nep-afr New Economics Papers
on Africa
Issue of 2022‒01‒17
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Testing the Triple Deficit Hypothesis for Sub-Saharan Africa: Implications for the African Continental Free Trade Area By Samson N. Okafor; Chukwunonso Ekesiobi; Ogonna Ifebi; Stephen K. Dimnwobi; Simplice A. Asongu
  2. Do Chinese Infrastructure Loans Promote Entrepreneurship in African Countries? By Munemo, Jonathan
  3. Towards The Quest To Reduce Income Inequality In Africa: Is There A Synergy Between Tourism Development And Governance? By Isaac K. Ofori; Toyo A. M. Dossou; Seyi S. Akadiri
  4. African migrants plight in India: Afrophobia impedes India's race for Africa's resources and markets By Kohnert, Dirk
  5. China, Africa, and the Rest: Recent Trends in Space Science, Technology, and Satellite Development By Klinger, Julie
  6. International Development Lending and Global Value Chains in Africa By Amendolagine, Vito
  7. Analysing Fiscal Federalism in Global South: South Africa, Kenya, Ethiopia and Nepal By Kaur, Gurleen; Chakraborty, Lekha S; Rangan, Divy; Kaur, Amandeep; Farida Jacob, Jannet
  8. Addressing Oil Spills and Agricultural Productivity. Evidence of Pollution in Nigeria. By Beatriz Manotas-Hidalgo

  1. By: Samson N. Okafor (Central Bank of Nigeria, Abuja, Nigeria); Chukwunonso Ekesiobi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Ogonna Ifebi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Stephen K. Dimnwobi (NnamdiAzikiwe University, Awka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Aware of the nature of deficits in the current account, fiscal account, and the financial account balances of the countries in the Sub-Saharan Africa (SSA) region, this inquiry assessed the relationship between these deficits and the implication of such relationship for the African Continental Free Trade Area (AfCFTA). To do this, the study adopted panel data analysis techniques using the Pooled Mean Group-Autoregressive Distributed Lag (PMG-ARDL) specifications to test for the Triple Deficit Hypothesis (TDH) in the region. The findings of the study revealed the presence of the TDH in SSA where bidirectional causality exists between current account balance and budget balance, and between saving gap and current account balance, with a unidirectional causality running from budget balance to saving gap. The adoption of sound fiscal, monetary, and trade interventions in the region constitutes the major policy recommendations.
    Keywords: Triple Deficit Hypothesis; Sub-Saharan Africa; African Continental Free Trade Area
    Date: 2021–01
  2. By: Munemo, Jonathan
    Abstract: As Chinese loans to Africa have been on an upward trajectory for more than a decade, there are questions about the economic consequences that large scale borrowing from China has on African economies. Jonathan Munemo investigates the impact these rising loans have on entrepreneurship and finds that African countries with a higher percentage of economic infrastructure loans have greater entrepreneurship in the form of new business startups.
    Date: 2021
  3. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Toyo A. M. Dossou (Chengdu, China); Seyi S. Akadiri (Central Bank of Nigeria, Abuja, Nigeria)
    Abstract: Despite the growing attention on the tourism development-income inequality nexus, a conspicuous gap in the literature is that rigorous empirical works examining how good governance moderates the relationship is hard to find. Anchoring on the trickle-down theory and the tourism-led growth hypothesis, this study fills this void in the literature based on data for 48 African countries for the period 1996 – 2020. We provide strong evidence robust to several specifications from the GMM estimator to show that, though unconditionally, both tourism development and governance reduce income inequality in Africa, the effect of the former is amplified in the presence of quality economic, political and institutional governance. Particularly, we find that control of corruption and political stability are keys for propelling Africa’s tourism sector to contribute to shared income distribution across the continent. Policy recommendations are provided in line with SDG 10 and Aspirations 1 and 3 of Africa’s Agenda 2063.
    Keywords: Africa; Corruption; Governance; Income Inequality; Tourism Development; Tourism Receipts
    JEL: C33 D31 D63 H11 L5 O55 Z32
    Date: 2021–01
  4. By: Kohnert, Dirk
    Abstract: Africa and India share a long history of trade, investment and slavery. The Portuguese alone brought up to 80,000 slaves from Mozambique to India since the 16th century. Unlike slaves in other parts of the world, African slaves, soldiers, and traders had a strong military and cultural influence on India's culture and society. Some of the slaves even held privileged positions. Today India competes with other global players, especially China, for African resources and markets. Growing racism and Afrophobia towards African migrants, however, could hamper the ambitions of the New-Delhi government. India's social networks and political leaders are increasingly looking for scapegoats and “strangers” to blame for their failures due to religious, racist and linguistic prejudice. Racism and Afrophobia did not appear first under Modi's administration, but they have become more daunting and contagious. The famous Indian writer and political activist, Arundhati Roy, rated Indian racism towards black people as almost worse than white peoples‟ racism. For example, Africans, who were often summarily disqualified as „Nigerians‟, were generally accused of being drug dealers and even suspected of „cannibalism‟. Yet, Indian authorities at all political levels did not effectively counter this. On the contrary, they not infrequently encouraged these prejudices. Modi, for example, compared breakaway Indian regions to „Somalia‟.
    Keywords: India, Africa, international migration, xenophobia, Afrophobia, racism, violence, Afro-Indian relations, informal sector, illegal migration, forced migration, slave-trade, minorities, remittances
    JEL: E26 F62 F66 N35 N95 Z13
    Date: 2021–12–14
  5. By: Klinger, Julie
    Abstract: Did you know China's first successful contract to build a satellite was for Nigeria's Space Research and Development Agency? Space is booming on the African continent. Millions of dollars in deals to build and launch satellites are being signed with a host of partners. This working paper by Julie Klinger explores how African scientists and entrepreneurs are engaging in space science policy at home and abroad, pushing the frontiers of what is possible in a rapidly transforming political and economic context.
    Date: 2020
  6. By: Amendolagine, Vito
    Abstract: As the world becomes more and more integrated, participating in global production fragmentation by connecting to global value chains (GVCs) can provide a "golden" opportunity for developing countries to access international markets and boost economies. Vito Amendolagine analyses the extent to which international development lending can support African countries in trading intermediate goods with foreign partners with the goal of further specializing in high value-added activities within cross-national production networks. Based on his research, it appears that Chinese lending increases the involvement of borrowing countries in the international trade of intermediate goods, while World Bank loans contribute to move African countries toward higher valued added activities along international production chains.
    Date: 2021
  7. By: Kaur, Gurleen; Chakraborty, Lekha S; Rangan, Divy; Kaur, Amandeep; Farida Jacob, Jannet
    Abstract: This paper examines the fiscal federalism processes in four countries in the global south – viz., South Africa, Kenya, Ethiopia and Nepal – focussing on their revenue and expenditure assignments and intergovernmental revenue sharing mechanisms. The significance of focussing on federations in global south is that the processes are still dynamic in terms of “optimal concurrency” in the expenditure and revenue assignments; and “revenue sharing” norms. The common feature of all these federations is the vertical and horizontal fiscal imbalances emanating from the asymmetric revenue and expenditure assignments and in turn identifying and restating the role of intergovernmental fiscal transfers to arrive at economic convergence across jurisdictions.
    Keywords: Federalism , Global South, Intergovernmental Fiscal Transfers , South Africa, Kenya, Ethiopia, Nepal
    JEL: H3 H30 H77
    Date: 2021
  8. By: Beatriz Manotas-Hidalgo (Universidad Publica de Navarra)
    Abstract: This paper examines how the pollution generated by oil operations in Nigeria can affect agricultural total factor productivity. I analyze oil spills, which are the main ecological disaster in Nigeria and lead to major environmental, economic, and social problems. Following a consumer-producer household framework, and applying a difference-and-difference approach, I estimate an agricultural production function. I find that farmers located less than 10 kilometers from oil spills suffer a relative reduction in agricultural output of around 2.73%. I also examine alternative mechanisms and find that oil-spill pollution can explain my results. I detect less owner-occupied land and a drop in labor income in urban areas close to oil spills, which could also be explained by a decrease in the labor productivity component. This study highlights an externality through which the oil industry affects living conditions in rural areas and stresses the importance of clean-up in areas close to oil spills.
    Date: 2021

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