nep-afr New Economics Papers
on Africa
Issue of 2020‒05‒18
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Shifting from deductions to credits: Unpacking the distributional effects of medical expenditure considerations in South Africa By Senia Nhamo; Edinah Mudimu
  2. Formalising informal cross-border trade: Evidence from One-Stop-Border-Posts in Uganda By Jade Siu
  3. An initial assessment of economic impacts and operational challenges for the tourism & hospitality industry due to COVID-19 By Thams, Andreas; Zech, Nicola; Rempel, David; Ayia-Koi, Albert
  4. Turnin' it up a notch: How spillovers from foreign direct investment boost the complexity of South Africa's exports By Bjørn Bo Sørensen
  5. Initial considerations for the creation of an inter-regional industrial hemp value chain between Malawi and South Africa By Sandy Lowitt

  1. By: Senia Nhamo; Edinah Mudimu
    Abstract: The recent National Health Insurance White Paper proposes redirection of medical tax credits revenue towards the financing of the national health insurance. This raises critical questions about the impact on affordability for the poor as well as fundamental legal implications. The 2012 tax reforms which saw the move from deductions to credits were justified on the basis of equitable income redistribution. This paper examines the redistributive effects of the medical tax credit system.
    Keywords: medical tax credit, medical expenses, tax deductions, distributional impacts, Inequality, tax progressivity, South Africa
    Date: 2020
  2. By: Jade Siu (University of Birmingham)
    Abstract: Informal trade is pervasive between sub-Saharan African countries. This study examines the extent to which the value of informal trade changes as a result from a change in the costs of trade. More specifically, I exploit time and custom point variation in the introduction of border facilities, aimed at reducing border delays and corruption. I find that the ratio of informal to total trade values between Uganda and its neighbours is reduced only in the quarter when the border facilities are introduced. By using an original data set collected at two border towns between Kenya and Uganda, I examine whether this result can be explained by formalisation of cross-border traders. I find that few traders formalise despite the reduced costs associated with trading formally, and that trade costs and border crossing choices are not only associated with export restrictions, but are also gendered.
    Date: 2020–05
  3. By: Thams, Andreas; Zech, Nicola; Rempel, David; Ayia-Koi, Albert
    Abstract: The tourism and hospitality industry currently faces one of its most serious operational, commercial, and financial crises as a result of the worldwide spread of COVID-19. Both destinations and source markets are substantially affected and have suspended operations and commercial activities. Major market players in all areas of the touristic value chain, i.e., airlines, tour operators, hotels, cruise lines, and retailers, have either minimized or even completely stopped their production for an undefined period of time, resulting in the sudden and total cut-off of their revenue streams. This paper will comprehensively highlight in an initial assessment economic impacts and operational challenges for the tourism and hospitality industry caused bv the from COVID-19 crisis. General and mostly European-centered perspectives are supplemented by an African insight represented by a Ghanaian case-study.
    Keywords: COVID-19,tourism industry,travel industry,hospitality management,economic impact,operational challenges,crisis management
    Date: 2020
  4. By: Bjørn Bo Sørensen
    Abstract: Countries' economic complexity, and the associated diversification and sophistication of their exports, is a key determinant of economic growth. Understanding how South African firms learn to export more sophisticated products is, therefore, an important policy issue. Using administrative data covering the entire tax-paying population of firms in South Africa, we argue that foreign direct investment can stimulate export upgrading in manufacturing firms.
    Keywords: economic complexity, Foreign Direct Investment, FDI, Spillovers, export upgrading, Manufacturing, South Africa
    Date: 2020
  5. By: Sandy Lowitt
    Abstract: Interest in industrial hemp has revived in the past 20 years. Malawi is considering legalizing the cultivation of industrial hemp as an alternative cash crop to tobacco with great potential. This study considers the potential and challenges of creating an industrial hemp value chain between South Africa and Malawi, with Malawi concentrating on upstream cultivation and South Africa on downstream value-adding activity.
    Keywords: contract buying, Contract farming, industrial hemp, novel crop establishment, Regional value chains
    Date: 2020

This nep-afr issue is ©2020 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.