nep-afr New Economics Papers
on Africa
Issue of 2022‒01‒10
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Donors for tax morale: Evidence from 34 African countries By Alessandro Belmonte; Vincenzo Bove; Jessica Di Salvatore
  2. Infrastructure development and population growth on economic growth in South Africa By Stungwa, Sanele; Daw, Olebogeng David
  3. Remittances and firm performance in sub-Saharan Africa: evidence from firm-level data By Kabinet Kaba; Mahamat Moustapha
  4. Women empowerment and environmental sustainability in Africa By Elvis Dze Achuo; Simplice A. Asongu; Vanessa S. Tchamyou
  5. Modeling and forecasting international tourism demand in Zimbabwe: a bright future for Zimbabwe's tourism industry By NYONI, THABANI
  6. Analyzing Capital Flow Drivers Using the ‘At-Risk’ Framework: South Africa’s Case By Mr. Ken Miyajima; Rohit Goel

  1. By: Alessandro Belmonte; Vincenzo Bove; Jessica Di Salvatore
    Abstract: Do aid projects affect citizens' motivation to pay taxes? We address this question by combining fine-grained data on aid projects from AidData and survey data from the Afrobarometer for 34 African countries. We first employ a subnational analysis, where the treatment varies by administrative unit, and then move to an individual-level analysis, which exploits the occurrence of a project during the Afrobarometer fieldwork.
    Keywords: Foreign aid, Tax morale, State capacity, Public goods, Africa
    Date: 2021
  2. By: Stungwa, Sanele; Daw, Olebogeng David
    Abstract: The objective of this study is to examine the correlation between infrastructure development and population growth on economic growth in South Africa. The study employed Cross-section Seemingly Unrelated regression to analyze the relationship between infrastructure development and population growth on economic growth using an annual panel data collected from nine provinces for the period 2006-2019. The results showed that infrastructure is not an effective instrument to stimulate economic growth. Provincial government expenditure was found to have a positive and significant relationship with economic growth. The study found that unemployment and economic growth have a negative and significant relationship. Moreover, the results revealed that population has a positive and statistical impact on economic growth. The granger causality test found that there is a causality running from population growth to infrastructure unidirectionally, meaning that population growth has an impact on infrastructure development in South Africa. To correct the problem of having harmful infrastructure on economic growth, South African policy makers should ensure that there is no lack of clarity about national objectives and standards and lack of coordination in the development of natural instruments and inconsistent implementation of national objectives. There is a need to invest more on infrastructure in South Africa.
    Keywords: Infrastructure, Population, Economic growth, Cross-section Seemingly Unrelated Regression South Africa
    JEL: C1 H54 H76 O18
    Date: 2021–10–10
  3. By: Kabinet Kaba (CERDI, University Clermont Auvergne); Mahamat Moustapha (Paris Dauphine University-PSL)
    Abstract: Sub-Saharan African firms face enormous obstacles to their development. The main constraints to business performance identified are poor access to finance and a weak domestic market. In this paper, we examine how international remittances affect firms’ performance. Specifically, we investigate the role of remittances on capital accumulation, sales, and employment in 34,010 f irms operating in 42 Sub-Saharan African countries between 2006 and 2020. Using a fixed-effect instrumental variable approach to control for the endogeneity of remittances, we find that international remittances positively affect the share of capital held by nationals in manufacturing firms. Moreover, international remittances positively affect sales in non-manufacturing firms, while a negative effect on the sales of manufacturing firms is observed. Regarding the effect of remittances on employment, we find a positive impact on both manufacturing and non-manufacturing f irms. Heterogeneity tests suggest that the effect of remittances on firms’ performance is larger in less financially developed and non-resource-rich countries. As for the negative impact of remittances on sales in manufacturing firms, the results show that it is entirely due to small firms. Finally, using remittances per capita instead of remittances relative to GDP, similar result are found.
    Keywords: Remittances, Firm Performance, Entrepreneurship, Saving and Capital Investment, Firm Employment, Africa
    JEL: F24 L25 L26 M51 O16 O55
    Date: 2021–12
  4. By: Elvis Dze Achuo (University of Dschang, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This study examines the effect of women’s socioeconomic empowerment on environmental sustainability in Africa over the 1996-2019 period. Results of the system Generalised Method of Moments (GMM) estimator reveal that women’s socioeconomic empowerment is environment enhancing. Moreover, the findings reveal that the environmental impact of women’s socioeconomic empowerment is modulated through GDP per capita and Foreign Direct Investments (FDI), leading to respective net effects of 0.002055 and 0.003478. These positive net effects are offset beyond respective threshold values of 9.513889 and 9.611398. These thresholds of GDP and FDI are critical for complementary policies relating to the link between women empowerment and environmental sustainability. Consequently, for women empowerment to effectively contribute to environmental sustainability in Africa, various governments, either through individual or concerted efforts should endeavour to create enabling business environments capable of attracting substantial FDI necessary to propel sustainable growth. Moreover, the nexus is not linear and hence, governments should also be aware of critical levels of FDI and GDP per capita at which, complementary policies are needed for women’s socioeconomic empowerment to maintain a positive influence on environmental sustainability.
    Keywords: Women empowerment, Environmental sustainability, Ecofeminism, Africa
    JEL: B54 J16 O55 Q56
    Date: 2022–01
    Abstract: This paper, which is the first of its kind in the case of Zimbabwe, uses annual time series on international tourism demand in Zimbabwe from 1980 to 2019, to model and forecast the demand for international tourism using the Box – Jenkins ARIMA approach. This research has been guided by the following objectives: to analyze international tourism trends in Zimbabwe over the study period, to develop and estimate a reliable international tourism forecasting model for Zimbabwe based on the Box-Jenkins ARIMA technique and to project international tourism demand in Zimbabwe over the next decade (2020 – 2030). Based on the Akaike Information Criterion (AIC), the study presents the ARIMA (2, 1, 0) model as the optimal model. The ARIMA (2, 1, 0) model proves beyond any reasonable doubt that over the period 2020 to 2030, international tourism demand in Zimbabwe will increase and that indeed, the future of Zimbabwe’s tourism industry is bright. Amongst other policy recommendations, the study advocates for the continued implementation and enforcement of COVID-19 preventive and control measures as well as unwavering support for tourism sector development through policies such as the National Tourism Recovery and Growth Strategy.
    Keywords: Forecasting; international tourism, Zimbabwe
    JEL: L83 Z0
    Date: 2021–12–02
  6. By: Mr. Ken Miyajima; Rohit Goel
    Abstract: Cross-border capital flows are important for South Africa. They fund the nation’s relatively large external financing needs and have important financial stability implications evidenced by the large capital outflows and asset price selloffs during the COVID-19 pandemic. This paper adds to the literature on the drivers of South Africa’s capital flows by applying the ‘at-risk’ framework––which differentiates between the likelihood of “extreme” inflows (surges) and outflows (reversals) and of “typical” flows––to both nonresident and resident capital flows. Estimated results show that among nonresident flows, the portfolio debt component is most sensitive to changes in external risk sentiment particularly during reversals. This applies to flows to the sovereign sector. Nonresident equity flows, both portfolio and FDI, are most sensitive to domestic economic activity especially during surges. This applies to flows to the corporate and banking sectors. Results also suggest that resident flows, in particular the FDI component, tend to offset nonresident flows, thus acting as buffers against funding withdrawal during periods of global risk aversion.
    Keywords: Capital flows, capital flows at risk, COVID-19 pandemic, emerging markets, financial stability, quantile regression, South Africa.; portfolio debt component; flow cycle; flow distribution; flow reversal; IMF staff calculation; capital-flows-at-risk framework; Capital flows; Foreign direct investment; Portfolio investment; Capital outflows; Capital inflows; Global; Africa
    Date: 2021–10–22

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