nep-afr New Economics Papers
on Africa
Issue of 2020‒08‒24
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Competition and inclusive regional economic growth in food production: Barriers to entry and the role of African multinational corporations By Teboho Bosiu; Thando Vilakazi
  2. Working Paper 331 - Mispricing of Sovereign Risk and Investor Herding in African Debt Markets By Hanan Morsy; Eman Moustafa
  3. Fast tracking the SADC integration agenda to unlock regional collaboration gains along growth corridors in Southern Africa By Alexis Habiyaremye
  4. Working Paper 333 - Corruption and Tax Morale in Africa By Amadou Boly; Maty Konte; Abebe Shimeles
  5. Building Knowledge Economies in Africa: An Introduction By Simplice A. Asongu; John Kuada
  6. Comparative approaches to key issues in the economic regulation of telecommunications markets in South Africa, Tanzania, Zambia, and Zimbabwe By Anthea Paelo; Genna Robb
  7. Peacekeeping and the Enforcement of Intergroup Cooperation, Evidence from Mali By William Nomikos
  8. Working Paper 336 - Jobs, Economic Growth, and Capacity Development for Youth in Africa By Haroon Bhorat; Morné Oosthuizen

  1. By: Teboho Bosiu; Thando Vilakazi
    Abstract: The growth of African multinational companies in Southern and East Africa in recent decades brings with it a great opportunity for development of productive capacity in the region and greater regional integration. This study identifies three emerging multinationals in the region?Trade Kings (from Zambia), Export Trading Group (Kenya), and Mount Meru (Tanzania)?that have developed capabilities over time to become effective competitors of incumbent food production companies in other country markets.
    Keywords: African multinational corporations, Multinational firms, barriers to entry, food production, Regional integration
    Date: 2020
  2. By: Hanan Morsy (Research Department, African Development Bank); Eman Moustafa (Research Department, African Development Bank)
    Abstract: In light of the limited evidence on herd behavior in frontier debt markets, this paper examines whether African sovereign risk is mispriced due to international investor herding and the tendency to cluster as one asset class rather than being driven by macroeconomic fundamentals. Exploiting high-frequency financial datasets of 55 countries between 2004 to 2019, we estimate several regression specifications and apply the Blinder-Oaxaca decomposition approach to reflect the determinants of sovereign risk pricing in Africa compared to other world regions. The results confirm an asymmetric and herd behavior in African debt markets and demonstrate that African debt assets are treated as one category or class. Our results also indicate that the mispricing of Africa's sovereign risk is mainly due to discriminatory behavior by international investors rather than to differences in the quality of macroeconomic fundamentals between Africa and non-Africa regions.
    Keywords: Herding, contagion, mispricing, CDS spreads, bond yields, sovereign risk, sovereign debt, Africa JEL Classification: G12, G14, G15, F34
    Date: 2020–05–25
  3. By: Alexis Habiyaremye
    Abstract: Despite more than two decades of economic integration efforts, levels of spatial development inequality remain high within the Southern African Development Community (SADC). Owing to persistent delays in the implementation of the SADC integration agenda, infrastructure connectivity is still overly inefficient, while cumbersome customs also continue to impede the free movement of goods and services. This hampers the growth potential of planned spatial development initiatives in the region.
    Keywords: Growth, growth corridors, intra-regional trade, Regional integration, Southern African Development Community, SADC, Structural transformation
    Date: 2020
  4. By: Amadou Boly (Research Department, African Development Bank); Maty Konte (United Nations University (UNU-MERIT)); Abebe Shimeles (African Economic Research Consortium)
    Abstract: This paper analyzes the effect of the quality of governance (proxied by perceived corruption) on attitudes toward paying taxes. Using the Afrobarometer surveys from 36 African countries, over the period 2011-2015, we find that a perception of low corruption at different levels of the executive branch (president's office, government officials, or tax authorities) has a significant and positive impact on tax morale. To account for possible reverse causality between a citizen's perception of governance quality and attitude toward tax payment, we also propose an instrumental variables (IV) approach, using the ethnicity of the country's leader as an instrument for perceived level of corruption, the assumption being that individuals from the same ethnic group tend to have a favorable perception of concurrent governance. The IV results confirm that an individual's positive perception of governance has a positive impact on one's willingness to pay taxes.
    Keywords: corruption, taxation, governance, Africa JEL Classification: D73, H71, O55
    Date: 2020–05–25
  5. By: Simplice A. Asongu (Yaounde, Cameroon); John Kuada (Aalborg University, Denmark)
    Abstract: Knowledge has emerged as a fundamental driver of economic growth and development by inter alia improving the effectiveness and efficiency of economic projects and boosting the process of finding new avenues of addressing developmental policy syndromes. Recent evidence suggests that Africa is on the threshold of significant and sustainable economic growth if its human and material resources can be effectively mobilised to support the process (Kuada & Mensah, 2017; Asongu & Tchamyou, 2019). Consequently, the World Bank’s Knowledge Economy Framework aims to explore and support the extent to which current policies in African countries affect the knowledge development process (and thereby competitiveness) on the continent. A knowledge economy is an economy in which economic prosperity largely depends on the accessibility, quality and quantity of information available, instead of the means of production (Asongu, 2017a, 2017b). This themed issue of Contemporary Social Science-‘Building Knowledge Economies in Africa’ - consists of papers that focus on, but are not limited to, the four dimensions of the World Bank’s Knowledge Economy Index. These are: information and communication technology, education, economic incentives and institutional regime, and innovation (Tchamyou, 2017). The themed issue engages with high quality contributions which, taken together, address the drivers towards knowledge-based economies. This introduction provides a context for understanding the importance of building knowledge economies in Africa and summarises the main contributions to the themed issue. The paper ends by advising scholars and policy makers regarding the risks associated with a colonial view of knowledge- notably the importance of proposing knowledge-based policies while avoiding hegemonic paradigms and hierarchical constructs. In summary, the issue consists of a set of theoretically informed, empirically robust, policy-relevant and accessible articles for both specialists and non-specialists.
    Keywords: Knowledge economy; Development; Africa
    JEL: O10 O30 O38 O55 O57
    Date: 2020–01
  6. By: Anthea Paelo; Genna Robb
    Abstract: This paper reviews comparative approaches to key issues in economic regulation in four countries of the Southern African Development Community, and how this has been reflected in outcomes in terms of competition, prices, access, and innovation in telecommunications services. In this paper, regulatory models in South Africa, Tanzania, Zambia, and Zimbabwe are evaluated with a focus on regulation of spectrum assignment, infrastructure sharing, call termination rates, and number portability.
    Keywords: Competition, economic regulation, Regulation, Southern African Development Community, Telecommunication
    Date: 2020
  7. By: William Nomikos (Washington University in St. Louis)
    Abstract: Despite the abundance of evidence that peacekeeping works, we know little about what actually makes peacekeepers effective. Recent work suggesting that local agendas are central to modern conflicts make this omission particularly problematic. The article demonstrates that the presence of peacekeepers makes individuals more optimistic about the risks of engagement and the likelihood that members of outgroups will reciprocate cooperation. I use data from a lab-in-the-field experiment conducted in Mali, a West African country with an active conflict managed by troops from France and the United Nations (UN), to show that UN peacekeepers increase the willingness of individuals to cooperate relative to control and French enforcers. Moreover, I find that UN peacekeepers are especially effective among those participants who hold other groups and institutions in low esteem as well as those who have more frequent contact with peacekeepers. Follow-up interviews and surveys suggest that perceptions of the UN as unbiased rather than other mechanisms account for its effectiveness.
    Keywords: Mali, peacekeeping, peacebuilding, ethnic conflict, intergroup cooperation, international enforcement
    JEL: C72 C91 C93 D74 D91 F51 F53 F54 O55
    Date: 2020–08
  8. By: Haroon Bhorat (Development Policy Research Unit, School of Economics, University of Cape Town); Morné Oosthuizen (Development Policy Research Unit, School of Economics, University of Cape Town)
    Abstract: The rapid growth of its population presents both opportunities and challenges to the African continent. In order for the demographic dividend to be harnessed, African countries' youthful populations need to find productive work. Unfortunately, labour market outcomes on the continent tend to be relatively poor, and while there has been a shift towards the services sector as a potential engine for future economic growth, development and— critically—jobs, it is debatable as to whether the services sector can generate jobs of the quantity or quality required to raise incomes. In this paper, we argue that the economic complexity framework, with its associated mapping of products within the product space, provides a useful lens through which to view industrial policymaking. By focusing more narrowly on specific products identified through the economic complexity methodology, it is argued that policymakers can be presented with a more targeted menu of policy recommendations aimed at resolving very specific problems within economies. By successfully addressing capability constraints, policy can have a potentially greater impact on the accumulation of capabilities and economic diversification, unlocking the potential of manufacturing as a source of economic dynamism and job creation.
    Keywords: Jobs, Economic Growth, Capacity Development, Youth, Africa JEL classification: F43, J13, J62, N37
    Date: 2020–06–26

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