nep-afr New Economics Papers
on Africa
Issue of 2019‒10‒28
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The Conditional Relationship between Renewable Energy and Environmental Quality in Sub-Saharan Africa By Simplice A. Asongu; Chimere O. Iheonu; Kingsley O. Odo
  2. Manufacturing Sector and Economic Growth: A Panel Study of Selected African Countries By Clement Moyo
  3. Why Sub-Saharan African countries only get to tax the crumbles of corporate synergy profits? A content analysis of the revised transactional profit split method unravelling unequal power in global tax governance By Vet, Cassandra; Cassimon, Danny; Van de Vijver, Anne
  4. National happiness and Environment quality in Africa. By Noubissi Domguia, Edmond; POUMIE, Boker
  6. The Effect of Personalized Feedback on Small Enterprises’ Finances in Uganda By Antonia Grohmann; Lukas Menkhoff; Helke Seitz

  1. By: Simplice A. Asongu (Yaoundé/Cameroon); Chimere O. Iheonu (University of Nigeria, Nsukka, Nigeria); Kingsley O. Odo (University of Nigeria, Nsukka, Nigeria)
    Abstract: This paper complements existing literature by assessing the conditional relationship between renewable energy and environmental quality in a sample of 40 African countries for the period 2002 to 2017. The empirical evidence is based on fixed effects regressions and quantile fixed effects regressions. The findings from both estimation techniques show that renewable energy consistently decreases carbon dioxide (CO2) emissions. Moreover, the negative effect is a decreasing function of CO2 emissions or the negative effect of renewable energy on CO2 emissions decreases with increasing levels of CO2 emissions. In other words, countries with higher levels of CO2 emissions consistently experience a less negative effect compared to their counterparts with lower levels of CO2 emissions. Policy implications are discussed.
    Keywords: Panel econometrics; Renewable energy; Carbon emissions; Africa
    JEL: Q32 Q40 O55
    Date: 2019–01
  2. By: Clement Moyo (Nelson Mandela University, South Africa Author-2-Name: Leward Jeke Author-2-Workplace-Name: Nelson Mandela University, South Africa Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The manufacturing sector plays an important role in any economy. However, Africa has experienced significant deindustrialisation over the last few decades, whilst economic growth has been on an upward trend over the same period. The high growth rates have mostly been propelled by improved macroeconomic stability and the commodity price boom. Further, the slowdown in commodity prices has recently caused a deceleration of economic growth which begs the question: Does promoting the manufacturing sector result in higher and sustainable economic growth and reduce unemployment? This study assesses the impact of the manufacturing sector on economic growth in 37 African countries.Methodology/Technique - This study employs the System-GMM Model for the period between 1990 and 2017. This technique is ideal as the number of cross-sectional units is greater than the number of time periods. This technique also caters for problems of endogeneity and heteroscedasticity.Findings - The results show that manufacturing value has a positive effect on economic growth in African countries. Therefore, it is recommended that policy makers enact measures to boost manufacturing output.Novelty - The deceleration of economic growth in African countries coupled with high unemployment and poverty levels has brought the issue of re-industrialisation into the spotlight. This study is vital for policy makers in African countries who seek to promote economic growth and employment levels. The study contributes to literature in African countries by incorporating variables such as human capital and institutional quality which are major determinants of economic growth.Type of Paper - Empirical.
    Keywords: Manufacturing Value Added; Economic Growth; African Countries; System-GMM.
    JEL: C23 E23 O14 O40
    Date: 2019–09–22
  3. By: Vet, Cassandra; Cassimon, Danny; Van de Vijver, Anne
    Abstract: It is widely recognized that international corporate taxation holds a distributional bias towards advanced economies and that developing countries only play a marginal role in tax governance-making. Yet, it is the ambition of both the G20 and the OECD to integrate developing countries in the BEPS Inclusive Framework. The Base Erosion and Profit Shifting (BEPS) Action Plan is the latest global initiative to update the international framework of corporate taxation and curb corporate tax avoidance. Nonetheless, the overall mode of integration continues to be on implementation and technical assistance in transfer pricing auditing should enable developing countries to implement the OECD transfer pricing regime despite its cost- and capacity-intensive nature. In contrast to apolitical approaches, the purpose of this paper is to critically asses how uneven power resources shape the distributional outcomes of the G20-OECD transfer pricing regime. Therefore, this study adds an additional criterion to the output legitimacy of the G20-OECD BEPS Project, namely, distributive justice. Specifically, this case-study of the reform of the guidance on the Transactional Profit Split Method (TPSM) reveals that the regime excludes low-income countries in Sub-Saharan Africa from participating in the fiscal impact of residual profits. Whereas the revised TPSM guidance expands the size of the overall cake of taxable profits, the criteria to use the TPSM and the ongoing complexity of the regime make it difficult for low-income countries in Sub-Saharan Africa to obtain a decent slice of the cake and actually eat it.
    Keywords: Sub-Saharan Africa; taxation
    Date: 2019–10
  4. By: Noubissi Domguia, Edmond; POUMIE, Boker
    Abstract: Using Ordinary Least Squares, the Generalized Method of Moments and Estimate fixed-effect panel threshold model, this paper analyses the effect of environment on happiness in a panel of 30 African countries over the period 2006-2014. We find that environment quality affects happiness. The linear model shows that actually the degradation of environment increase happiness. However, the Estimate fixed-effect panel threshold model concludes that the relation between happiness and Greenhouse Gas are not a linear but quadratic. The estimation of quadratic equation revealed that this relationship takes the form of an inverted U. These results mean that in the long run environment negatively affects the happiness of people in Africa. Thus, the effect of environmental quality on happiness in Africa depends on the level of Greenhouse Gas emissions and the level of income per capita.
    Keywords: National happiness, Environment quality, Africa
    JEL: I31 O15
    Date: 2019–10–16
  5. By: Aniceth Kato Mpanju (Tanzania Institute of Accountancy)
    Abstract: The major purpose of this paper is to analyze the impact of microfinance services on SME?s performance in Dar-es-Salaam region, Tanzania. Using a sample of 350 SMEs, the study adopted a descriptive-correlation research design an econometric analysis using statistical package for social sciences (SPSS) version 24. The results show that microfinance services in the form of financial intermediation and enterprise development had to a large extent adequate to small and medium-sized entrepreneurs. Then from above analysis we may conclude that there existed a strong relationship between the extent of microfinance services and the performance of SMEs and that microfinance services influenced the performance of the SMEs in the Dar-es-Salaam region.
    Keywords: Microfinance services, SMEs, Microfinance institutions, Financial literacy and enterprise development
    JEL: G29
    Date: 2019–10
  6. By: Antonia Grohmann; Lukas Menkhoff; Helke Seitz
    Abstract: This RCT examines the effect of a new style finance training during which participants are given personalized feedback on their financial business outcomes in addition to a “rules-of-thumb” training approach. We compare this to the effects of a “rules-of-thumb” training by itself and to a control group. Targeting about 500 small and micro entrepreneurs in Kampala, Uganda, we find that the personalized feedback training significantly improves outcomes at the six-months horizon. The index of primary outcomes increases by 0.258 SD units and overall savings improve by 0.257 SD units. Analyzing the feedbacks provided we find evidence that feedback works by increasing motivation, in line with “feedback-intervention-theory.”
    Keywords: Financial Training, Feedback, Small Business Growth, Economic Development
    JEL: O12 D22 O16 L26
    Date: 2019

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