nep-afr New Economics Papers
on Africa
Issue of 2023‒01‒23
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Differential corporate taxation and inter-asset investment distortions in South Africa By Mashekwa Maboshe; Matthew Stern; Yash Ramkolowan
  2. Information Frictions, Belief Updating and Internal Migration: Evidence from Ghana and Uganda By Frohnweiler, Sarah; Beber, Bernd; Ebert, Cara
  3. The role of governance in the effect of the internet on financial inclusion in sub-Saharan Africa By Armand F. Akpa; Simplice A. Asongu
  4. eNaira central bank digital currency (CBDC) for financial inclusion in Nigeria By Ozili, Peterson K
  5. Turnover and Accountability in Africa's Parliaments By Jeremy Bowles; Benjamin Marx
  6. African Women Vulnerability Index: Focus on Rural Women By Vanessa S. Tchamyou; Samba Diop; Simplice A. Asongu; Joseph Nnanna

  1. By: Mashekwa Maboshe; Matthew Stern; Yash Ramkolowan
    Abstract: South Africa has since the 1990’s actively reformed its corporate tax policy to stimulate investment in various assets and industries. While the investment impact of corporate taxation has been evaluated in various studies, no effort has been made to assess the potential inter-asset distortions due to differential taxation. Using a unique asset-industry level dataset, we […]
    Keywords: Africa, corporate taxation, fiscal policy, South Africa
    JEL: D22 F14 L25 O12 O32 O55
    Date: 2021–07–01
  2. By: Frohnweiler, Sarah (RWI); Beber, Bernd (RWI); Ebert, Cara (RWI)
    Abstract: Information frictions about the benefits of migration can lead to inefficient migration choices. We study the effects of a randomly assigned information treatment about regional income differentials in Ghana and Uganda to learn about participants' belief updating and subsequent changes in migration intentions and destination preferences. Participants react to the provided information by correcting their destination preferences towards regions with higher incomes, whereas their intent to migrate changes less. Participants' belief updating follows an asymmetric process restricted to individuals who initially underestimated regional differentials. The results suggest that income differentials matter for where to and less whether to migrate.
    Keywords: income differentials, migration decision, belief updating
    JEL: J31 J68 O15
    Date: 2022–12
  3. By: Armand F. Akpa (Université d’Abomey-Calavi, Benin); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Financial inclusion is a necessary condition for the population to get access to credit. Despite the efforts made by governments and policy makers, the rate of financial inclusion in Sub-Saharan African (SSA) countries remains low. The internet can be one of the options to increase the rate of financial inclusion in SSA. But the use of internet in SSA remains low due to the poor quality of the internet and to its high cost. So, good governance quality can consolidate internet infrastructure in order to promote the internet. This paper analyses the role of governance quality in the relationship between internet and financial inclusion in Sub-Saharan African countries. The study utilises data from the International Monetary Fund (IMF) database for indicators of financial inclusion, World Development Indicators (WDI) for internet users and World Governance Indicators (WGI) for governance indicators over the period 2004 to 2020. Analysing the data using the System Generalized Method of Moments (SGMM), the results show that the internet can be effectively complemented with the quality of governance to improve financial inclusion.Thresholds of governance that are needed for the internet to promote financial inclusion are provided. The established thresholds are as follows: (i) 0.300 “voice and accountability†and “government effectiveness†, respectively; (ii) 0.250 “rule and law†; (iii) 2.500 “economic governance†and (iv) 1.000 “institutional governace†and “general governance†, respectively. Policies aimed at reinforcing the quality of governance in SSA countries could help consolidate internet infrastructure to promote internet usage and in turn improve financial inclusion.
    Keywords: Internet, financial inclusion, governance quality
    JEL: O30 G20 H11
    Date: 2023–01
  4. By: Ozili, Peterson K
    Abstract: There is much interest in central bank digital currency (CBDC) among central banks around the world. African countries have also joined the league of nations that are conducting research into CBDC. The launch of the eNaira CBDC in Nigeria has drawn substantial interest from observers around the world including central banks. The eNaira CBDC is envisaged to bring many benefits, and financial inclusion is considered to be one of such benefits. This paper explores the eNaira CBDC and its potential to increase financial inclusion in Nigeria. I show that the eNaira CBDC can increase financial inclusion by (i) offering an easy account opening process for greater financial inclusion (ii) enabling digital access to diverse financial services in the financial system, (iii) offering low-cost financial products and services, (iv) avoiding unexplained bank charges that causes financial exclusion, (v) attracting people who have lost confidence in banks, (vi) introducing interest-bearing eNaira, and (vii) using offline channels to access the eNaira.
    Keywords: Nigeria, eNaira, central bank digital currency, CBDC, financial inclusion, eNaira wallet.
    JEL: E50 E52 E58 G21
    Date: 2023
  5. By: Jeremy Bowles (Stanford University); Benjamin Marx (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Legislators in developing democracies turn over at very high rates: across recent parliamentary elections in 12 African countries, only a third of incumbents are reelected on average. We show that this high turnover is consistent with an electoral equilibrium wherein voters' self-fulfilling beliefs limit accountability. First, we establish that voters' pessimistic beliefs, grounded in their inability to link distributive benefits to their representatives, induce the sanctioning of incumbents and reduce incentives to seek reelection. Second, we explore the role of attribution challenges in causing this equilibrium. Leveraging new data and plausibly exogenous variation in the allocation of constituency development funds (CDFs), over which legislators hold significant discretion, we find that CDFs (1) increase the rate at which incumbents are reelected; (2) decrease voters' perceptions of parliamentary corruption. These results shed new light on how attributable policy instruments, by shifting voters' beliefs about parliamentary efficacy, can contribute to enhancing democratic accountability.
    Date: 2022–02–16
  6. By: Vanessa S. Tchamyou (Yaounde, Cameroon); Samba Diop (Alioune Diop University, Bambey, Senegal); Simplice A. Asongu (Yaoundé, Cameroon); Joseph Nnanna (Abuja, Nigeria)
    Abstract: In this paper, we develop a new index labelled the African Women Vulnerability Index (AWVI) with a focus on rural women using Round 7 of the Afrobarometer Survey. The AWVI comprises 59 indicators in six dimensions namely: safety, empowerment, health, education, economic prosperity and digitalisation. Our findings show that: (i) Botswana performs best while women in Guinea and Sudan are the most vulnerable. Indeed, Mauritius appears as a good example in some dimensions such as health and digitalisation. (ii) Except for the dimension of digitalisation, rural women’s vulnerabilities in other dimensions are very close to those at the national level. (iii) National vulnerability trends strongly explain rural women’s vulnerability especially for the economic, empowerment and health dimensions.
    Keywords: Index creation, gender, rural analysis, Africa
    JEL: C43 O18 O55
    Date: 2023–01

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