwa Edwin; Adidoye Babatunde; Simbanegavi Witness
    Abstract: A linear public good experiment has been employed to investigate strategic behaviour in pollution abatement among African climate decision-makers. The experiment consisted of three groups of which Group 1 did not receive any treatments, and Groups 2 and 3
    Keywords: Group decision making, Hazardous wastes, Natural disasters, Pollution
    Date: 2015
  5. By: Ija Trapeznikova (Royal Holloway, University of London); Juan Pablo Rud (Royal Holloway, University of London)
    Abstract: Labor markets in least developed countries are characterised by small wage sectors and low productivity and wages. Using household level data for many countries in Sub-Saharan Africa, we document that they also show a greater level of wage dispersion. This is in stark contrast with the positive correlation between income mean and income inequality for the same countries. We propose a labor search and matching framework with entry costs and firm heterogeneity that delivers endogenously the negative correlation between (i) wage dispersion and size of the wage sector and (ii) wage dispersion and wage mean. We also show that this model can reconcile the differences between wage and income inequality by accounting for labor reallocations between wage and self-employment sectors. We focus on three channels to explain these phenomena in Sub-Saharan Africa: entry costs (e.g. regulations, financial constraints to starting a business), differences in countries' underlying productivity distribution (e.g. due to lower capital intensity, or poor infrastructure) and labor market frictions. A numerical simulation shows that the model does a good job in reproducing the main stylised facts and reveals how these different constraints interact to reduce labor market performance.
    Date: 2015
  6. By: Bertrand LAPORTE (Centre d'Etudes et de Recherches sur le Développement International(CERDI)); Guy Dabi GAB-LEYBA
    Abstract: Concession Contracts (CC) and Production Sharing Contracts (PSC) have quite different implications for Government Take and the properties of the tax system, such as progressivity. In general, taxation via CC introduces significant distortions in activity, particularly due to the balance of royalties which tax production irrespective of the profitability of the project. So CC is normally regressive while PSC is normally progressive, because PSC taxation depends more directly on the profitability of the project. Chad has the distinction of having introduced PSC in the 2007 Chad oil code, while maintaining a royalty on production. Despite this feature, we show with a Cash Flow model and Monte Carlo simulations that the application of the 2007 oil code introduced more progressivity into taxation. This feature is particularly interesting in the current context of falling crude oil prices, because it maintains a favorable tax regime for exploration and exploitation by multinational oil companies. As a result, the Chad government should reactivate a counter-cyclical policy of oil revenue reserves when the crude oil price increases again.
    JEL: N5 H21 E62 E27
    Date: 2015–10

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