nep-afr New Economics Papers
on Africa
Issue of 2022‒02‒28
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Sustainability, Growth and Impact of MFIs in Africa By Agbloyor, Elikplimi; Asongu, Simplice; Muriu, Peter
  2. Getting Stuck in the Status Quo Ante: Evidence from the Egyptian Economy By Doruk, Ömer Tuğsal; Pastore, Francesco
  3. Agriculture 4.0: is sub-Saharan Africa ready? By Jellason, Nugun P.; Robinson, Elizabeth J. Z.; Ogbaga, Chukwuma C.
  4. Labor Mobility and Innovation in Africa By Mbaye, Linguère Mously; Okara, Assi; Tani, Massimiliano
  5. Are growth effects of foreign capital significant for increasing access to electricity in Africa? By Mbiankeu Nguea, Stéphane; KAGUENDO, Ulrich Vianney Elisée
  6. Should Governments Tax Digital Financial Services? A Research Agenda to Understand Sector-Specific Taxes on DFS By Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio

  1. By: Agbloyor, Elikplimi; Asongu, Simplice; Muriu, Peter
    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
    JEL: O10 O20
    Date: 2021–08
  2. By: Doruk, Ömer Tuğsal (Adana Alpaslan Türkeş Science and Technology University); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: In this study, for the first time, to our knowledge, we use the propensity score matching algorithm to estimate the probability to remain 'stuck in the status-quo ante' across generations in Egypt. We use repeated cross-sectional data relative to a 20-year period from 1998 to 2018 to build transition matrices of intergenerational occupational mobility. The findings of the econometric analysis hint at a low degree of occupational mobility, with children of fathers in the agricultural sector or holding a blue- or white-collar job remaining linked to the profession of their fathers in most cases and experiencing only rarely upward mobility from agricultural to blue- and white-collar jobs.
    Keywords: intergenerational occupational mobility, status quo bias, propensity score matching, Egypt
    JEL: C35 D64 J24 J62 L16
    Date: 2022–01
  3. By: Jellason, Nugun P.; Robinson, Elizabeth J. Z.; Ogbaga, Chukwuma C.
    Abstract: A fourth agricultural revolution, termed agriculture 4.0, is gradually gaining ground around the globe. It encompasses the application of smart technologies such as artificial intelligence, biotechnology, the internet of things (IoT), big data, and robotics to improve agriculture and the sustainability of food production. To date, narratives around agriculture 4.0 associated technologies have generally focused on their application in the context of higher-income countries (HICs). In contrast, in this perspective, we critically assess the place of sub-Saharan Africa (SSA) in this new technology trajectory, a region that has received less attention with respect to the application of such technologies. We examine the continent’s readiness based on a number of dimensions such as scale, finance, technology leapfrogging, institutions and governance, education and skills. We critically reviewed the challenges, opportunities, and prospects of adopting agriculture 4.0 technologies in SSA, particularly with regards to how smallholder farmers in the region can be involved through a robust strategy. We find that whilst potential exist for agriculture 4.0 adoption in SSA, there are gaps in knowledge, skills, finance, and infrastructure to ensure successful adoption.
    Keywords: agriculture 4.0; internet of things (IoT); precision agriculture; robotics; smallholders; sub-Saharan Africa (SSA); APC funding
    JEL: R14 J01
    Date: 2021–06–21
  4. By: Mbaye, Linguère Mously (African Development Bank); Okara, Assi (CNRS); Tani, Massimiliano (University of New South Wales)
    Abstract: We develop a theoretical model to investigate whether short-term mobility differentially affects innovation in product or process and carry out an empirical analysis with a focus on Africa using firm-level data from the World Bank Enterprise Survey, as well as complementary country level information collected by the World Bank, the World Trade Organisation, and the United Nations. We find that labor mobility positively affects innovation: on average, a 10% increase in the flow of international visits per 10,000 inhabitants is associated with a 0.4 increase in the probability to innovate in products/services or process, supporting the use of labor mobility as an effective mechanism to diffuse productive knowledge and foster innovation. The probability of innovation as a result of short-term mobility is 0.4 higher in Africa overall – especially in East Africa – vis-à-vis the rest of the world, and strongest in the case of innovation in products and services rather than process, suggesting limited capability to produce entirely within the continent. The results are robust to a variety of approaches controlling for endogeneity, which include a control function approach and the use of an instrumental variable based on a gravity model. Focusing only on arrivals for business and professional purposes, our findings show stronger evidence that African firms are more likely to innovate as a result of short-term mobility compared to the rest of the world.
    Keywords: innovation, labor mobility, Africa
    JEL: F20 F22 J24 J61 O14 O55
    Date: 2022–01
  5. By: Mbiankeu Nguea, Stéphane; KAGUENDO, Ulrich Vianney Elisée
    Abstract: Despite the advancements towards Sustainable Development Goal 7, access to electricity in Africa is still lagging far behind the goal. In this study, we employ a panel data covering 36 African countries from 2000 to 2017 to investigate the effects of FDI, remittances and foreign aid on access to electricity. We use a dynamic empirical model based on system GMM to control for unobserved heterogeneity and potential endogeneity of the explanatory variables. The results show that FDI and remittances matter for increasing access to electricity. Also, foreign aid reduces access to electricity. We also find that remittances reduce urban-rural disparities in access to electricity, while FDI and foreign aid increase disparities. Finally, these results remain globally robust when we perform sub-regional analyses.
    Keywords: FDI, Remittances, Foreign aid, Access to electricity, System GMM, Africa
    JEL: F21 F24 F35 Q41
    Date: 2022–01–07
  6. By: Munoz, Laura; Mascagni, Giulia; Prichard, Wilson; Santoro, Fabrizio
    Abstract: Digital financial services (DFS) have rapidly expanded across Africa and other low-income countries. At the same time, low-income countries face strong pressures to increase domestic resource mobilisation, and major challenges in taxing the digital economy. A growing number are therefore advancing or considering new taxes on DFS. These have generated much debate and there are significant disagreements over the rationale for the taxes and their likely impacts. This paper examines three key questions that could help governments and other stakeholders to better understand the rationale for, and impacts of, different decisions around taxing DFS – and to arrive at policies that best meet competing needs. First, what is the rationale for imposing specific taxes on money transfers or mobile money in particular? Second, and most importantly, what is the likely impact of DFS taxes? Third, how do the policy processes through which taxes on DFS and money transfers are introduced function in practice? The paper looks at the core principles of good taxation and presents the existing debate around whether taxes on DFS observe them. It explains why understanding the landscape of financial services is essential to designing suitable tax policies and lays out a framework for developing the necessary analysis of the impacts of taxes on DFS. It also highlights the importance of better understanding the processes that give rise to these taxes.
    Keywords: Governance,
    Date: 2022

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