nep-afr New Economics Papers
on Africa
Issue of 2021‒03‒29
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Corruption and distortion of public expenditures: Evidence from Africa By Harouna Sedgo; Luc-Désiré Omgba
  2. Trade effects of the East Africa Customs Union in Tanzania: Application of a structural gravity model By Vincent Leyaro
  3. Youth aspirations and the reality of jobs in Africa By Adrien Lorenceau; Ji-Yeun Rim; Toma Savitki
  4. Determinants of Intra-SSA Tourism Demand By Kagochi, John; Durmaz, Nazif
  5. The tax burden on mobile network operators in Africa By Grégoire Rota-Graziosi; Fayçal Sawadogo
  6. Assessing SME Perceptions of Using Green Social Media Marketing By Shelley B Beck
  7. Effects of political institutions on the external debt-economic growth nexus in Africa By Yann Nounamo; Simplice A. Asongu; Henri Njangang; Sosson Tadadjeu
  8. Advancing digital frontiers in African economies: lessons learned from firm-level innovations By Joël Cariolle; David Carroll

  1. By: Harouna Sedgo; Luc-Désiré Omgba
    Abstract: This study investigates the effect of corruption on the trade-off between capital and current expenditures in a panel of 48 African countries over the period 2000-2016.Based on statistical yearbooks, we compile disaggregated data on public finances for African countries and find that a high prevalence of corruption distorts the composition of public expenditures at the expense of the share of capital expenditure. Specifically, an increase in corruption by one standard deviation is associated with a decrease in the proportion of capital expenditure from 29\% to 16\%. The results are robust to various specifications and estimation methods, including the fixed effects and instrumental variables approach. The supportive argument demonstrates that it seems more beneficial for corrupted bureaucrats to manipulate public spending in favor of current rather than capital expenditures. The latter relies on formal and traceable procedures, whereas current expenditure is known to be more open to the use of discretionary allocation.
    Keywords: Corruption; capital expenditure; current expenditure; public expenditure; Africa
    JEL: D73 E62 H5 O55
    Date: 2021
  2. By: Vincent Leyaro
    Abstract: By measuring the effects of forming and joining a regional integration bloc using an augmented structural gravity model, this paper finds that the East African Community (EAC) and EAC Customs Union have significantly enhanced Tanzanian trade into EAC markets. Kenya has continued to be the main trading partner for Tanzania in the EAC markets, and from 2015 onwards the trade deficit with Kenya changed into a surplus, signalling improvement in the balance of trade. Tanzania has also maintained a significant trade balance surplus with the other EAC Partner States.
    Keywords: East African Community, Customs union, Single Customs Territory, Gravity model, Tanzania
    Date: 2021
  3. By: Adrien Lorenceau; Ji-Yeun Rim; Toma Savitki
    Abstract: The gap between youth aspirations and the reality of the labour markets in Africa is large. Career aspirations of young Africans have little in common with current and projected labour demand in the region, making it unlikely that they will go through a smooth school to work transition. Evidence from ten African countries shows that what youth in these countries value most is job security, such as work in the public sector. Agriculture-related work or medium-skilled jobs in manufacturing are the least attractive for young Africans. Policies can help address the misalignment between youth employment preferences and employment opportunities. A two-pronged approach is recommended: i) helping young people shape career aspirations that are realistic and that can fit with the world they will be entering, and ii) improving the quality of jobs with due regard to the job conditions that matter for young people.
    Keywords: african youth, skills mismatch, youth aspirations, youth employment
    JEL: J11 J13 J18 J23
    Date: 2021–03–26
  4. By: Kagochi, John; Durmaz, Nazif
    Abstract: The study examines factors that influence demand for intra- sub-Saharan Africa countries’ tourism for 46 bilateral countries using a dynamic panel (system GMM) data model technique. The study employs most common macroeconomic variables and some critical social variables that help explain demand for African tourism. Results from the study suggest that while most common variables are significant, intra-SSA tourists consider internet usage important and prefer to visit less urbanized regions in SSA. However, there is enough evidence in the study to conclude that reasons for travelling within Africa are not much different than for international tourists.
    Keywords: sub-Saharan Africa; tourism; panel data regression; GMM model.
    JEL: C33 F41 L83
    Date: 2021–01
  5. By: Grégoire Rota-Graziosi (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Fayçal Sawadogo (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We estimate the tax burden on the mobile telecommunication sector in twenty-five African countries. This tax burden encompasses not only standard and particular taxes under the control of the Ministry of Finance (MoF), but also fees raised by national telecommunication Regulatory Agency (RA). Given the lack of financial data at the country level, we build a representative mobile network operator, named TELCO, using the GSMA Intelligence database. We compute the Average Effective Tax Rate (AETR) for this firm considering general and special taxes and fees levied only on the telecommunication sector. We develop a web application (, which allows the reader to replicate our analysis or to modify TELCO and tax parameters. The AETR varies significantly across countries, ranging from 33 percent in Ethiopia to 118 percent in Niger. Special taxes and fees represent a large share of the AETR illustrating some taxation by regulation and a potential tax competition (a race to the top) between the MoF and the RA. We compare the AETR of TELCO to this of a representative gold mining plant and a standard firm with similar gross return. The tax burden of the telecommunication sector is higher than this of the mining sector in 15 countries out of the 19 countries for which we have data on the gold mining sector.
    Keywords: Taxation,Telecommunication sector,Project analysis,Developing countries
    Date: 2021–01–22
  6. By: Shelley B Beck (Oxford Brookes University, Headington Campus, Oxford, OX3 0BP, United Kingdom Author-2-Name: Ayanda P Deliwe Author-2-Workplace-Name: Nelson Mandela University, University Way, Summerstrand, 6031, Port Elizabeth, South Africa. Author-3-Name: Elroy E Smith Author-3-Workplace-Name: Nelson Mandela University, University Way, Summerstrand, 6031, Port Elizabeth, South Africa. Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - SMEs often fail to market their business and their green marketing initiatives effectively. This paper assesses how the promotion of green social media marketing could provide a possible solution to SMEs failed marketing efforts within the metropoles of Nelson Mandela Bay and Buffalo City in the Eastern Cape Province of South Africa. Methodology/Technique - An empirical study was conducted following a descriptive quantitative research approach in which 150 self-administered structured questionnaires were distributed to respondents. Findings - It was found that most SMEs do not make use of green social media marketing but are aware of the benefits it could offer. Novelty - The study provides guidelines to the owners of SMEs on how to successfully implement green social media marketing. Type of Paper - Empirical.
    Keywords: Green marketing; social media marketing; green initiatives; social media; SME's
    JEL: M31 M39
    Date: 2021–03–31
  7. By: Yann Nounamo (Douala, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Henri Njangang (Dschang , Cameroon); Sosson Tadadjeu (Dschang , Cameroon)
    Abstract: The main contribution of this study is the determination of an endogenous threshold of institutional quality, beyond which external debt would affect economic growth differently. The focus is on 14 countries of the African Franc zone over the period 1985-2015. Based on the panel Smooth Threshold Regression model, the results reveal that the relationship between external debt and economic growth is based on institutional quality. It is found that the level of indebtedness at which the effect of external debt on economic growth becomes negative is higher in countries with lower levels of corruption and high levels of democracy. This means that poor institutional quality prevents a country from taking full advantage of its credit opportunities. Thus, the more countries become democratic, the more debt helps finance economic growth. These results are robust to sensitivity analysis and Generalized Method of Moments estimation.
    Keywords: external debt, political institutions, economic growth
    Date: 2021–01
  8. By: Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); David Carroll (Tufts Universiy)
    Abstract: Multiple initiatives across sub-Saharan Africa are currently leveraging digital technologies to provide transformative solutions to micro, small and medium enterprises (MSMEs) as well as consumers across the region. This paper presents a deeper dive on several promising key players currently pushing frontiers in the digitalisation landscape in sub-Saharan Africa, with a particular focus on West Africa where possible. All highlighted firms use cutting-edge technologies and digital innovations to improve MSME development and job creation by addressing key obstacles to development prevalent in many regions of sub-Saharan Africa, including market failures, missing infrastructures, and insufficient levels of public intervention. Some of the firms described are MSMEs themselves or are in the start-up phase, while others are larger, more established firms that serve MSMEs among their clientele bases. Although the description of sectors, technologies, and enterprises presented in this paper is by no means exhaustive, it nevertheless provides an in-depth picture of several African firms leveraging a diverse set of technologies, serving diverse communities, and offering a wide array of products and services destined for MSMEs and consumers alike.
    Date: 2020–12–20

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