nep-afr New Economics Papers
on Africa
Issue of 2017‒01‒15
four papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The Changing Structure of Africa's Economies By Xinshen Diao; Kenneth Harttgen; Margaret McMillan
  2. Oil Prices and African Stock Markets Co-movement: A Time and Frequency Analysis By Gourène, Grakolet Arnold Zamereith; Mendy, Pierre
  3. Food Inflation in Sub-Saharan Africa; Causes and Policy Implications By Emre Alper; Niko A Hobdari; Ali Uppal
  4. The Impact of Reforming Energy Subsidies, Cash Transfers, and Taxes on Inequality and Poverty in Ghana and Tanzania. By Stephen Younger

  1. By: Xinshen Diao; Kenneth Harttgen; Margaret McMillan
    Abstract: Using data from the Groningen Growth and Development Center’s Africa Sector Database and the Demographic and Health Surveys, we show that much of Africa’s recent growth and poverty reduction has been associated with a substantive decline in the share of the labor force engaged in agriculture. This decline is most pronounced for rural females over the age of 25 who have a primary education; it has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity services and manufacturing. We also show that although the employment share in manufacturing is not expanding rapidly, in most of the low-income African countries, the employment share in manufacturing has not peaked and is still expanding, albeit from very low levels. More work is needed to understand the implications of these shifts in employment shares for future growth and development in Africa south of the Sahara.
    JEL: O11 O4 O55
    Date: 2017–01
  2. By: Gourène, Grakolet Arnold Zamereith; Mendy, Pierre
    Abstract: This paper explores the co-movement between OPEC (Organization of the Petroleum Exporting Countries) oil prices and six largest African stock markets in term of capital. The Wavelet Coherence method is used to analyze the evolution of this relationship in both time and frequency. Our results show that the co-movement between the African financial markets and oil prices is relatively low except for the emerging stock markets such as South Africa and Egypt and is related for the majority of stock markets in large time scales during the period of the 2007 financial crisis and after. At small time scales, African stock markets could be a way of diversification benefits for oil market active investors.
    Keywords: African Stock Markets, OPEC oil prices, Co-movement, Wavelet Coherence.
    JEL: C1 F3 G1
    Date: 2015–12–31
  3. By: Emre Alper; Niko A Hobdari; Ali Uppal
    Abstract: This paper analyzes food inflation trends in Sub-Saharan Africa (SSA) from 2000 to 2016 using two novel datasets of disaggregated CPI baskets. Average food inflation is higher, more volatile, and similarly persistent as non-food non-fuel (NF/NF) inflation, especially in low-income countries (LICs) in SSA. We find evidence that food inflation became less persistent from 2009 onwards, related to recent improvements in monetary policy frameworks. We also find that high food prices are driven mainly by non-tradable food in SSA and there is incomplete pass-through from world food and fuel prices and exchange rates to domestic food prices. Taken together, these finding suggest that central banks in low-income countries with high and persistent food inflation should continue to pay attention to headline inflation to anchor inflation expectations. Other policy levers include reducing tariffs and improving storage and transport infrastructure to reduce food pressures.
    Keywords: Food prices;Sub-Saharan Africa;Inflation;Low-income developing countries;
    Date: 2016–12–22
  4. By: Stephen Younger (Department of Economics, Ithaca College, Ithaca, NY.)
    Abstract: The paper explains methods developed by the Commitment to Equity Institute to simulate policy changes and uses them to assess the distributional consequences of three types of policy reform in Ghana and Tanzania: removal of energy subsidies, expansion of conditional cash transfer programs, and shifts in the balance between indirect and direct taxation. The methods are simple to implement and provide a first-order approximation to the true distributional effects. In both countries energy subsidies are substantial and popular but regressive despite the use of lifeline tariffs for electricity consumption. Their removal would reduce inequality but also increase poverty by a non-trivial amount because the poor do garner some benefit from the subsidies. A simultaneous expansion of cash transfer programs could offset the poverty consequences at significantly lower fiscal cost than that of the energy subsidies. In both countries direct taxes are more progressive than indirect taxes, yet shifting taxation from indirect to direct taxes has relatively little effect on inequality and poverty because the incidence of the two is not so different as, for instance, the difference between taxes and a strongly progressive expenditure like conditional cash transfers.
    Keywords: fiscal incidence, poverty, inequality, subsidy reform, Ghana, Tanzania
    JEL: D31 H22 I14
    Date: 2016–11

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