nep-afr New Economics Papers
on Africa
Issue of 2018‒11‒12
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. At Africa's Expense? Disaggregating the Social Impact of Chinese Mining Operations By Wegenast, Tim; Strüver, Georg; Giesen, Juliane; Krauser, Mario
  2. The long-run and short-run effects of foreign direct investment, foreign aid and remittances on economic growth in African countries By Njangang, Henri; Nembot Ndeffo, Luc; Noubissi Domguia, Edmond; Fosto Koyeu, Prevost
  3. How important are supermarkets for the diets of the urban poor in Africa? By Wanyama, R.; Godecke, T.; Qaim, M.
  4. The Cost and Benefits of Tax Treaties with Investment Hubs: Findings from Sub-Saharan Africa By Sebastian Beer; Jan Loeprick
  5. Bank Earnings Smoothing During Mandatory IFRS adoption in Nigeria By Ozili, Peterson K; Outa, Erick R
  6. A blue revolution in sub-Saharan Africa? Evidence from Ghana’s tilapia value chain By Ragasa, Catherine; Andam, Kwaw S.; Kufoalor, Doreen S.; Amewu, Sena

  1. By: Wegenast, Tim; Strüver, Georg; Giesen, Juliane; Krauser, Mario
    Abstract: Qualitative studies and media reports suggest that the presence of Chinese oil or mining companies generates resentments among local extractive communities due to low wages, poor working conditions, environmental degradation, the employment of foreign labour, and perceived racial discrimination. At the same time, Chinese investment in the extractive sector appears to enhance local infrastructure. So far, these claims have not been empirically tested in a systematic way. Relying on novel data on the control-rights regimes of diamond, gold, and copper mines and geo-referenced information from Afrobarometer surveys, this paper examines whether Chinese-controlled mining promotes anti-Chinese sentiments among the local populations of sub-Saharan African countries. In addition, we test the effect of mining contractors' nationality on socio-economic indicators such as local employment rates and infrastructure levels. Our logistic regression analysis for the period 1997-2014 reveals that the effect of Chinese mining companies on African local development is ambiguous: while proximity to Chinese-operated mines is associated with anti-Chinese sentiments and unemployment, populations living close to Chinese mining areas enjoy better infrastructure, such as paved roads or piped water. Multilevel mixed-effects estimations using district-level data from the Demographic Health Survey for 20 sub-Saharan countries corroborate these findings.
    Keywords: natural resources,Africa,China,mining,unemployment,infrastructure
    JEL: O13 Q34 O55 L72 E24 O18
    Date: 2017
  2. By: Njangang, Henri; Nembot Ndeffo, Luc; Noubissi Domguia, Edmond; Fosto Koyeu, Prevost
    Abstract: This paper investigates the long-run and short-run effects of foreign direct investment (FDI), foreign aid and migrant remittances on economic growth in 36 African countries over the period 1980–2016. Empirical evidence is based on Pooled Mean Group (PMG) approach. The following findings are established. First, while there is a positive and significant long-run relationship between foreign direct investment and economic growth in Africa as a whole, the effect of remittances and foreign aid is insignificant. Second, in the short-run there is no evidence of any significant impact of FDI, remittances and foreign aid on economic growth. Third, results are still robust in the short-run when the panel is divided in three subsamples. However, in the long-run the effects of FDI, remittances and foreign aid on economic growth depend on the income level.
    Keywords: FDI; Remittances; Foreign Aid; economic growth; PMG
    JEL: F23 F24 F35 F43 O55
    Date: 2018–10–28
  3. By: Wanyama, R.; Godecke, T.; Qaim, M.
    Abstract: Many developing countries are undergoing a profound transformation of food systems. Especially in larger cities, supermarkets have become increasingly popular, affecting consumers food choices and diets. Previous research showed that supermarkets can have both positive and negative effects on dietary quality and nutrition. However, which households actually use supermarkets, and to what extent? While supermarket shopping is positively correlated with income, little is known about how important supermarkets are for the diets of the poor, who are of particular interest from a food policy perspective. The poorest of the urban poor often reside in informal settlements, so they are underrepresented in official surveys. We add to the literature by analyzing food consumption data collected from households in the poorest neighborhoods of Nairobi (Kenya) and Kampala (Uganda). We find high levels of nutritional deficiencies. Despite their ubiquitous presence, supermarkets are not yet very important for the diets of the urban poor. Supermarkets only account for 3% and 0.4% of sample households total food expenditures in Nairobi and Kampala, respectively. Especially unprocessed foods, which make up the largest share of calorie consumption, are primarily purchased in traditional retail outlets. We also show differences by food groups and income strata. Acknowledgement : This research was financially supported by the German Federal Ministry for Economic Cooperation and Development (BMZ). The authors thank the International Center for Tropical Agriculture (CIAT), the Kenya Agricultural and Livestock Research Organization (KALRO), and the National Agricultural Research Organization (NARO)-Uganda, for their research cooperation in the project Making Value Chains Work for Food and Nutrition Security for the Vulnerable Populations in East Africa (grant number C-030-16), and the great support during the survey.
    Keywords: Consumer/Household Economics
    Date: 2018–07
  4. By: Sebastian Beer; Jan Loeprick
    Abstract: This paper investigates the costs and benefits of concluding double tax treaties with investment hubs. Based on a sample of 41 African economies from 1985–2015, the results suggest that signing treaties with investment hubs is not associated with additional investments; yet, these treaties tend to come with nonnegligible revenue losses. Building on a theoretical model, the paper investigates the role of treaty shopping in driving nominal investment flows and provides indirect evidence for its importance in the sample
    Date: 2018–10–24
  5. By: Ozili, Peterson K; Outa, Erick R
    Abstract: We examine the extent of bank earnings smoothing during mandatory IFRS adoption in Nigeria, to determine whether mandatory IFRS adoption increased or decreased income smoothing among Nigerian banks. We find that the mandatory adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings smoothing among Nigerian banks, which implies that Nigerian banks do not use loan loss provisions to smooth reported earnings during the mandatory IFRS adoption period. We find evidence for earnings smoothing via LLP during voluntary IFRS adoption. Earnings smoothing is not significantly associated with listed and non-listed Nigerian banks during voluntary and mandatory IFRS adoption. Overall, the findings indicate that mandatory IFRS adoption improves the informativeness and reliability of loan loss provisions estimate by discouraging Nigerian banks from influencing loan loss provisions for earnings smoothing purposes during the mandatory IFRS adoption. The findings of this paper are relevant to the debate on whether IFRS reporting improves the quality of financial reporting among firms in Nigeria. The implication of the study is that IFRS has higher accounting quality than local GAAP in Nigeria as it improves the quality and informativeness of accounting numbers (LLPs and earnings) reported by Nigerian banks during the period examined
    Keywords: Loan Loss Provisions, Discretionary Accruals, Income Smoothing, Earnings Management, Nigeria, Banks, IFRS.
    JEL: G2 G21 G28 M41 M42 M48
    Date: 2018
  6. By: Ragasa, Catherine; Andam, Kwaw S.; Kufoalor, Doreen S.; Amewu, Sena
    Abstract: Global growth in aquaculture is underway – a “blue revolution” featuring rapid increases in demand for fish and a corresponding surge in aquaculture production. This paper describes the fast-growing tilapia value chain in Ghana to demonstrate the features of a nascent blue revolution in sub-Saharan Africa (SSA) and to illustrate its potential for job creation and reducing poverty and food insecurity there. Tilapia production has been growing at 15 percent annually in SSA, but imports are also surging to satisfy the growing appetite for tilapia. This paper illustrates how aquaculture can grow sustainably in SSA within the context of growing demand and global competition. A value chain analysis is conducted using secondary data analysis, desk reviews of experiences and lessons from other countries, interviews with 95 actors in the tilapia value chain in Ghana, and detailed production and profitability data from Ghanaian tilapia farmers. A profitable farmed tilapia industry has been established in Ghana with the potential to expand supply to satisfy local demand and to export to neighboring countries. Productivity in the industry has grown mainly through reducing the mortality rates of fingerlings and improvements in the supply of locally-produced high-quality fish feed. Feed costs remain high. However, there is potential to reduce those costs by improving the productivity of crops that are used in fish feed, particularly maize and soybean. Reducing local feed costs will have positive spillover effects on both other pond-based aquaculture systems and on the livestock feed sector. Moreover, Ghana can expand it fish feed production to be an important source of feed within SSA. The industry can further increase aquaculture productivity through the adoption of faster-growing fish strains and better management practices. Ghana’s aquaculture sector could grow even faster by adopting lessons from other countries, including on infrastructure provision, fiscal incentives for the production of fish feed ingredients, and sustainable fish farming practices, particularly through paying close attention to water and feed quality and addressing food safety concerns within the sector.
    Keywords: GHANA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA ; aquaculture; value chain; competitiveness; profitability; quality controls; fishery production; food safety ; tilapila farming; aquaculture growth
    Date: 2018

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