nep-afr New Economics Papers
on Africa
Issue of 2018‒12‒03
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Investor relations - are natural resources companies better? Evidence from South Africa. By Leana Esterhuyse
  2. Assessing the European Union’s North Africa trade agreements By Uri Dadush; Yana Myachenkova
  3. Gender Inequality and Marketisation Hypothesis in Sub-Saharan Africa By Tendai Zawaira; Manoel Bittencourt; Matthew W. Clance
  4. Environmental Pollution Policy of Small Businesses in Nigeria and Ghana: Extent and Impact By Uchenna Efobi; Tanankem Belmondo; Emmanuel Orkoh; Scholastica Ngozi Atata; Opeyemi Akinyemi; Ibukun Beecroft
  6. Why African Tax Authorities Should Employ More Women: Evidence from the Uganda Revenue Authority By Mwondha, Michael; Kaidu Barugahara, Tina; Nakku Mubiru, Mwajumah; Wasagali Kanaabi, Sarah; Isingoma Nalukwago, Milly
  7. Relevance of governance quality on the effect of foreign direct investment on economic growth: new evidence from African countries By Njangang, Henri; Nawo, Larissa

  1. By: Leana Esterhuyse (University of South Africa)
    Abstract: This paper aims to determine whether natural resources companies have better investor relations practices than companies in other industries, and secondly, whether classification as a natural resources company is a significant predictor of the quality of companies? investor relations practices. The companies under investigation are listed on the Johannesburg Stock Exchange (JSE) of South Africa. Output from natural resources companies is a significant contributor of GDP in South Africa, an emerging and developing economy. In order to attract foreign investors, improve stock pricing and trading liquidity, South African companies need to signal to the capital market at the level that they are used to from companies in developed economies. Communications with the capital market is proxied by investor relations activities on the companies? websites. I find that on average, natural resources companies have significantly better IR practices than companies in other industries. However, in the multivariate model, being a natural resource company is a weak and insignificant predictor of online investor relations quality. Results indicate that larger companies that were listed more recently, had a Big 4 Auditor and were listed on multiple exchanges had significantly better online investor relations practices. From a policy point of view, investor relations officers at natural resources companies can still do more to improve their capital market communication practices to reap the full benefits from increased transparency, especially in the face of political uncertainty and declining or stagnant commodity prices. This study contributes to the theories on signalling and legitimacy by testing its application to natural resource companies in a sub-Saharan country.
    Keywords: Natural resources, South Africa, investor relations, transparency
    JEL: D82 O16 Q32
    Date: 2018–06
  2. By: Uri Dadush; Yana Myachenkova
    Abstract: This paper was produced with the financial support of Compagnia di San Paolo. The trade agreements that the European Union has with North African countries – with Algeria, Egypt, Morocco and Tunisia – are often seen as having delivered disappointing results since they came into force during the 2000s. The four North African countries have seen insufficient growth in their exports to the EU, and have undergone only limited diversification. In the meantime, the EU’s exports to North Africa have grown quite rapidly. Economic growth in North Africa has been well short of what is needed to reduce chronic under-employment, especially of young people. The EU trade agreements with North Africa could generate additional, large benefits if they either directly led to or at least incentivised behind-the-border reforms to make the North African countries more competitive in international markets. Though this reform is the responsibility of the governments of North African countries, the EU could provide stronger incentives to improve the business environment. Meanwhile, in agriculture, were the North African countries able to compete with the EU on an even playing field, agriculture’s share of domestic value-added would almost certainly be significantly larger and rural poverty correspondingly lower than at present. Nevertheless, the agreements have been judged too harshly. They helped generate large amounts of trade, though not enough was done on the domestic front to derive the maximum benefit from them. Moreover, the domestic and international environment has been unfavourable, impeding North Africa’s progress. Over much of the relevant period, the EU grew sluggishly, and North African countries faced sharply increasing competition on European markets from China and the eastern Europe countries that joined the EU in 2004 and after. Generally, countries that acceded to the EU have done much better than the countries of North Africa. While the countries of North Africa are not EU candidates, there is much that they and the EU can learn from the example of the former accession countries in terms of how a new generation of trade agreements between the EU and North Africa could be deeper and more comprehensive than currently, and could be accompanied by increased aid for trade.
    Date: 2018–11
  3. By: Tendai Zawaira (Department of Economics, University of Pretoria, Pretoria, South Africa); Manoel Bittencourt (School of Economic and Business Sciences, University of Wiatersrand); Matthew W. Clance (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: The marketisation hypothesis states that the growth of the service sector reduces gender inequality. Women have a comparative advantage in service jobs and consequently benefit more than men as the sector grows. In recent years, the African service sector has grown considerably, however, gender inequality in the region is still relatively high. Using a new dataset on gender inequality and panel data analysis, we study the relationship between service sector shares and gender inequality in 31 sub-Saharan African countries during the 1990-2014 period. Consistent with predictions of the hypothesis, service sector shares significantly reduce gender inequality and the results are robust after the inclusion of a wide range of controls. However, we find that this relationship is nonlinear, requiring that the size of the service sector reaches a threshold before we observe improvements in gender inequality.
    Keywords: Gender, Marketisation Hypothesis, Africa
    JEL: J16 O11
    Date: 2018–11
  4. By: Uchenna Efobi (Covenant University, Ota, Ogun State, Nigeria); Tanankem Belmondo (MINEPAT, Yaoundé, Cameroon); Emmanuel Orkoh (World Trade Organization, Geneva); Scholastica Ngozi Atata (Abeokuta, Nigeria); Opeyemi Akinyemi (Covenant University, Ota, Ogun State, Nigeria); Ibukun Beecroft (Covenant University, Ota, Ogun State, Nigeria)
    Abstract: This study provides a comprehensive assessment of firms’ operation and environmental protection polices in Nigeria and Ghana, where there has been a rising industrial growth amidst low regulatory and institutional frameworks. We analyze the extents to which firms’ adoption of environmental protection policies affect their performances. We use firm-level data of 842 firms (447 for Nigeria and 395 for Ghana) distributed across different regions of both countries for our descriptive and econometric estimations. We find, among other things, that firms’ adoption of internal policies on environmental protection is dismally low in both Nigeria (32 percent) and Ghana (17 percent), with policies focused on reducing solid (38 percent, Nigeria; and 35 percent, Ghana), gaseous (22 percent, Nigeria; and 44 percent, Ghana), and liquid (24 percent, Nigeria; and 14 percent, Ghana) pollution. Training appears to be an important intervention that can help improve firms’ adoption of such policies. We also found that firms’ adoption and implementation of environmental protection policies significantly improve their performance.
    Keywords: Environment; Green Industrialization; Performance; Pollution; Small Businesses; West Africa
    JEL: H32 L25 Q52 Q53
    Date: 2018–01
  5. By: Johan Hattingh (Central University of Technology, Free State)
    Abstract: As one of the largest industries in the world, the tourism industry has a positive economic impact on countries. This is especially true for developing countries where tourism is an essential driver for economic growth and development. In this regard Africa and specifically Southern Africa has plenty to offer tourists. The Southern African Development Community (SADC) is a regional economic community comprising fifteen member states, namely Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe (SADC, 2017). The tourism industry in the SADC region has been growing rapidly and the region has prioritized tourism as a means of promoting economic development and regional integration (SADC, 2017). For the fulfillment of these goals, a protocol on the development of tourism was created. The protocol aims to use tourism as a means for sustainable development drawing on the region?s natural and cultural resources (SADC, 2017). Southern Africa has large rural areas and many communities in need of local economic development (LED). LED is thus an on-going concern. Route tourism is often seen as a means to attract tourists to rural areas and to ensure that product owners, community members and governments are involved in a coordinated way (World Bank, 2017). The paper intends to reflect on the local economic development activities of two areas in Southern Africa where local economic development tourism has been contemplated. This includes the Maloti Drakensberg Tourism Route in South Africa and the Four Deserts Tourism Route in southern Namibia. The aim of the paper is to contribute theoretically and empirically to the development of approaches that enable growth for rural areas and to identify how LED has been implemented or not in the two study areas. Although the paper reflects a southern African perspective it will provide valuable insights applicable to other local economic tourism initiatives.
    Keywords: Sustainable tourism development,local economic development, Southern Africa, Maloti Drakensberg Route, Four Deserts Tourism Route, South Africa, Namibia.
    JEL: L83
    Date: 2018–11
  6. By: Mwondha, Michael; Kaidu Barugahara, Tina; Nakku Mubiru, Mwajumah; Wasagali Kanaabi, Sarah; Isingoma Nalukwago, Milly
    Abstract: Tax collection has historically – in Africa and in the rest of the world – been very much a male preserve. The situation is changing. Partly because of changes in the ways in which taxes are collected, women are entering the profession in increasing numbers. In Africa, they are still very much in the minority. The Uganda Revenue Authority (URA) is one of the few national tax administrations in Africa that has been employing large numbers of women for many years, and where the numbers of female and male employees are gradually approaching parity. What is the impact of this on staff performance and organisational growth? On the basis of a thorough study of the URA’s personnel records and a sample survey of 11 per cent of staff, four conclusions emerge. First, the only available indicator of staff performance – scores given to employees following their regular six-monthly appraisals – indicates that female staff on average perform slightly better than men. Second, in an organisation where rates of staff turnover can be high, female employees on average serve the organisation for slightly longer than men: 12.3 versus 11.6 years. Third, the rate of disciplinary actions against male employees is more than twice that against female employees. Fourth, both women and men are generally relaxed and satisfied with working in a mixed-gender environment – although there are some marginal concerns among men that they are especially likely to be posted to more remote areas of the country. These findings suggest that large-scale recruitment of women into tax administration probably improves organisational performance.
    Keywords: Governance,
    Date: 2018
  7. By: Njangang, Henri; Nawo, Larissa
    Abstract: Despite the large volume of studies on the direct impact of foreign direct investment on economic growth, the results remain inconclusive. This has led researchers to examine the channels through which FDI affects economic growth. Evidence suggests that institution quality can improve economic growth by increasing foreign direct investment in the host countries. As governance quality is improving in African countries during the last decade, the aim of this study is to investigate the relationship between foreign direct investment, governance quality and economic growth in 51 African countries over the period 1998-2015. The empirical evidence is based on Generalized Method of Moments. The following findings are established. First, there is an unconditional positive effect of foreign direct investment on economic growth in African countries. We also find a positive and significant relationship between governance quality and economic growth. Second, these findings are still robust when we use the composite governance quality indicators. Three, when regards at interaction terms between governance quality and foreign direct investment, we find a convincing evidence that governance quality moderate favorably the effect of FDI on economic growth. Four, the moderate effect of governance quality on foreign direct investment and growth nexus still robust with composite governance quality indicators. Overall this study has established net direct positive and significant effect of foreign direct investment on economic growth and that this effect is enhanced by good governance. The major implication from our study is that African countries should improve their governance quality to benefit more from FDI in terms of achieving better growth outcomes.
    Keywords: FDI, governance, economic growth, Africa, GMM
    JEL: F23 G30 O55
    Date: 2018–11–20

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