nep-afr New Economics Papers
on Africa
Issue of 2016‒05‒28
ten papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Rational Asymmetric Development: Transfer Mispricing and Sub-Saharan Africa’s Extreme Poverty Tragedy By Asongu, Simplice
  2. Electoral Violence and Nigeria Economic Prospects: A Glimpse of 2015 Elections By Ojeaga, Paul; Odejimi, Deborah
  3. Globalisation and Conflict: Evidence from Sub-Saharan Africa By Carolyn Chisadza; Manoel Bittencourt
  4. What Do Farmers Want in the Design of Biofuel Investments in Kenya? A Choice Experiment Approach By Ochieng, Isabel Joy; Otieno, David; Oluoch-Kosura, Willis; Jistrom, Magnus
  5. Corporate Social Responsibility of Oil Multinational Corporations: A focus on the challenges of Environmental By Mercy Erhi Makpor; Regina Leite
  6. Financing Africa's Insfrastructure Deficit: From development banking to long-term investing By Rabah Arezki; Amadou Sy
  7. How Is Multinational Investment in Grain and Oilseed Trading Reshaping the Smallholder Markets in Zambia? By Sitko, Nicholas J.; Chisanga, Brian
  8. The Role of Institutions in the Migration of Corporate Governance Practice into Emerging Economies – The Case of Africa By Hearn, Bruce; Oxelheim, Lars; Randøy, Trond
  9. “Sometimes you don't make enough to buy food†- an analysis of South African street waste pickers’ income By Viljoen JMM, Blaauw PF & Schenck CJ
  10. China's slowdown and rebalancing: potential growth and poverty impacts on Sub-Saharan Africa By Lakatos,Csilla; Maliszewska,Maryla; Osorio-Rodarte,Israel; Go,Delfin Sia

  1. By: Asongu, Simplice
    Abstract: A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA), in spite of over two decades of growth resurgence. This chapter explores the role of transfer mispricing in SSA’s extreme poverty tragedy. The analytical structure entails: (i) emphasis of rational asymmetric development as the dark side of transfer pricing; (ii) linkages between financial reporting, international financial reporting standards (IFRS), transfer pricing and poverty; (iii) evidence that the recent growth resurgence in African countries has been driven substantially by resource-rich countries which are experiencing high levels of exclusive growth and extreme poverty; (iv) the practice of transfer mispricing by multinationals operating in resource-rich countries of SSA and (v) a Zambian case study of extreme poverty and transfer mispricing schemes by Glencore in the copper industry. While transfer mispricing is contributing to diminishing African growth, available evidence shows that the component of growth that is not captured by transfer mispricing does not trickle down to the poor because the African elite is also animated by practices of rational asymmetric development. Policy implications for the fight against extreme poverty are discussed.
    Keywords: Transfer pricing, Asymmetric development; Extreme poverty: SSA
    JEL: F20 F50 H20 O11 O55
    Date: 2015–08
  2. By: Ojeaga, Paul; Odejimi, Deborah
    Abstract: Modern societies can be differentiated from pre modern societies by the existence of a social contract amongst the resident of a given geographical area, therefore modern societies often find elections as way of selecting representatives to govern a given territory. Nigeria also remains the largest economy in Africa, attractive to foreign investors and the most populated of all African countries. Ethic divide also weaken the country making it difficult to govern. The study investigates the effect of the 2015 general elections on the Nigerian Economy, by analyzing its impact in a pre, during and post-election scenario. The questions asked in the study included if the Nigerian economic condition depreciated prior to, during and after the 2015 general elections? To what extent has youth despair particularly towards their future employability reduced since after the 2015 general elections, and finally if the seemingly stable political climate improved investors perception and increased the ease of doing trade in Nigeria? Nigeria like any other developing country is plagued with political instability, poor leadership succession process, weak electoral process and endemic poverty. The study finds that in the periods before, during and after elections Nigeria economic outlook where gleam.
    Keywords: Nigerian Elections, Political Economy, Instrumental Interests, Expressive Interests and Voters Paradox
    JEL: C72 H1 P4 P48
    Date: 2015–06–05
  3. By: Carolyn Chisadza (Department of Economics, University of Pretoria); Manoel Bittencourt (Department of Economics, University of Pretoria)
    Abstract: Stephen Pinker (2011) advances that various forms of violence such as homicide, rape, torture and conflict have decreased over time because of the following historical shifts in society: pacification process, civilising process, humanitarian and rights revolutions, and extended periods of peace. We regard these shifts as modernising processes encompassed in globalisation and investigate the effects of globalisation on conflict, one of the forms of violence Pinker discusses. We use panel data from 46 sub-Saharan African countries dated 1970 to 2013 and find that increased globalisation significantly reduces severity of conflict through increased opportunity costs. Furthermore, we disaggregate globalisation into its three key components (social, political and economic openness) and find that social globalisation drives the results, an indication of the significance of increased flows of people and information in fostering tolerance and empathy. We also disaggregate conflict into intrastate and interstate and find that the severity of intrastate conflict is significantly reduced by the globalisation processes compared to interstate conflict.
    Keywords: globalisation, conflict, sub-Saharan Africa
    JEL: O10 O55 H56 F69
    Date: 2016–05
  4. By: Ochieng, Isabel Joy; Otieno, David; Oluoch-Kosura, Willis; Jistrom, Magnus
    Abstract: Emerging forms of investment such as biofuels have intensified pressure on scarce land especially in developing countries. This has implications on household enterprise choice and food security. However, biofuel investments in Sub-Saharan Africa are often undertaken without adequate stakeholder consultations on priorities and preferences. In order to provide insights for managing potential resource conflicts, this study assessed farmers’ preferences on the design of biofuel investments in Kenya. Choice Experiment was used to elicit survey data from 342 farmers, and random parameter model applied in analysis. Results indicated higher positive preferences for short contract lengths, leasing of a quarter of their land, permanent employment and renewable contracts. Compensating surplus estimates showed that farmers who already practice mixed crop-livestock systems required higher compensation to accept biofuel investments. These findings offer insights on the design of biofuel investments as a potential livelihood diversification option.
    Keywords: Biofuel-investments, Farmer preferences, Livelihood diversification., Agricultural and Food Policy, Farm Management,
    Date: 2015
  5. By: Mercy Erhi Makpor (School of Economics and Management, University of Minho); Regina Leite (School of Economics and Management, University of Minho)
    Abstract: The purpose of this paper is to draw attention to the ever alarming constraints and challenges faced due to oil extraction in the Niger Delta region of Nigeria. The Niger Delta is one of the poorest regions in Nigeria due to underdevelopment and the nonchalant attitude on the part of the government to make provision for economic and infrastructural development in the region. The paper argues that while the Corporate Social Responsibility (CSR) of oil Multinational Corporations (MNCs) has not reached its full capacity, government on the other hand, not only lack the intellectual “know-how†of tackling the operations and activities of the oil MNCs, but also refrains from rendering suitable solutions to restiveness in the region. Under-development in the region is tilted from the part of the oil MNCs’ push for exploitative susceptibilities which has invariably led to environmental degradation, poverty, displacement, and a high level of restiveness. Also the issue of excruciating poverty and the quality of life of the people have not been properly dealt with as government has not done much to diversify the natural resources of the nation into other key productive areas. Hence, the general belief that organizations and the society gain when social responsibility on the part of organizations is exhibited is therefore questioned.
    Keywords: Corporate Social Responsibility, Environmental Degradation, Niger Delta, Nigeria, Oil Multinational Corporations (MNCs), Poverty.
    JEL: M14
  6. By: Rabah Arezki; Amadou Sy
    Abstract: This paper studies the appropriate financing structure of infrastructure investment in Africa. It starts with a description of recent initiatives to scale up infrastructure investment in Africa. The paper then uses insights from the literature on informed vs. arm’s length debt to discuss the structure of infrastructure financing. Considering the differences in investors’ preferences that Africa faces, the paper argues that continent’s success to fill its greenfield and hence risky infrastructure gap hinges upon a delicate balancing act between development banking and institutional long-term investment. In a first phase, development banks which have both the flexibility and expertise should help finance the riskier phases of large greenfield infrastructure projects. In a second phase, development banks should disengage and offload their mature brownfield projects to pave the way for a viable engagement of long term institutional investors such as sovereign wealth funds. In order to promote an Africa wide infrastructure bond markets where the latter could play a critical role, the enhancement of Africa’s legal and regulatory framework should however start now.
    Keywords: Africa, Infrastructure Finance, Development Banks, Long-term Investors
    JEL: H49 H54 G30 G38
    Date: 2016
  7. By: Sitko, Nicholas J.; Chisanga, Brian
    Abstract: African agrifood systems are being transformed by an influx of multinational capital. Research on this transformation focuses primarily on the rise of supermarkets and demand for African land. An under-appreciated facet of this transformation is multinational investment in African grain trading. This paper uses basic descriptive statistical data and qualitative evidence to examine the implications of the recent multinational investment wave into cereal and oilseed trading in Zambia.
    Keywords: Agricultural and Food Policy, Demand and Price Analysis, International Development,
    Date: 2016–02
  8. By: Hearn, Bruce (University of Sussex, UK); Oxelheim, Lars (Research Institute of Industrial Economics (IFN)); Randøy, Trond (University of Agder, Norway)
    Abstract: This study examines the role of institutional environment in influencing the migration of corporate governance best practice into 22 emerging African economies. Using a unique and comprehensive sample hand-collected sample of 202 IPO firms from across the continent we adopt a novel institutional logics perspective in studying the diffusion of CEO salary disclosure – a central element of corporate transparency. Our findings reveal that the adoption of CEO salary disclosure by firms is more likely in more homogenous informal institutional contexts. Complementarities arising from disclosure originating from an Anglo-American shareholder value governance framework and indigenous formal institutions adhering to English common law infer disclosure is more likely than in contrasting civil code law contexts. Finally firms with higher proportions of their boards of directors being drawn from indigenous social elites are less likely to disclose CEO salary – where this is reversed in the context of elevated institutional quality. Our findings are important for regulatory authorities, investors and policy makers alike who are involved in institutional improvements in emerging economies.
    Keywords: Disclosure; CEO Salary; Institutional Theory; Africa; Emerging Economies; IPO
    JEL: G23 G38 M12 M14 M16
    Date: 2016–05–10
  9. By: Viljoen JMM, Blaauw PF & Schenck CJ
    Abstract: In this paper we use income data of 873 street waste pickers in South Africa to assess whether their income is sufficient to make a living and to identify the possible factors that may influence their income. The results can assist policy makers to make informed decisions in designing and implementing policies aimed at improving the street waste pickers’ income earning potential. The results of a linear and logistic regression analysis show that street waste pickers’ income is low and many of the street waste pickers in South Africa are trapped in persistent and chronic poverty. The findings further show that the only variables under the direct control of street waste pickers that may have a small positive effect on their income are the use of a trolley and the number of hours worked. Most of the variance in the daily income is explained by the prices of, access to, and the quality of recyclable waste collected over which the street waste pickers have little or no control. This leaves street waste pickers with little scope to improve their income and consequently their socio-economic conditions. Local governments can, however, create an environment and infrastructure in which higher levels of quality waste are made accessible to the street waste pickers.
    Keywords: waste pickers, income, poverty, waste management, recycling, waste, Informal economy
    JEL: E26 I30 J40
    Date: 2016
  10. By: Lakatos,Csilla; Maliszewska,Maryla; Osorio-Rodarte,Israel; Go,Delfin Sia
    Abstract: This paper explores the economic impacts of two related tracks of China's expected transformation?economic slowdown and rebalancing away from investment toward consumption?and estimates the spillovers for the rest of the world, with a special focus on Sub-Saharan African countries. The paper finds that an average annual slowdown of gross domestic product in China of 1 percent over 2016?30 is expected to result in a decline of gross domestic product in Sub-Saharan Africa by 1.1 percent and globally by 0.6 percent relative to the past trends scenario by 2030. However, if China's transformation also entails substantial rebalancing, the negative income effects of the economic slowdown could be offset by the positive changes brought along by rebalancing through higher overall imports by China and positive terms of trade effects for its trading partners. If global supply responds positively to the shifts in relative prices and the new sources of consumer demand from China, a substantial rebalancing in China could have an overall favorable impact on the global economy. Economic growth could turn positive and higher on average, by 6 percent in Sub-Saharan Africa and 5.5 percent globally, as compared with the past trends scenario. Finally, rebalancing reduces the prevalence of poverty in Sub-Saharan Africa compared with the isolated negative effects of China's slowdown, which slightly increase the incidence of poverty. Overall, China's slowdown and rebalancing combined are estimated to increase gross domestic product in Sub-Saharan Africa by 4.7 percent by 2030 and reduce poverty, but the extent of this varies by country.
    Keywords: Debt Markets,Climate Change Economics,Economic Theory&Research,Emerging Markets,Pro-Poor Growth
    Date: 2016–05–10

This nep-afr issue is ©2016 by Sam Sarpong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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