nep-afr New Economics Papers
on Africa
Issue of 2022‒09‒12
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Reforming Small Electricity Systems: Market Design and Competition By Asantewaa, Adwoa; Jamasb, Tooraj; Llorca, Manuel
  2. Machine ethics and African identities: Perspectives of artificial intelligence in Africa By Kohnert, Dirk
  3. Real sector macroeconomic stabilization and structural resilience in Africa By Krantz, Sebastian
  4. The Landscape of CO2 Emissions Across Africa: A Comparative Perspective By Jaime de Melo; Jean-Marc Solleder
  5. Incorporating informal workers into social insurance in Tanzania By Roosa Lambin; Milla Nyyssölä
  6. In the Pursuit of Financial Criminality in the Moroccan Public Sector By Mohamed Amrhar; Khadija Angade

  1. By: Asantewaa, Adwoa (Durham University Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Llorca, Manuel (Department of Economics, Copenhagen Business School)
    Abstract: The financial viability of electric utilities in sub-Sahara Africa (SSA) is a central energy policy issue. This follows a persistent under-recovery of costs despite having some of the highest electricity prices in the world. However, discussions on electricity price-cost margins often focus on the revenue aspects and tariff and utility reforms, but inadequately on costs and broader sector reforms. Through a synthesis of reform theories and case studies and using small electricity systems as a surrogate for liberalised sectors without competitive markets, this paper examines the connection between sector reforms and costs. It brings economic perspective to financial performance in SSA electricity systems and the need for a holistic approach for cost-recovery. We recommend the promotion of mobile power plants to facilitate contestability in generation and competitive procurement of new capacity to lower costs. Small systems should participate in regional power markets to neutralise the scale limitations of autarkic demand, and form platforms to share information on cost opportunities to inform procurement designs and regulatory benchmarks. Regional markets could partner with governments to develop subsidy schemes such as contracts for differences to remove rigidities in national power purchasing contracts to promote participation of small systems in regional markets. Yardstick competition in the distribution segment is viable in small electricity systems and should be pursued.
    Keywords: Small electricity systems; sub-Saharan Africa; electric utilities; financial performance; cost under recovery; electricity prices
    JEL: D47 D52 D61 E13 L97 P18 P41 P48
    Date: 2022–08–08
  2. By: Kohnert, Dirk
    Abstract: Artificial Intelligence (AI) has been embraced enthusiastically by Africans as a new resource for African development. AI could improve well-being by enabling innovation in business, education, health, ecology, urban planning, industry, etc. However, the high expectations could be little more than pious wishes. There are still too many open questions regarding the transfer required, and the selection of appropriate technology and its mastery. Given that the 'technology transfer' concept of modernization theories of the 1960s utterly failed because it had not been adapted to local needs, some scholars have called for an endogenous concept of African AI. However, this caused a lot of controversies. Africa became a battlefield of 'digital empires' of global powers due to its virtually non-existent digital infrastructure. Still, African solutions to African problems would be needed. Additionally, the dominant narratives and default settings of AI-related technologies have been denounced as male, gendered, white, heteronormative, powerful, and western. The previous focus on the formal sector is also questionable. Innovators from the informal sector and civil society, embedded in the local sociocultural environment but closely linked to transnational social spaces, often outperform government development efforts. UNESCO also warned that the effective use of AI in Africa requires the appropriate skills, legal framework and infrastructure. As in the past, calls by African politicians for a pooling of resources, a pan-African strategy, were probably in vain. AI may develop fastest in the already established African technology hubs of South Africa, Nigeria and Kenya. But promising AI-focused activities have also been identified in Ethiopia and Uganda. Gender equality, cultural and linguistic diversity, and changes in labour markets would also be required for AI to enhance rather than undermine socioeconomic inclusion. In addition, ethical questions related to a specific African identity have been raised. The extent to which African ideas of humanity and humanitarianism should be taken into account when developing an African AI remains an open question. In short, calling for the rapid deployment of AI in Africa could be a double-edged sword.
    Keywords: Artificial Intelligence; Innovation;, Machine learning; Big Data Analytics; moral values; AI ethics; African ethics; African philosophy; Africa; Sub-Saharan Africa; economic development; human development; informal sector; poverty; famine; international trade; global power; fragile state; South Africa; Nigeria; Kenya; Uganda; Ethiopia; Postcolonialism; African Studies;
    JEL: E24 E26 F15 F22 F35 F54 F63 I3 J4 J46 L26 M1 M13 N77 O32 O33 O35 P46 Q14 Z13
    Date: 2022–07–17
  3. By: Krantz, Sebastian
    Abstract: Over the past 30 years (1990-2019), African economies have experienced remarkable improvements in real macroeconomic conditions, characterized by higher and more stable real per-capita growth rates, and lower and more stable inflation. This paper documents and seeks to explain these changes at the aggregate and sectoral levels. Sectoral analysis shows a particularly strong reduction in growth volatility, of more than 50%, in the agricultural sector, and a gradual stabilization in services. On the expenditure side, private consumption and investment have also stabilized considerably. Most of the decline in aggregate growth volatility is due to within-sector changes in volatility, structural change explains less than 5%. Correlates of African stabilization are firstly a more favorable external environment through lower levels of external debt, higher levels of FDI and remittances, and improved terms of trade (ToT), as well as lower volatility of ToT and financial flows. These developments were complemented by better exchange rate management (resulting in lower exchange rate and inflation volatility) and more fiscal stability through the adoption of fiscal rules. Domestic financial deepening and higher levels of reserves, both official and by banks, as well as slightly higher national savings, further increased Africa's resilience to shocks. Regarding structural characteristics, the quality of the institutional and business environment appears to be the most important factor for stability, followed by the intensity and volatility of financial flows, trade intensity and diversification, natural resource dependence, natural disaster and conflict incidence. Some of these factors encourage deeper investigations, for example how improvements in business conditions in multiple African economies interacted with broader macroeconomic stabilization.
    Keywords: macoeconomic stability,structural resilience,growth,inflation,volatility,structural change,economic structure,institutions,macroeconomic policy
    JEL: O11 E30 E60
    Date: 2022
  4. By: Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, UNIGE - Université de Genève); Jean-Marc Solleder (UNIGE - Université de Genève)
    Abstract: Expansion of Global Value Chains (GVCs) is a mixed blessing for the environment. Effects of growth and emissions from transport associated with international trade have negative effects; but greater flows of knowledge and associated spillovers, and adoption of environmentally innovative products have positive effects. This paper provides evidence on carbon dioxide (CO2) emissions for 51 African and 132 other countries for 163 products over the period 1995-2015. The resulting landscape is summarized in four patterns. Patterns identified for the Africa region differ from those identified for other regions but are closely related to a synthetic aggregate comparator constructed on the basis of three characteristics (per capita income, share of manufacturing in GDP, and distance to trading partners).
    Keywords: Africa,decarbonization,emission intensity
    Date: 2022–07–26
  5. By: Roosa Lambin; Milla Nyyssölä
    Abstract: Expansion of social protection reach among workers in the large informal economy represents a persisting and thorny challenge in the development context. In Mainland Tanzania, several domestically led policy reforms have been introduced to increasingly expand social protection for informal workers. This paper examines the case of Tanzania by exploring the policy developments that have sought to facilitate access to social protection within the informal economy over the past 10-15 years, notably through the expansion of social insurance provision.
    Keywords: Informal sector, Tanzania, Social policy, Sub-Saharan Africa, Informal work
    Date: 2022
  6. By: Mohamed Amrhar (ENCG - École Nationale de Commerce et de Gestion d'Agadir - Université Ibn Zohr [Agadir]); Khadija Angade (ENCG - École Nationale de Commerce et de Gestion d'Agadir - Université Ibn Zohr [Agadir])
    Abstract: Financial crime is a widespread issue for organizations, institutions. Criminals adopt more complex techniques to circumvent judicial scrutiny and conduct crimes as regulators and financial authorities use new strategies to detect and prevent financial offenses. Financial crimes are financial offenses perpetrated by individuals within organizations, most of the time in order to acquire a financial advantage through the employment of illegal methods. It involves taking money or other property that belongs to someone else, to obtain a financial or professional gain. The purpose of this article is to present a review of academic literature on financial crimes theories that have emphasized the theatrical framework since the advent of the differential association theory developed by Edwin Sutherland in the 1940s, which shed light on the realms of finance and crime, and exhibit empirical findings from a documentary study of convicted public officials to provide an outline of the main forms of financial offenses that occur in the Moroccan public sector. This documentary study is founded on a nationwide sample of 139 final judgments that was collected based on financial court reports released between 2013 and 2019. The wide range of financial infractions is classified in this paper by adopting two main categories of financial offenses that are, infractions that occur in the public spending area, and state revenues area. The majority of the offenders were convicted of breaking public procurement and public debt recoverylegislation. Using a Likert scale (1 to 5), we concluded that, on average, public officials in high-ranking positions incurred severe financial sanctions. The findings also demonstrate a strong correlation between the offenders' occupations rank and the heaviness of financial sentences. This research only encompasses cases of financial offenses that have passed through the entire legal procedure and whose final decisions have already been issued; other sorts of financial offenses may be excluded owing to a lack of evidence to prosecute public officials. Furthermore, other data regarding financial offenses that occur in the public sphere are present in the criminal records of the criminal chamber responsible for financial crimes, or in cases reported by the National Authority for Probity, Prevention, and the Fight Against Corruption. However access to this data is a challenge.
    Keywords: Financial infractions,Categorization,Sanctioning pattern,Public sector,Morocco
    Date: 2022

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