nep-afr New Economics Papers
on Africa
Issue of 2023‒11‒20
four papers chosen by
Sam Sarpong, Xiamen University Malaysia Campus

  1. Sustainable practices in cocoa production. The role of certification schemes and farmer cooperatives By Katharina Krumbiegel; Pascal Tillie
  2. Agro-Economic Determinants of Violations of Protected Areas in Western Africa By Marco Rogna
  3. Portfolio Diversification of Nigerian REIT: Evidence from an African Real Estate Market By Daniel Ibrahim Dabara; Oluwafemi Timothy Ayodele; Augustina Chiwuzie; Emmanuel Itodo Daniel
  4. Long-run stability of money demand and monetary policy: The case of Algeria By Raouf Boucekkine; Mohammed Laksaci; Mohamed Touati-Tliba

  1. By: Katharina Krumbiegel (European Commission - JRC); Pascal Tillie (European Commission - JRC)
    Abstract: Many small-scale cocoa producers in Côte d’Ivoire and Ghana grow cocoa on unshaded or low-shaded cocoa plots. This has dire consequences for farm biodiversity, resulting in lower species richness and depleted soils. To measure the extent of sustainable agricultural practices’ use in the cocoa sector, we develop a scale that incorporates dimensions of agroforestry, soil conservation, pest and disease management and farm sanitation. We use a representative data set of more than 1700 cocoa producers in Côte d’Ivoire and Ghana to assess farmer participation in different organizational structures and market channels and their roles in promoting sustainable practices. We apply a multinomial endogenous switching regression model to control for potential selection bias and derive the average treatment effect of the treated (ATT) and the untreated (ATU) for three participation options: 1) certification scheme only, 2) farmer cooperative only and 3) both. In Côte d’Ivoire, econometric results show that joint participation in both a certification scheme and a farmer cooperative leads to a significantly higher sustainability score than alternative options. In comparison, certification scheme membership shows the highest effect in Ghana. Different findings may be explained by differences in the organization of the cocoa value chain across the two countries. Governmental extension services in Ghana provide support to cocoa farmers, which otherwise farmer cooperatives would potentially offer.
    Keywords: Certification schemes, sustainable agricultural practices, farmer cooperatives, cocoa
    JEL: O13 Q13 Q56
    Date: 2023–10
  2. By: Marco Rogna (European Commission - JRC)
    Abstract: Protected areas are a widely diffused instrument for preserving the environment by restricting human activities in locations with a high natural value. However, such restrictions may create discontent on nearby inhabitants or on economic actors that are prevented from exploiting the resources present in protected areas. This may easily lead to violations. Encroachment, the use of land inside protected areas for agricultural purposes, is a common violation. The present paper investigates the determinants of encroachment in Western African countries. The focus is placed on the agro-economic determinants. Protected areas in locations with strong agricultural vocation or with high percentage of protected land are more likely to be subject to violations. Furthermore, economic deprivation and land profitability are other two mild drivers of encroachment together with mechanization. Other indicators of modern practices such as irrigation and use of inorganic fertilizers, instead, do not increase the probability of violations to protected areas.
    Keywords: Africa; Agriculture; Encroachment; Protected Areas; Tobit.
    JEL: Q12 Q18 Q24 Q57
    Date: 2023–10
  3. By: Daniel Ibrahim Dabara; Oluwafemi Timothy Ayodele; Augustina Chiwuzie; Emmanuel Itodo Daniel
    Abstract: This study examines REITs' risk-adjusted performance and diversification benefits in an emerging African property market (Nigeria). The data on the quarterly returns of N-REIT, the Nigerian Federal Government Bonds (FGB), and the stock market's All-Share Index (ASI) were obtained and analysed to reveal their risk-adjusted performance and diversification benefit. Two mean-variance portfolios were developed to assess N-REITs' effect in the mixed asset portfolio. While the first portfolio was unconstrained, the second was constrained to a maximum of 5%. According to the study findings, N-REIT demonstrated superior performance to the other assets. The examination of the unconstrained portfolio showed that increasing the allocation of N-REITs up to 28% had both return and risk reduction effects. An examination of the constrained portfolio showed that with an increased allocation to N-REITs from 0.00% to 0.05%, portfolio risk and return reduced from 2.78% to 2.59% and 12.49% to 10.93%, respectively. Comparing the two portfolios based on the return risk ratios, showed that including N-REIT beyond the 5% threshold might not yield optimal portfolio performance. This study can be a valuable resource for investors seeking to make well-informed investment decisions, particularly in emerging markets such as Africa.
    Keywords: asset allocation; Diversification; Investment decisions; N-REIT; Risk-Adjusted Performance
    JEL: R3
    Date: 2023–01–01
  4. By: Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business); Mohammed Laksaci (Ecole Supérieure de Banque); Mohamed Touati-Tliba (ESC - Ecole Supérieure de Commerce d'Alger)
    Abstract: Since the start of the oil counter-shock in June 2014, Algeria has experienced unprecedented twin deficits. The excessive monetisation of the public deficit coupled with other deep anomalies in the economy of this country acutely calls for reconsideration of its monetary policy. To this end a prior study of the long-run stability of money demand is needed. We estimate the demand for money for monetary aggregates M1 and M2, and cash in Algeria over the period 1979–2019, and study its long-run stability. We show that the transaction motive is significant for all three aggregates, especially for the demand for cash, reflecting the weight of informal economy "practices". The elasticity of the scale variable is very close to unity for M2 and M1, and even equal to unity for cash demand (1.006). The elasticity of inflation is also significant for all three aggregates, although its level is higher in the case of cash demand (−6.474). Despite the persistence of certain financial repression mechanisms, interest rate elasticity is significant for all three aggregates, but higher for M1 and cash. The same observation is made for elasticity of the exchange rate, reflecting the effect of monetary substitution, especially for M1 and cash. Finally, our study concludes that the demand for money in terms of M1 remains stable, the same observation being confirmed for the M2 aggregate. However, the demand for fiat currency proves not to be stable. The consequences for the optimal design of monetary policy in Algeria are clearly stated.
    Keywords: Monetary policy, Money demand, Long-run stability, Resource-rich countries, Algeria, Co-integration
    Date: 2021–11

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