nep-afr New Economics Papers
on Africa
Issue of 2019‒10‒21
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Assessing the migration and social instability nexus in sub-saharan Africa : A spatial analysis By fofana, moustapha; Lawson, Laté; ballo, zié
  2. Exporters in Africa: What Role for Trade Costs? By Afonso, Helena; Vergara, Sebastian
  3. Migrant remittances: Alternative money transfer channels By Metzger, Martina; Riedler, Tim; Pédussel Wu, Jennifer
  4. Shaking Out or Shaking In: The Impact of Zimbabwe's Economic Crisis on the Country's Manufacturing Sector Allocative Efficiency By Nicholas Masiyandima; Lawrence Edwards
  5. Financial Structure and Economic Growth: Evidence from Sub-Saharan Africa By Naomi M. Mathenge; Dr. Eftychia Nikolaidou
  6. The causal linkages among money growth, inflaion and interest rates in Ghana By Amankwah, Ernest; Atta Sarfo, Prince

  1. By: fofana, moustapha; Lawson, Laté; ballo, zié
    Abstract: The reverse effects of migration in enhancing small-scale social unrest seem less regarded in the existing studies on social conflicts in Africa. Thus, this paper proposes to reversely assess the migration and social instability nexus in Africa, exploiting data on “riots and protests” and “violence against civilians”. In addition to geographical spillovers in social instability, our results indicate that increasing migrants stock enhances small-scale internal conflicts in African countries. On the contrary, good economic performances and openness to trade are found to be reducing social conflicts. Globally, our results impel political actors and regional unions to further implement specific policies for the inclusive integration of regional migrants.
    Keywords: Small-scale conflicts; migration, spatial spillovers; development; Sub-Saharan Africa
    JEL: C23 O15 Q34
    Date: 2019–07–30
  2. By: Afonso, Helena; Vergara, Sebastian
    Abstract: This paper investigates the role of trade costs in exporter dynamics in Africa. In comparison to exporters from other regions, African exporting firms are fewer, smaller and relatively less diversified. African countries also display the highest rates of entry, exit and turnover of exporting firms, exporting products and export destinations. This suggests that Africa’s export environment is volatile, with exporters having difficulties in maintaining trade relationships. The analysis also confirms that trade costs are a crucial factor in explaining exporter performance in Africa vis-à-vis other regions, but also among African countries. Trade costs play a disproportionate role in affecting the size of new exporters and the survival of exporters in Africa in comparison to other regions. Also, trade costs differences across African countries are a relevant factor in explaining the lower market diversification of exporters from landlocked countries. A key implication is that the African Continental Free Trade Agreement can entail large benefits in the medium-term, especially in terms of export flows and destination markets. Yet, the diversification of export products will likely remain limited without strengthening productive capacities.
    Keywords: Trade Costs, Exporter dynamics, Africa
    JEL: F14
    Date: 2019–09–27
  3. By: Metzger, Martina; Riedler, Tim; Pédussel Wu, Jennifer
    Abstract: This paper first explores the role of digital financial services, e.g. mobile money systems and cryptocurrency-based systems, and their impact on the choice of migrants to send remittances. Secondly we discuss whether alternative remittances sending channels increase access to financial services for remittance-sending and remittance-receiving households. Africa, and in particularly Kenya, are pioneers in alternative money transfer systems and of tailor-made regulatory initiatives to address digital financial services. Thus, our paper focuses on the technologies of the Kenyan mobile money system, M-Pesa, and the major cryptocurrency, Bitcoin, and based on that takes into account selected experiences of other Sub-Saharan African countries. We find that in comparison to traditional remittances sending channels, mobile money transfer channels are often superior in terms of service-related features as costs of transfers for sending and receiving households, speed of delivery, availability and access to the remittances by receiving households or security of transactions. More importantly, mobile cash systems can fulfil the SDG goal of the 3 per cent fee more than 10 years earlier than envisaged in 2030. On the other side, the choice to use a specific transfer channel might be restricted by the lack of physical and technological availability of providers and means, and technological illiteracy. In addition, sending and receiving households might be cautious to use mobile cash systems due to a lack of trust in the system, the providers or regulatory authorities. Accordingly, financial inclusion beyond e-payments and outreach to the poor is not an automatism. In contrast, the use of Bitcoin-based transfer systems is more ambivalent; these systems are technically more challenging both in terms of infrastructure and literacy and more vulnerable to fraud. Some findings also indicate that Bitcoin is an incomplete and inferior substitute to which migrants refer to if their first option is not available or suffers from severe deficiencies. Future research also needs to differentiate sending and receiving households stronger according to personal features in order to deepen our understanding about the choices of and restrictions of vulnerable groups who would benefit the most from using mobile cash systems.
    Keywords: Remittances,Financial Inclusion,Bitcoin,Alternative Money,Financial Technology,Africa,Mobile Cash
    JEL: F24 G23 G28 O16 O19
    Date: 2019
  4. By: Nicholas Masiyandima; Lawrence Edwards
    Abstract: Zimbabwe had one of the world's worst economic crises from the late 1990s to 2009. The crisis encompassed a nancial sector crisis, severe adverse investment and demand shocks and idiosyncratic rm and industry interventions by government. On the basis of the resource misallocation hypothesis, the study investigates the effects of the shocks on within industry resource allocation effciency for the country. Using the country's manufacturing firm data before and after the crisis and comparable data for two comparator countries, Ghana and Kenya to estimate the potential productivity eects of the crisis, there is evidence suggesting a deterioration in the country's within industry resource allocation effciencies, with the country estimated to have lost at least 20 and 32.8 log points in potential firm productivity, respectively, against its pre crisis and its comparator countries productivity, with the allocative ineciency persisting into the post crisis period.
    Keywords: Crisis, Selective Policy, Firm, productivity, Size, Allocation, Zimbabwe
    JEL: O33 L60
    Date: 2018–06
  5. By: Naomi M. Mathenge; Dr. Eftychia Nikolaidou
    Abstract: Financial structure, the extent to which a country’s financial system is either bank-based or market-based has been shown to have an effect on some countries economic growth, while in other countries, it has been shown to be of no economic significance. Many of the studies have focused on developed and emerging economies that have well developed financial systems relative to the financial systems of developing countries.
    Date: 2018–09
  6. By: Amankwah, Ernest; Atta Sarfo, Prince
    Abstract: This study instigates the causal linkages among money growth, inflation and interest rate in Ghana. The essence of ensuring price stability, a considerable increase in money growth that enhances economic growth and development and favorable rate of interest that encourage domestic business and foreign direct investment cannot be over emphasized. The data was extracted from two main sources. The main variable under study were money supply, interest rate and inflation rate. Other variables that affect inflation rate such as exchange rate, real gross domestic product were controlled for. Data on money supply, interest rate and exchange rate Twere extracted from world development indicator (WDI) whereas data on inflation and the GDP growth were extracted from annual report of the Central Bank. The data comprises of of missed order of cointegration. That is I (0) and I(1). So bounds test of cointegration proposed by Pesaran, Shin and Smith (2001) was used. It was found out that money growth has both short run and long run relationship with inflation and all the other variables are insignificant in influencing inflation. The Granger causality test was conducted to help find the causality among the variables of interest. The null hypothesis that inflation rate does not does not Granger cause money growth was rejected at 5% which implies that there is a uni-directional causality between inflation and money growth. It was recommended that, in an attempt of reducing inflation both in the long run and short run, increase in money supply should be reasonable.
    Keywords: Money growth, Inflation and Interest rate in Ghana
    JEL: E42
    Date: 2019–10–13

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