nep-afr New Economics Papers
on Africa
Issue of 2018‒12‒10
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City By Girum Abebe; Stefano Caria; Marcel Fafchamps; Paolo Falco; Simon Franklin; Simon Quinn
  2. Testing the Quiet Life Hypothesis in the African Banking Industry By Simplice A. Asongu; Nicholas M. Odhiambo
  3. Knowledge-Driven Economic Growth: The Case of Sub-Saharan Africa By Stephen Oluwatobi; Isaiah Olurinola; Philip Alege; Adeyemi Ogundipe
  4. Dollarization and the “Unbundling†of Globalization in sub-Saharan Africa By Kazeem B. Ajide; Ibrahim D. Raheem; Simplice A. Asongu
  5. Co-investments and African infrastructure deficit: Understanding and mitigating political risks in Conflicts Affected and Fragile States By Nawo, Larissa; Njangang, Henri
  6. Does relative deprivation induce migration? Evidence from Sub-Saharan Africa By Winters, P.; Kafle, K.; Benfica, R.
  7. Side Effects of Immunity: The Rise of African Slavery in the US South By Elena Esposito
  8. Cohesive Institutions and Political Violence By Thiemo Fetzer; Stephan Kyburz

  1. By: Girum Abebe; Stefano Caria; Marcel Fafchamps; Paolo Falco; Simon Franklin; Simon Quinn
    Abstract: This paper exploits a natural experiment to assess whether arresting the head of Burkina Faso’s Customs Ministry for corruption charges had any trickle-down effect on the petty corruption behaviour of lower-ranked customs officials. I measure petty corruption using a unique micro-dataset collated by the USAID West Africa Trade Hub, which records over 257,000 bribes paid by truck-drivers across six West African countries from 2006 to 2012. Using a difference-in-difference methodology, I find that the arrest significantly reduced the bribe-taking behaviour of Burkinabé customs officials relative to non-customs officials in Burkina Faso and to customs officials in three neighbouring countries. These results are robust to a variety of robustness tests and alternative explanations. Overall, my findings support the select use of leadership decapitation as an anti-corruption tool, though the dynamics of the results post-arrest point to the need for further research before its long-term effectiveness can be more confidently asserted.
    JEL: O18 J22 J24 J61 J64 M53
    Date: 2018
  2. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (University of South Africa, Pretoria, South Africa)
    Abstract: The Quiet Life Hypothesis (QLH) is the pursuit of less efficiency by firms. In this study, we assess if powerful banks in the African banking industry are increasing financial access. The QLH is therefore consistent with the pursuit of financial intermediation inefficiency by large banks. To investigate the hypothesis, we first estimate the Lerner index. Then, using Two Stage Least Squares, we assess the effect of the Lerner index on financial access proxied by loan price and loan quantity. The empirical evidence is based on a panel of 162 banks from 42 African countries for the period 2001-2011. The findings support the QLH, although quiet life is driven by the below-median Lerner index sub-sample. Policy implications are discussed.
    Keywords: Financial access; Bank performance; Africa
    JEL: D40 G20 G29 L10 O55
    Date: 2018–01
  3. By: Stephen Oluwatobi (Covenant University, Ota, Ogun State, Nigeria); Isaiah Olurinola (Covenant University, Ota, Ogun State, Nigeria); Philip Alege (Covenant University, Ota, Ogun State, Nigeria); Adeyemi Ogundipe (Covenant University, Ota, Ogun State, Nigeria)
    Abstract: The experience of South Korea, India, China and Singapore reveals that developing economies can fasttrack development, leapfrog the stages of development and catch up with advanced economies by putting knowledge capital as the driver of development. If the knowledge economy is therefore an accelerant of development for both advanced and developing economies, it is possible for Sub-Saharan African (SSA) economies to also catch up with advanced economies. It was on this basis that this study assessed the knowledge capacity of SSA and the effect it has on its economic advancement. Given the importance of the interrelatedness among the knowledge economy elements, this study, thus, examined how the interaction effect between the elements of the knowledge economy affects economic growth in 32 SSA countries, for which data were available, over the period of 17 years (1996-2012). Using the System Generalized Method of Moments (SGMM), the study found out that institutions and human capital in SSA mitigate the effect of innovation on economic growth in the region, thus, making it a lean knowledge economy.
    Keywords: Economic Growth; Human Capital; ICT; Innovation; Institutions; Knowledge Economy
    JEL: O10 O30 O38 O55 O57
    Date: 2018–01
  4. By: Kazeem B. Ajide (University of Lagos, Lagos, Nigeria); Ibrahim D. Raheem (University of Kent, Canterbury, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study contributes to the dollarization literature by expanding its determinants to account for different dimensions of globalization, using the widely employed KOF index of globalization. Specifically, globalization is “unbundled†into three different layers namely: economic, social and political dimensions. The study focuses on 25 sub-Saharan African (SSA) countries for the period 2001-2012.Using the Tobit regression approach, the following findings are established. First, from both economic and statistical relevance, the social and political dimensions of globalization constitute the key dollarization amplifiers, while the explanatory power of the economic component is weaker on dollarization. Second, consistent with the theoretical underpinnings, macroeconomic instabilities (such as inflation and exchange rate volatilities) have the positive expected signs. Third, the positive association between the accumulation of international reserves and dollarization is also apparent. Policy implications are discussed.
    Keywords: Dollarization; Globalization; sub-Saharan Africa; Tobit regression
    JEL: E41 F41 C21
    Date: 2018–01
  5. By: Nawo, Larissa; Njangang, Henri
    Abstract: This article through a qualitative assessment identifies political risks confronted by FDI in infrastructures project in African Conflicts Affected and Fragile (CAF) States and studies the structure for infrastructures financing which allows lessening political risks. Outside hydrocarbon sector which remains attractive even in a worse political context, African CAF regions infrastructures sector as other sectors remain unattractive to foreign investors. By considering global investors’ weak preferences for CAF countries infrastructures assets, due to high levels of political risks, we argue that: to fill the CAF States’ infrastructure gap and addressing at the same time political risks concern, an optimal solution is located in a strategic tricky balance between African SWFs as kick-started, Multi-Development Banks (MDBs) (like MIGA agency under the World Bank Group) and long-term institutional investors like foreign SWFs. In the initial phase, MDBs with both their flexibility and experience ought to help finance the riskiest phases of infrastructure projects after African SWFs have to identified bankable projects. In the second period, MDBs ought to disengage and transfer their mature green infrastructure projects to secure the path for a workable involvement of long-term institutional investors such as sovereign wealth funds. With the aim to foster a vast African infrastructure bonds’ markets in which the African CAF States could play a pivotal role, strengthening rules of law (regulatory and legal frames) should begin straightaway
    Keywords: Sovereign wealth Funds, Africa, CAF States, Political risks, infrastructure financing, co-investments, Multi-Development Banks (MDBs)
    JEL: D61 D74 G32 H54 O55
    Date: 2018–11–29
  6. By: Winters, P.; Kafle, K.; Benfica, R.
    Abstract: This paper revisits the decades-old relative deprivation theory of migration. In contrast to the traditional view which portrays absolute income maximization as a driver of migration, we test whether relative deprivation induces migration in the context of sub-Saharan Africa. Taking advantage of the internationally comparable longitudinal data from integrated household and agriculture surveys from Tanzania, Ethiopia, Malawi, Nigeria, and Uganda, we use panel fixed effects to estimate the effects of relative deprivation on migration. We find that a household s migration decision is based not only on its wellbeing status but also on the relative position of the household in the wellbeing distribution of the local community. Results are robust to alternative specifications including pooled data across the five countries and the migration relative deprivation relationship is amplified in rural, agricultural, and male-headed households. Results imply a need to renew the discussion of relative deprivation as a cause of migration. Acknowledgement :
    Keywords: Labor and Human Capital
    Date: 2018–07
  7. By: Elena Esposito
    Abstract: Why did African slavery rise in the southern United States? The novel empirical evidence presented in this paper reveals that (i) malaria was a major determinant for the rise and spread of African slavery in the US South and (ii) malaria resistance made sub-Saharan Africans especially attractive for employment in these regions. We show that African enslaved labor was massively introduced in the United States after the spread of a deadly malaria species, and that it remained largely concentrated in the more malariainfested areas of the South. We further document that more malaria-resistant slaves, i.e. those born in the most malaria-ridden regions of Africa, commanded higher prices.
    Keywords: Slavery, Malaria, African Slave Trade, Colonial Institutions
    JEL: I12 N31 N37 N57 J15 J47
    Date: 2018–07
  8. By: Thiemo Fetzer (University of Warwick); Stephan Kyburz (Center for Global Development)
    Abstract: Can institutionalized transfers of resource rents be a source of civil conflict? Are cohesive institutions better at managing conflicts over distribution? We exploit exogenous variation in revenue disbursements to local governments and use new data on local democratic institutions in Nigeria to answer these questions. There is a strong link between rents and conflict far away from the location of the resource. Conflict over distribution is highly organized, involving political militias, and concentrated in the extent to which local governments are non-cohesive. Democratically elected local governments significantly weaken the causal link between rents and political violence. Elections produce more cohesive institutions, and vastly limit the extent to which distributional conflict between groups breaks out following shocks to the rents. Throughout, we confirm these findings using individual level survey data.
    Keywords: Nigeria, conflict, ethnicity, natural resources, political economy, commodity, prices
    JEL: Q33 O13 N52 R11 L71
    Date: 2018–11

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