nep-afr New Economics Papers
on Africa
Issue of 2017‒12‒18
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The Calculus of Democratization and Development By Jacob Ferguson
  2. The Nexus Between Key Macroeconomic Determinants and Economic Growth in Zambia: A Dynamic Multivariate Granger-Causality Linkage By Chirwa, Themba G.; Odhiambo, Nicholas M.
  3. Access to Finance Constraint and SMEs Functioning in Ghana By Nyanzu, Frederick; Quaidoo, Matthew
  4. Human Smuggling and Intentions to Migrate: Global Evidence from a Supply Shock along Africa-to-Europe Migration Routes By Guido, Friebel; Miriam, Manchin; Mariapia, Mendola; Giovanni, Prarolo;
  5. Local content requirements in the petroleum sector in Tanzania: A thorny road from inception to implementation? By Abel Kinyondo; Espen Villanger
  6. Improving financial access in Africa: insights from information sharing and financial sector development By Asongu, Simplice
  7. Botswana; Selected Issues By International Monetary Fund
  8. Quantitative Easing in Joseph's Egypt with Keynesian Producers By Jeffrey Campbell

  1. By: Jacob Ferguson
    Abstract: In accordance with "Democracy's Effect on Development: More Questions than Answers", we seek to carry out a study in following the description in the 'Questions for Further Study.' To that end, we studied 33 countries in the Sub-Saharan Africa region, who all went through an election which should signal a "step-up" for their democracy, one in which previously homogenous regimes transfer power to an opposition party that fairly won the election. After doing so, liberal-democracy indicators and democracy indicators were evaluated in the five years prior to and after the election took place, and over that ten-year period, we examine the data for trends. If we see positive or negative trends over this time horizon, we are able to conclude that it was the recent increase in the quality of their democracy which led to it. Having investigated examples of this in depth, there seem to be three main archetypes which drive the results. Countries with positive results to their democracy from the election have generally positive effects on their development, countries with more "plateau" like results also did well, but countries for whom the descent to authoritarianism was continued by this election found more negative results.
    Date: 2017–12
  2. By: Chirwa, Themba G.; Odhiambo, Nicholas M.
    Abstract: This study investigates the nexus between key macroeconomic determinants and economic growth in Zambia by employing the Autoregressive Distributed Lag model to test for Granger-causality covering the period 1970???2015. The empirical results reveal that there are three distinct Granger-causality hypotheses that exist in Zambia related to economic growth. The dominant hypothesis is the feedback hypothesis between investment, population growth, foreign aid and economic growth in both the short and long run; between real exchange rate, trade openness and economic growth in the short run; and between government consumption, inflation and economic growth in the long run. The second is the supply-leading hypothesis that runs from government consumption and inflation to economic growth in the short run; and from real exchange rate and trade openness to economic growth in the long run. Lastly, the neutrality hypothesis holds between human capital and economic growth in the short run. These results have significant policy implications for the Zambian economy. They imply that the authorities should focus on promoting economic incentives that encourage the growth of real GDP per capita and investment, improve the quality of human capital, trade reforms, population control, macroeconomic stability, and the effectiveness of foreign aid
    Keywords: Zambia; Autoregressive Distributed Lag Models; Cointegration; Granger-causality; Economic Growth
    Date: 2017–12
  3. By: Nyanzu, Frederick; Quaidoo, Matthew
    Abstract: Well-functioning small and medium enterprises (SMEs) are a fundamental part of the economic fabric in developing countries, and play a crucial role in contributing to GDP growth, reducing unemployment as well as furthering innovation and prosperity. Unfortunately, they are strongly restricted in accessing the capital that they require to grow, expand and function, with nearly half of SMEs in developing countries rating access to finance as a major constraint. This paper examines the link between access to finance and SMEs functioning in Ghana. The study resorts to the current World Bank Enterprise Survey data released for Ghana (2013); and using chi-square, logit and ordered logit analysis, it finds out that access to credit is a major constraint of SMEs in Ghana with implications for their functioning and growth. The study recommends, therefore, that governments should create the enabling environment for SMEs to function effectively by providing financing avenues and improving access to financing.
    Keywords: Financial Constraint, Small and Medium Enterprises, Functioning, Ghana
    JEL: G20 M20
    Date: 2017–12
  4. By: Guido, Friebel; Miriam, Manchin; Mariapia, Mendola; Giovanni, Prarolo;
    Abstract: Africa-to-Europe irregular migration depends heavily on human smuggling services. The demise of the Gaddafi regime in 2011 marked the end of a bilateral agreement between Italy and Libya and opened the Central Mediterranean Route for irregular border crossing. How did this remarkable increase in human smuggling services affect migration intentions in the rest of the region? This paper isolates a causal impact by exploiting the spatial dimension of the smuggling network and its change over time, which produced a heterogeneous decrease in bilateral migration distances between countries in Africa and Europe. We use this source of variation and a novel dataset of bilateral distances along irregular land and sea routes, combined with cross-country survey data on individual intentions to move from Africa to Europe between 2010 and 2012. Netting out pair- and country-by-time-specific fixed effects, we find a large negative effect of distance along smuggling routes on individual migration intentions. Shorter distances increase the willingness to migrate especially for youth, (medium) skilled individuals and those with a network abroad. The effect is stronger in origin countries not too far from Libya and with weak rule of law.
    Keywords: International Migration, Human Smuggling, Illegal Migration, Libyan Civil War
    JEL: K23 K42
    Date: 2017–12–06
  5. By: Abel Kinyondo; Espen Villanger
    Abstract: Abstract Tanzania has recently discovered huge offshore natural gas fields. This has led the Government to develop local content policies (LCPs) to increase job and business opportunities for nationals in the sector. We study the process behind the development of these policies and the positions of stakeholders. We find that although there is a positive view among domestic stakeholders of imposing such policies, there is much suspicion–to such a degree that it shapes their recommendations of which policies to include in the LCP. One reason is that the Government monopolized the policy development process and abstained from conducting a consultative process. Our findings suggest that future Tanzanian policy development should include in-depth consultations to maximize the decision maker’s knowledge base, add to the transparency of the process and manage expectations. This would also contribute to effective implementation and lessen tensions, conflicts and suspicion among stakeholders. This research is funded by the Norwegian Embassy in Tanzania, which is gratefully acknowledged. We are also grateful to Odd-Helge Fjeldstad, Kendra Dupuy, Siri Lange, Jan Isaksen and participants at the REPOA Annual Workshop 2016 for useful comments. CMI working paper number 6 2016 Repoa working paper number 16/4 August 2016 Authors Abel Kinyondo Director of Strategic Research, REPOA Espen Villanger Corresponding author. Senior Researcher, Chr. Michelsen Institute Printed version: ISSN 0804-3639 Electronic version: ISSN 1890-5048 Printed version: ISBN 978-82-8062-600-4 Electronic version: ISBN 978-82-8062-601-1
    Keywords: Tanzania Local content policy Natural gas
    Date: 2016
  6. By: Asongu, Simplice
    Abstract: The study investigates interactions between information sharing offices, the coexistence of financial sub-systems and financial access. The empirical evidence is based on Quantile regressions in order to articulate countries with low, intermediate and high levels of financial access. The scope of the study is on 53 African countries for the period 2004-2011. The following main results are established. First, the positive association between “information sharing offices (ISOs)” and “formal financial sector development” consistently increases with improvements in initial levels of credit access. Second, the negative linkage between ISOs and “informal financial sector development” consistently decreases with increasing levels of credit access. In summary, we establish that the positive complementarity of ISOs and financial formalization is an increasing function of financial activity (or access to credit) whereas the negative complementarity
    Keywords: Information Asymmetry; Financialization; Financial Access
    JEL: G20 G29 L96 O40 O55
    Date: 2017–07
  7. By: International Monetary Fund
    Abstract: Selected Issues
    Keywords: Botswana;Sub-Saharan Africa;
    Date: 2017–08–08
  8. By: Jeffrey Campbell (Federal Reserve Bank of Chicago)
    Abstract: This paper considers monetary and fiscal policy when tangible assets can be created and stored after shocks that increase desired savings, like Joseph's biblical prophecy of seven fat years followed by seven lean years. The model's flexible-price allocation mimics Joseph's saving to smooth consumption. With nominal rigidities, monetary policy that eliminates liquidity traps leaves the economy vulnerable to confidence recessions with low consumption and investment. Josephean Quantitative Easing, a fiscal policy that purchases either obligations collateralized by reproducible tangible assets or the assets themselves, eliminates both liquidity traps and confidence recessions by putting a floor under future consumption. This requires no commitment to a time-inconsistent plan. In a small open economy, the monetary authority can implement Josephean Quantitative Easing with a sterilized currency-market intervention that accumulates foreign reserves. This can improve outcomes even if it leaves nominal exchange rates unchanged.
    Date: 2017

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