nep-afr New Economics Papers
on Africa
Issue of 2022‒10‒31
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Poverty and Violence : The Immediate Impact of Terrorist Attacks against Civilians in Somalia By Nunez,Gonzalo Ignacio; Pape,Utz Johann
  2. Increasing Tax Collection in African Countries : The Role of Information Technology By Okunogbe,Oyebola Motunrayo; Santoro,Fabrizio
  3. Refugees, Diversity and Conflict in Sub-Saharan Africa By Bertinelli,Luisito; Comertpay,Rana; Maystadt,Jean-François
  4. The Dog that Didn’t Bark : The Missed Opportunity of Africa’s Resource Boom By Cust,James Frederick; Rivera Ballesteros,Alexis; Zeufack,Albert G.
  5. Tradable Jobs and Local Labour Market in sub-Saharan Africa By Charpe, Matthieu
  6. Putting a Price on Safety — A Hedonic Price Approach to Flood Risk in African Cities By Erman,Alvina Elisabeth; Dallmann,Ingrid

  1. By: Nunez,Gonzalo Ignacio; Pape,Utz Johann
    Abstract: Somalia, one of the poorest countries in Sub-Saharan Africa, still faces many challenges as itremains fragile. Terrorist groups and their attacks are threatening the government and limiting its capacity toimplement effective development policies. Using difference-in-difference and instrumental variablesapproaches with micro-data from two waves of the Somali High Frequency Survey, this paper estimates the immediate (withina week) impact of terrorist attacks on households. The consumption of households exposed to terrorist incidentsdecreases by 33 percent, mainly on food items. As a result, poverty and the depth of poverty among the poor increases.The decline in consumption seems to be explained by a smaller share of household members working and earningincome after an attack. In addition, the effect on consumption is restricted to a 4-kilometer radius fromincidents and has a heterogeneous impact, not affecting households in the top 20 percent of the consumptiondistribution. The paper also finds a deterioration in people’s perception of police competence. Achieving peace isa fundamental first step to increase welfare conditions that will also bring other wider long-term benefits in Somalia.
    Date: 2022–09–08
  2. By: Okunogbe,Oyebola Motunrayo; Santoro,Fabrizio
    Abstract: Many African countries struggle to collect an adequate amount of tax revenue to support neededinvestments in public services. This paper examines how African countries may take advantage of recent advances intechnology to improve tax administration. It provides an overview of the potential and challenges of different taxcategories in Africa: consumption taxes, real estate taxes, trade taxes, and income taxes. It then describes the ways inwhich technology solutions may be deployed to address these challenges by helping to identify the tax base, monitorcompliance, and facilitate compliance. Lastly, it provides insights from interviews with senior tax administratorsacross the continent on their practical experiences in adopting technology for taxation.
    Date: 2022–09–14
  3. By: Bertinelli,Luisito; Comertpay,Rana; Maystadt,Jean-François
    Abstract: Despite mixed empirical evidence, refugees have been blamed for spreading conflict in thecountries that receive them. This paper hypothesizes that such a relationship largely depends on the resulting changein ethnic composition of refugee-hosting areas. To test this, this paper investigates changes in diversity inrefugee-hosting areas across 23 countries in sub-Saharan Africa between 2005 and 2016. The paper then assesses thelikelihood of conflict in relation to the changing level of ethnic fractionalization and ethnic polarization. Ethnicfractionalization measures the probability that two individuals drawn at random from a society will belong totwo different ethnic groups and thus increases with the number of ethnic groups present. Ethnic polarizationcaptures antagonism between individuals and is maximized when the society is divided into two equally sized anddistant ethnic groups. Refugee polarization is found to exacerbate the risk of conflict, with a one standarddeviation increase in the polarization index increasing the incidence of violent conflict by 5 percentage points. Suchan effect corresponds to a 10 percent increase at the mean. The opposite effect is found for the fractionalizationindex. Additional analyses are also conducted based on individual data. Ethnic polarization increases thelikelihood of experiencing physical assault by 2.1 percentage points. Inversely, the equivalent change in theethnic fractionalization index decreases the likelihood of experiencing physical assault by 1.9 percentage points.Similar effects are found for interpersonal crime. The results should not be interpreted as evidence that refugeesper se impact the likelihood of violence. Indeed, there is no evidence of a significant correlation between the numberof refugees and the occurrence of conflict. Instead, the analysis points to the risk of conflict when refugeesexacerbate ethnic polarization in the hosting communities. In contrast, a situation where refugee flows increase thelevel of ethnic fractionalization is likely to see an attenuated risk of violence. This certainly calls forspecific interventions in polarized refugee-hosting communities.
    Date: 2022–05–18
  4. By: Cust,James Frederick; Rivera Ballesteros,Alexis; Zeufack,Albert G.
    Abstract: The commodity price boom from 2004–2014 was a huge economic opportunity for Africancountries abundant in oil, gas and minerals. During this period their government revenues from resources grew by anaverage of 1.1 billion US$ per year, and economic growth in those same resource-rich countries surged. GDP growth inresource-rich countries accelerated from 4.6% to 5.4% as countries entered a decade long period of sustained highcommodity prices. Nonetheless, the paper traces a significant missed opportunity for resource-rich countriesin Africa, with little to show for it in the post-boom period, which saw growth collapse far below pre-boom levels,to 2.7% per annum. This paper considers the record of performance during the boom (2004–2014) and subsequent bustfrom 2015 onwards. The paper describes four main outcomes of the boom: 1) measures of resource dependency rose inSub-Saharan Africa during the boom, 2) the growth record was strong during the boom but collapsed once commodity pricesfell, 3) poverty and inequality rose during the boom despite strong GDP growth, 4) resource-rich countries failed todiversify both their exports and their asset base, leaving thempoorly prepared for the end of the boom and a period of lower commodity prices and subsequent COVID-19 pandemic. Theconclusions are stark. During this golden decade of sustained high commodity prices and booming revenues, therewas limited re-investment of those revenues into building sustainable assets for the future. In other words, countriesconsumed the boom, rather than successfully transformed their economies. The conclusion is that many resource-richcountries in the region squandered their “once in a generation” opportunity for economic transformation,offering policy lessons that may prove valuable as we enter a new period of elevated commodity prices.
    Date: 2022–07–06
  5. By: Charpe, Matthieu
    Abstract: This paper measures the impact of attracting tradable jobs on nontradable jobs at the local level in sub-Saharan countries. Applying the local multiplier approach to 10 medium and low-income countries disaggregated into 1441 administrative entities, we show that the multipliers are 3 to 5 times larger than in high-income countries. The multipliers also increase with the employment status and the skills of the tradable jobs created, highlighting the importance of the consumption of locally produced goods. This points to the importance of manufacturing for economic development and structural transformation. The paper also suggests a modification of the usual shift-share instrumental variable in countries characterized by sectoral diversification/unconditional convergence. Lastly, we show that the multipliers maybe be impacted by the size of administrative entities.
    Keywords: Local multiplier, tradable, nontradable, local labour market, structural transformation
    JEL: J23 J46 O14 R11 R22
    Date: 2022–10–03
  6. By: Erman,Alvina Elisabeth; Dallmann,Ingrid
    Abstract: This paper uses a hedonic propertyprice function to estimate the relationship between flood risk and rents in four Sub-Saharan Africa cities: Accra,Antananarivo, Dar es Salaam, and Addis Ababa. The analysis relies on household survey data collected after flood eventsin the cities. Flood risk is measured with self-reported data on past flood exposure and perception of future risk offlooding of households. The study finds that flood risk is associated with lower rents in Accra, Antananarivo, andAddis Ababa, ranging from 14 to 56 percent lower. In contrast, risk is associated with higher rent in Dar esSalaam, which could be potentially attributed to a combination of lack of awareness of flood risk amongrenters, high transaction costs and omitted variable bias. For example, only 12 percent of households living inflood-prone areas were aware of the flood risk when they moved in. In Antananarivo, job density is associated withhigher rents while in Accra and Addis Ababa, higher job density is associated with lower rents. Results are negativebut not significant in Dar es Salaam. When interacting job density with flood risk for each city, the negative effectof job density on rents is higher (in absolute value) when flood risk is high in Accra and Addis Ababa, and thepositive effect of job density on rents becomes negative when flood risk is high in Antananarivo. This relationshipis not found in Dar es Salaam. The finding seems to suggest that access to jobs is a factor driving people to settle inflood-prone areas.
    Date: 2022–07–21

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