nep-afr New Economics Papers
on Africa
Issue of 2023‒06‒19
six papers chosen by
Sam Sarpong
Xiamen University Malaysia Campus

  1. Africa's emergent tech sector: It's characteristics impact on development and labour markets By Lay, Jann; Tafese, Tevin
  2. Heterogeneous and time varying nexus between climate change and quality of life in Africa By Rilwan Sakariyahu; Olayinka Oyekola; Rasheed Adigun; Temitope Fagbemi; Oluwagbenga Seyingbo; Rodiat Lawal
  3. Sustainability Burden or Boost? Examining the Effect of Public Debt on Renewable Energy Consumption in Sub-Saharan Africa By Favour C. Onuoha; Stephen K. Dimnwobi; Kingsley I. Okere; Chukwunonso Ekesiobi
  4. Nigeria’s eNaira, One Year After By Jookyung Ree
  5. Determinants of Financial Inclusion in Africa and OECD Countries By Evzen Kocenda; Samuel Fiifi Eshun
  6. Colonialism, Cash Crops and Women in Africa By Martina Miotto

  1. By: Lay, Jann; Tafese, Tevin
    Abstract: This study investigates the characteristics of Africa's tech sector, its digital services, and its impact on economic development, specifically on labour markets. Our literature review and new analyses based on a database of African startups shows that Africa's emergent tech sector is adapting to the continent's constraints on development and, sometimes, contributes to overcoming them. A case in point is the credit constraints that numerous startups have overcome to attract very significant amounts of capital. Tech startups tend to be concentrated in financial services in the "Big Four": Egypt, Kenya, South Africa, and Nigeria. We show, first, that "home-grown" African platform businesses do not simply connect demand and supply, but also invest in logistics and infrastructure; second, that many tech firms offer multiple products that complement the original service; and third, that business models often rely on large networks of agents. We conclude that more evidence on the impact of digital technologies is needed.
    Keywords: Africa, digitalisation, startups, development, labour markets, ICT
    JEL: N27 M13 J40 L86
    Date: 2023
  2. By: Rilwan Sakariyahu (Business School, Edinburgh Napier University); Olayinka Oyekola (Department of Economics, University of Exeter); Rasheed Adigun (JPMorgan Chase); Temitope Fagbemi (Aberdeen Business School, Robert Gordon University); Oluwagbenga Seyingbo (Business School, University of Winchester); Rodiat Lawal (School of Oriental and African Studies, University of London)
    Abstract: Climate change, one of the world's existential problems, has sparked widespread concern at national and multinational levels. In this study, we deviate from the existing scores of academic literature by investigating heterogenous and time-varying effects of climate change on quality of life at the continent and regional levels in Africa. Towards this end, we utilise carbon emissions and ecological footprint as our climate change variables and human development index to proxy quality of life for 31 African countries over the period 2000 to 2018. Several econometric techniques are then employed to account for cross-sectional dependence, panel unit root, long-term cointegration with structural break, and heterogeneous panel causality, whilst we also present results based on Bayesian panel VAR impulse response functions. The results indicate cross-sectional dependence due to spill-over effects from common factors in Africa, while the panel cointegration test affirms that climate change variables have long-term consequences for quality of life only in sub-Saharan African region. Moreover, our results reveal a uni-directional causality between climate change variables and quality of life at both the continent and sub-Saharan African region levels. However, the test shows a bi-directional causality between these variables in North Africa. This differential impacts of climate change variables on quality of life between Northern and sub-Saharan Africa suggests that policy initiatives toward mitigating the effects of climate crises should consider regional dynamics of the continent.
    Keywords: climate change, carbon emissions, ecological footprints, quality of life, SDGs 3 and 13, Africa
    JEL: Q5 I3 R11
    Date: 2023–05–17
  3. By: Favour C. Onuoha (Evangel University Akaeze, Nigeria); Stephen K. Dimnwobi (Nnamdi Azikiwe University, Awka, Nigeria); Kingsley I. Okere (Gregory University, Uturu, Nigeria); Chukwunonso Ekesiobi (Igbariam, Nigeria)
    Abstract: Given that the development of renewable energy is regarded as a sustainable alternative to the realization of environmental quality, it is not surprising that the discussion of the sustainability of the world’s energy sources continues to expand. While renewable energy has a negligible impact on environmental degradation, developing regions like sub-Saharan Africa (SSA) is restricted by the capital-intensive investment requirements of the burgeoning renewable energy market. To explore the significance of available funding sources on renewable energy development in the region, this study investigates the influence of public debt on renewable energy consumption (REC) in a panel of 29 SSA countries, in full and sub-regional categorizations. A combination of the instrumental variable generalized method of moment (IV-GMM) approach and the two-stage least squares estimator was applied to achieve the goal of the study. Overall, our findings indicate that public debt, carbon emission, financial development, and economic growth exert a negative and significant linkage with renewable energy, while urbanization has a positive and significant influence. Aware of the study findings, appropriate policy prescriptions are proposed to improve the debt-financed funding for the development of the renewable energy sector in SSA.
    Keywords: Public Debt, Renewable Energy, Financial Development, Economic Growth, Carbon Emission
    Date: 2023–01
  4. By: Jookyung Ree
    Abstract: This paper reflects on the first year of the eNaira—the first CBDC in Africa. Despite the laudable undisrupted operation for the first full year, the CBDC project has not yet moved beyond the initial wave of limited adoption. Network effects suggest the initial low adoption spell will require a coordinated policy drive to break it. The eNaira’s potential in financial inclusion requires a strategy to set the right relationship with mobile money, given the former’s potential to either complement or substitute the latter. Cost savings from integrating CBDC—as a bridge vehicle—in the remittance process may also be substantial.
    Keywords: Central Bank Digital Currency; financial inclusion; remittance; blockchain; mobile money
    Date: 2023–05–16
  5. By: Evzen Kocenda (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague; Institute of Information Theory and Automation of the CAS, Prague; CESifo Munich; IOS Regensburg.); Samuel Fiifi Eshun (Institute of Economic Studies, Charles University, Prague, Czech Republic.)
    Abstract: Using a dynamic panel data analysis, we explore the factors influencing financial inclusion in Sub-Saharan Africa (SSA) and countries belonging to the Organization for Economic Co-operation and Development (OECD). We employ the System Generalized Method of Moments (GMM) estimator and assess 31 SSA and 38 OECD countries from 2000-2021. We found that the differences in trade openness, banks' efficiency, income, and remittances are some macro-level factors that explain the variation in financial inclusion levels. We highlight the importance of quality literacy policies, trade improvement with restrictions on cross-border capital flows, and a more efficient financial system to promote financial inclusion.
    Keywords: Financial Inclusion, Financial Inclusion Index, Sub-Saharan Africa (SSA), Organization for Economic Co-operation and Development (OECD), System Generalized Methods of Moments (GMM)
    JEL: C23 E44 F65 G21 O16 O57
    Date: 2023–05
  6. By: Martina Miotto
    Abstract: I study the impact of European colonialism in Africa on the present status of women. The historical literature suggests that a critical determinant of persistent gender inequality is the colonial cash crop system. This favoured men’s entry into the cash economy and excluded women, whose workload increased as they provided additional labour in their husbands’ cash crop fields. By contrast, contemporary economic literature suggests that raising the status of women in the labour force could improve gender norms. I take districts with different levels of participation in cash crop agriculture during colonial rule and compare outcomes for the contemporary female descendants, using exogenous land suitability as the instrument for cash crop production. My findings show a persistent positive effect of cash crop agriculture on women’s status, measured as higher agency within the household, less willingness to justify husbands’ violence, and higher levels of education. No effect is found for labour force participation. The intergenerational transmission of culture plays a key role in explaining the long-run persistent effect, which is especially prevalent in regions whose cash crops were cocoa and palm oil, as women played a substantial role in producing these crops.
    Date: 2023–04

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