nep-afr New Economics Papers
on Africa
Issue of 2022‒08‒08
seven papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Towards Inclusive Green Growth in Africa: Critical energy efficiency synergies and governance thresholds By Isaac K. Ofori; Emmanuel Gbolonyo; Nathanael Ojong
  2. The Effect of Foreign Direct Investment on Employment in Manufacturing Industry Sectors in Sub-Saharan African Countries By Hyojung Kang
  3. Financial access of midstream agricultural firms in Africa: Evidence from the LSMS-ISA and World Bank enterprise surveys By Ambler, Kate; de Brauw, Alan; Herskowitz, Sylvan; Pulido, Cristhian
  4. Towards efforts to enhance tax revenue mobilisation in Africa: Exploring the interaction between industrialisation and digital infrastructure By Pamela E. Ofori; Isaac K. Ofori; Simplice A. Asongu
  5. Lightening the Path to Financial Development: The Power of Electricity By Pan, Lei; Dwumfour, Richard Adjei; Kheng, Veasna
  6. The African Continental Free Trade Area and Financial Development for Women Economic Participation in Africa By Vanessa S. Tchamyou; Juste Some; Simplice A. Asongu
  7. Does corruption cause income inequality and long-run poverty?(Evidence from Nigeria) By Usenata, Nnyeneime

  1. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Emmanuel Gbolonyo (University of Cape Town, South Africa); Nathanael Ojong (York University,Toronto, Canada)
    Abstract: This study contributes to the scholarly literature on the drive towards sustainable development in light of the UN’s Agenda 2030 and the African Union’s Agenda 2063 by examining pathways through which energy efficiency (EE) promotes inclusive green growth (IGG) in Africa. Our contribution is novel from both the conceptual and empirical perspectives. With regard to the former, we develop a framework on how EE and governance feed into IGG, and on the latter, our contribution is based on country-level data for 23 African countries for the period 1996 – 2020. First, evidence from the generalised method of moments (GMM) estimator shows that EE is not unconditionally effective for spurring IGG. Second, we find that governance is both directly, and indirectly effective for repackaging EE to foster IGG. In particular, the evidence suggests that governance mechanisms for controlling corruption while ensuring regulatory quality and government effectiveness are keys for forming relevant synergies with EE to foster IGG. Third, regarding the socioeconomic sustainability (SES) and environmental sustainability (EVS) dichotomy of IGG, we find that the EE-governance pathway is more effective for driving the latter compared to the former. We also make some policy recommendations.
    Keywords: Africa, Inclusive Growth; Inclusive Green Growth; Greenhouse Gases; Environmental Sustainability; Carbon Intensity; Sustainable Development
    JEL: I3 O11 O43 O44 O55 Q01 Q43 Q56
    Date: 2022–01
  2. By: Hyojung Kang (Economics Department and International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University)
    Abstract: Sub-Saharan Africa(SSA)’s labor market has long struggled—data from the past two decades show that vulnerable employment consists of more than two thirds of employment, and, closely related, that 60-80% of employment comes from the informal sector. Industry-wise, the highest share of employment is in agriculture while the least is in manufacturing, and this trend is not expected to change, since most of the new jobs created in the past two decades have been in agriculture. With the expectation of the working-age population in the region to experience a net increase of 20 million per year over the next two decades, the need for sustained employment creation becomes more critical. And much of the hope for a solution has been placed on the role of foreign direct investment (FDI). This paper looks at the effect of manufacturing FDI on manufacturing employment in Sub-Saharan African countries, by using annual data for 16 manufacturing industry sectors in 15 SSA countries from 2003 to 2018. We find that manufacturing FDI has a positive effect on manufacturing employment at the industry sector level, which include indirect employment effects through potential spillover effects. We also look at how the effect of manufacturing FDI on manufacturing employment differs by groups of industry sectors. The results show that the effect of manufacturing FDI on employment creation varies by industry sector groups; automotive related industries create the most, followed by business machines/electronics related industries, and lastly metals/minerals related industries. The result reflects both direct and indirect employment effects via spillovers and forward and backward linkages. The paper implies that SSA countries would improve their labor market by attracting manufacturing FDI, which should also contribute to their industrial diversification/structural transformation.
    Keywords: economic development, labor, manufacturing, Africa
    Date: 2022–07–01
  3. By: Ambler, Kate; de Brauw, Alan; Herskowitz, Sylvan; Pulido, Cristhian
    Abstract: The midstream of agricultural value chains are rapidly changing in response to shifting domestic and international demand. While the performance of this segment may have important implications for the entire sector, evidence on midstream actors and their financial needs remain thin. We use data from both the Living Standards Measurement Study – Integrated Surveys on Agriculture and the World Bank Enterprise Survey from seven African countries to identify these agricultural midstream firms and assess their access to formal credit, comparing them to other, non-agricultural midstream firms. We find that the identified agricultural midstream firms are larger and more productive than their non-agricultural midstream counterparts and are less likely to report barriers to accessing credit, though overall access levels remain low. Among agricultural midstream firms, those owned or managed by women are more likely to report barriers to accessing credit. Taken together, these findings help build our understanding about the financial needs of micro-, small-, and medium-size enterprises in the agricultural midstream.
    Keywords: AFRICA; AFRICA SOUTH OF SAHARA; CENTRAL AFRICA; EAST AFRICA; NORTH AFRICA; SOUTHERN AFRICA; WEST AFRICA; financial institutions; agro-industry; World Bank; surveys; value chains; demand; credit; enterprises; small and medium enterprises; finance
    Date: 2022
  4. By: Pamela E. Ofori (University of Insubria, Varese, Italy); Isaac K. Ofori (University of Insubria, Varese, Italy); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Motivated by the momentous rise in the new economy, the implementation of the African Continental Free Trade Area agreement, and the expected rebound of foreign direct investment to Africa from 2022, this study examines the joint effects of industrialisation and digital infrastructure on resource mobilisation in Africa. To this end, we mine data for 42 African countries for the analysis. The results, which are based on the system GMM estimator show that although unconditionally both industrialisation and digital infrastructure enhance (i) goods and services tax (GST), and (ii) profits, corporate and income tax (PCIT) mobilisation efforts in Africa, the effects of the former is rather remarkable in the presence of the latter. Particularly, we find that although all our digital infrastructure dynamics amplify the effect of industrialisation on GST, only ICT usage and ICT skills matter for PCIT. Second, the study unveils ICT thresholds for complementary policies. Accordingly, industrialisation and ICTs are necessary and sufficient conditions for tax revenue mobilisation only below some ICT thresholds. Above these ICT thresholds, complementary policies are needed to maintain the overall positive incidence on tax revenue mobilisation. Policy recommendations are provided in the end.
    Keywords: AfCFTA; Africa; ICT access; ICT diffusion; Industrialisation; Tax; Revenue
    JEL: C33 F6 H2 H71 O33 O55
    Date: 2022–01
  5. By: Pan, Lei; Dwumfour, Richard Adjei; Kheng, Veasna
    Abstract: This paper examines the impact of access to electricity on financial development. In doing so, we use plausibly exogenous variations in population density as an instrument for electrification rate. Using panel data for 44 countries in Sub-Saharan Africa over the period 2000 to 2018, the results suggest that more people having access to electricity can promote financial development. In addition, mobile phone and commercial bank branches diffusion serve as potential channels through which access to electricity affects financial development. The results have important implications for policies in overcoming barriers to electricity access.
    Keywords: Access to electricity; Financial development; Sub-Saharan Africa; Population density
    JEL: O16 Q43
    Date: 2022–06–12
  6. By: Vanessa S. Tchamyou (Yaounde, Cameroon); Juste Some (Université Norbert Zongo, Koudougou, Burkina Faso); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The study has contributed to the extant literature on the relevance of the African Continental Free Trade Agreement (AfCFTA) by assessing how financial development dynamics can moderate the incidence of African trade integration on female labour force participation. The focus is on 47 African countries for the period 1995 to 2019 and the empirical evidence is based on Fixed Effects regressions. The findings show that financial development moderates African trade integration to engender an overall positive effect on female labour force participation. Moreover, financial depth proxied by liquid liabilities should reach a threshold of approximately 15.47 (% of GDP) in order to completely dampen an initial negative incidence of intra-African trade integration on female labor force participation. It follows that financial development becomes a necessary and sufficient condition to moderate intra-African trade integration in order to positively affect female labor force participation only when the established threshold of financial depth is attained. Other policy implications are discussed.
    Keywords: Trade; Financial development; Inclusion; Gender; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2022–01
  7. By: Usenata, Nnyeneime
    Abstract: There is a significant relationship between corruption and economic stagnation in Nigeria. Corruption is one of the fastest ways to poverty because higher growth rate is associated with lower poverty levels. Corruption slows down the rate of poverty reduction by reducing growth. Income inequality has been shown to be harmful to growth and if corruption increases income inequality, it will also reduce growth in the process thus becoming an impediment to poverty reduction. Corruption makes poverty self-reinforcing especially in low-income countries. Corruption reduces the poor’s access to public goods. When it goes unchecked, corruption is often accompanied by economic stagnation, misallocation of resources, social and economic disparities, and political violence. Corruption grows into tax evasion, poor tax administration and exemptions which disproportionately favors the rich, privileged, and wealthy population groups.
    Keywords: Corruption, governance, politics, bribe, income, poverty, stagnation, growth
    JEL: O47
    Date: 2022–06–27

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