nep-afr New Economics Papers
on Africa
Issue of 2019‒11‒04
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Portfolio optimization at the frontier: Assessing the diversification benefits of African securities By SENGA, Christian
  2. How should rural financial cooperatives be best organized? Evidence from Ethiopia By Koru, Bethelhem
  3. The rise of the economic technocracy in Rwanda - A case of a bureaucratic pocket of effectiveness or state-building prioritisation? By Benjamin Chemouni
  4. The shifting fortunes of the economic technocracy in Uganda: Caught between state-building and regime survival? By Badru Bukenya; Sam Hickey
  5. Analysis of Compensation of Farmers Affected by Crude Oil Spillage in Delta State By Okoror, Okiemua Theresa; Erhabor, Patrick Osaretin; Alufohai, Grace Oghenerobor

  1. By: SENGA, Christian
    Abstract: This study investigates the diversification benefits of African securities in comparison with other international investment opportunity sets from the perspective of a US investor. Using data from the most representative S&P Dow Jones traded indices of the US, other developed, emerging and African markets for the period of July 2014 - September 2018, I assess the benefits of diversification over these markets using the traditional and step-down tests of mean-variance spanning, and test the results' robustness by deviating from the normality assumption. My results show that, unlike their peers, African investment opportunity sets offer statistically significant diversification benefits to the benchmark US domestically-diversified minimum-variance and tangency portfolio. More specifically, I find that the "All Africa" set contributes to risk profile of the benchmark set while the "Africa ex-SA" is the only set offering significant improvements to this benchmark's tangency portfolio. These results bring additional evidence to the observation that countries with higher country-risk offer greater potential benefits of global diversification, which justifies to a significant extent the ongoing high appetite of international investors for African securities.
    Keywords: International diversification, Mean-Variance Spanning, Frontier markets, Africa
    JEL: G11 G15 C46
    Date: 2018–11
  2. By: Koru, Bethelhem
    Abstract: What is the optimal size and composition of Rural Financial Cooperatives (RFCs)? With this broad question in mind, we characterize alternative formation of RFCs and their implications in improving rural households’ access to financial services, including savings, credit and insurance services. We find that some features of RFCs have varying implications for delivering various financial services (savings, credit and insurance). We find that the size of RFCs exhibits nonlinear relationship with the various financial services RFCs provide. We also show that compositional heterogeneity among members (including diversity in wealth) is associated with higher access to credit services, while this has little implication on households’ savings behavior. Similarly, social cohesion among members is strongly associated with higher access to financial services. These empirical descriptions suggest that the optimal size and composition of RFCs may vary across the domains of financial services they are designed to facilitate. These pieces of evidence provide some suggestive insights on how to ensure financial inclusion among smallholders, a pressing agenda and priority of policy makers in developing countries, including Ethiopia. The results also provide some insights into rural microfinance operations which are striving to satisfy members’ demand for financial services.
    Keywords: Agricultural Finance, Financial Economics
    Date: 2019–09
  3. By: Benjamin Chemouni
    Abstract: The Rwandan Ministry of Finance and Economic Planning (MINECOFIN) is recognised as the most effective organisation in the Rwandan state. The objective of the paper is to understand the organisational and political factors influencing MINECOFIN’s performance since the genocide and link them to the wider conversation on the role of pockets of effectiveness (PoEs) in state-building in Africa. It argues that, because of the Rwandan political settlement and elite vulnerability, MINECOFIN is not a PoE but only a good performer in a generally well functioning state. The Ministry overperforms first because, unsurprisingly, the nature of its tasks is specific, requires little embeddedness and allows a great exposure to donors, making its mandate easier to deliver in comparison to other organisations. MINECOFIN also performs better than other state organisations because it is, more than others, at the frontline of the elite legitimation project since it is the organisation through which resources are channelled, priorities decided, and developmental efforts coordinated. Given the rulers’ need for an effective state as a whole, MINECOFIN appears only as the lead climber in a wider dynamics of systematic state building.
    Date: 2019
  4. By: Badru Bukenya; Sam Hickey
    Abstract: Uganda’s impressive levels of economic growth over most of the past three decades have often been linked to the performance of its economic technocracy, particularly the high-powered Ministry of Finance, Economic Planning and Development (MFPED). This paper argues that MFPED (or parts thereof) can indeed be seen as ‘pockets of effectiveness’, with the Ministry often managing to deliver effectively on its mandate, in a context in which this is not the norm. This can be explained in part by the functional and legally mandated nature of some of the tasks it delivers and in part by strong levels of international support and oversight. However, we also find that MFPED’s performance has varied considerably over time, particularly in terms of its capacity to control the budgetary process and public expenditure. This variation can be traced to shifts within Uganda’s political settlement, which moved from being broadly ‘dominant-developmental’ to ‘vulnerable-populist’ in character from the early 2000s onwards. This shift profoundly altered the ‘embedded autonomy’ that MFPED had previously enjoyed with regards its relationship with State House, in ways that have undermined MFPED’s capacity to deliver on its mandate. Despite efforts to regain both power and autonomy in recent years, MFPED remains subject to the politics of regime survival in Uganda, in ways that undermine its effectiveness. Whilst this may loosen the hold of neoliberal economic governance in Uganda and enable alternative perspectives to emerge, the more immediate effects have been to damage prospects for policy coherence and economic growth in the country.
    Date: 2019
  5. By: Okoror, Okiemua Theresa; Erhabor, Patrick Osaretin; Alufohai, Grace Oghenerobor
    Abstract: This study analysed compensation of farmers affected by crude oil spillage in Delta State. The study evaluated the causes, channel, mode and procedure of compensation; estimated the monetary value of compensation to cassava farmers affected by crude oil spillage; and developed a model for compensation. Data obtained were analysed using net farm income, contingent valuation technique, capitalization of earnings and compounding technique. Findings of the study showed that the prevalent cause of crude oil spill as reported by the oil firms and farmers were third party interference and equipment failure respectively. The channel of compensation was through the community leaders to affected farm families. Compensation was based on tangibles only without considering the intangibles and the future implication of the spills. The developed model of compensation incorporated the tangibles, intangibles and future income stream from the farm land. The study concluded that the procedure for compensation omitted some significant components.
    Keywords: Agricultural and Food Policy, Crop Production/Industries
    Date: 2019–09

This nep-afr issue is ©2019 by Sam Sarpong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.