nep-afr New Economics Papers
on Africa
Issue of 2019‒03‒11
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Working Paper 308 - The Diaspora and Economic Development in Africa By Blaise Gnimassoun; John Anyanwu
  2. Working Paper 307 - The Macroeconomics of State Fragility in Africa By Chuku Chuku; Onye Kenneth
  3. Why Does Economic Performance Differ between Domestic and Foreign-Owned Establishments? Evidence from Nigeria By Hideaki Goto; Nonso Richard Okechukwu
  4. FinTech in Sub-Saharan African Countries; A Game Changer? By Amadou N Sy; Rodolfo Maino; Alexander Massara; Hector Perez Saiz; Preya Sharma
  5. Can Algeria be the first African country to outsmart the Malthusian population trap? Insights from the ARIMA approach By NYONI, THABANI

  1. By: Blaise Gnimassoun (Université de Lorraine); John Anyanwu (African Development Bank)
    Abstract: While the dominant collective belief asserts that brain drain is detrimental to the development of small economies, new studies hold the reverse view. This paper aims at studying the role of the African Diaspora in the economic development of Africa. It analyzes both the overall effect and the specific effect of emigration according to the level of education of emigrants. Then, through a deeper investigation, the paper analyzes the main channels through which the Diaspora influences economic development in Africa. The results show that the African Diaspora contributes positively, significantly and robustly to the improvement of real per capita income in Africa. These findings challenge the dominant collective belief since the higher the educational level of the emigrants, the greater the impact of the Diaspora on the level of economic development. Improvements in human capital, total factor productivity and democracy are effective transmission channels of this impact. Finally, the results show that while high-skilled emigrants have an overall greater impact on economic development and democracy, those with a low level of education contribute more to remittances to Africa. The establishment of an annual African Diaspora Summer School (ADSS) by the AfDB in partnership relevant international and regional stakeholders as a channel for the transfer of knowledge, technology and experience would further strengthen the role of the Diaspora in Africa’s economic development.Keywords: International migration, Economic development, Africa. JEL classification: F22, F63, O55
    Date: 2019–02–22
  2. By: Chuku Chuku (African Development Bank; University of Uyo - Nigeria); Onye Kenneth (University of Uyo - Nigeria)
    Abstract: Are poor macroeconomic outcomes primarily the result of economic policies, or of deeper underlying state fragility problems in sub-Saharan Africa? We attempt to answer this question by using carefully specified dynamic panel regression techniques to show how state fragility conditions help to explain the differences in the macroeconomic performance of sub-Saharan African economies, and to identify the most plausible mechanisms of transmission. We find that countries with greater fragility suffer higher macroeconomic volatility and crisis; they also experience weaker growth. When we disaggregate state fragility into its various components, we find that it is the security and social components that have the strongest causal impact on macroeconomic outcomes, while the political component is, at best, weak. Therefore, we conclude: it is state fragility conditions, and not necessarily macroeconomic policies, that are of first-order importance in explaining the differences in macroeconomic performance for African countries. The knock-on effects are mostly mediated through the fiscal channel, the aid channel, and the finance channel. Accordingly, we recommend that interventions in fragile states should best focus on exploiting the potential for using fiscal policy, aid, and finance as instruments to improve macroeconomic outcomes.Keywords: State fragility, macroeconomic volatility and crises, dynamic panel model, macroeconomic polices, sub-Saharan Africa. JEL classification: E02, O43, D72
    Date: 2019–02–22
  3. By: Hideaki Goto (International University of Japan); Nonso Richard Okechukwu (Bureau of Public Enterprises)
    Abstract: Diversifying its economy away from the oil industry and developing competitive nonagricultural industries are two of Nigeria's most important policy targets. However, the Nigerian economy faces significant challenges, such as educational attainment among workers, soundness of infrastructure, and access to finance. This study investigates how and to what extent these factors affect the output and productivity of domestic establishments (DEs) and foreignowned establishments (FOEs) in Nigeria. Further, it compares the economic performance of these two groups of establishments and analyzes the determinants of ownership differentials. First, the results show that FOEs significantly outperform DEs. Second, access to finance plays a key role, both in improving the economic performance of establishments (regardless of their ownership) and in explaining ownership differentials in economic performance. Third, it is implied that increasing educational attainment amongst workers could improve the performance of DEs by making it easier for them to employ skilled employees. In Nigeria, many reforms are under way under the Economic Recovery and Growth Plan, and they aim to develop infrastructure, strengthen the financial system, and improve human capital, to name but a few objectives; however, their rapid and complete implementation are urgently needed.
    Keywords: ownership, manufacture, productivity, decomposition, Nigeria
    Date: 2019–01
  4. By: Amadou N Sy; Rodolfo Maino; Alexander Massara; Hector Perez Saiz; Preya Sharma
    Abstract: FinTech is a major force shaping the structure of the financial industry in sub-Saharan Africa. New technologies are being developed and implemented in sub-Saharan Africa with the potential to change the competitive landscape in the financial industry. While it raises concerns on the emergence of vulnerabilities, FinTech challenges traditional structures and creates efficiency gains by opening up the financial services value chain. Today, FinTech is emerging as a technological enabler in the region, improving financial inclusion and serving as a catalyst for the emergence of innovations in other sectors, such as agriculture and infrastructure.
    Keywords: Sub-Saharan Africa;Financial services;Technological innovation;Financial inclusion;FinTech; Financial Technology; Financial Inclusion; Innovation; Sub-Saharan Africa
    Date: 2019–02–14
    Abstract: Using annual time series data on total population in Algeria from 1960 to 2017, we model and forecast total population over the next 3 decades using the Box – Jenkins ARIMA technique. Diagnostic tests such as the ADF tests show that Algeria annual total population is I (2). Based on the AIC, the study presents the ARIMA (4, 2, 0) model as the optimal model. The diagnostic tests further show that the presented model is stable and that its residuals are integrated of order zero. The results of the study reveal that total population in Algeria will continue to rise gradually in the next three decades and in 2050 Algeria’s total population will be approximately 62 million people. In order to outsmart the Malthusian population trap, 4 policy prescriptions have been suggested for consideration by the government of Algeria.
    Keywords: Algeria; Forecasting; Population
    JEL: C53 Q56 R23
    Date: 2019–02–15

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