nep-afr New Economics Papers
on Africa
Issue of 2020‒11‒02
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Why Are Africa's Female Entrepreneurs Not Playing the Export Game? Evidence from Ghana By Ackah, Charles G.; Görg, Holger; Hanley, Aoife; Hornok, Cecília
  2. Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach By Asantewaa, Adwoa; Jamasb, Tooraj; Llorca, Manuel
  3. Determinants of Financial Performance of Microfinance Banks in Kenya By King'ori S. Ngumo; Kioko W. Collins; Shikumo H. David
  4. Explaining Firm-Level Gender Productivity Differential in Africa By Amira El-Shal; Hanan Morsy
  5. Assessing Private Investment in African Renewable Energy Infrastructure: A Multi-criteria Decision Analysis Approach By Baumli, Kenny; Jamasb, Tooraj
  6. The Effect of Antimalarial Campaigns on Child Mortality and Fertility in Sub-Saharan Africa By Wilde, Joshua; Apouey, Bénédicte; Coleman, Joseph; Picone, Gabriel
  7. Is sub-Saharan Africa deindustrializing? By Mensah, Emmanuel B.

  1. By: Ackah, Charles G. (University of Nottingham); Görg, Holger (Kiel Institute for the World Economy); Hanley, Aoife (Kiel Institute for the World Economy); Hornok, Cecília (Kiel Institute for the World Economy)
    Abstract: We explore the export performance of Africa's underperforming female entrepreneurs, using the Ghanaian ISSER-IGC panel, a comprehensive dataset of manufacturing firms for 2011–2015. Uniquely, the data provides information about the severity of key business constraints, across both male and female entrepreneurs. We find that females are less likely to export (and optimize their exporting) than their male peers. Although reduced access to finance seriously constrains the exports of female entrepreneurs, this limitation does not explain their relative inability to leverage value from exports. Consistent with related work, we find that certain social and cultural constraints, in particular constraints linked to bribes and security concerns, are more deeply felt by female entrepreneurs. This may hint at the exclusion of Africa's females (voluntarily or involuntarily) from male-dominated networks or business practices.
    Keywords: female entrepreneurship, business constraints, productivity, exporting, Africa, Ghana
    JEL: D22 F14 J16
    Date: 2020–10
  2. By: Asantewaa, Adwoa (World Bank Group and Durham University Business School, Durham University, UK); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Llorca, Manuel (Department of Economics, Copenhagen Business School)
    Abstract: Since the late 1980s, electricity sector reforms have transformed the structure and organisation of the sector in many countries across the world. While the outcomes of reforms in developed and some developing countries have been extensively examined, there is limited analysis on the outcomes of the reforms in sub-Saharan Africa (SSA). This paper analyses the performance of electricity sector reforms in 37 SSA countries between 2000 and 2017. We use a Stochastic Frontier Analysis approach to estimate a multi-input-multi-output distance function to assess the impact of reform steps and institutional features on sector-level performance. The results indicate that reforms in SSA increased the installed generation capacity per capita and plant load factor but did not reduce technical network losses. Also, the presence of an electricity law, sector regulator, vertical unbundling, and private participation in the management of assets have a positive impact on reform performance. Perceptions of non-violent institutional features such as corruption, regulatory quality and governance effectiveness do not seem to have significant effect on reform performance, but perceptions of political stability, violence and terrorism influence reform outcomes. The effects of hydroelectric capacity on reform performance was found to be negligible while larger electricity systems were found to be more efficient reformers. We conclude that a workable reform in SSA involves vertical unbundling with an electricity law, a regulator and private ownership and management of assets where desirable. However, the positive outcomes go hand in hand with an increase of technical network losses, and hence emphasis should be placed on decoupling these losses from generation capacity and plant load factor.
    Keywords: Electricity Sector Reform; Sub-Saharan Africa; Institutions; Stochastic Frontier Analysis; Distance Function
    JEL: H54 L94 O13 P11 Q48
    Date: 2020–08–06
  3. By: King'ori S. Ngumo; Kioko W. Collins; Shikumo H. David
    Abstract: Microfinance provides strength to boost the economic activities of low-income earners and thus contributes to eradication of poverty. However, microfinance institutions face stringent competition from commercial banks; the growth of microloan activities of commercial banks may confront microfinance institutions with increased competition for borrowers. In Kenya, the micro finance sector has extremely high competition indicated by the shifting market share and profitability. This study sought to examine the determinants of financial performance of Microfinance banks in Kenya. The study adopted a descriptive research design and used secondary data from 7 Microfinance banks for a period of 5 years from 2011 to 2015. The data collected was analyzed using correlation and regression analysis. The study found a positive and statistically significant relationship between operational efficiency, capital adequacy, firm size and financial performance of microfinance banks in Kenya. However, the study found an insignificant negative relationship between liquidity risk, credit risk and financial performance of microfinance banks in Kenya. The study concluded that there is direct relationship between operational efficiency, capital adequacy, firm size and financial performance of microfinance banks in Kenya.
    Date: 2020–10
  4. By: Amira El-Shal (African Development Bank); Hanan Morsy (African Development Bank)
    Abstract: The gender gap in firm productivity is the widest in Africa, and evidence on the determinants of this variation remains thin. We exploit a harmonized firm-level survey dataset of 46 African countries over the period 2006-2018 to explain the productivity gender differential and identify the association pathways. Special focus is placed on the behavior with respect to innovation and technology adoption and dealing with market inefficiencies and institutional barriers. We construct five composite indices to reflect the categories of productivity determinants and apply mean and quantile decomposition approaches. Our estimates indicate a significant productivity differential by the gender of entrepreneur in Africa, specifically in the Northern and Eastern regions. Interestingly, the differential is not induced by educational nor entrepreneurial abilities but rather by women being more negatively affected by institutional barriers, such as corruption and perceptions about it, and market inefficiencies, such as the lack of access to finance. These results can be explained by gender-based behavioral differences and institutional structures, which can as well affect women’s selection of business activity, making their firms less likely to benefit from some innovation and technology adoption activities.
    Date: 2020–10–20
  5. By: Baumli, Kenny (Department of Economics, Copenhagen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School)
    Abstract: Energy poverty remains prevalent in many African countries, hindering economic development and exacerbating social inequalities. Simultaneously, population growth throughout the continent is expected to perpetuate the already high demand for basic energy services into the coming decades. Private sector finance is increasingly regarded as a necessary ingredient to remedy Africa’s energy challenges and to stimulate the adoption of renewable energy. However, investments remain insufficient for the burgeoning infrastructure requirements of the African economies. This paper seeks to delineate the financial and non-financial drivers of investment decisions to understand better the barriers to private participation in African renewable energy projects. Using a Fuzzy Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) approach, we evaluate the attitudes and beliefs about country-level characteristics for investment decisions. Analysis of primary data from energy professionals highlights that perceptions moderate choices through evaluation criteria, which in turn predicate policy recommendations. Investor confidence in regulatory effectiveness is identified as the primary concern for investors. Local capacity building and policy instruments, designed to overcome institutional rigidities, are among the preferred solutions. The findings indicate that non-financial drivers contribute significantly to understanding Africa’s private energy investment challenges and provide a key to disentangling the determinants of these investments.
    Keywords: Renewable energy; Investment; Multi-Criteria Decision-Making; Africa
    JEL: G10 G20 H40 Q20 Q40
    Date: 2020–10–05
  6. By: Wilde, Joshua (Max Planck Institute for Demographic Research); Apouey, Bénédicte (Paris School of Economics); Coleman, Joseph (University of South Florida); Picone, Gabriel (University of South Florida)
    Abstract: We examine the extent to which recent declines in child mortality and fertility in Sub- Saharan Africa can be attributed to insecticide-treated bed nets (ITNs). Exploiting the rapid increase in ITNs since the mid-2000s, we employ a difference-in-differences estimation strategy to identify the causal effect of ITNs on mortality and fertility. We show that the ITN distribution campaigns reduced all-cause child mortality, but surprisingly increased total fertility rates in the short run in spite of reduced desire for children and increased contraceptive use. We explain this paradox in two ways. First, we show evidence for an unexpected increase in fecundity and sexual activity due to the better health environment after the ITN distribution. Second, we show evidence that the effect on fertility is positive only temporarily – lasting only 1-3 years after the beginning of the ITN distribution programs – and then becomes negative. Taken together, these results suggest the ITN distribution campaigns may have caused fertility to increase unexpectedly and temporarily, or that these increases may just be a tempo effect – changes in fertility timing which do not lead to increased completed fertility.
    Keywords: Malaria, bed nets, child mortality, fertility, Sub-Saharan Africa
    JEL: I15 J13 O10 O15
    Date: 2020–10
  7. By: Mensah, Emmanuel B. (UNU-MERIT, Maastricht University)
    Abstract: There is a general view that Africa is deindustrializing. We examine the extent to which the existing result is sensitive to sample size and new sectoral indicators. In addition to the usual linear fixed effect model, we use nonlinear panel data method that recognizes the fractional nature of manufacturing share of employment and output. We do not find convincing and robust evidence in support of the general view that Africa is deindustrializing prematurely. Manufacturing employment shares do not follow an inverse U-shape relationship. Conditional on income, population, and country-specific fixed effects, manufacturing output shares show positive and statistically significant trends over time. When we increase the coverage of countries to almost all countries in Africa, the results suggest that Africa is not deindustrializing, although there has not been any significant industrial development since the 1970s. This result masks important regional differences. A sub-regional analysis shows that East Africa is industrializing, whereas Southern Africa is the only region that seems to be deindustrializing. We examine the underlying drivers of manufacturing performance and discuss the implication for data collection and industrial policy in Africa.
    Keywords: Africa, de-industrialization, industrialization, industrial development, manufacturing, economic growth
    JEL: O14 O55
    Date: 2020–10–09

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