nep-afr New Economics Papers
on Africa
Issue of 2016‒04‒04
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Understanding farmers’ technology adoption decisions: Input complementarity and heterogeneity: By Abay, Kibrom A.; Berhane, Guush; Taffesse, Alemayehu Seyoum; Koru, Bethlehem; Abay, Kibrewossen
  2. Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa By Asongu, Simplice
  3. Long run equilibrium adjustment between inflation and stock market returns in South Africa: A nonlinear perspective By Phiri, Andrew
  4. What drives structural transformation in sub-Saharan Africa? By Justice Tei Mensah; George Adu; Anthony Amoah; Kennedy Kwabena Abrokawa; Joseph Adu
  5. Tax Mobilization in Sub-Saharan Africa: The Impact of Tax and Business Law Reforms By Luisito Bertinelli; Arnaud Bourgain

  1. By: Abay, Kibrom A.; Berhane, Guush; Taffesse, Alemayehu Seyoum; Koru, Bethlehem; Abay, Kibrewossen
    Abstract: Agriculture growth in Africa is often characterized by low aggregate levels of technology adoption. Recent evidence, however, points to co-existence of substantial adoption heterogeneities across farm households and a lack of a suitable mix of inputs for farmers to take advantage of input complementarities, thereby limiting the potential for learning towards the use of an optimal mix of inputs. We use a detailed large longitudinal dataset from Ethiopia to understand the significance of input complementarities, unobserved heterogeneities, and dynamic learning behavior of farmers facing multiple agricultural technologies. We introduce a random coefficients multivariate probit model, which enables us to quantify the complementarities between agricultural inputs, while also controlling for alternative forms of unobserved heterogeneity effects. The empirical analysis reveals that, conditional on various types of unobserved heterogeneity effects, technology adoption exhibits strong complementarity (about 70 percent) between chemical fertilizers and improved seeds, and relatively weaker complementarity (between 6 and 23 percent) between these two inputs and extension services. Stronger complementarities are observed between specific extension services (advice on land preparation) and improved seed and chemical fertilizers, as opposed to simple visits by extension agents, suggesting that additional benefits can be gained if the extension system is backed by “knowledge” inputs and not just focus on “nudging” of farmers to use these inputs. The analysis also uncovers substantial unobserved heterogeneity effects, which induce heterogeneous impacts in the effect of the explanatory variables among farmers with similar observable characteristics. We also show that ignoring these behavioral features bears important implications in quantifying the effect of some policy interventions which are meant to facilitate technology adoption. For instance, ignoring these features leads to significant overestimation of the effectiveness of extension services in facilitating technology adoption. We also document strong learning behavior, a process that involves learning-by-doing as well as learning from extension agents.
    Keywords: agricultural growth, technology adoption, input complementarity, unobserved heterogeneity, dynamics, random coefficients multivariate probit, maximum simulated likelihood approaches,
    Date: 2016
  2. By: Asongu, Simplice
    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: 2015–06
  3. By: Phiri, Andrew
    Abstract: Following the global financial crisis of 2007-2008, the empirical investigation into financial variables affecting the performance of stock markets has gained prominence in the field of research. This study becomes the first to investigate the asymmetric cointegration effects of inflation on the stock market returns for the Johannesburg Stock Exchange (JSE) using monthly data collected from 2003:01 to 2014:12. The empirical model used in the study is the recently developed momentum threshold autoregressive (MTAR) model. Indeed, our results advocate for a negative, nonlinear cointegration relationship between inflation and stock returns in South Africa with causality running uni-directional from inflation to stock returns. Our empirical results suggest two things. Firstly, investors cannot hedge against rising inflation by investing in equity stocks listed on the JSE. Secondly, monetary policy, through the use of inflation targets, can provide a stable financial environment for the growth of equity markets in South Africa.
    Keywords: Inflation; Stock market returns; Momentum threshold autoregressive (MTAR) model; Threshold error correction (TEC) model; Johannesburg Stock Exchange (JSE); South Africa; Sub-Saharan Africa (SSA); Developing economies
    JEL: C22 C51 C52 E31 G10
    Date: 2016–03–24
  4. By: Justice Tei Mensah (Swedish University of Agricultural Sciences); George Adu (Kwame Nkrumah University of Science and Technology); Anthony Amoah (University of East Anglia); Kennedy Kwabena Abrokawa (Ghana Institute of Management and Public Administration); Joseph Adu (University of Professional Studies, Accra-Ghana)
    Abstract: This paper provides an empirical assessment of the driving forces behind structural transformation in Sub-Saharan Africa, and to further access the role of structural reforms in accounting for cross-country differences in transformation. Evidence from this paper reveals that country specific fundamentals, institutions and policy reforms as well as governance and fiscal reforms are the key drivers of transformation in the region. A set of policy strategies is proposed to engender sustained transformation and development in the region.
    Date: 2016–02
  5. By: Luisito Bertinelli (CREA, Université du Luxembourg); Arnaud Bourgain (CREA, Université du Luxembourg)
    Abstract: This paper contributes to measuring the influence of business (and tax) law reforms on sub-Saharan African countries’ tax mobilization ability. Relying on a new business law reform indicator, our results validate the significant impact of corporate law modernization on governmental revenue, and unearth a complementary effect between business and tax law reforms.
    Keywords: Tax revenue mobilization, Business law reform, Tax reform
    JEL: H20 O17
    Date: 2016

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