nep-afr New Economics Papers
on Africa
Issue of 2022‒01‒03
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Take the Highway? Paved Roads and Well-Being in Africa By Djemaï, Elodie; Clark, Anrew E.; D'Ambrosio, Conchita
  2. Sustainability, Growth and Impact of MFIs in Africa By Elikplimi K. Agbloyor; Simplice A. Asongu; Peter Muriu
  3. Solar-powered cold-storages and sustainable food system transformation: Evidence from horticulture markets interventions in northeast Nigeria By Takeshima, Hiroyuki; Yamauchi, Futoshi; Bawa, Dauda; Kamaldeen, Salaudeen O.; Edeh, Hyacinth O.; Hernandez, Manuel A.
  4. Enabling Tax Bargaining: Supporting More Meaningful Tax Transparency and Taxpayer Engagement in Ghana and Sierra Leone By van den Boogaard, Vanessa; Prichard, Wilson; Beach, Rachel; Mohiuddin, Fariya
  5. Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa? By Isaac K. Ofori; Toyo A. M. Dossou; Simplice A. Asongu; Mark K. Armah
  6. The Effect of Rural Electrification on Firm Creation - New Evidence from Ghana By Tom Carlowitz

  1. By: Djemaï, Elodie; Clark, Anrew E.; D'Ambrosio, Conchita
    Abstract: Public Goods aim to improve individual welfare. We investigate the causal consequences of roads on well-being in 24 African countries, instrumenting paved roads by 19th Century hypothetical lines between major ports and cities. We have data on over 32 000 individuals, and consider both their objective and subjective well-being. Roads reduce material deprivation, in terms of access to basic needs, but at the same time there is no relation between roads and subjective living conditions. The benefit of roads in providing basic needs then seems to be offset by worse outcomes in non basic-needs domains.
    Keywords: Roads, Subjective Well-being, Basic Needs, Material Deprivation, Africa
    Date: 2021–11
  2. By: Elikplimi K. Agbloyor (University of Ghana Business School, Ghana); Simplice A. Asongu (Yaoundé, Cameroon); Peter Muriu (University of Nairobi, Kenya)
    Abstract: This study provides insights into the sustainability of microfinance institutions (MFIs) in Africa with specific emphasis on documented measures of MFI sustainability, stylized facts surrounding the phenomenon, perspectives on the growth of MFIs, determinants of the growth of MFIs and the impact of MFIs.
    Keywords: Sustainability; Growth; MFIs; Africa
    Date: 2021–08
  3. By: Takeshima, Hiroyuki; Yamauchi, Futoshi; Bawa, Dauda; Kamaldeen, Salaudeen O.; Edeh, Hyacinth O.; Hernandez, Manuel A.
    Abstract: Modern cooling technologies that utilize renewable energy sources have been increasingly recognized as a promising tool to address a multitude of challenges emerging in progressively complex food systems in developing countries. When provided as cold-storages inside horticulture markets, cooling technologies can potentially contribute to improved quality of products and strengthened vertical linkages. Knowledge gaps about the actual impacts of these technologies in developing countries remain, especially in Africa south of Sahara (SSA). This study partly fills this knowledge gap by providing evidence from the evaluation of recent interventions in northeast Nigeria in which 7 small solar-powered cold-storages were installed across 7 horticulture markets. Combinations of difference-in-difference and variants of propensity-score-based methods suggest that using cold-storages significantly increased horticulture sales volumes and revenues of market-agents. Back-of-the-envelope calculations indicate that increased net revenues for market-agents may be sufficiently large to recoup the investments and operating costs of cold-storages within a reasonable time frame. Using cold-storage also reduced the share of food loss and lengthened the products' shelf-life, while raised prices received by both market-agents and farmers, which were associated with improved product quality, expanded value-adding activities by market-agents, and increased use of advance payments. We find no evidence of negative spillover effects inside horticulture markets. Finally, additional food-science experiments confirm that cold-storages preserve original physical and nutritional qualities of key horticultural products several days longer than products stored under ambient temperature.
    Keywords: NIGERIA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; food systems; transformation; markets; solar energy; cold storage; sustainability; horticulture; food quality; food losses; market-agents
    Date: 2021
  4. By: van den Boogaard, Vanessa; Prichard, Wilson; Beach, Rachel; Mohiuddin, Fariya
    Abstract: Motivation While there is increasing evidence that taxation can contribute to greater government responsiveness and accountability, such positive outcomes are not guaranteed. If the environment does not enable tax bargaining, there is a risk that taxation will amount to little more than enforced extraction. Purpose We consider how such enabling environments may be fostered and identify specific strategies that governments, civil society actors, and donors can adopt to strengthen the links between taxation, responsiveness, and accountability. Methods and approach We undertake two case studies of tax transparency and taxpayer engagement in Ghana and Sierra Leone, making use of data from taxpayer surveys, focus group discussions (FGDs), and interviews with key stakeholders in government, civil society, and donor agencies. Findings We highlight two key findings. First, meaningful transparency requires that information is comprehensive, relates to taxpayers’ priorities, and serve as a basis for dialogue between taxpayers and governments. Second, there is a need to proactively encourage taxpayer engagement by supporting forums for engagement that taxpayers perceive as safe, secure and sincere. This has been most successful where governments have visibly demonstrated responsiveness to citizens’ concerns, even on a small scale, while partnering with civil society to foster trust and dialogue. Policy implications Our findings point to the need for taxpayer education and engagement programmes that make information more accessible and more directly relevant to taxpayers’ everyday experiences. In particular, policymakers and development partners need to expand existing efforts to facilitate engagement and dialogue regarding what revenues are collected and how they are spent. We highlight the valuable role that civil society can play as translators of tax information, enablers of public forums, and trainers to support greater tax literacy and sustained taxpayer engagement.
    Keywords: Economic Development,
    Date: 2021
  5. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Toyo A. M. Dossou (Chengdu, China.); Simplice A. Asongu (Yaoundé, Cameroon); Mark K. Armah (University of Cape Coast, Cape Coast, Ghana)
    Abstract: In line with the SDG 10 and Aspiration 1 of Africa’s Agenda 2063, this study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa, and (iii) there exist relevant threshold levels required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator for the period 1996 – 2020, reveal that though: (1) Chinese FDI contributes to equitable income distribution in Africa, the effect is weak, and (2) Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are keys. Finally, critical masses required for these three key governance dynamics to propel Chinese FDI to reduce income inequality are 0.8, 0.5 and 0.1, respectively. These critical masses are thresholds at which governance is a necessary but no longer a sufficient condition to complement Chinese FDI in order to mitigate income inequality. Hence, at the attendant thresholds, complementary policies are worthwhile. Policy recommendations are provided in the end.
    Keywords: Africa, Agenda 2063, China, Corruption, Governance, FDI, Income Inequality
    JEL: F6 F15 O43 O55 R58
    Date: 2021–01
  6. By: Tom Carlowitz
    Abstract: Billions of dollars are spent each year on electrification infrastructure projects in the hope to benefit the 770 million people who still lack access to electricity. However, the evidence to date on the effects of such projects is mixed. In this paper, I study the effect of rural electrification on firm creation in Ghana by focusing on the effect on female-owned microenterprises. I combine firm census data covering over 638,000 firms (including informal and rural establishments) with electricity access and geo-spatial data. I address the endogeneity of the grid expansion using an instrumental variable approach. The instrument is the distance to a hypothetical grid connecting historical regional capitals, border towns, and main hydropower plants. I find that a 10% increase in district-level electrification leads to the creation of 152 female-owned firms, which corresponds to a 37% increase. I show that this effect is largely driven by two channels: i) a reduction in home production activities by women and ii) a lowering of required startup capital for microenterprises. The findings of this paper are consistent with previous literature, showing large effects of electrification particularly for women.
    Keywords: rural electrification; infrastructure; microenterprises; firms; Ghana
    JEL: L26 O13 O14 O18 Q41 R11
    Date: 2021

This nep-afr issue is ©2022 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.