nep-afr New Economics Papers
on Africa
Issue of 2023‒02‒06
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Governance quality and trade performance in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  2. Potential economic benefits of the African continental free trade area for Africa and the EU By Hinz, Julian; Chowdhry, Sonali; Jacobs, Anna; Thiele, Rainer
  3. Poverty Imputation in Contexts without Consumption Data: A Revisit with Further Refinements By Dang, Hai-Anh H.; Kilic, Talip; Abanokova, Kseniya; Carletto, Calogero
  4. Visual Nudges: How Deterrence and Equity Shape Tax Compliance Attitudes and Behaviour in Rwanda By Scarpini, Celeste; Santoro, Fabrizio; Mascagni, Giulia
  5. Exchange rate undervaluation and African surges: what do we learn from exported products? By Camille da Piedade; Luc Jacolin; Patrick Plane
  6. Gaps and opportunities in preventing and countering violent extremism: empirical insights and reflections from participatory research in Northwest Nigeria By Okpara, Uche; Treasure, Lilian

  1. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: In this study, nexuses between governance and trade performance in terms of natural resource rents are assessed in 44 sub-Saharan African countries. The empirical evidence is based on Tobit regressions. The findings show that political governance (entailing “voice & accountability†and political stability) and institutional governance (consisting of the rule of law and corruption control) have a negative effect on trade performance. The findings are consistent with the perspective that resources rents are linked to inefficiencies in governance which are further detrimental to trade performance within the remit of natural resource rents on the one hand and, on the other, the premise of the prevailing weak institutions in the region less likely to boost trade performance.
    Keywords: Natural Resources; Economic Growth; Governance; Sub-Saharan Africa
    JEL: H10 Q20 Q30 O11 O55
    Date: 2023–01
  2. By: Hinz, Julian; Chowdhry, Sonali; Jacobs, Anna; Thiele, Rainer
    Abstract: Despite some growth, intra-African trade activity remains at low levels and falls far behind the levels of internal trade observed in more integrated regions like the EU. The European continent remains a major trading partner, but its share in total African exports and imports has decreased from nearly 50% to 35% between 2000 and 2020. Our simulations suggest that implementing the African Continental Free Trade Area (AfCFTA) agreement can lead to substantial welfare gains in Africa, but only if tariff reductions are accompanied by a significant lowering of Non-Tariff-Barriers (NTBs). If NTBs are reduced on a multilateral basis, the EU's declining trade share with Africa might also be reversed. European governments and EU institutions should therefore have an incentive to provide technical and financial assistance - possibly within the framework of the existing WTO-led aid-for-trade initiative - to help AfCFTA economies lowering NTBs on a multilateral basis.
    Date: 2022
  3. By: Dang, Hai-Anh H.; Kilic, Talip; Abanokova, Kseniya; Carletto, Calogero
    Abstract: Household consumption data are often unavailable, not fully collected, or incomparable over time in poorer countries. Survey-to-survey imputation has been increasingly employed to address these data gaps for poverty measurement, but its effective use requires standardized protocols. We refine existing poverty imputation models using 14 multi-topic household surveys conducted over the past decade in Ethiopia, Malawi, Nigeria, Tanzania, and Vietnam. We find that adding household utility expenditures to a basic imputation model with household-level demographic and employment variables provides accurate estimates, which even fall within one standard error of the true poverty rates in many cases. Further adding geospatial variables improves accuracy, as does including additional community-level predictors (available from data in Vietnam) related to educational achievement, poverty, and asset wealth. Yet, within-country spatial heterogeneity exists, with certain models performing well for either urban areas or rural areas only. These results offer cost-saving inputs into future survey design.
    Keywords: consumption, poverty, survey-to-survey imputation, household surveys, Vietnam, Ethiopia, Malawi, Nigeria, Tanzania, Sub-Saharan Africa
    JEL: C15 I32 O15
    Date: 2023
  4. By: Scarpini, Celeste; Santoro, Fabrizio; Mascagni, Giulia
    Abstract: Tax administrations in low-income countries engage in a variety of interventions to improve taxpayer compliance and close their countries’ financing gap. With this aim, the Rwanda Revenue Authority (RRA) has implemented measures of enforcement, facilitation, and promotion of professionalism and trust in the revenue administration. Despite these efforts, the country’s tax-to-GDP ratio remains slightly below the average for sub-Saharan African countries. Thus, understanding the drivers of compliance and how to leverage them is crucial, especially since Covid-19 has exacerbated revenue needs in LICs. Remote engagement with taxpayers through mass media communication represents a promising solution, as it is a cheap option that budget-constrained revenue administrations could use to improve compliance. Our survey experiment implemented in Rwanda sheds light on the potential impact of videos as a new way to deliver tax messages. We randomly exposed over 2, 000 small and medium firms filing for CIT and PIT to two information videos, and a control group, and surveyed them before and after the viewing. The videos were two-minute-long animated films on tax matters, focusing respectively on deterrence and equity of the tax system1 - which are considered two key factors explaining compliance. Using combined survey and administrative data, we identified the videos’ causal impact on the taxpayers’ perceptions and behaviours. Summary of Working Paper 145 by Celeste Scarpini, Fabrizio Santoro and Giulia Mascagni.
    Keywords: Governance,
    Date: 2023
  5. By: Camille da Piedade; Luc Jacolin; Patrick Plane
    Abstract: We investigate the role of undervaluation of African currencies in export “surges” of some primary and manufactured goods. We calculate country-product specific misalignments on the basis of the absolute purchasing power parity principle adjusted for the productivity level. Using a panel of 41 African countries and a basket of 149 primary and manufactured exported goods (4-digit HS code), we identify 96 export surges over the period 1995-2017. The complementary log-log (cloglog), which more appropriately treats rare events, brings to light undervaluation as an influential determinant for triggering an export surge then sustaining it over time. This effect is controlled for relevant covariates. Results prove robust to alternative calculations of export surges and to different estimators used in regression analyses.
    Keywords: Exports Surges, Competitiveness, Exchange Rate Misalignements, Developing Countries
    JEL: F14 O24 O55
    Date: 2022
  6. By: Okpara, Uche; Treasure, Lilian
    Abstract: Violent extremism (VE) represents a serious challenge to public safety. Measures to prevent and counter it often crosscut multiple intervention areas and practices. However, enquiries into existing gaps and opportunities in preventing and countering violent extremism (P/CVE) in regions experiencing multiple forms of violence have so far been preliminary, with scant context-specific evidence to inform better preventative strategies. Here, we assemble and analyse diverse data bothering on VE and P/CVE issues in northwest Nigeria generated through a combination of multiple methods: desk reviews, scoping visit, telephone interviews, young citizens panels, expert workshop and consensus conference. Our data cover issues around local support for violent extremist groups, people’s motivation for joining VE activities, spread and level of risks of recruitment and radicalisation, collaborative strengths of organisations working on P/CVE issues, and local prevention, intervention and response efforts. We find that ideological support for VE groups exists, mirroring the prevalence of shared religious beliefs, ethnic nationalism and political philosophy between affected communities and VE groups. Policies and practices empowering people to build alliances against radical ideologies from within specific ideological communities are severely lacking. These – in combination with VE root causes and motivations - heighten the risks of radicalisation and recruitment. Moreover, two-thirds of current P/CVE policies address VE as a security challenge as against confronting it as a social issue, demonstrating the primacy of militarised responses over ‘soft power’ measures. In addition, affected communities view defence and intelligence measures as exclusionary and less sensitive to human rights protection and local needs for citizens empowerment and community resilience. Our findings mirror gaps in P/CVE efforts in fragile settings, highlighting ways in which P/CVE opportunities around participation, prevention and protection can be maximised to close critical intervention gaps.
    Date: 2023–01–09

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