nep-afr New Economics Papers
on Africa
Issue of 2023‒09‒11
four papers chosen by
Sam Sarpong, Xiamen University Malaysia Campus

  1. Taxation and Accountability in sub-Saharan Africa By Roel Dom; Oliver Morrissey; Abrams Tagem
  2. Factors influencing the deployment of local platform crowdfunding in Sub Saharan Africa: Evidence from West and Central Africa Countries By Pepin Ilonga Nkupo
  3. The Effects of Climate Change in the Poorest Countries: Evidence from the Permanent Shrinking of Lake Chad By Remi Jedwab; Federico Haslop; Roman Zarate; Carlos Rodriguez-Castelan
  4. Promoting renewable energy consumption in Sub-Saharan Africa: how capital flight crowds-out the favorable effect of foreign aid By Simplice A. Asongu; Joel Hinaunye Eita

  1. By: Roel Dom; Oliver Morrissey; Abrams Tagem
    Abstract: Taxation can contribute to state-building through a tax bargain in which taxpayers are willing to increase compliance in return for improved government accountability. There is limited evidence for this in sub-Saharan Africa (SSA) where it is argued that the fiscal state is weak, with low tax revenues and governments that are not accountable. However, since the early 2000s, SSA countries on average have increased tax/GDP ratios significantly and there have also been increases in measures of accountability. Has the increase in taxation promoted improved accountability? This paper analyses data for up to 47 African countries from 1980 to 2019 and shows a robust positive correlation between tax revenue and accountability. Instrumental variable estimation provides support for a causal interpretation. The effect of taxation is only observed for vertical accountability (capturing the quality of elections and party competition), not for other measures of accountability capturing the role of civil society or the judiciary, consistent with the emergence of a tax bargain. Furthermore, we show that the tax effect is one of the significant determinants of vertical accountability.
    Keywords: tax revenue, vertical accountability, tax bargain, sub-Saharan Africa
    Date: 2023
  2. By: Pepin Ilonga Nkupo (University of Mons)
    Abstract: The purpose of this study is to show why African countries, in West and Central Africa (WCA) particularly, are not able to exploit the potential of crowdfunding and maintain the activities of local platforms. I use the hypothetico-deductive methodology, and faced with panel data, this study uses logistic regression models (fixed effect, random effect, and mixed effect), covering the period 2010–2019 for 20 WCA countries (West and Central Africa). To my knowledge, this study is among the first to explore the factors upstream of the deployment of local crowdfunding platforms, based on basic infrastructure, technological and communication innovation, education, the legal framework, and financial system. This research contributes to the current debate on the development of crowdfunding in sub-Saharan Africa as well as to the future models to be adopted so that this activity is sustainable at the local level. The study points out that the infrastructure of information and communication technologies, based on the penetration of the Internet and mobile telephony, significantly influences the deployment of the national platform. Nevertheless, the basic infrastructure such as electricity and urbanization variables, a legal framework based on the business creation score, education, and the weakness of the financial development system constitute an obstacle to claiming development in long-term and sustainable local crowdfunding activities. Following these striking results, the study highlights a series of levers on which legislators in WCA countries can act to meet the crowdfunding challenges of tomorrow. By proposing three research levels, this study should promote and support the development of crowdfunding from a pedagogical point of view by emphasizing entrepreneurship and emerging technologies in education at the level of professional or university training, from the infrastructure, access to physical and digital infrastructure by emphasizing the importance of regional partnerships, creating partnerships with traditional African banks, to prevent risks, build trust, and ensure the security of investments, decision makers must establish the law on alternative finance activities (crowdfunding, cryptocurrency).
    Date: 2023–08–11
  3. By: Remi Jedwab (George Washington University); Federico Haslop (George Washington University); Roman Zarate (World Bank); Carlos Rodriguez-Castelan (World Bank)
    Abstract: Empirical studies of the economic effects of climate change (CC) largely rely on climate anomalies for causal identification purposes. Slow and permanent changes in climate-driven geographical conditions, i.e. CC as defined by the IPCC (2013), have been studied relatively less, especially in Africa which remains the most vulnerable continent to CC. We focus on Lake Chad, which used to be the 11th-largest lake in the world. This African lake the size of El Salvador, Israel, or Massachusetts slowly shrunk by 90% for exogenous reasons between 1963 and 1990. While water supply decreased, land supply increased, generating a priori ambiguous effects. These effects make the increasing global disappearance of lakes a critical trend to study. For Cameroon, Chad, Nigeria, and Niger - 25% of sub-Saharan Africa's population –, we construct a novel data set tracking population patterns at a fine spatial level from the 1940s to the 2010s. Difference-in-differences show much slower growth in the proximity of the lake, but only after the lake started shrinking. These effects persist two decades after the lake stopped shrinking, implying limited adaptation. Additionally, the negative water supply effects on fishing, farming, and herding outweighed the growth in land supply and other positive effects. A quantitative spatial model used to rationalize these results and estimate aggregate welfare losses taking into account adaptation shows overall losses of about 6%. The model also allows us to study the aggregate and spatial effects of policies related to migration, land use, trade, roads, and cities.
    Keywords: Climate Change; Aridification; Shrinkage of Lakes; Natural Disasters; Environment; Water Supply; Land Supply; Rural Decline; Agricultural Sectors; Adaptation; Land Use; Africa
    JEL: Q54 Q56 Q15 Q20 R11 R12 O13 O44
    Date: 2023–06
  4. By: Simplice A. Asongu (Johannesburg, South Africa); Joel Hinaunye Eita (Johannesburg, South Africa)
    Abstract: The study assesses the effect of capital flight in the nexus between foreign aid and renewable energy consumption in 20 countries in Sub-Saharan Africa using data for the period 1996-2018. The empirical technique employed is interactive quantile regressions and the following findings are established. Foreign aid increases renewable energy consumption while capital flight dampens the favorable effect of foreign aid on renewable energy consumption. The underlying significance and corresponding mitigating effect are exclusively relevant to the bottom (i.e., 10th) quantile of the conditional distribution of renewable energy consumption. The findings are robust to simultaneity and the unobserved heterogeneity. Policy implications are discussed.
    Keywords: Foreign aid; capital flight; renewable energy; sub-Saharan Africa
    JEL: H10 Q20 Q30 O11 O55
    Date: 2023–01

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