nep-afr New Economics Papers
on Africa
Issue of 2023‒12‒11
four papers chosen by
Sam Sarpong, Xiamen University Malaysia Campus

  1. Digitalisation and Subnational Tax Administration in Nigeria By Masud, Abdulsalam; Mohammed, Sani Damamisau; Gimba, Yusuf Abdu
  2. Sectoral shifts and labour market outcomes in sub-Saharan Africa By Amie M. Jobe; Roberto Ricciuti
  3. Are low-income workers financially irresponsible? An analysis of financial and accounting practices in Nairobi By Thereza Balliester Reis; Vincent Mugo Kamau
  4. The effects of non-performing loans on bank stability and economic performance in Zimbabwe By Katuka, Blessing; Mudzingiri, Calvin; Vengesai, Edson

  1. By: Masud, Abdulsalam; Mohammed, Sani Damamisau; Gimba, Yusuf Abdu
    Abstract: There has recently been an expansion in the use of digital financial services and digital IDs by tax authorities. However, the extent to which such technologies are being adopted and data from them used strategically to improve tax administration has been little explored, especially as regards subnational tax administrations. This study investigates the extent of the adoption and strategic usage of data from e-tax systems and digital IDs by state internal revenue services (SIRSs) in Nigeria. It analyses whether IT adoption correlates with tax performance among these authorities. It highlights the need for SIRSs to improve their adoption and strategic use of data from e-tax systems and digital IDs and finds that lessons could be learned from the Federal Inland Revenue Service (FIRS). The study’s uniqueness lies in its focus on the supply side of technology in tax administration within decentralised tax administration jurisdictions. Primary data was collected through qualitative interviews and evaluated using thematic analysis; secondary data on internally generated revenue (IGR) was also used. This is a Summary of African Tax Administration Paper 29.
    Keywords: Finance,
    Date: 2023
  2. By: Amie M. Jobe; Roberto Ricciuti
    Abstract: Using the Economic Transformation Database, this paper attempts to assess the magnitude of structural transformation and the effects of sectoral shifts due to structural transformation on the labour market performance of 18 sub-Saharan African countries over the period from 1990 to 2018. The first part of this study examines some patterns of structural transformation in Africa, focusing on sectoral output shares, sectoral employment shares, and the relative labour productivity of sectors. We find that Africa is gradually advancing towards structural transformation but at a very slow speed.
    Keywords: Structural transformation, Employment, Labour market, Africa, Economic Transformation Database
    Date: 2023
  3. By: Thereza Balliester Reis (Department of Economics, SOAS University of London); Vincent Mugo Kamau (Independent Researcher)
    Abstract: Studies on financial inclusion place strong emphasis on financial literacy and individual financial responsibility. Over-spending and over-indebtedness are often thought to be consequences of a lack of understanding of prudent budgeting, saving, and investment. Building on the critical accounting and everyday financialisation literature, this study challenges those claims. By interviewing 30 low-income workers in Nairobi, Kenya, we find that many are highly financially literate and have extensive knowledge on how to save on transaction costs and to select optimal borrowing opportunities. In fact, participants report several new techniques to save on costs, such as splitting transactions on M-Pesa to avoid fees. Yet, as their income is low, those individuals often find themselves indebted over sustained periods, particularly for basic needs such as food and transport. Furthermore, where individuals select costly financial services or are unable to save for the future, these seem to be consequences of structural and income constraints rather than a lack of understanding of accounting practices. Taken together, our article critiques established understandings of financial knowledge by presenting new evidence on everyday financial practices in Nairobi. Our results suggest that financialisation of everyday life has spread to countries beyond the Global North and might have severe consequences for development goals.
    Keywords: everyday life financialisation; financial literacy; critical accounting; Kenya
    JEL: B50 D14 G51 G53
    Date: 2023–11
  4. By: Katuka, Blessing; Mudzingiri, Calvin; Vengesai, Edson
    Abstract: This study explores the impact of non-performing loans (NPLs) on the Zimbabwean banking industry’s stability and economic performance during the dollarization era. The panel vector autoregressive (PVAR) model was applied using annual data from 2009 to 2017. The findings indicated that short-run NPL shocks negatively impact the risk-adjusted return, while the impact on risk-adjusted capitalization is positive but dies off in the long run. The findings from the paper further show that NPLs have a strong negative and significant effect on loan growth and economic performance in the short run but remain muted in the long run. The study results also show a bi-directional causality between banking industry stability and NPLs. In summary, NPLs affect banking industry stability, loan growth and economic performance in Zimbabwe. A possible implication is the formulation of a sound regulatory framework that curbs the increase in NPLs, promotes stability within the banking industry, and improves economic performance. The practical implication is that banks must get it right the first time regarding bank lending policies. Thus, the study recommends that Zimbabwean banks proactively manage their exposure to non-performing loans by implementing rigorous credit risk assessment processes.
    Keywords: Bank stability, Financial accelerator theory, Non-performing loans, Panel vector autoregressive model, Zimbabwe, Z score
    JEL: E51 G2 G21
    Date: 2023–05–18

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