nep-afr New Economics Papers
on Africa
Issue of 2020‒09‒28
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The Extractive Industry's Impact on Economic Growth in SADC Countries By Nhabinde, Simeão; Heshmati, Almas
  2. Does Social Pressure Hinder Entrepreneurship in Africa? The Forced Mutual Help Hypothesis By Philippe Alby; Emmanuelle Auriol; Pierre Nguimkeu
  3. Energy Consumption, Capital Investment and Environmental Degradation: The African Experience By Ekundayo P. Mesagan; Chidi N. Olunkwa
  4. Energy consumption and economic growth in Botswana: Empirical evidence from a disaggregated data By Odhiambo, Nicholas M
  5. The Recent Political Situation in Ethiopia and Rapprochement with Eritrea By Amsalu K. Addis; Simplice A. Asongu; Zhu Zuping; Hailu Kendie Addis; Eshetu Shifaw
  6. Exploring the Inflationary Effect of Oil Price Volatility in Africa's Oil Exporting Countries By Sina J. Ogede; Emmanuel O. George; Ibrahim A. Adekunle
  7. Renewable Energy in Morocco: a reign-long project By Henri-Louis Vedie

  1. By: Nhabinde, Simeão (Eduardo Mondlane University); Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: The Southern African Development Community (SADC) countries are rich in natural resources and in most of them their extractive industries extract and export natural resources with little industrial processing. This study analyzes the direct and indirect impacts that the extractive industries in the SADC countries have on their economic growth. The study also examines the hypothesis of economic convergence. Its empirical results are based on data from the 11 founding SADC countries covering the period 2004-17. The results show that despite the process of integration, the SADC economies do not converge in terms of per capita incomes. The extractive industries have direct negative impacts on the countries' economic growth thus providing evidence of a resource curse. Extractive industries in South Africa, Botswana, and Namibia have positive direct impacts on their economic growth. However, in terms of indirect impacts, the extractive industries do not have any impact on GDP because their impact on manufacturing, human capital, public expenditure, economic openness, exchange rate, and inflation is insignificant. The study also shows that GDP, the colonial path followed by these countries, and inflation have a negative but insignificant impact on extractive industries, while manufacturing, government expenditure, and economic openness have positive but insignificant impacts in all SADC countries. Human capital and exchange rate are the only factors that have both significant positive and negative impacts on economic growth, respectively.
    Keywords: SADC, extractive industry, growth impact, natural resources, resource curse, Africa
    JEL: N57 Q13 P48
    Date: 2020–08
  2. By: Philippe Alby (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Emmanuelle Auriol (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Pierre Nguimkeu (Georgia State University - USG - University System of Georgia)
    Abstract: In the absence of a public safety net, wealthy Africans have the social obligation to share their re- sources with their needy relatives in the form of cash transfers and inefficient family hiring. We develop a model of entrepreneurial choice that accounts for this social redistributive constraint. We derive pre- dictions regarding employment choices, productivity, and profitability of firms ran by entrepreneurs of African versus non-African origin. Everything else equal, local firms are over-staffed and less productive than firms owned by nonlocals, which discourages local entrepreneurship. Using data from the manu- facturing sector, we illustrate the theory by structurally estimating the proportion of missing African entrepreneurs. Our estimates, which are suggestive due to the data limitation, vary between 8% and 12.6% of the formal sector workforce. Implications for the role of social protection are discussed.
    Keywords: Entrepreneurship,Family Solidarity,Formal Sector,Africa
    Date: 2020–04
  3. By: Ekundayo P. Mesagan (University of Lagos, Lagos, Nigeria); Chidi N. Olunkwa (University of Lagos, Nigeria)
    Abstract: This study investigates the effects of energy consumption and capital investment on environmental degradation in selected African countries between 1981 and 2017 using panel cointegration approaches. The Fully Modified and the Dynamic Ordinary Least Squares results affirm that energy consumption positively affects carbon emissions in Algeria, Nigeria, Morocco, and in the panel. At the same time, both also confirm that capital investment positively and significantly impacts carbon emissions in the region. Again, results show that capital investment augments energy use to reduce carbon emissions in Africa significantly. This implies that capital investment can provide needed impetus to reduce environmental degradation in the continent. The study, therefore, recommends that African countries should focus on energy conservation policies to reduce the adverse effect of energy use on carbon emissions.
    Keywords: Electricity Consumption, Capital investment, Environmental Degradation, Africa
    JEL: Q40 Q42 Q43 Q54 Q57
    Date: 2020–01
  4. By: Odhiambo, Nicholas M
    Abstract: In this paper we examine the causal relationship between energy consumption and economic growth in Botswana during the period 1980-2016. We disaggregate energy consumption into six components, namely: total energy consumption, electricity consumption, motor gasoline, gas/diesel oil, fuel oil and liquefied petroleum gas. We then compare the results of the disaggregated energy components with that of the aggregated energy consumption level. In order to account for the omission-of-variable bias, we incorporate inflation and trade openness as intermittent variables between the various components of energy consumption and economic growth, thereby creating a system of multivariate equations. Using the ARDL-bound testing approach, the study found a causal flow from economic growth to energy consumption to predominate. This finding has important policy implications as it shows that the buoyant economic growth that Botswana has enjoyed over the years is not energy-dependent, and that the country could pursue the requisite energy conservation policies without necessarily stifling its economic growth. To our knowledge, this study may be the first of its kind to examine in detail the causal relationship between energy consumption and economic growth in Botswana using a multivarite causality model and a disaggregated dataset.
    Keywords: Botswana, Disaggregated Energy Consumption, Economic Growth, ARDL-bounds Testing Approach
    Date: 2020–07
  5. By: Amsalu K. Addis (Fuzhou University, Fuzhou, China); Simplice A. Asongu (Yaoundé, Cameroon); Zhu Zuping (Fuzhou University, Fuzhou, China); Hailu Kendie Addis (Bahir Dar, Ethiopia); Eshetu Shifaw (Wollo, Ethiopia)
    Abstract: The aim of this article is designed to provide an overview of the historical and contemporary relations between Ethiopia and Eritrea as well as to examine the recent geopolitical situation and the perception of local people in Ethiopia. This paper is mainly based on secondary data analysis of the available secondary information and news reports, online articles, academic literature, interviews and discussions. The war between Ethiopia and Eritrea brought political, economic and social security threats to the Horn of Africa. Although the economy in Ethiopia is at the developing stage, recent protests have shaken the country to its core. Since 2015, anti-government protests have been triggered over freedom of the press, land rights, under-represented seats in the coalition parties, and horizontal inequality in economic, political and social affairs among ethnic groups across the country. In this study, it is established that the unrestrained political circumstance of the current regime has created dissension and violence among the public, and thus led to escalating political, economic and security crises in the country. If this issue is not rectified quickly, the peace in the country may be jeopardised. Another issue is that although Ethiopia-Eritrea rapprochement is appreciated, the agreement between the two leaders and their foreign policy orientation is still unclear.
    Keywords: Ethiopia, Eritrea, Protest, Amhara, Oromo, State of emergency, EPRDF
    Date: 2020–01
  6. By: Sina J. Ogede (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Emmanuel O. George (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Ibrahim A. Adekunle (Olabisi Onabanjo University, Ogun State, Nigeria)
    Abstract: A range of explanations had been offered for the apparent change in oil price-inflation relationship outcomes ranging from the possible use of alternate energy sources, change in the structure of output regarding fewer oil intensive sectors and the role of fiscal and monetary in the affected oil-exporting countries. These changes had drawn the attention of stakeholders, government and the society at large to the anecdotal relationship among oil price volatility, inflation, and output in Africa oil-exporting countries. This study leans empirical credence to the impact of oil price volatility on inflation and economic performance in the Africa oil-exporting countries from 1995 through 2017. We employed the Pool Mean Group estimation procedure with the inference drawn at a 5% level of significance. We found that oil price volatility had a negative and significant effect on inflation in Africa oil-exporting countries. The study concluded that oil price volatility had a substantial impact on inflation in the Africa oil-exporting countries. The study, therefore, recommended that Africa oil-exporting countries should adopt precautionary measures to monitor inflation potentials due to different responses of inflation to positive and negative oil price shocks.
    Keywords: Oil Price Volatility; Inflation; Growth Outcomes; Pool Mean Group; Africa
    JEL: C33 O55 Q41
    Date: 2020–01
  7. By: Henri-Louis Vedie
    Abstract: The Kingdom of Morocco, which has no oil and gas, has shifted to renewable energy as early as 1960, giving priority to hydroelectricity and the construction of dams. However, most of the country’s power plants were and remain powered by diesel or gas, which has a heavy impact on its balance payments. Since then, the demand for electricity has continued to grow due to the country’s development on the one hand and, as a result of the use of desalination facilities on the other hand, which consume a lot of electricity, to meet the constantly increasing drinking water needs. Since 2009, and at the initiative of King Mohammed VI, renewable energy has become a reign-long project, with the objective of covering 42% of the electricity produced by 2020. To achieve this goal, three branches will be used to contribute an equal share of 14% each: hydropower, wind energy and solar energy. This study shows that this objective should be achieved at the cost of considerable investment, with a focus on state-of-the-art technologies. Over and above this statistical success, Morocco will also be able to export the know-how learned, particularly in the solar and wind fields, a success which should give hope to emerging economies deprived of fossil energy, in search of development and sustainable development.
    Date: 2020–02

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