nep-afr New Economics Papers
on Africa
Issue of 2021‒12‒06
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Glimpses of Fiscal States in Sub-Saharan Africa By Moore, Mick
  2. Environmental Performance in the West African Economy: MM-Quantile and 2SLS Approach By Musibau, Hammed; Yanotti, Maria Belen; Nepal, Rabindra; Vespignani, Joaquin
  3. Mobile Broadband Internet, Poverty and Labor Outcomes in Tanzania By Bahia, Kalvin; Castells, Pau; Cruz, Genaro; Masaki, Takaaki; Rodriguez Castelan, Carlos; Sanfelice, Viviane
  4. Financial institutions, poverty and severity of poverty in Sub-Saharan Africa By Simplice A. Asongu; Valentine B. Soumtang; Ofeh M. Edoh
  5. Impact of COVID-19: Nowcasting and Big Data to Track Economic Activity in Sub-Saharan Africa By Reda Cherif; Karl Walentin; Brandon Buell; Carissa Chen; Jiawen Tang; Nils Wendt
  6. The Impact of Financial Inclusion on Household Health Expenditures in Africa By Ofeh M. Edoh; Tii N. Nchofoung; Ofeh E. Anchi
  7. Assessment of The Macroeconomic Situation in North African Countries and Their Role in The System of World Economic Relations By Agapova, Anna; Budarina, N; Shafiev, R; Tataeva, I.; Kuskov, A.
  8. Tourism Development and Poverty Alleviation in Sub-Saharan African Countries: An Empirical Investigation By Nicholas M Odhiambo

  1. By: Moore, Mick
    Abstract: There is a widespread perception that taxing in sub-Saharan Africa has been and remains fraught with problems or government failure. This is not generally true. For more than a century, colonial administrations and independent states have steadily developed the capacity to routinely collect more substantial revenues than one might expect in a low-income region. The two main historical dimensions of this collection capacity were (a) powerful, centralized bureaucracies focused on achieving revenue collection targets and (b) large, taxable international trade sectors. In recent decades, those centralized bureaucracies have to some extent been reformed such that in structure and procedure they resemble more closely tax administrations in OECD countries. More strikingly, nearly all states have adopted VAT and found it to be a very powerful revenue collection instrument. However, the tax share of GDP has been broadly constant for several decades, and it will be hard to increase it. It is difficult for African governments to effectively tax transnational corporations, especially in the mining and energy sectors, which are of growing importance. Tax administrations continue to approach richer Africans with a light touch, and to exaggerate the potential for taxing small-scale (‘informal’) enterprises. The revenue operations of sub-national governments are often opaque. Ordinary people often pay large sums in ‘informal taxes’ that are generally regressive in impact. And the standard direction of travel in the reform of tax policy and administration is not appropriate to those large areas, especially in the Sahel, that are afflicted by internal and cross-border armed conflicts.
    Keywords: Governance,
    Date: 2021
  2. By: Musibau, Hammed; Yanotti, Maria Belen; Nepal, Rabindra; Vespignani, Joaquin
    Abstract: The 2019 World Bank report on West Africa's coast indicates that over $3.8 billion is lost annually due to environmental issues, like erosion, flooding, and pollution. In this paper, the newly introduced environmental performance index (EPI) is incorporated into the neoclassical growth model to empirically address the impact of environmental performance on economic growth for the Economic Community of West African States (ECOWAS). Using the novel Method of Moments-Quantile Regression methodology and 2SLS models, the empirical investigation finds a positive relationship between environmental performance and economic growth across quantiles for ECOWAS. Empirical results provide evidence supporting bidirectional relationships running from environmental performance to economic growth; from government size to economic growth; and from trade openness to economic growth across all quantiles. Results show that environmental performance, government size, labour, and capital stock have a positive impact on West African Economic Growth, while trade openness decreases economic growth. We find a 48% optimal threshold of environmental performance index (EPI) on economic Growth for ECOWAS countries. Based on the findings, policies to encourage improved environmental performance above the threshold estimated will go a long way to enhance West African economies.
    Keywords: economic growth, environmental performance, ECOWAS, Moment of Method-QR estimator
    JEL: E00 F40
    Date: 2021–09–01
  3. By: Bahia, Kalvin (GSMA); Castells, Pau (GSMA); Cruz, Genaro (GSMA); Masaki, Takaaki (World Bank); Rodriguez Castelan, Carlos (World Bank); Sanfelice, Viviane (Temple University)
    Abstract: What are the impacts of expanding mobile broadband coverage on poverty, household consumption and labor market outcomes in developing countries? Who benefits from improved coverage of mobile internet? To respond to these questions, this paper applies a difference-in-differences estimation using panel household survey data combined with geospatial information on the rollout of mobile broadband coverage in Tanzania. The results reveal that being covered by 3G networks has a large positive effect on total household consumption and poverty reduction, driven by positive impacts on labor market outcomes. Working age individuals living in areas covered by mobile internet witnessed an increase in labor force participation, wage employment, and non-farm self-employment, and a decline in farm employment. These effects vary by age, gender and skill level. Younger and more skilled men benefit the most through higher labor force participation and wage employment, while high-skilled women benefit from transitions from self-employed farm work into non-farm employment.
    Keywords: Africa, consumption, labor force participation, welfare, Tanzania
    JEL: F63 I31 L86 O12
    Date: 2021–09
  4. By: Simplice A. Asongu (Yaounde, Cameroon); Valentine B. Soumtang (Yaoundé, Cameroon); Ofeh M. Edoh (Yaoundé, Cameroon)
    Abstract: The study assesses how financial institution dynamics have affected poverty and the severity of poverty in 42 sub-Saharan African countries for the period 1980-2019. In order to increase for policy relevance of the study, three financial development indicators are used, namely: financial institutions depth, financial institutions access and financial institutions efficiency. The adopted empirical strategy is a quantile regressions approach which enables the study to assess how financial institutions dynamics affect poverty and the severity of poverty throughout the conditional distribution of poverty and severity of poverty. The findings show various tendencies, inter alia: (i) financial institutions depth (efficiency) consistently decreases the severity of poverty (poverty headcount) and (ii) financial institutions access consistently decreases both poverty and the severity of poverty and the decreasing effect increases with increasing levels of poverty in the top quantiles and throughout the conditional distribution of the severity of poverty. Policy implications are discussed with respect of SDG1 on poverty reduction.
    Keywords: financial development; poverty alleviation; Africa
    JEL: G20 I10 I20 I30 O10
    Date: 2021–11
  5. By: Reda Cherif; Karl Walentin; Brandon Buell; Carissa Chen; Jiawen Tang; Nils Wendt
    Abstract: The COVID-19 pandemic underscores the critical need for detailed, timely information on its evolving economic impacts, particularly for Sub-Saharan Africa (SSA) where data availability and lack of generalizable nowcasting methodologies limit efforts for coordinated policy responses. This paper presents a suite of high frequency and granular country-level indicator tools that can be used to nowcast GDP and track changes in economic activity for countries in SSA. We make two main contributions: (1) demonstration of the predictive power of alternative data variables such as Google search trends and mobile payments, and (2) implementation of two types of modelling methodologies, machine learning and parametric factor models, that have flexibility to incorporate mixed-frequency data variables. We present nowcast results for 2019Q4 and 2020Q1 GDP for Kenya, Nigeria, South Africa, Uganda, and Ghana, and argue that our factor model methodology can be generalized to nowcast and forecast GDP for other SSA countries with limited data availability and shorter timeframes.
    Keywords: model prediction; quantile plot; ML model; GDP YoY; data variable; YoY percent change; Factor models; Machine learning; Time series analysis; Spot exchange rates; Mobile banking; Africa; Sub-Saharan Africa
    Date: 2021–05–01
  6. By: Ofeh M. Edoh (University of Dschang, Cameroon); Tii N. Nchofoung (University of Dschang, Cameroon); Ofeh E. Anchi (University of Bamenda, Cameroon)
    Abstract: This study examines the impact of financial inclusion on household health expenditure in 17 African countries. It argues that financial inclusion is an active influencer of individuals’ health demand and that Gross Domestic Product (GDP) per capita and voluntary health insurance schemes tend to be active transmission channels through which financial inclusion affects household health expenditures. The study used an instrumental variable (2SLS) technique for the analysis over a period from 2008 to 2017.Results from the study show that being financially included leads to increase household health expenditures. Suggestions for policy emerging from this study to governments in Africa are on the aspect of fostering financial inclusion to a wider population alongside enhancing the Universal Health Coverage (UHC) plan to ease the burden of out-of-pocket payments on households.
    Keywords: Financial inclusion, Health expenditure, Out-of-pocket (OOP) payments, 2SLS
    JEL: G15 I13 C23
    Date: 2021–01
  7. By: Agapova, Anna; Budarina, N; Shafiev, R; Tataeva, I.; Kuskov, A.
    Abstract: In this article, based on the analysis of the macroeconomic situation of the North African countries, their role in the system of world economic relations is determined. It is proved that despite a certain similarity of the economic model of development of the countries of North Africa, based on the use of raw materials, the impact of external shocks causes different reactions and consequences that are incomparable in scale. It has been determined that the political and economic instability of the North African countries is reflected, among other things, in the ratings of socio-economic development published by international organizations and leading expert and analytical centers. It was revealed that the progress that was achieved by the countries of the region in previous years is largely leveled by factors of a political and religious nature, as well as a strong dependence on world markets for raw materials, which in modern conditions adds certain difficulties to these countries in the world economy.
    Keywords: North African countries, economic development, unemployment rate, export and import of goods, global competitiveness index, globalization index, doing business index, economic freedom index, global innovation index.
    JEL: O10
    Date: 2021–03–05
  8. By: Nicholas M Odhiambo
    Abstract: In this study, the impact of tourism development on poverty alleviation is examined using panel data from 32 sub-Saharan African (SSA) countries during the period 2005-2014. Two indicators of tourism development are used, namely tourist arrivals and tourism revenue. In addition, four control variables have been used, namely economic growth, trade, the rule of law, and income inequality (measured by the Gini coefficient, the Atkinson index and the Palma ratio), thereby leading to three separate specifications for each tourism development proxy. Using the generalized method of moments (GMM) regression analysis, the study found that the impact of tourism development on poverty alleviation is not unanimous. When the number of tourist arrivals is used as a proxy, the results show that an increase in tourism development consistently leads to an increase in household welfare; hence, a decrease in poverty, irrespective of the specification used. However, when tourism revenue is used as a proxy, no significant impact of tourism development on household welfare is found to exist, irrespective of the model specification used. The results also show that income inequality has a clear negative impact on household welfare in SSA countries, while economic growth and the rule of law have a distinct positive effect.
    Date: 2021–11

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