nep-afr New Economics Papers
on Africa
Issue of 2019‒08‒19
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Is Favoritism a Threat to Chinese Aid Effectiveness? A Subnational Analysis of Chinese Development Projects By Dreher, Axel; Fuchs, Andreas; Hodler, Roland; Parks, Brad; Raschky, Paul A.; Tierney, Michael J.
  2. Regional Growth Spillovers in Sub-Saharan Africa By Francisco Arizala; Matthieu Bellon; Margaux MacDonald
  3. Determinants of Mobile Broadband Use in Developing Economies: Evidence from Sub-Saharan Africa By Maude Hasbi; Antoine Dubus
  4. Official development aid effectiveness and economic growth in African countries: The role of the governance By Yahyaoui, Ismahene; Hamdaoui, Mekki; Bouchoucha, Najeh
  5. Corporate Governance and Efficiency of Rural and Community Banks (RCBs) in Ghana By OTENG-ABAYIE, ERIC Fosu; Affram, Anthony; Mensah, Henry Kofi

  1. By: Dreher, Axel; Fuchs, Andreas; Hodler, Roland; Parks, Brad; Raschky, Paul A.; Tierney, Michael J.
    Abstract: Chinese aid comes with few strings attached, allowing recipient country leaders to use it for domestic political purposes. The vulnerability of Chinese aid to political capture has prompted speculation that it may be economically ineffective, or even harmful. We test these claims by estimating the effect of Chinese aid on subnational economic development - as measured by per-capita nighttime light emissions - and whether this effect is different in politically favored jurisdictions than in other parts of the country. Contrary to the conventional wisdom, we do not find that the local receipt of Chinese aid undermines economic development outcomes at either the district level or provincial level. Nor does political favoritism in the allocation of Chinese aid towards the home regions of recipient country leaders reduce its effectiveness. Our results - from 709 provinces and 5,835 districts within 47 African countries from 2001-2012 - demonstrate that Chinese aid improves local development outcomes, regardless of whether such aid is allocated to politically consequential jurisdictions.
    Keywords: Africa; Aid effectiveness; China; Development finance; economic growth; favoritism; foreign aid
    JEL: D73 F35 O19 O47 P33 R11
    Date: 2019–07
  2. By: Francisco Arizala; Matthieu Bellon; Margaux MacDonald
    Abstract: This paper documents the steady increase in intraregional trade in sub-Saharan Africa since 1980, links this rise to important growth spillovers in the region, and identifies the main source countries and those most vulnerable to the economic conditions of others. Estimates show that in the short run, positive idiosyncratic shocks to regional trading partners’ growth significantly increase growth in the average sub-Saharan African country, while in the long-run the annual impact of growth in regional trading partner’s is smaller in magnitude. Policy implications including the need to support further continent-wide integration and the associated growth spillovers are discussed. Actions policymakers in sub-Saharan Africa can take to capture the benefits of these spillovers, while limiting exposure to the associated risks, are also proposed.
    Date: 2019–07–24
  3. By: Maude Hasbi (I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - CNRS - Centre National de la Recherche Scientifique); Antoine Dubus (Télécom ParisTech)
    Abstract: Broadband is seen as a vector of economic growth and social development. In the developing world, mobile technologies are widely adopted and mobile broadband is progressively rolled-out with high expectations on its impact on the countries' development. We highlight what the determinants of mobile broadband use are in four Sub-Saharan countries. Using micro-level data coming from household surveys over 5 years, from 2013 to 2017, we show that SIM card ownership and being part of an online social community has a strong positive impact on mobile broadband use. We also highlight a positive correlation between digital inclusion and financial inclusion as mobile money users and bank account users are found to be more inclined to use mobile broadband. However, beyond apparent similarities, mobile broadband is used in different ways according to countries specificities. For instance, among the non-mobile owners in Nigeria, the unemployed are the most likely to use mobile broadband, most probably for job search practices, while it is rather used by students for information gathering in other countries. Finally we show that those excluded from mobile broadband use are the eldest, those with the lowest level of education, and women.
    Keywords: O12,L50,L96,O55,Financial Inclusion,Digital Gap JEL Classification: I30,Mobile Broadband Use,Developing Economy
    Date: 2019–08–07
  4. By: Yahyaoui, Ismahene; Hamdaoui, Mekki; Bouchoucha, Najeh
    Abstract: This work revolves around support policies of developing countries which, in most cases, need financing and more particularly development aid. In this setting, the aim of this study is to evaluate the effectiveness of development aid for a sample of African countries of which 25 are considered to have intermediate incomes and 23 achieve low incomes. To do this, we relied on a cross-sectional regression over the period 1996-2014. Our results imply that good governance is a deterministic condition of the positive effect of aid on economic growth. Indeed, international aid unaccompanied by good governance practices (control of corruption, political stability, a sound regulatory quality, a rigid state of rights, government effectiveness, voice and accountability) has adverse effects on economic activity and creates more inequalities of opportunity, especially in low-income countries. Thus, we note that the better quality of institutions allow a better allocation of international aid towards productive projects which stimulates economic growth in the two sub regions. So, in order to achieve the desired goals of international aid, countries must first ensure political stability and develop a regulatory and institutional framework to organize economic activities, second need to protect individual properties and resolve disputes between players in different markets.
    Keywords: Development Assistance Effectiveness; Economic growth; Governance Quality.
    JEL: O10
    Date: 2019–08–02
  5. By: OTENG-ABAYIE, ERIC Fosu; Affram, Anthony; Mensah, Henry Kofi
    Abstract: Corporate governance crises that occur in the banking sector normally cripple economies and bring many hardships to individuals, corporate entities, communities, and the nation at large. In this study, we sought to examine the level of technical efficiency and productivity growth of rural and community banks (RCBs) and the impact of corporate governance indicators on the RCBs' efficiency performance in Ghana. A sample of 70 out of 140 RCBs was selected based on the ARB Apex Bank's performance ratings and data availability. Data envelopment analysis (DEA) was used to determine the technical efficiency scores of the selected RCBs. In the second stage of the analysis, these computed efficiency scores were regressed on the corporate governance variables to assess the effects of the latter. The findings from the DEA approach show that 11% to 20% of the sampled RCBs in Ghana operate close to the efficiency frontier, whereas the majority - about 65% to 81% - underperformed within the study period of 2007 to 2013. The study further established that the number of board members, frequency of board meetings, and corporate social responsibility have significant influence on RCB efficiency.
    Keywords: Corporate governance, efficiency, Rural banks, Ghana, DEA
    JEL: G2 G21
    Date: 2018–12

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