nep-afr New Economics Papers
on Africa
Issue of 2022‒11‒07
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Decentralised finance and cryptocurrency activity in Africa By Ozili, Peterson K
  2. Trade Creation and Trade Diversion in African RECs : Drawing Lessons for AfCFTA By Kassa,Woubet,Sawadogo,Pegdewende Nestor
  3. Climate Anomalies and International Migration : A Disaggregated Analysis for West Africa By Flores,Fernanda Martínez; Milusheva,Svetoslava Petkova; Reichert,Arndt Rudiger
  4. Unravelling Africa's raw material footprints and their drivers By Albert Kwame Osei-Owusu; Michael Danquah; Edgar Towa
  5. The interaction effect of government non-financial support and firm’s regulatory compliance on firm innovativeness in Sub Saharan Africa By Sam Njinyah; Simplice A. Asongu; Ngozi B. Adeleye
  6. Resource-Backed Loans in Sub-Saharan Africa By Mihalyi,David; Hwang,Jyhjong; Rivetti,Diego; Cust,James Frederick

  1. By: Ozili, Peterson K
    Abstract: This paper presents a discussion of decentralized finance in Africa. It presents some statistics and data on decentralized finance in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with decentralized finance in Africa are discussed. Recently, there has been an increase in the use of cryptocurrency, decentralized finance applications (dApps) and decentralized financial services (DeFi) in several countries. These innovations facilitate the delivery of financial services using smart contracts. Decentralized finance (DeFi) encompasses all financial services that are built on public blockchains, based on open protocols and removes intermediaries from the financial intermediation process. There is significant cryptocurrency activity in Africa while decentralized finance (DeFi) is relatively new and unpopular in the African continent. There is low interest in decentralized finance in Africa. The benefit of DeFi to African countries include increased liquidity for small and medium scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, it will usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, it will encourage peer-to-peer trade between economic agents in several African countries, it will enhance the efficiency of the Pan-African Payment Settlement System (PAPSS), and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement (AfCFTA), amongst others.
    Keywords: Decentralized finance, Cryptocurrencies, DeFi, dApps, AfCFTA, Bitcoin, blockchain, central bank digital currency crypto technologies, Africa, smart contracts.
    JEL: G21 G23 O31
    Date: 2022–09
  2. By: Kassa,Woubet,Sawadogo,Pegdewende Nestor
    Abstract: This study aims to draw key lessons for the African Continental Free Trade Area using evidence from within the region. Although drawing lessons from the rest of the world is essential, given the unique features of economies in the Africa region, the most relevant lessons can be drawn from the experiences of regional economic communities in the continent. The study draws on the eight regional economic communities that have been recognized by the African Union as pillars on which the continent will rely to implement the African Continental Free Trade Area. The study evaluates the trade creation and trade diversion impacts of each of the eight RECs and examines their performance with the goal of drawing lessons and identifying challenges for the success of the African Continental Free Trade Area. Despite significant heterogeneities, there is more trade creation than trade diversion and a generally positive impact on trade within the regional economic communities. Two regional economic communities in particular—the East African Community and the Southern African Development Community—outperform all the other regional economic communities in terms of boosting intra–regional economic community trade. This is mainly associated with the high level of investment in trade facilitation, the level of synergy between national and regional goals, the density of economic activity, and the advancement in the quantity and quality of regional infrastructure. There are also many challenges that policy makers should address to realize the objectives of the African Continental Free Trade Area and transform the continent. Learning from the regional economic communities is central. But, given the scope of the African Continental Free Trade Area, there is also a need to examine the transition from regional economic communities to the African Continental Free Trade Area, which is expected to be a sticky transition.
    Keywords: International Trade and Trade Rules,Marketing,Private Sector Development Law,Private Sector Economics,Urban Solid Waste Management,Trade and Multilateral Issues,Transport Services
    Date: 2021–08–30
  3. By: Flores,Fernanda Martínez; Milusheva,Svetoslava Petkova; Reichert,Arndt Rudiger
    Abstract: Migration is one of the channels West African populations can use to adjust to the negative impacts of climate change. Using novel geo-referenced and high- frequency data, this study investigates the extent to which soil moisture anomalies drive international migration decisions within the region and toward Europe. The findings show that drier soil conditions decrease (rather than increase) the probability to migrate. A standard deviation decrease in soil moisture leads to a 2 percentage point drop in the probability to migrate, equivalent to a 25 percent decrease in the number of migrants. This effect is concentrated during the crop-growing season and likely driven by financial constraints. The effect is only seen for areas that are in the middle of the income distribution, with no impact on the poorest or richest areas of a country, suggesting that the former were constrained to start and the latter can address those financial constraints.
    Keywords: Crops and Crop Management Systems,Climate Change and Agriculture,Natural Disasters,Inequality,Climate Change and Environment,Climate Change and Health,Science of Climate Change,Food Security
    Date: 2021–05–17
  4. By: Albert Kwame Osei-Owusu; Michael Danquah; Edgar Towa
    Abstract: This paper applies an environmentally extended input-output analysis, leveraging the Eora database, to estimate the global raw material footprints of 51 African nations from 1995 to 2015. It employs least absolute shrinkage and selection operator and panel regression models to quantify the effects of diverse variables on Africa's raw material footprints. The findings show that the raw material footprints of Africa's production and consumption soared by 41 per cent and 38 per cent, respectively, from 1995 to 2015, mainly driven by biomass and construction materials.
    Keywords: Ecological footprint, Input–output, Raw materials, Africa, environmental impact, Regression analysis
    Date: 2022
  5. By: Sam Njinyah (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon); Ngozi B. Adeleye (Covenant University, Ogun State, Ota, Nigeria)
    Abstract: Firms' regulatory compliance with environmental and safety issues has been suggested as one of the reasons why firms innovate. Such compliance provides legitimacy, improves reputation and corporate image, and enhances customer loyalty and competitive advantages, which influences firm innovativeness. However, regulatory compliance is costly and with limited resources, the role of government support is crucialas a moderator, to help firms become more compliant and influence their innovativeness. The study uses data from the World Bank Enterprise Innovation Survey for seven countries in Sub Saharan Africa. Regulatory compliance has a positive and significant effect on firm innovativeness. Increased use of government non-financial support enhances the level of firm regulatory compliance and the effect of regulatory compliance on firm innovativeness. The study contributes to the literature on compliance and firm innovativeness in Africa by showing how the positive effect of regulatory compliance on firm innovativeness is stronger when firms benefit from government non-financial support.
    Keywords: Regulatory Compliance, Firm Innovativeness, government non-financial Support, and Sub Saharan Africa (SSA)
    Date: 2022–01
  6. By: Mihalyi,David; Hwang,Jyhjong; Rivetti,Diego; Cust,James Frederick
    Abstract: This paper investigates the characteristics of resource-backed lending acrossSub-Saharan Africa. To shed light on this type of lending, the paper presents new information on 30 resource-backedloans between 2004 and 2018, identified through publicly available information. These loans were concentrated in afew countries, where they represented a sizable fraction of all borrowing and were typically taken by centralgovernments and state-owned enterprises. Although the loan terms are mostly opaque, where data are available, the studyfinds that such loans are not cheaper than regular loans. The paper highlights opportunities to transparency andoffers some suggestions for improving the governance of collateralized borrowings across developing countries.
    Keywords: Financial Sector Policy,Energy and Natural Resources,Coastal and Marine Resources,Public Sector Administrative and Civil Service Reform,Democratic Government,Public Sector Administrative & Civil Service Reform,De Facto Governments,Primary Metals
    Date: 2022–02–02

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