nep-afr New Economics Papers
on Africa
Issue of 2020‒04‒27
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The Effect of Blackouts on Households’ Electrification Status: evidence from Kenya By Raúl Bajo-Buenestado
  2. Banking Union, Fiscal Union and Political Union as Pathways to Complete and Sustainable Monetary Integration of Africa By Mogaji, Peter Kehinde
  3. COVID-19 in Africa: socioeconomic impact, policy response and opportunities By Ozili, Peterson K
  4. Can Tax Buoyancy in Sub-Saharan Africa Help Finance the Sustainable Development Goals? By Sanjeev Gupta; Jianhong Liu
  5. Building Resilient Health Systems: Experimental Evidence from Sierra Leone and the 2014 Ebola Outbreak By Darin Christensen; Oeindrila Dube; Johannes Haushofer; Bilal Siddiqi; Maarten Voors

  1. By: Raúl Bajo-Buenestado
    Abstract: A number of countries in Sub-Saharan Africa have recently deployed billions of dollars to improve their electricity infrastructure. However, aggregate data shows that the relative number of households with an electricity connection at home has barely increased. In this paper we study the role of blackouts to partially explain why there have been relatively few additional households with electricity access despite the increase in electrification expenditure. Using geo-localized survey data from Kenya, we find that households that live in neighborhoods in which power outages are relatively more frequent are (at least) about 6%-9% less likely to have electricity at home. We also find that households that have electricity access but which experience frequent power outages are also less likely to purchase electrical appliances.
    Keywords: Energy poverty, Electricity access, Electrification rates, Sub-Saharan Africa.
    JEL: L94 O13 Q41 Q48
    Date: 2020–02
  2. By: Mogaji, Peter Kehinde
    Abstract: Following the monetary integration trends in Europe, there had been the desire for the African Monetary Union and the creation of a unified currency for the African continent. This proposed African common currency would be known as ‘afro’, a single currency for Africa by 2028. The continent of Africa, characterised by the largest number of countries and the largest number of currencies has consequently embarked on a special project for an African monetary integration. The 1991 Abuja treaty set out six stages in the process of achieving a monetary union and a single currency for Africa. This strategy for African monetary integration is based on progressive economic and monetary integration of African economic communities which are regarded as building blocks of Africa. These economic communities are the East African Community (EAC), the Southern African Development Community (SADC) and the Economic Community of the West African States (ECOWAS). Evidences generated from the analyses of the formation of the European Monetary Union (EMU) prompted many conclusions that there were major defects in its establishment as exposed by the Eurozone crisis. Some of these identified optimum currency area (OCA) related design flaws of the Eurozone are: (i) the absence of effective economic governance mechanism; (ii) the retention of banking supervision and resolution at national levels; (iii) the lack of financial back-stops and crisis resolution mechanisms at the union level; and (iv) defects in the design of the Eurozone's common central bank. Clearly, the Eurozone crisis has obviously revealed that banking union and integrated financial market, fiscal union and integrated fiscal framework and political union are all required in a monetary union, for completeness and sustainability. Unfortunately, these are issues not addressed by the OCA theory. From view-points in various debates on the sustainability and completeness of the EMU as well as various revealed faults in the design of Eurozone and the defects inherent in the original optimum currency area (OCA) theory and its application to monetary integration, this paper consequently discusses and highlights banking union, fiscal union and political union as pathways to complete and sustainable monetary integration in Africa.
    Keywords: Monetary Integration, European Monetary Union, African Monetary Union, Optimum Currency Area, Eurozone Crisis, Banking Union, Fiscal Union, Political Union
    JEL: E6 F36 F45
    Date: 2020–02
  3. By: Ozili, Peterson K
    Abstract: The COVID-19 or coronavirus pandemic which has affected the global economy has also affected the African economy through spillovers to African countries. Many African countries have taken bold quarantine and lockdown measures to control the spread of COVID-19 although this has come at a cost such as the collapse of health systems and a painful economic crisis or recession. A coordinated and bold response by African authorities is needed. First, public funds should be provided to improve the capacity of health systems in African countries. Second, financial support should be provided to individuals, entrepreneurs and corporations to help them cope with the adverse effect of the coronavirus crisis. Third, employers should be granted incentives to preserve employment during the crisis to avoid mass layoff of workers. Finally, the Central bank in African countries should provide liquidity and credit support as well as asset purchase programs to prevent credit and liquidity crunch in domestic financial markets.
    Keywords: Africa, COVID-19, Coronavirus, SARS-CoV-2, outbreak, pandemic, economic crisis, financial crisis, global recession, public health, spillovers, monetary policy, fiscal policy, liquidity provision, Central banks.
    JEL: G18 G20 G23 I1 I15 I18
    Date: 2020
  4. By: Sanjeev Gupta (Center for Global Development); Jianhong Liu (Center for Global Development)
    Abstract: In this paper, we estimate short- and long-term tax buoyancy for 44 sub-Saharan African (SSA) countries during 1980-2017 using time series and panel techniques. The buoyancy of the tax system captures the response of tax revenues to changes in national income including discretionary changes. We find that the long-term tax buoyancy is either one or slightly above one for most SSA countries. Fragile states have a lower short-term tax buoyancy reflecting their institutional weaknesses. Short-term buoyancy of personal income tax is significantly less than one. Both short- and long-run tax responses are lower than those reported in previous cross-country studies, which can be interpreted as a reduced power of both automatic stabilization in the short-run and fiscal sustainability in the long-run. Our results are robust to discretionary tax changes. We find that central government debt and shadow economy exert a downward pressure on tax buoyancy. An important implication of these results is that the current tax systems in SSA would not be able generate domestic revenues to the extend needed for financing the Sustainable Development Goals (SDGs). This is illustrated for the entire region and two SSA countries, Benin and Rwanda.
    Keywords: Tax buoyancy, Sustainable Development Goals, Error Correction Model, fiscal sustainability, sub-Saharan Africa
    JEL: E62 H20 H24 H25
    Date: 2020–04–15
  5. By: Darin Christensen (UCLA, Luskin School of Public Affairs); Oeindrila Dube (University of Chicago, Harris School of Public Policy); Johannes Haushofer (Princeton University); Bilal Siddiqi (University of California, Berkeley); Maarten Voors (Wageningen University)
    Abstract: Developing countries are characterized by high rates of mortality and morbidity. A potential contributing factor is the low utilization of health systems, stemming from the low perceived quality of care delivered by health personnel. This factor may be especially critical during crises, when individuals choose whether to cooperate with response efforts and frontline health personnel. We experimentally examine efforts aimed at improving health worker performance in the context of the 2014–15 West African Ebola crisis. Roughly two years before the outbreak in Sierra Leone, we randomly assigned two social accountability interventions to government-run health clinics—one focused on community monitoring and the other gave status awards to clinic staff. We find that over the medium run, prior to the Ebola crisis, both interventions led to improvements in utilization of clinics and patient satisfaction. In addition, child health outcomes improved substantially in the catchment areas of community monitoring clinics. During the crisis, the interventions also led to higher reported Ebola cases, as well as lower mortality from Ebola—particularly in areas with community monitoring clinics. We explore three potential mechanisms: the interventions (1) increased the likelihood that patients reported Ebola symptoms and sought care; (2) unintentionally increased Ebola incidence; or (3) improved surveillance efforts. We find evidence consistent with the first: by improving the perceived quality of care provided by clinics prior to the outbreak, the interventions likely encouraged patients to report and receive treatment. Our results suggest that social accountability interventions not only have the power to improve health systems during normal times, but can additionally make health systems resilient to crises that may emerge over the longer run.
    Date: 2020–03–25

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