nep-afr New Economics Papers
on Africa
Issue of 2020‒05‒25
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Working Paper 325 - Unleashing the Potential of institutional investors in Africa By Katja Juvonen; Arun Kumar; Hassen Ben Ayed; Antonio Ocaña Marin
  2. A comparative study of export processing zones in the wake of sustainable development goals: Cases of Botswana, Kenya, Tanzania and Zimbabwe By Richard Adu-Gyamfi; Simplice A. Asongu; Tinaye S. Mmusi; Herbert Wamalwa; Madei Mangori
  3. Working Paper 322- Managing Natural Resource Revenue in Ghana By Lacina Balma; Mthuli Ncube
  4. Cabinet Size and Governance in Sub-Saharan Africa By Wehner,Joachim Hans-Georg; Mills,Linnea Cecilia
  5. From bad to worse: Poverty impacts of food availability responses to weather shocks in Zambia By Koo, Jawoo; Mamun, Abdullah; Martin, Will
  6. Wage polarization in a high-inequality emerging economy: The case of South Africa By Haroon Bhorat; Kezia Lilenstein; Morné Oosthuizen; Amy Thornton

  1. By: Katja Juvonen (Strategy and Operational Policies Department, African Development Bank); Arun Kumar (Human Capital, Youth and Skills Development, African Development Bank); Hassen Ben Ayed (Infrastructure and Urban Development Department, African Development Bank); Antonio Ocaña Marin (African Development Bank)
    Abstract: There is a growing appetite among the institutional investors to invest in infrastructure assets as they are looking to diversify their portfolios. Investment opportunities within African infrastructure sector can meet these expectations in terms of deal size and financial returns. However, multiple challenges still need to be addressed to multiply the investments in the region. The Multilateral Development Banks (MDBs) play an important role as catalysts for investments, as the investors often appreciate their expertise and ‘political clout’ in new investments that are perceived risky. This paper analyses the potential opportunities for the MDBs, including the African Development Bank (AfDB), to engage with institutional investors to mobilize additional resources for Africa’s infrastructure development. AfDB’s Strategy and Operational Policies department conducted comprehensive phone interviews with a selected group of institutional investors and industry experts in order to understand investors’ preferences, investment strategies and their interest in collaborating with MDBs. Based on the discussion held with institutional investors, this paper suggests that the MDBs should strengthen their focus to develop solutions that aim to scale up their project preparation facilities, set up co-investment platforms, develop innovative risk mitigation instruments, support the governance and regulatory frameworks and continue to support domestic capital market development. JEL classification: F21, F33, G23
    Keywords: infrastructure financing, institutional investors, Multilateral Development Banks (MDBs)
    Date: 2019–12–31
  2. By: Richard Adu-Gyamfi (Geneva, Switzerland); Simplice A. Asongu (Yaoundé, Cameroon); Tinaye S. Mmusi (Gaborone, Botswana); Herbert Wamalwa (Nairobi, Kenya); Madei Mangori (Gaborone, Botswana)
    Abstract: The objective of this research is to assess the extent to which export processing zones in Botswana, Kenya, Tanzania, and Zimbabwe integrate the Sustainable Development Goals in their implementation and operations. We focused on four Sustainable Development Goals—gender equality, decent work, industry, and climate action. We interviewed four zone authorities, one in each country. A total of 12 firms in the agro-processing, textiles and garments, construction, and real estate sectors were also interviewed. All four zone authorities demonstrate a measure of environmental inclusiveness in their zone programmes. We found that firms in Kenya and Zimbabwe have a higher number of male than female employees, while zones in Tanzania employ more women. We propose that to promote sustainable development in these zones, policy action should concentrate on attracting firms that (are willing and able to) align with the particular Sustainable Development Goal that zone programmes are intended to achieve.
    Keywords: export processing zones, sustainable development, Botswana, Kenya, Southern Africa, Tanzania, Zimbabwe
    JEL: O25 O55 O57 Q01
    Date: 2020–05
  3. By: Lacina Balma (Research Department, African Development Bank); Mthuli Ncube (Minister of Finance and Economic Development, Republic of Zimbabwe)
    Abstract: It is well recognized that infrastructure investment is vital for growth. However, its financial implications could be huge, which could not be met by traditional sources of financing only. Using a general equilibrium model applied to Ghana, this paper combines four fiscal rules for managing oil revenue for public investment spending: i) the government combines both oil proceeds and borrowing (baseline experiment); ii) the government saves all oil proceeds and resort to borrowing (Bird-in-Hand experiment); iii) the government invests all oil proceeds and does not borrow (Hand-to-Mouth experiment); iv) aggressive investment approach; and v) baseline with structural reforms. We find that the baseline rule is susceptible to generate an intermediate impact on non-oil GDP growth and non-oil fiscal balance while minimizing the macroeconomic and fiscal volatility. We find that the baseline rule is susceptible to generate an intermediate impact on non-oil GDP growth and non-oil fiscal balance while minimizing macroeconomic and fiscal volatilities. In contrast, the Bird-in-Hand approach generates a smooth and long lasting non-oil GDP growth, and is susceptible to contain absorptive capacity constraints and Dutch disease effects. The Hand-to-Mouth approach leads to macroeconomic volatility, lower non-oil GDP growth and declining non-oil fiscal balance as a share of GDP. The aggressive investment approach is likely to produce higher non-oil GDP growth compared to the baseline but will accentuate downside risks in the baseline. Furthermore, we find that structural reforms that improve the efficiency of the baseline scaling up of public investment create sizable increase in public capital stock, which has additional positive spillover effect to the rest of the economy. JEL classification: Q32; E22; E62
    Keywords: Oil Revenue, Public Investment, Sustainable Development, Ghana
    Date: 2019–08–21
  4. By: Wehner,Joachim Hans-Georg; Mills,Linnea Cecilia
    Abstract: There is frequent public and media concern over the cost of bloated cabinets in many Sub-Saharan African countries. Scholarship on elite clientelism links cabinet positions with corruption and practices that undermine sound policy making. This paper presents new data on the number of ministers in African governments and shows a negative association with several measures of governance. The associations are robust in a regression framework that exploits within-country variation over time and accounts for various potential confounders. These patterns suggest that policy makers, donors, investors, and citizens should pay close attention to the number of ministers appointed to the cabinet. Although the paper cautions against simplistic policy prescriptions, a sizable increase in the number of ministers is likely bad news for governance.
    Keywords: Youth and Governance,Governance Indicators,Government Policies,National Governance,Conflict and Fragile States,Judicial System Reform,Armed Conflict,Macro-Fiscal Policy,Economic Adjustment and Lending,Public Finance Decentralization and Poverty Reduction,Public Sector Economics
    Date: 2020–05–06
  5. By: Koo, Jawoo; Mamun, Abdullah; Martin, Will
    Abstract: Since Amartya Sen’s famous work on Poverty and Famines, economists have understood that policy responses to food market shocks should be guided by changes in households’ incomes and access to food, rather than by overall food availability. Perhaps because the household-level impacts are not directly observable, many policy makers have continued to rely on availability-oriented policies such as export bans. In the Zambia case considered in this paper, export bans imposed in response to an El Niño event exacerbated the poverty problems resulting from the output shock. The combination of household-level data and crop models used in this paper allows us to assess the impacts of weather and price shocks at the household level, and hence to evaluate the suitability of availability-based policies for dealing with weather shocks. These analytical techniques are also useful in identifying the households and regions adversely affected by food output shocks, and hence in designing policies to improve poor consumers’ access to food.
    Keywords: ZAMBIA; SOUTHERN AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; spatial data; climate change; El Nino; models; food security; exports; trade; trade policies; poverty; weather; food supply; households; Decision Support System for Agro-technology Transfer (DSSAT); export ban; geospatial; weather shocks
    Date: 2020
  6. By: Haroon Bhorat; Kezia Lilenstein; Morné Oosthuizen; Amy Thornton
    Abstract: Earnings growth in South Africa displayed a U-shaped pattern across the earnings percentiles between 2000 and 2015, resembling wage polarization in the industrialized world. We investigate whether the drivers of this example of wage polarization in an emerging economy resemble those explored for industrialized ones. These are: skills-biased technical change; changing sectoral composition; the role of labour market institutions; and how occupational task content interacts with technology.
    Keywords: Inequality, Minimum wage, recentered influence function, South Africa, tasks, wage polarization
    Date: 2020

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