nep-afr New Economics Papers
on Africa
Issue of 2021‒04‒12
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Policy options for digital infrastructure strategies: A simulation model for broadband universal service in Africa By Edward Oughton
  2. Non-military actors as a regional strategy in the Lake Chad region By OECD
  3. Africa's Latent Assets By Soeren J. Henn; James A. Robinson
  4. On the Ends of the State: Stationary Bandits and the Time Horizon in Eastern Congo By Soeren J. Henn; Christian Mastaki Mugaruka; Miguel Ortiz; Raúl Sánchez de la Sierra; David Qihang Wu
  5. Stock exchange market activities and Economic Development: Evidence from the Nigerian economy By Adesanya, Babatunde Moses; Adediji, Adebisi Moses; Okenna, Nwabueze Prince
  6. The Science and Art of Communicating Fan Chart Uncertainty: The case of Inflation Outcome in Sierra Leone By Jackson, Emerson Abraham; Tamuke, Edmund

  1. By: Edward Oughton
    Abstract: Internet access is essential for economic development and helping to deliver the Sustainable Development Goals, especially as even basic broadband can revolutionize available economic opportunities. Yet, more than one billion people still live without internet access. Governments must make strategic choices to connect these citizens, but currently have few independent, transparent and scientifically reproducible assessments to rely on. This paper develops open-source software to test broadband universal service strategies which meet the 10 Mbps target being considered by the UN Broadband Commission. The private and government costs of different infrastructure decisions are quantified in six East and West African countries (C\^ote D`Ivoire, Mali, Senegal, Kenya, Tanzania and Uganda). The results provide strong evidence that `leapfrogging` straight to 4G in unconnected areas is the least-cost option for providing broadband universal service, with savings between 13-51% over 3G. The results also demonstrate how the extraction of spectrum and tax revenues in unviable markets provide no net benefit, as for every $1 taken in revenue, a $1 infrastructure subsidy is required from government to achieve broadband universal service. Importantly, the use of a Shared Rural Network in unviable locations provides impressive cost savings (up to 78%), while retaining the benefits of dynamic infrastructure competition in viable urban and suburban areas. This paper provides evidence to design national and international policies aimed at broadband universal service.
    Date: 2021–02
  2. By: OECD
    Abstract: The purpose of this paper is to examine current regional strategies employed to counter extremism in the Lake Chad Basin region. Using the Lake Chad Basin Commission (LCBC) as a case study, the paper highlights the importance of non-military actors in shaping African regional military strategies. Regional peace and security frameworks have generally placed a predominant emphasis on member countries’ militaries and their institutions. Unfortunately, such an approach remains incomplete in effectively countering transnational terrorist threats. By assessing current LCBC collaborative mechanisms with non-military actors under the Regional Stabilisation Strategy created in 2018, the paper concludes that there is a need to incorporate more local actors in the regional security framework. Such collaborations will improve civil-military relations while boosting the resilience of member states in combatting Boko Haram and other transnational groups.
    Keywords: extremism, Lake Chad Bassin Commission, security, terrorism, West Africa
    JEL: D74 Q34 N47
    Date: 2021–04–13
  3. By: Soeren J. Henn; James A. Robinson
    Abstract: Despite the past centuries’ economic setbacks and challenges, are there reasons for optimism about Africa's economic prospects? We provide a conceptual framework and empirical evidence that show how the nature of African society has led to three sets of unrecognized “latent assets.” First, success in African society is talent driven and Africa has experienced high levels of perceived and actual social mobility. A society where talented individuals rise to the top and optimism prevails is an excellent basis for entrepreneurship and innovation. Second, Africans, like westerners who built the world's most successful effective states, are highly skeptical of authority and attuned to the abuse of power. We argue that these attitudes can be a critical basis for building better institutions. Third, Africa is “cosmopolitan.” Africans are the most multilingual people in the world, have high levels of religious tolerance, and are welcoming to strangers. The experience of navigating cultural and linguistic diversity sets Africans up for success in a globalized world.
    JEL: H11 J6 O1 O11
    Date: 2021–03
  4. By: Soeren J. Henn; Christian Mastaki Mugaruka; Miguel Ortiz; Raúl Sánchez de la Sierra; David Qihang Wu
    Abstract: We show that armed actors refrain from using their power to arbitrarily steal from an economy if, and only if, the armed actors' property rights over stealing from that economy are secure. By 2009, armed actors taxed, administered, and protected various villages in Democratic Republic of the Congo. We exploit the timing and targeting of an international military operation that permanently made taxing these villages impossible. Following the operation, these armed actors turned to violently expropriating the same villages. The findings suggest that the security of property rights over stealing, hence the stealing horizon, can sustain, or destroy, economic growth.
    JEL: H2 O55 P26 P48
    Date: 2021–04
  5. By: Adesanya, Babatunde Moses; Adediji, Adebisi Moses; Okenna, Nwabueze Prince
    Abstract: The study examined the impact of stock exchange market activities on economic development in Nigerian economy. The study employs multiple regressions as a technique to measure the effect of stock exchange market development on the Nigerian economy. The Secondary Data used were into market capitalization (CAP), all share index (ALLSHARE) and total volume of transaction (TNOV) and were sourced from the Central Bank of Nigeria (CBN) statistical bulletin, 2019. The technique of data analysis used was the ordinary least square (OLS) method of estimation. Findings reveals that the market capitalization (CAP) had a positive relationship with GDP, with the relationship being statistically insignificant. ALLSHARE has a positive and significant relationship with GDP. TNOV has a positive and significant relationship with GDP. Therefore, it was recommended that Government should help to restore confidence to the market through regulatory authorities which will portray transparency, fair trading transactions and dealing in the stock exchange and consequently improve economic development. The SEC and NSE should put a very good advocacy programme in place to encourage and awaken Nigerians’ interest in the capital market as this will boost local participation in the market and as well enable local investors to absorb shares offloaded by foreign investors any time there was perceived economic instability.
    Keywords: stock exchange market, economic development, ordinary least square (OLS)
    JEL: E44 G10
    Date: 2020–12–02
  6. By: Jackson, Emerson Abraham; Tamuke, Edmund
    Abstract: The use of macro-econometric modelling technique has become a norm for policy decisions in central banks and in particular, the Bank of Sierra Leone. This study has leveraged on the technicalities of scientific and artistic approaches of assessing risks around point / baseline forecast; this in general makes it more convincing for probability confidence bands to be used in explaining uncertainty that surround point forecast in particular. In the case of this study, the use of the Box-Jenkins ARIMAX model has made it possible to highlight the relevance of Composite Leading Indicator (CLI) like Exchange Rate in alerting signals about early turning point of inflation outcome, both in terms of the uncertainty and risks surrounding its projections. With the derived (scientific) probability distribution of risks (30%, 60% and 90%), it was possible for the study outcome to unearth vast amount of information from the Inflation Fan Chart, particularly with respect to the art of providing balanced assessment of policy framework needed to communicate the BSL’s price stability objective. While the use of Fan Chart is hailed as a very relevant tool, the paper also recommend the use of other model approaches like Scenario and Sensitivity analysis, also considered relevant in providing leading evidence of balancing risks surrounding macroeconomic outlook.
    Keywords: Fan Chart; Normal Distribution; Forecast uncertainty; Balanced Risks
    JEL: C15 C52 C81 E37 E59
    Date: 2021–01–02

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