nep-afr New Economics Papers
on Africa
Issue of 2023‒10‒02
seven papers chosen by
Sam Sarpong, Xiamen University Malaysia Campus

  1. Heterogeneous Assessment of Urbanisation, Energy Consumption and Environmental Pollution in Africa: the Role of Regulatory Quality By Bruno N. Ibekilo; Chukwunonso Ekesiobi; Precious M. Emmanuel
  2. Domestic Resource Mobilization for Economic Development in Africa: Challenges, Policy Options, and Prospects in the New Horizon By Amutabi, Cyprian
  3. Will the UEMOA survive the rise of anti-French sentiment in West Africa? By Kohnert, Dirk
  4. Tax and Governance in the Context of Scarce Revenues: Inefficient Tax Collection and its Implications in Rural West Africa By Beach, Rachel; van den Boogaard, Vanessa
  5. Monetary Approach to Balance of Payments: Empirical Evidence from ECOWAS Countries By Cham, Yaya
  6. Foreign Investment, International Trade and Environmental Sustainability: Exploring Ecological Footprints in 37 African Countries By Chimere O. Iheonu; Ekene ThankGod Emeka; Simplice A. Asongu; Princewill U. Okwoche
  7. Pass-through of cocoa prices along the supply chain: What's left for farmers in Côte D'Ivoire? By Bensch, Gunther; Kaestner, Kathrin; Vance, Colin

  1. By: Bruno N. Ibekilo (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Chukwunonso Ekesiobi (Chukwuemeka Odumegwu Ojukwu University, Nigeria); Precious M. Emmanuel (University of Ibadan, Oyo State, Nigeria)
    Abstract: The pace of urbanisation, the intensity of energy consumption, and the quality of environmental regulation level pose a severe threat to environmental sustainability in Africa. Hence, we examine the role of regulatory quality on environmental pollution through urbanisation and energy consumption channel in 33 African nations between 1996 and 2020. Our study considers cross-sectional dependence in Africa; as a result, we employ the Augmented Mean Group (AMG) method and Common Correlated Effect Mean Group (CCEMG) for a robustness check to analyse the panel series. The study finds that (i) urbanisation increases environmental pollution, (ii) energy consumption accelerates environmental degradation, (iii) regulatory quality can partially mediate pollution in Africa via urbanisation and energy consumption channels, and (iv) The interaction of regulatory quality with urbanisation and energy consumption, respectively reduce environmental pollution establishing a moderation effect. The study suggests that African countries tighten environmental regulatory policies to lessen carbon emissions and drive environmental sustainability towards achieving carbon neutrality by 2050.
    Keywords: Heterogeneous, Urbanisation, Energy consumption, Environmental pollution, Regulation, Africa
    JEL: C20 R00 Q40 Q52 L52 N57
    Date: 2023–01
  2. By: Amutabi, Cyprian
    Abstract: This paper reviews the literature on the challenges, policy options, and prospects for Domestic Resource Mobilization (DRM) in Africa. Despite efforts made by African countries to enhance their resource mobilization capacity for the realization of both Agenda 2030 and Agenda 2063; notable challenges still exist and continue to hamper optimal revenue collection. Indeed, the prevailing global shocks namely the COVID-19 pandemic, the Russia-Ukraine conflict, and the climate change crises have generated colossal financing gaps which now portray mixed visions for the continent. Nonetheless, the new horizon presents a vast array of prospects in which DRM endeavors within the continent can blossom. First, African countries should expedite their respective ratification processes for entry into force and operationalization of the African Continental Free Trade Area (AfCFTA) agreement to harness the trade opportunities embedded therein. Secondly, unlocking the idle resources entrenched in sovereign wealth and pension funds is paramount. Thirdly, harnessing the digital technology potential especially, mobile technology is pivotal. Four, capital market deepening promotes financial asset diversification. Five, to reap optimal benefits from their rich resource endowments, African countries need to invest in sophisticated skills and technology. Six, the Base Erosion and Profit Shifting (BEPS) project provides many African countries with the opportunity to seal any tax evasion or avoidance loopholes employed by Multinational Corporations (MNCs). BEPS addresses the transfer pricing challenge and is also instrumental in taming illicit capital flight. Finally, mitigating the effects of the climate change crisis requires the transfer of environmentally sound technologies from developed to developing countries.
    Keywords: Domestic Resource Mobilization; Challenges; Policy Options; Prospects; New Horizon
    JEL: E02 E6 H12 O1
    Date: 2023–08–24
  3. By: Kohnert, Dirk
    Abstract: The West African Economic and Monetary Union (UEMOA) was established by France to counteract the dominance of Anglophone countries in West Africa, particularly Nigeria and Ghana, over Francophone West Africa. Francophonie in French West Africa is mainly driven by a power elite, the 'Pré Quarré' in both France and Africa. The notorious Françafrique network determined the fate of the region for decades. This provoked a growing anti-French sentiment, which focused on three points. First, development policy; second, the currency; and third, the military. France was the only western country to maintain a significant military presence in the Sahel. While the number of French troops has fallen drastically from 30, 000 in the early 1960s to around 6, 100 today, political and military interventionism has not abated. But, after so many years of failed military efforts against terrorism in the region, citizens became increasingly suspicious of France's motives for being there. However, a clear distinction must be made between anti-French sentiment and anti-French military presence. Many believe that any presence of foreign troops in the Sahel makes the situation worse by attracting rather than repelling extremists. Yet, this view obscures two important realities. First, the development of a broader authoritarian movement, driven in part by Russia, that challenges democracy and its proponents. The local population makes France the scapegoat for the worsening of their situation on the ground. Its political leaders are capitalizing on hostility to the colonial legacy, including the CFA franc and military cooperation. This is fertile ground for insurgent military officials, who have no legal legitimacy but a thirst for authenticity. The slogan 'France, get out' has become a new means of legitimizing political and military power in French-speaking Africa. However, for some autocrats it is also used as a welcome distraction from acknowledging their own responsibility for the predicament. Africans are becoming increasingly aware that France is staying in Africa for its own interests. But anti-French is not necessarily pro-coup. The axis of young, fiery military leaders, seeking legitimacy from their terrorized compatriots, exploited all sorts of populist sentiments, from Africanism to the quest for economic independence. They accused Paris of supporting the terrorists who are targeting the local population so that France can continue siphoning off their resources and thereby sinking the country into increasing poverty. It would be a mistake to think that making it clear to Africans that they are being manipulated by the Russians would end the whole thing. Nevertheless, the African heavyweights of UEMOA, Côte d'Ivoire and Senegal, as well as the other member states, will keep the Union together out of self-interest, albeit on fairer terms. African public opinion is-understandably extremely sensitive to being treated as an equal. They don't want to be lectured to or made fun of.
    Keywords: Françafrique; WAEMU; UEMOA; ECOWAS; Anti-French sentiment; Africanisms; coup d'état; governance; sustainable development; post-colonialism; informal sector; CFA franc; ODA; Sub-Saharan Africa; West Africa; Mali; Burkina Faso; Niger; Guinea; Nigeria; African Studies;
    JEL: F15 F35 F51 F52 F54 H12 H56 K42 L13 L72 N17 N47 Z13
    Date: 2023–08–22
  4. By: Beach, Rachel; van den Boogaard, Vanessa
    Abstract: The expansion of the ‘tax net’ has commanded considerable domestic and international policy attention as a means of financing essential services, reducing dependence on international aid, and producing positive ‘government dividends.’ A growing body of research, however, questions the logic of extending the tax base, particularly among individuals and businesses in the urban informal economy, highlighting the associated revenue inefficiencies, negative equity implications, and lack of a direct relationship between tax payment and government accountability.
    Keywords: Development Policy, Finance, Governance,
    Date: 2023
  5. By: Cham, Yaya
    Abstract: The study primarily presents a critical and imperative analytical framework, accentuating the intricate interplay between the demand for money and the supply of money in shaping the economic equilibrium of the balance of payments (BOP). The focal point of this paper involves a meticulous examination of the monetary perspective regarding the BOP within the ECOWAS countries spanning the temporal domain from 2005 to 2019. This investigation is accomplished through the adept utilization of the second-generation unit root tests, namely the Common Augmented Dickey-Fuller (CADF) test and the Cross-sectional Augmented IPS (CIPS) test, alongside the comprehensive Westerlund cointegration test to ascertain the enduring nexus existing within the examined series. By adopting the dynamic homogeneous panel estimator, this study conducts an exhaustive scrutiny of both the short-term and long-term dynamics. The empirical findings, gleaned from the Pooled Mean Group analysis, unveil the pivotal role of monetary variables in determining BOP. In the medium and extended temporal spectra, ameliorations in domestic credit within the ECOWAS region are juxtaposed with a concomitant decline in net foreign assets, thus manifestly contributing to the deterioration of the BOP milieu in the aforementioned zones. Furthermore, a parallel analysis divulges a counteractive relationship between economic growth and inflation with net foreign assets in the short run, while this association transforms a synergistic correlation over the long haul. Conversely, the money supply engenders a positive and consequential influence on net foreign assets, evinced across both the transient and enduring periods. Essentially, the research findings substantiate the veracity of the monetary approach within the purview of the zones under contemplation. Consequently, monetary variables wield substantial and pronounced impacts on the BOP, with an escalating BOP, forth as a harbinger of enhanced equilibrium within the zones' balance of payments framework. Concerning policy implications, the underlying study underscores the monetary approach as an adept and fitting strategy, elucidating the notion that an outsized BOP deficit could potentially foster an environment conducive to the propagation of excessive domestic credit. Knowledge obtained from this research will go a long way in helping policy formulation and will also help the region in ensuring smooth developments in the external sector especially during the implementation of monetary policy.
    Keywords: Yaya Cham Monetary Approach Balance of Payments West African Monetary Institute Central Bank of The Gambia ARDL ECOWAS Crossectional
    JEL: E5 E51 E52 E58 O55 O57 Y40 Y50
    Date: 2023–08
  6. By: Chimere O. Iheonu (University of Nigeria, Nsukka, Nigeria); Ekene ThankGod Emeka (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Johannesburg, South Africa); Princewill U. Okwoche (Benue State University, Makurdi, Nigeria)
    Abstract: This study complements existing literature by examining the short-run heterogeneous and long-run homogeneous impacts of foreign direct investment (FDI) and international trade on ecological footprints in 37 African countries for the period 1990 to 2019. Utilizing the pooled mean group estimator, our findings show considerable heterogeneity in the impact of FDI and international trade on ecological footprints in the short run. In particular, the findings revealed that while FDI increases ecological footprints in Botswana, Egypt, and Mauritania, it reduces ecological footprints in Algeria, Comoros, Gambia, and Togo. Furthermore, the findings revealed that international trade increases ecological footprints in Cameroon, Cote d'Ivoire, and Eswatini but reduces ecological footprints in Algeria, Mauritania, and Morocco. Nonetheless, the study finds that in the long run, FDI significantly reduces ecological footprints while international trade has no significant influence on the environment. The study further finds economic growth and population to be significant in propping up ecological footprints in the long run. Policy recommendations based on these findings are discussed.
    Keywords: Foreign Direct Investment, International Trade; Environmental Sustainability; Ecological Footprints; Pooled Mean Group
    JEL: C33 F18 F21
    Date: 2023–01
  7. By: Bensch, Gunther; Kaestner, Kathrin; Vance, Colin
    Abstract: Cocoa farmers in Côte d'Ivoire face precarious livelihoods. Low farm-gate prices that are a fraction of the world market price compel land-extensive farming practices that perpetuate a cycle of poverty and environmental degradation. This paper seeks to understand the drivers of the low pass-through of cocoa prices in the world's largest cocoa-producing country and to identify potential inefficiencies and remedies. The analysis comprehensively covers price formation along all segments of the in-country supply chain. Our approach couples econometric analyses using secondary cocoa price data and primary farm household survey data with qualitative assessments of institutional factors specific to the cocoa value chain in Côte d'Ivoire. Notwithstanding the country's highly regulated system of setting cocoa prices, we do not find evidence for inefficiencies that would explain persistently low farm-gate prices. Nor do we find that the recently introduced ''Living Income Differential'', a price premium on internationally traded cocoa, has benefited farmers. We conclude by advocating for the international cocoa industry to strengthen its development programmes in cocoa-growing communities, complemented by government provision of infrastructure and other public goods. Such efforts can ultimately serve to increase the opportunity cost of cocoa production, drawing farmers into other employment sectors while improving the resilience and livelihoods of those who remain.
    Keywords: Cocoa, pass-through, price, policy impact, value chain
    JEL: O12 O13 Q11
    Date: 2023

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