nep-afr New Economics Papers
on Africa
Issue of 2022‒09‒19
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Quality of sub-national government and regional development in Africa By Iddawela, Yohan; Lee, Neil; Rodríguez-Pose, Andrés
  2. Economic Globalisation and Inclusive Green Growth in Africa: Contingencies and Policy-Relevant Thresholds of Governance By Ofori, Isaac K.; Figari, Francesco
  3. Perspectives of Croatia's new Africa relations as impending member of the Eurozone By Kohnert, Dirk
  4. Evaluating the Impacts of Minigrid Electrification in Sub-Saharan Africa By Ayhan, Sinem H.; Falchetta, Giacomo; Steckel, Jan C.
  5. Recentring the margins: theorizing African capitalism after 50 years By Breckenridge, Keith; James, Deborah
  6. Social cohesion and firms' access to finance in Africa By Yabibal Mulualem Walle

  1. By: Iddawela, Yohan; Lee, Neil; Rodríguez-Pose, Andrés
    Abstract: Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 339 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national-level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.
    Keywords: institutions; quality of government; regions; Africa; decentralisation
    JEL: N0 R14 J01
    Date: 2021–08–03
  2. By: Ofori, Isaac K.; Figari, Francesco
    Abstract: This study employs macrodata for 23 African countries to examine whether good governance interacts with economic globalisation (EG) to foster inclusive green growth (IGG). First, the study finds that EG hampers IGG in Africa. Second, although unconditionally good governance promotes IGG, only government effectiveness interacts with EG to foster IGG. Across the social and environmental sustainability dimensions of IGG, however, the effects differ substantially. Notably, while the EG-governance pathways yield remarkable environmental sustainability net gains, a modest harmful effect was observed for socioeconomic sustainability. Evidence from our threshold analyses also suggests that while government effectiveness is critical for propelling EG to promote IGG, across the social and environmental perspectives of IGG, it is investments in building frameworks and structures for corruption control and the rule of law that are crucial. Our results shed new light on IGG and have several implications for Agenda 2030 and Agenda 2063.
    Keywords: Africa; Economic Globalisation; Governance; Inclusive Growth; Inclusive Green Growth; Greenhouse Gas Emissions; Sustainable Development
    JEL: F18 F4 F6 F63 F64 H11 O5 O55 Q01 Q56
    Date: 2022–09
  3. By: Kohnert, Dirk
    Abstract: In July 2020, the EU Parliament voted in favour of Croatia’s application to become the newest member of the eurozone from January 1, 2023. Despite the setback caused by the COVID-19 pandemic, it met all the criteria for adopting the euro, high inflation, and the impact of Russia’s invasion of Ukraine. Croatia’s accession to the euro will be the first significant positive step in the European integration process since Brexit. It may depict perspectives for a further enlargement of the eurozone in the Balkans. The admission will also impact the EU Africa relations. In addition to the close foreign ties with South Africa, Zagreb established diplomatic relations with South Sudan, Somalia, the Central African Republic in 2020. Yet, regarding Croatia’s long-established relations with Africa it is decisive to take account of the lessons learned from its multifaceted African relations history. Croatian explorers like Dragutin Lerman, mostly unknown outside their home-country, had been active in exploring Sub-Saharan African countries in the early 20th century. During the Cold War political and economic relations between Yugoslavia (including Croatia) and the African nonaligned countries improved significantly between 1973 and 1981. Mutual economic cooperation between nonaligned countries had been encouraged to fight ‘underdevelopment’ in Africa. Thus, in 1971, within the framework of industrial cooperation, Yugoslav-Ghanaian joint ventures were established, for example, for forest exploitation and wood processing and for a joint factory for motorcycles and pumps in Ghana. In addition, Yugoslavia was the only non-African country to help fund the Organization of African Unity's (OAU) Liberation Committee, although Zagreb favored bilateral relations with individual liberation movements. However, both Croatia and South Africa faced difficulties during the transition process with the illegal arms trade due to high levels of corruption within the judicial system and police. Also the citizens of both countries lack of trust in the states capacity to impose social control opened the way for organized crime to work with impunity. Criminal groups used patron-client relationships with the citizens of South Africa and Croatia to establish and maintain a level of popular legitimacy that the state lacked.
    Keywords: Croatia;Yugoslavia; Zagreb; Balkans; Balkan Studies; Western Balkans; Cold war; Non-aligned movement; EU; Euro-zone; Sub-Saharan Africa; OAU; economic development; informal sector; international trade; Ghana; South Africa; African Studies;
    JEL: D31 D62 E26 F13 F22 F35 F54 N17 N47 O15 O17 O19 O52 O55 P27 Z13
    Date: 2022–08–18
  4. By: Ayhan, Sinem H. (Institute for East and Southeast European Studies, Regensburg); Falchetta, Giacomo (IIASA - International Institute for Applied Systems Analysis); Steckel, Jan C. (Mercator Research Institute on Global Commons and Climate Change (MCC))
    Abstract: A large share of the population of sub-Saharan Africa (SSA) lacks access to modern energy services. To bridge the electricity access gap, distributed power generation systems such as minigrids and stand-alone photovoltaic systems emerge as attractive options in the power supply solution space. In this study, we analyze the impact of minigrid electrification on household welfare and agricultural development across SSA countries. The empirical analysis makes use of a novel geocoded database covering 1,888 minigrid projects from 27 SSA countries, which is merged with various data sources including satellite-based nighttime light data, vegetation health index, and Demographic and Health Surveys. Our results indicate that minigrid electrification is positively associated with households’ electricity uptake, ownership of low-power home appliances, and agricultural employment and productivity, while being effective in changing neither overall labor market outcomes nor the choice of cooking fuels.
    Keywords: electricity access, minigrids, household welfare, agriculture, sub-Saharan Africa
    JEL: O13 J43 Q01 Q42 N57
    Date: 2022–07
  5. By: Breckenridge, Keith; James, Deborah
    Abstract: This introduction to our special issue addresses scholars’ failure, in recent times, to consider and analyse the forms of capitalism that have developed on the African continent. To redress the balance, it takes up the study of economic arrangements on the continent—property, infrastructure, debt, financialisation, regulation—as well as exploring the history and politics of the scholarly field of African economics as an intellectual and institutional project. In the process it considers the advantages (and drawbacks) of seeing Africa as part of the ‘global south’. Central to the special issue is the question of how to marry an analysis of intimate and smaller-scale economies centred on household, family and (often informal) labour regimes, on the one hand, with a recognition of large-scale processes such as the central banking systems imposed by states, the increasing prevalence of high-tech finance, the emergence of continent-wide regulation, and the influence of multilateral development agencies and the international publication industry, on the other. How, we ask, can the importance of these institutions, so unlike in size and scale, be reckoned without assuming that the bigger and more powerful ones always prevail?
    Keywords: African capitalism; central banks; development; debt; economics; finance; Global South; heterodox; informalisation; publishing; regulation
    JEL: N0 J1
    Date: 2021–02–10
  6. By: Yabibal Mulualem Walle
    Abstract: Social cohesion has recently gained increasing attention in academic and policy circles. Apart from being a necessary feature of stable societies per se, social cohesion is also a key factor for sustainable economic development. One potential means through which social cohesion could foster economic development is by enhancing financial development. In this paper, we examine whether social cohesion is significantly associated with firms' access to finance in Africa. To this end, we use a recently constructed dataset on social cohesion in Africa, which is based on the Afrobarometer survey and the Varieties of Democracy database. The dataset contains indices for the three pillars of social cohesion - trust, inclusive identity and cooperation for the common good. Combining this dataset with that of the World Bank Enterprise Surveys, we build a sample which covers more than 12,500 firms and 27 African countries. Our results show that all three components of social cohesion are positively associated with at least one measure of firms' access to external finance. In particular, trust - but not inclusive identity and cooperation for the common good - is significantly associated with the likelihood that firms have a checking or savings account, or are financially constrained. When we measure access to finance with respect to having a line of credit or a loan from a financial institution, all the three pillars of social cohesion, including inclusive identity and cooperation for the common good, are related to access to finance. The results are robust to addressing endogeneity concerns using a heteroskedasticity-based identification strategy. Overall, our results suggest that improving social cohesion (e.g. through social protection, education, strengthening civil society organisations) could do more than hold society together; it could also promote access to finance, growth of firms, and thus economic development and job creation.
    Keywords: access to finance,social cohesion,trust,cooperation for the common good,identity,Africa
    Date: 2022

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