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on Africa |
| By: | Kohnert, Dirk |
| Abstract: | The issue of poverty in Africa is well-known and widely researched. Around a third of the world's poorest people live in Africa. Evidence from more recent years suggests that inequality may be an even greater challenge in Africa than in other developing regions. High levels of poverty and inequality persist in Africa despite it being one of the fastest-growing regions of the last decade. In particular, six of the world's ten fastestgrowing economies between 2001 and 2010 were in sub-Saharan Africa (SSA). Initial inequality reduces the ability of growth to reduce poverty, and even more so if inequality rises during the growth process. Although income inequality fell by 4.3% between 1990 and 2009, Africa remains the second most unequal region globally, after Latin America and the Caribbean. Inequality not only dampens the poverty-reducing impact of growth and lowers the growth rate, but also hollows out the middle class, encourages corruption and rent-seeking, increases crime and violence, undermines social stability and precludes sustained growth. Growth trends in sub-Saharan Africa are not significantly different to those of other developing countries that have fallen into a poverty trap. The combination of endemic poverty, high inequality and low growth is a major obstacle to poverty reduction and overall socioeconomic development in much of Africa. Multidimensional inequality is deeply entrenched in much of Africa and exhibits vertical and horizontal dimensions that hinder human development. The roots of inequality lie in the colonial past and have been reinforced by institutions that limited access and were established by the colonisers and maintained by generations of African leaders since then. Attention should also be paid to the diachronic dimensions of inequality, especially how inequality changes over individuals' lifetimes and its effect on intergenerational mobility. As effective democratic practices take firmer root on the continent, it can be expected that pressure for general and inclusive social redistribution will increase. Providing social protection contributes to reducing poverty and inequality in Africa. Additionally, rising income inequality contributes to increased CO₂ emissions. Furthermore, an increase in poverty has a detrimental effect on environmental pollution in sub-Saharan African countries. Over half of adults infected with HIV in Africa are female, yet poverty and social structures still prevent many women from protecting themselves. Current strategies to change HIV-related behaviours continue to fail women and girls in Africa. |
| Keywords: | Poverty; inequality; economic growth; Sub-Saharan Africa; Nigeria, South Africa; DR Congo; |
| JEL: | D14 D31 D63 E24 E26 E64 F24 F54 I14 N17 N37 O15 O17 O55 P46 Z13 |
| Date: | 2025–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125930 |
| By: | Pasquale Scaramozzino |
| Abstract: | This paper assesses the role of foreign investment in the economic performance of South Africa. Although the evidence is inconclusive about how foreign capital flows affect aggregate variables, there is clear evidence of their positive and significant long-run effects at the sectoral level. Foreign direct investment has a positive impact on economic performance and is in turn attracted to sectors with stronger performance. Debt instruments tend to display stronger long-run relationships with economic performance indicators than equity and investment fund shares. Overall, the analysis in this paper confirms the beneficial effects of foreign direct investment on the South African economy. The design of capital flow management policies should thus take into account the sectoral impact of direct investment and its potential to stimulate sectors economic performance. |
| Date: | 2025–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11092 |
| By: | Perrotta Berlin, Maria (Stockholm Institute of Transition Economics); Lvovkskyi, Lev (BEROC) |
| Abstract: | In the wake of international sanctions, Russia has intensified its engagement in Africa, with potential ramifications for democracy, international relations, and conflict dynamics. This paper examines whether the expanding presence of Russian actors has influenced the allocation and composition of development aid from Western partners, particularly after the invasion of Ukraine. Given established evidence on the local socioeconomic and political effects of foreign aid, such shifts could shape public perceptions of Western development efforts and carry wider geopolitical and developmental implications. |
| Keywords: | foreign aid; Russia; World Bank |
| JEL: | F35 O12 O19 O55 P45 |
| Date: | 2025–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:hasite:0064 |
| By: | Shehu Usman Rano, Aliyu |
| Abstract: | Despite the significance of finance as a major trade lubricant, evidence in the literature alludes to its scarcity and increasing cost, especially in developing countries where small and medium-scale enterprises are worst affected. The creation of the African Continental Free Trade Area (AFCFTA) in 2018, an organ of the African Union (AU), was meant to serve as a beacon for deepening economic integration through the removal of trade barriers inhibiting intra-African trade and movement of persons, among others. Hence, this research explores the role Islamic finance (IF) could play in promoting trade finance in the AfCFTA. The study involves six countries: Egypt, Kenya, Malaysia, Morocco, Nigeria, and Saudi Arabia, and employs survey research methodology, a total of 430 sample data, and SmartPLS Structural Equation Modelling (SEM) techniques in its analyses. Findings reveal strong evidence that Shari'ah, legal and regulatory compliance issues of IF institutions rhythm with the internal, national, and international compliance requirements equally as the unique instruments applied in IF. In addition, IF was found to be largely driven by global economic and political stability, socially responsible finance, ethical and moral considerations, risk-sharing, and resilience of the global Islamic finance industry. Furthermore, SMEs, governments, and importers are the major beneficiary sectors. SmartPLS results show that AFCFTA's protocols are in tune with the principles of IF and are therefore suited for the spread of Islamic finance institutions on the continent. And, while AML/KYC and BASEL requirements are crucial, compliance with the AAOIFI and IFSB standards, paucity of Shari'ah experts, threats to global security, and increasing global economic uncertainty pose as major impediments. The study calls for the licensing of more IF institutions in the continent, participation of multilateral institutions in Islamic trade finance (ITF), and harmonization of Shariah standards. |
| Keywords: | AfCFTA, Islamic Trade Finance (ITF), Murabaha, letter of credit, and forwarding |
| JEL: | C12 C35 F13 P45 |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126475 |
| By: | Kohnert, Dirk |
| Abstract: | Economic governance is measured by economic freedom, while political governance is measured by the electoral competitiveness index. How can political instability and poor governance in SSA be coped with? This is often seen as the overarching problem that exacerbates many others. Systemic corruption at all levels deprives the state of much-needed revenue, increases the cost of doing business and undermines public trust in institutions. In addition, weak institutions, such as an inefficient judiciary, inadequate public administration and barely existing public services, hinder development. Conflict and fragility displace people, destroy infrastructure and tie up resources that could be invested in education or healthcare. Without reliable contracts and property rights, both foreign and domestic investments are at great risk. Poor governance, reflected in a lack of rule of law, property rights, a regulatory burden, political violence and ineffective government, impedes growth in per capita revenue. In African politics, neo-patrimonialism appears to be the default setting, described as the 'moral economy of corruption' or the 'economics of affection. However, bad governance is not culturally specific; it is a universal challenge that affects all nations at some point in their development history. Good governance must be pursued and implemented in all SSA countries. Even with the support of the donor community, governments may develop ambitious plans to improve governance and strengthen institutions, yet fail to improve the standard of living of their citizens. Since the Second World War, Africa, and Sub-Saharan Africa in particular, has had the poorest economic performance of any region in the world. By the end of the 20th century, incomes per capita had barely improved since independence, and in some cases had worsened considerably. The main problem was the failure to improve the efficiency of resource use. In contrast to many other developing countries, total factor productivity was static or negative for much of the time. With few exceptions, African countries have lacked a sound social and political foundation conducive to growth and development, and this foundation has tended to deteriorate over time. Good governance practices are supported by institutions such as the World Bank and the International Monetary Fund. Good governance practices are also supported by such institutions. In order to receive development aid, states must apply and accept the principles of good governance. If they neglect to do so, African states risk not receiving financial aid. Accountability is a positive aspect of good governance. However, African states have developed a 'new culture', especially after decolonisation. There is a significant difference in perspective between Africans and Westerners regarding governance. The clientelist forms of politics that define postcolonial states do not stem from a class project, but are a contemporary manifestation of a dynamic national, African and ethnic culture. |
| Keywords: | economic governance; political governance; political stability; corruption; rule of law, accountability; African culture; Sub-Saharan Africa; South Africa; Nigeria; Ivory Coast; |
| JEL: | D72 D73 D74 N17 O17 O40 P10 Z13 |
| Date: | 2025–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126144 |
| By: | Tesfaye T. Lemma; Michael Machokoto; Marvelous Kadzima |
| Abstract: | This study examines the impact of climate risk and climate policies on capital flows in Southern African Development Community (SADC) countries. Using data from 10 SADC countries spanning 2000 to 2022, we find that climate risk proxied by extreme weather and climatic events negatively affects aggregate international capital flows and their individual components: direct investments, portfolio investments and other investments. Similarly, the extensiveness of climate policies is associated with a decline in capital flows across all three categories. These inverse relationships persist whether international capital inflows or outflows are used as the dependent variable. The findings remain robust after addressing potential biases related to omitted variables, measurement issues, endogeneity and self-selection. This study offers important policy insights for SADC economies a region highly vulnerable to climate change yet relatively under-researched. |
| Date: | 2025–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11093 |