nep-afr New Economics Papers
on Africa
Issue of 2020‒03‒16
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Illicit financial flows: Artisinal and small-scale gold mining in Ghana and Liberia By OECD
  2. Supply chain trade in East Africa: Prospects and challenges* By Jaime de Melo; Anna Twum
  3. The Effects of Pollution and Business Environment on Firm Productivity in Africa By Soppelsa,Maria Edisa; Lozano Gracia,Nancy; Xu,L. Colin
  4. Thresholds of External Flows for Inclusive Human Development in Sub-Saharan Africa By Simplice A. Asongu; Joseph I. Uduji; Elda N. Okolo-Obasi
  5. Jobs and Intimate Partner Violence - Evidence from a Field Experiment in Ethiopia By Andreas Kotsadam; Espen Villanger;
  6. Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa? By Calderon,Cesar; Chuhan-Pole,Punam; Kubota,Megumi

  1. By: OECD
    Abstract: Illicit financial flows (IFFs) generated by the artisanal and small-scale gold mining (ASGM) sector in West Africa have historically contributed to conflict and instability, although it would be a mistake to classify this issue as a criminal matter, given its links to formal and informal networks and local livelihoods. This study examines IFFs associated with the ASGM sector in Ghana and Liberia and reveals a complex web of informal and illicit activity associated with IFFs, with detrimental consequences for development. It focuses on gold because of its prominence in the West African Region and artisanal small-scale mining (ASM), rather than large-scale mining (LSM). Further, ASMG is largely informal and consequently more vulnerable to exploitation by criminal networks, and plays a prominent role as a local livelihood. This case study is relatively narrow in focus, providing insights into the nature and scope of ASGM activities and their resulting IFFs, and making several observations on those areas where action could be taken in an effort to reduce IFF risks. The study selected Ghana and Liberia as two countries where research could be conducted, and where gold is a major industry.
    Date: 2020–03–13
  2. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Anna Twum
    Abstract: Deeper regional integration is the main objective of the recently launched Africa Continental Free Trade Area (AfCFTA). Supply chain trade both at the level of the Regional Economic Communities (RECs) and across RECs are to spearhead the AfCFTA. Indicators of Global Value Chains (GVC) participation show that even though the EAC and other African RECs have increased their participation in GVCs over the period 1990-2015 surpassing MERCOSUR they still lag behind the ASEAN region. There has also been little improvement in the participation of African RECs in Regional Value Chains (RVCs). This outcome is not due to a lack of ambition. Indeed, African Regional Economic Communities (RECs) have prioritized strengthening deeper RVC integration as a stepping stone to their development. The EAC has gone as far as targeting specific value chains: cotton, wood and paper, food and beverages among others, but with very little to show for it so far; only 1.7% of total gross exports of the EAC are related to RVCs. This is in contrast to ASEAN (17.2%), MERCOSUR (4.6%) and SADC (3%); within the EAC, Rwanda has made impressive progress while Uganda has underperformed. Overall, over the period 1990-2015, the EAC and other African RECs have participated mostly in nonregional value chains along forward rather than backward participation (i.e. their value-added exports are mostly on intermediates that enter exports of other trade partners while the share of foreign exports in their exports is low) activities. This paper singles out for discussion three obstacles hampering greater inclusion in global value chains: (i) high tariffs on imports of intermediates; (ii) restrictive rules of origin, an obstacle to intra-regional trade; (iii) high ad-valorem equivalents of barriers to connectivity and more generally to trade in services. Lastly, controlling for per capita income, correlations for the sample of 149 countries over the period 1995-2015 confirms that overall GVC participation is negatively associated with increases on the tariffs on imports and exports of intermediates as well as on trade costs. However, forward GVC participation (i.e. the share of intermediates of foreign origin) is positively associated with the number of mobile phone subscribers a proxy for digital connectivity.
    Date: 2020–02–24
  3. By: Soppelsa,Maria Edisa; Lozano Gracia,Nancy; Xu,L. Colin
    Abstract: This paper explores the links between city competitiveness and air pollution and the business environment. Because competitive cities not only attract more productive firms, but also facilitate their business, the paper look at firm performance as a proxy for city competitiveness. It focuses on African firms, because this region is developing fast and experiencing increasing pollution levels and the effects of agglomeration economies. The analysis finds two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.
    Date: 2019–04–30
  4. By: Simplice A. Asongu (Yaounde, Cameroon); Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria)
    Abstract: This research investigates the incidence of enhancing external flows on inclusive human development in a panel of 48 countries in sub-Saharan Africa. It complements the literature by examining the relevance of enhancing three types of external flows, namely: development assistance, foreign investment and remittances. Ordinary Least Squares, Tobit, Fixed effects, Generalised Method of Moments and Quantile regressions are used as empirical strategies. The following main results are apparent: (i) between 60 and 150 (% of GDP) is the threshold of foreign aid; (ii) 33.333 (% of GDP) is the foreign investment threshold and (iii) 25 (% of GDP) is the critical mass of remittances. At the established critical masses or thresholds, external flows start having positive effects on inclusive human development. Countries characterized by inclusive development levels that are low need more investment in foreign aid for inclusive human development compared to their counterparts characterized by inclusive human development levels that are high.
    Keywords: Foreign investment; Remittances; Foreign aid; Inclusive development; Africa
    JEL: F21 F24 F35 I30 O55
    Date: 2019–01
  5. By: Andreas Kotsadam; Espen Villanger;
    Abstract: We identify the effects of employment on Intimate Partner Violence (IPV) by collaborating with 27 large companies in Ethiopia to randomly assign jobs to equally qualified female applicants. The job offers increase formal employment, earnings, and earnings shares within couples in the short and medium run but we can reject relatively small effects in any direction on our main outcome, physical IPV. In the short run, job offers reduce emotional abuse and there are indications of heterogeneous effects whereby women with low bargaining power at baseline experience increased risks of abuse if offered a job.
    Keywords: employment, gender, RCT, IPV, violence Ethiopia
    JEL: J20 O10 Z10
    Date: 2020
  6. By: Calderon,Cesar; Chuhan-Pole,Punam; Kubota,Megumi
    Abstract: This paper discusses recent trends and investigates the drivers of capital flows across regions in the world, with emphasis on Sub-Saharan Africa. The post-global financial crisis behavior of capital flows into Sub-Saharan Africa is unique and differs from that of global capital flows. The structure of financial flows into Sub-Saharan Africa has shifted toward new sources, such as international bond issuances and debt inflows from non?Paris Club governments. The main message is that the behavior of capital flows into Sub-Saharan Africa differs from that of capital flows into global, industrial, and non?Sub-Saharan African developing countries. The regression analysis reveals that gross flows into Sub-Saharan African are predominantly influenced by external factors, such as foreign growth and uncertainty in global markets and policies. Capital flow behavior for Sub-Saharan African countries is different from that of industrial countries due to different economic structures, which render different transmission processes. The main findings suggest that pull and push factors are the driving forces of capital inflows for industrial countries and non?Sub-Saharan African developing countries?especially better economic performance, sound fiscal outcomes, a greater degree of financial openness, and stronger institutions. The impact of these drivers has become stronger in the 2000s. Macroeconomic policy can play an important role in attracting capital inflows. For instance, fiscal discipline promotes greater other investment inflows, and less flexible exchange rate arrangements (more exchange rate stability) foster portfolio investment inflows.
    Date: 2019–03–12

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