nep-afr New Economics Papers
on Africa
Issue of 2022‒03‒07
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Be Nice to thy Neighbours: Spatial impact of Foreign Direct Investment on Poverty in Africa By Arogundade, Sodiq
  2. Regional integration, trade and industry in Africa By Asche, Helmut
  3. Import penetration and manufacturing employment: Evidence from Africa By Owusu, Solomon; Ndubuisi, Gideon; Mensah, Emmanuel. B.
  4. Political inclusion and democracy in Africa: some empirical evidence By Nchofoung, Tii; Asongu, Simplice; Tchamyou, Vanessa; Edoh, Ofeh
  5. Fighting the soaring prices of agricultural food products. VAT versus Trade tariffs exemptions in a context of imperfect competition in Niger : CGE and micro-simulation approach By Celine de Quatrebarbes; Bertrand Laporte; Stéphane Calipel
  6. Digital discretion and public administration in Africa: Implications for the use of artificial intelligence By Plantinga, Paul
  7. Legal hunting for conservation of highly threatened species: The case of African rhinos By ’t Sas-Rolfes, Michael; Emslie, Richard; Adcock, Keryn; Knight, Michael

  1. By: Arogundade, Sodiq
    Abstract: This study examines the spatial impact of FDI on the poverty of 44 African countries. In achieving this, the study uses the Driscoll-Kraay fixed effect instrumental variable regression, instrumental variable generalised method of moments estimator (IV-GMM), and the spatial durbin model. The empirical investigation of this study yielded four significant findings: (1) neighbouring countries’ FDI has a positive and significant impact on the incidence and intensity of host country’s poverty. (2) Improved institutional quality in neighbouring countries has a significant impact on FDI-poverty reduction nexus of the host country. (3) the empirical results lend support for a significant spatial spillover of poverty in the region. (4) the marginal effect results indicate that countries within the region are no longer in isolation or independent, i.e., the level of poverty in a particular country is influenced by its determinants in the neighbouring country. This result is robust to the alternative proximity matrix, which is the inverse distance. Since there is spatial interdependence among African countries, we recommend that African governments through the African Union (AU) should not only champion the institutional reform in the region, but also establish a binding mechanism to ensure reform implementation.
    Keywords: FDI, Driscoll-Kraay fixed effect instrumental variable regression, IV-GMM, Spatial Durbin Model, Poverty, Institutional quality, Africa
    JEL: F00 F3 F30 P0 P00
    Date: 2021–12–08
  2. By: Asche, Helmut
    Abstract: With the advent of the African Continental Free Trade Area (CFTA), regional economic integration in Africa has captured international attention and raised high hopes. In the new book "Regional Integration, Trade and Industry in Africa", the present state of economic integration on the continent is explored in the context of global trade and plans to foster industrialization. This policy brief authored by Helmut Asche summarises the book's main findings.
    Date: 2021
  3. By: Owusu, Solomon (UNU-MERIT, Maastricht University, and German Development Institute, and University of Oxford); Ndubuisi, Gideon (UNU-MERIT, Maastricht University, and German Development Institute); Mensah, Emmanuel. B. (UNU-MERIT, Maastricht University, and GGDC, University of Groningen)
    Abstract: Exposure to import competition can either help or hurt domestic employment creation. There is, however, a dearth of cross-country empirical evidence assessing labor market effects of import penetration in Africa. This paper fills this gap. Using manufacturing industry and establishment-level data across 20 African countries and estimating a conditional and unconditional labor demand model, we find an unambiguous employment creation effect of intermediate good import penetration, whilst final good import penetration has a negative, or at best, an insignificant effect on employment. Splitting intermediate good import penetration into their origins, we find that intermediate good import penetration from developed (developing) countries is employment increasing (reducing). Further analyses reveal that the positive employment effects of intermediate import penetration from developed countries disproportionately benefit the skilled workforce. We also find that industries with higher absorptive capacity stand to gain more from intermediate good import penetration from developed countries, with the negative effects of intermediate good import penetration from developing countries also diminished for these industries. We discuss the implications of our findings.
    Keywords: Import Penetration, Employment, Absorptive Capacity, Manufacturing, Africa
    JEL: F11 F14 L25 L60 O14 O15
    Date: 2022–02–17
  4. By: Nchofoung, Tii; Asongu, Simplice; Tchamyou, Vanessa; Edoh, Ofeh
    Abstract: The objective of this study is to examine the effect of political inclusion on democracy in Africa. The results of the analyses through the OLS, system GMM, IV-Tobit and IV-2SLS show that political inclusion enhances democracy in Africa. This result is robust across alternative specifications of political inclusion and democracy. Besides, the results equally stood when controlled for colonisation and internal conflicts. As policy implications, policy makers in Africa should enhance their fight for political inclusion as one of the gateways to promoting democracy. In this respect, national laws could be put in place, which impose gender quotas in political positions in every country. Equally, the African Union could sign a convention on these quotas for respective countries to ratify.
    Keywords: Political inclusion; democracy; Africa
    JEL: I32 O55 P16 P43 P50
    Date: 2021–12
  5. By: Celine de Quatrebarbes (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Bertrand Laporte (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Stéphane Calipel (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: As happened in West Africa in 2008, in an imported inflation context, it is common for the governments to take short-term tax action to protect the poor: VAT or trade tariffs exemptions. As part of the tax-tariff transition, the comparison between Trade tariffs and VAT has already been the subject of much works. The introduction of VAT, as a tax on final consumption, is supposed to be optimal, due to its economically neutral aspect for production decisions. However, some authors show that in developing countries, a large informal sector affects this result. In this paper, we use a CGE model and a micro-simulation model to compare the effects of VAT and Trade tariffs exemptions to combat rising agricultural food prices. The approach is innovative because it integrates how VAT works in developing countries (VAT increases production costs for some producers), in a context of imperfect competition for the service of marketing products. Results show that VAT exemptions are more effective than Trade tariffs exemptions in limiting the effects of the rise in world prices on poverty in Niger. In the context of the current increase in food prices linked to the Covid-19 crisis (FAO, 2020), this issues may one again be in the limelight for the African governments.
    Keywords: Computable general equilibrium model,Imperfect competition,Indirect taxes,Poverty,Niger
    Date: 2021–02
  6. By: Plantinga, Paul
    Abstract: The digitalisation of public services is implicated in fundamental changes to how civil servants make decisions and exercise discretion. Most significant has been a shift in responsibility away from ‘street-level bureaucrats’ to ‘system-level bureaucrats’; a technology-savvy community of officials, consultants and private enterprises involved in the design of information technology systems and associated rules. The relatively recent inclusion of artificial intelligence (AI) and data-driven algorithms raises new questions about the conflation of policy formulation and system development activities, but also intensifies concerns about the epistemic dependence and policy alienation of public officials. African public administrations are in an especially vulnerable position with respect to the adoption of AI, and so this chapter seeks to synthesise lessons from previous digital implementations on the continent, and considers the implications for AI use. Four broad considerations emerge from the review of literature: Integrity of recommendations provided by decision-support systems, including how they are influenced by local organisational practices and the reliability of underlying infrastructures; Inclusive decision-making that balances the (assumed) objectivity of data-driven algorithms and the influence of different stakeholder groups; Exception and accountability in how digital and AI platforms are funded, developed, implemented and used; and a Complete understanding of people and events through the integration of traditionally dispersed data sources and systems, and how policy actors seek to mitigate the risks associated with this aspiration.
    Date: 2022–01–10
  7. By: ’t Sas-Rolfes, Michael; Emslie, Richard; Adcock, Keryn; Knight, Michael
    Abstract: Legal hunting of highly threatened species – and especially the recreational practice of ‘trophy hunting’ – is controversial with selected ethical objections being increasingly voiced. Less attention has been paid to how hunting (even of threatened species) can be useful as a conservation tool, and likely outcomes if this was stopped. As case studies, we examine the regulated legal hunting in South Africa and Namibia of two African rhino species. Counter-intuitively, removing a small number of specific males can enhance population demography and genetic diversity, encourage range expansion, and generate meaningful socio-economic benefits to help fund effective conservation (facilitated by appropriate local institutional arrangements). Legal hunting of these species has been sustainable, as very small proportions of the populations of both species are hunted each year, and numbers of both today are higher in these countries than when controlled recreational hunting began. Terminating this management option and funding source could have negative consequences at a time when rhinos are being increasingly viewed as liabilities and COVID-19 has significantly impacted revenue generation for wildlife areas. Provided that there is appropriate governance and management, conservation of certain highly threatened species can be supported by cautiously selective and limited legal hunting.
    Date: 2021–09–21

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