nep-afr New Economics Papers
on Africa
Issue of 2022‒10‒24
seven papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. ICT, e-formalization and tax mobilisation efforts in sub-Saharan Africa By Cyril Chimilila; Vincent Leyaro
  2. Can donors prevent aid misallocations? Evidence from Chinese and World Bank aid By Pierre André; Paul Maarek; Fatoumata Tapo
  3. Modeling the Impact of Non-Tariff Barriers in Services on Intra-African Trade: Global Trade Analysis Project Model By Lukman Oyelami; Amara Zongo
  4. The macroeconomics of establishing a basic income grant in South Africa By Steenkamp, Daan; Havemann, Roy; Hollander, Hylton
  5. Climate Change and Migration: The Case of Africa By Bruno Conte
  6. Reviewing deficiencies in international trade and export strategies in Malawi’s developmental agendas By Phiri Kampanje, Brian
  7. Financial Inclusion in Ethiopia By Mengistu Bessir Achew; Alemayehu A. Ambel; Helen L. Gradstein; Asmelash Haile Tsegay; Imtiaz Ul Haq; Minita M. Varghese; Manex Bule Yonis

  1. By: Cyril Chimilila; Vincent Leyaro
    Abstract: This paper investigates the effect of ICT and e-formalization on tax mobilization efforts in sub-Saharan Africa. Using a panel of 42 countries from 1991 to 2018 and applying appropriate model specifications; the empirical findings show that there is strong support that ICT (mobile subscription and internet usage) and e-formalization (e-government) enhanced tax mobilization efforts. There is scope to increase tax compliance and expand the tax base in SSA (tax mobilization efforts) through the increase in the usage of ICT that can be applied to simplify tax administration, reduce compliance costs, and provide convenience to taxpayers and enhance enforcement. It is equally important that other policies are skewed toward supporting the development of ICT in SSA countries, supporting the application to improve e-payments, formalization, and tax administration. Furthermore, tax administrations in SSA should take advantage of ICT in discouraging the use of cash in paying taxes to help reduce informality, integrate systems that use third-party information collected from e-payment platforms, and combine advanced data analysis to expand the tax base, enhance enforcement and increase taxpayer compliance.
    Keywords: ICT, e-formalization, tax effort, sub-Saharan Africa
    Date: 2022
  2. By: Pierre André; Paul Maarek; Fatoumata Tapo (Université de Cergy-Pontoise, THEMA)
    Abstract: We estimate to what extent international aid projects are subject to favoritism. We compare two different sources: Chinese aid and World Bank aid, using differences in differences and RDD estimates based on the dates of presidential turnovers. Consistently with the literature, we find Chinese aid massively targets the region of birth of new presidents, concentrating in its large urban centers but not necessarily in the district of birth of the president. However, we also find some evidence of a less visible and less intense form of favoritism for World Bank aid: it targets areas co-ethnic with a new president without following main regional administrative borders. Finally, this pattern of World Bank aid disappears with democratization, which contrasts with Chinese aid also following the place of birth of presidents in democracies.
    Keywords: clientelism, Pork Barel politics, ethnic favoritism, aid, Africa.
    JEL: H41 H52 O10 O12
    Date: 2022
  3. By: Lukman Oyelami; Amara Zongo (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In 2015, the African Union launched negotiations to establish an African free trade agreement named AfCFTA (African Continental Free Trade Area). This paper examines the effects of the AfCFTA on intra-African trade in the short and long term. Associated with the implementation of this trade agreement, this paper assesses the impact of a reduction of 90% in import tariffs and 50% in non-tariff barriers (NTBs) for goods and services on GDP and intra-African trade. In this study, we highlighted the role of services in intra-African trade. We use the computable general equilibrium model (GTAP) and ad valorem equivalents (AVEs) of NTBs in services calculated using the Services Trade Restrictiveness Indices (STRIs) from the World Bank database following the Australian Productivity Commission's methodology. Our results suggest that liberalization of services stimulates GDP growth in the long run. The reduction of NTBs in services leads to a rise in intra-African exports of agricultural products, manufactured goods, processed food, fuel, energy-intensive products, wood and paper products, textiles and clothing in the long run. The manufacturing and natural resources sectors are the most affected by the reduction of barriers to services trade in Africa. Moreover, this trade agreement creates both long-term trade creationand diversion.
    Keywords: AfCFTA,Restrictions in Services,Trade in services,GTAP model
    Date: 2022–09–12
  4. By: Steenkamp, Daan; Havemann, Roy; Hollander, Hylton
    Abstract: This paper quantifies the effect of fiscal transfers on the trade-off between social relief and debt accumulation, and discusses the economic growth and fiscal implications of different combinations of expanded social support and funding choices. Given South Africa’s already high level of public debt, the opportunity to fund a basic income grant through higher debt is limited. Using a general equilibrium model, the paper shows that extending the social relief of distress grant could be fiscally feasible provided taxes rise to fund such a programme. Implementing such a policy would, however, have a contractionary impact on the economy. A larger basic income grant (even at the level of the food poverty line) would threaten fiscal sustainability as it would require large tax increases that would crowd-out consumption and investment. The model results show that sustainably expanding social transfers requires structurally higher growth, which necessitates growth-enhancing reforms that crowd-in the private sector through, for example, relieving the energy constraint, increasing government infrastructure investment and expanding employment programmes.
    Keywords: Universal basic income, DSGE, fiscal sustainability
    JEL: D58 E62 H63
    Date: 2022–09–16
  5. By: Bruno Conte
    Abstract: This paper estimates the impacts of climate change in sub-Saharan Africa (SSA) on migration and other economic outcomes. I develop a quantitative spatial model that captures the role of trade networks, migration barriers, and agricultural yields on the geography of the economy. I combine the model with forecasts of future crop yields to find that climate change, by the end of the century, reduces SSA real GDP per capita by 1.8 percent and displaces 4 million individuals. Migration barriers in SSA are very stringent: if absent, climate-induced migration exceeds 100 million individuals. Still, migration and trade are powerful adaptation mechanisms. Reducing migration barriers to the European Union (EU) standards eliminates the aggregate economic losses of climate change in SSA, but at the cost of more climate migration and higher regional inequality. Also reducing trade frictions to the EU levels attenuates this cost and makes SSA better off on aggregate and distributional terms.
    Keywords: climate change, migration, economic geography
    JEL: O15 Q54 R12
    Date: 2022
  6. By: Phiri Kampanje, Brian
    Abstract: Malawi is an undoubtedly the net importer of goods and services. It is deemed less competitive on the global scale despite putting significant effort to widen export base as often prescribed in the country’s developmental agendas such as the Malawi Growth and Development Strategies (MDGDs) I, II and III, National Export Strategy (NES) and National Export Strategy (NES) II as well as the Vision 2063 through MIP 1 (2021-2030). This adverse scenario is attributed to the lack of clear set targets to be achieved by our trade attachés, porous borders leading to uncounted exports, failure to record exports in some years and other factors. It is recommended that MIP1 and NES II should address the shortfalls for better Malawi.
    Keywords: Deficiencies; Malawi; Development; Exports
    JEL: F10 F14 F19 F63 O10 O17
    Date: 2022–08–15
  7. By: Mengistu Bessir Achew; Alemayehu A. Ambel; Helen L. Gradstein; Asmelash Haile Tsegay; Imtiaz Ul Haq; Minita M. Varghese; Manex Bule Yonis
    Keywords: Finance and Financial Sector Development - Access to Finance Finance and Financial Sector Development - Finance and Development Finance and Financial Sector Development - Financial Literacy Finance and Financial Sector Development - Financial Structures Gender - Gender and Economics Poverty Reduction - Inequality
    Date: 2021–06

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