nep-afr New Economics Papers
on Africa
Issue of 2020‒11‒23
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Comparing the market microstructure between two South African exchanges By Ivan Jericevich; Patrick Chang; Tim Gebbie
  2. Future-proofing the plastics value chain in Southern Africa By Liako Mofo
  3. Effect of Short-Term Debt on Financial Growth of Non-Financial Firms Listed at Nairobi Securities Exchange By David Haritone Shikumo; Oluoch Oluoch; Joshua Matanda Wepukhulu
  4. Financial performance and Corporate Governance: Evidence from National Development Banks in Africa By Samantha Attridge; Yunnan Chen; Michael Mbate
  5. Informal-formal workers' transition in Nigeria: A livelihood analysis By Abiodun O. Folawewo; Olusegun A. Orija

  1. By: Ivan Jericevich; Patrick Chang; Tim Gebbie
    Abstract: We consider shared listings on two South African equity exchanges: the Johannesburg Stock Exchange (JSE) and the A2X Exchange. A2X is an alternative exchange that provides for both shared listings and new listings within the financial market ecosystem of South Africa. From a science perspective it provides the opportunity to compare markets trading similar shares, in a similar regulatory and economic environment, but with vastly different liquidity, costs and business models. A2X currently has competitive settlement and transaction pricing when compared to the JSE, but the JSE has deeper liquidity. In pursuit of an empirical understanding of how these differences relate to their respective price response dynamics, we compare the distributions and auto-correlations of returns on different time scales; we compare price impact and master curves; and we compare the cost of trading on each exchange. This allows us to empirically compare the two markets. We find that various stylised facts become similar as the measurement or sampling time scale increase. However, the same securities can have vastly different price responses irrespective of time scales. This is not surprising given the different liquidity and order-book resilience. Here we demonstrate that direct costs dominate the cost of trading, and the importance of competitively positioning cost ceilings. Universality is crucial for being able to meaningfully compare cross-exchange price responses, but in the case of A2X, it has yet to emerge in a meaningful way due to the infancy of the exchange -- making meaningful comparisons difficult.
    Date: 2020–11
  2. By: Liako Mofo
    Abstract: Plastics are ubiquitous across the region and play an important role in multiple industries. Most plastic products are based on a value chain that is grounded in petroleum refining, posing an environmental challenge. Plastic manufacturing in South Africa suffers from the high cost of polymers as inputs. Mozambique is endowed with large natural gas deposits.
    Keywords: feedstocks, polymers, plastic, Input, Prices, Regional value chains, Production
    Date: 2020
  3. By: David Haritone Shikumo; Oluoch Oluoch; Joshua Matanda Wepukhulu
    Abstract: A significant number of the non-financial firms listed at Nairobi Securities Exchange (NSE) have been experiencing declining financial performance which deter investors from investing in such firms. The lenders are also not willing to lend to such firms. As such, the firms struggle to raise funds for their operations. Prudent financing decisions can lead to financial growth of the firm. The purpose of this study is to assess the effect of short-term debt on financial growth of non-financial firms listed at Nairobi Securities Exchange for a period of ten years from 2008 to 2017. Financial firms were excluded because of their specific sector characteristics and stringent regulatory framework. The study is guided by Agency Theory and Theory of Growth of the Firm. Explanatory research design was adopted. The target population of the study comprised of 45 non-financial firms listed at the NSE for a period of ten years from 2008 to 2017. The study conducted both descriptive statistics analysis and panel data analysis. The result indicates that, short term debt explains 45.99% and 25.6% of variations in financial growth as measured by growth in earnings per share and growth in market capitalization respectively. Short term debt positively and significantly influences financial growth measured using both growth in earnings per share and growth in market capitalization. The study recommends that, the management of non-financial firms listed at Nairobi Securities Exchange to employ financing means that can improve the earnings per share, market capitalization and enhance the value of the firm for the benefit of its stakeholders.
    Date: 2020–11
  4. By: Samantha Attridge; Yunnan Chen; Michael Mbate
    Abstract: This is a draft discussion paper and has not been through an external peer review process. A final ODI working paper will be published after the research conference. This study aims to examine the extent to which governance of national development banks (NDBs) in Africa affects their financial performance. The authors combine in-depth descriptive analysis with a quantitative analysis based on a sample of 33 banks, drawn from a dataset of over 100 identified African NDBs. They explore the governance and financial trends that characterise these diverse banks, then use an econometric analysis to measure the impact of political influence in governance. They find key measures of political influence, particularly political appointments, have a strongly negative impact for financial performance, as well as the risk-appetite for banks. Additionally, They find this effect is stronger in countries where the enabling environment is weaker. The authors conclude that increasing institutional distance between government ownership and management of banks may have a positive influence for financial performance.This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development. It is part of the pilot research program “Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals”. This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).Have a look on the key findings for a quick overview of the research results (coming soon)See the video pitch
    Keywords: Afrique
    JEL: Q
    Date: 2020–11–01
  5. By: Abiodun O. Folawewo; Olusegun A. Orija
    Abstract: This study evaluates the effects of the informal sector on Nigerian workers' livelihoods and analyses workers' transitions within the informal sector and between informal and formal employment. A binary logit model is applied to General Household Survey panel data for the periods 2010/11, 2012/13, and 2015/16. We find that informal employment has the greatest impact on workers' livelihoods in terms of earnings. Results also indicate the existence of a high level of dynamic transition of workers within different types of informal employment.
    Keywords: Regression analysis, Employment, Formal and informal, Nigeria, transitions
    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.