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on Africa |
| By: | Mue, Kelvin |
| Abstract: | This paper seeks to provide an analysis of the "African premium”, that is, the excess yield or cost that African sovereign and corporate issuers pay relative to comparable emerging market peers. Drawing from academic literature, market data, and institutional reports spanning 2008-2026, we document that African sovereigns systematically pay higher borrowing costs than justified by fundamental risk factors alone. In 2018, African Eurobond yields averaged 6.0%, which equated to a 50-basis point premium compared to the 5.5% emerging market average, coupled with a 200-basis point premium compared to the 4.0% Asia-Pacific average. On careful observation, my analysis has shown that as important as macroeconomic factors such as debt ratios, growth prospects, and inflation rates are, along with credit rating, governance, and global factors, they do not explain the high borrowing costs for African countries. This unexplained component suggests the presence of a so-called "prejudice premium" or structural mispricing, potentially costing African economies billions annually in excess interest payments. The African fixed income market has experienced tremendous growth, with Sub-Saharan Africa Eurobond issuance growing from less than $1 billion in 2008 to $18 billion in 2025. However, ongoing challenges include low market liquidity, investor bases, bond maturities, as well as exposure to global financial shocks. Notwithstanding, as of mid-2025, a sovereign spread crisis, as measured by distressed levels above 1, 000 basis points, did not affect any African country. This is a milestone not achieved since 2015. The policy implications relevant to this paper thereafter relate to issues like strengthening macroeconomic fundamentals, better governance, better institutions, better debt transparency, better development of local currency markets, and better addressing issues like information asymmetries through initiatives like the Africa Credit Rating Agency (AfCRA), which was recently established on January 27th 2026. These measures could potentially substantially reduce the African premium and lower financing costs for governments and corporations across the continent. |
| Keywords: | African premium, sovereign bond spreads, fixed income markets, emerging markets, money markets, credit risk premium, Sub-Saharan Africa, Eurobond yields, sovereign debt, market development, credit ratings, fiscal fundamentals, governance indicators, market liquidity |
| JEL: | E0 E02 G1 G14 G15 |
| Date: | 2026–02–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128017 |
| By: | Emanuele Colonnelli; Marcio Cruz; Mariana Pereira-Lopez; Tommaso Porzio; Chun Zhao |
| Abstract: | We build new data on startups in Africa to study which types of financing these firms demand, how financing is allocated in practice, and the implications for startup creation and the composition of the sector. We combine a continent-wide founder survey, an incentive-compatible experiment estimating financing preferences, and venture capital (VC) deal records matched to founders’ education and work histories. We find that startups strongly prefer equity over debt, but equity is supplied mainly by foreign investors and flows disproportionately to foreign-connected founders. About 80 percent of VC deals involve a foreign investor, and more than 60 percent of funded founders have studied or worked outside Africa. A simple accounting framework shows that this foreignness reflects three main forces: scarce local equity capital, a thin pool of local entrepreneurs able to access startup finance, and frictions limiting local entrepreneurs’ access to foreign investors. Together, these forces reduce startup creation and tilt the sector toward foreign investors and foreign-connected founders. |
| JEL: | F0 G0 O10 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35261 |
| By: | Mattias Antar; Adel Daoud; Connor T. Jerzak |
| Abstract: | Subnational studies of aid effectiveness often rely on repeated cross-sections or nighttime lights, making it difficult to separate local treatment effects from baseline differences and potentially favoring infrastructure-heavy projects. We address these limitations by studying World Bank and Chinese development projects in Africa with a balanced panel of 2, 166 DHS clusters across 35 countries from 2002 to 2013. Geocoded AidData projects are linked to satellite-imputed International Wealth Index estimates, a household-centered measure of material living standards. We compare a conventional two-way fixed effects (TWFE) event-study with the switcher--stayer estimator of de Chaisemartin and D'Haultfoeuille (dCdH), which avoids contaminated comparisons under staggered treatment timing. Pre-treatment diagnostics show that project placement is frequently selective: clusters that later receive projects often begin from weaker relative positions before treatment onset. Consequently, TWFE often implies larger post-treatment gains than the preferred staggered-treatment design supports. Under dCdH, the evidence becomes more selective and sector-specific. For the World Bank, positive evidence is strongest in Health, while Education shows positive but less cleanly identified gains. For China, Water Supply and Sanitation and Other Social Infrastructure and Services show positive associations with local wealth, although residual selection concerns remain. By contrast, Chinese Energy Generation and Supply appears strongly positive under TWFE but falls close to zero under dCdH. Overall, the results do not support a donor-wide claim that either the World Bank or China uniformly improves local wealth. Instead, estimated effects are concentrated in a limited set of donor--sector panels and depend strongly on how treatment timing, selection, and outcome measurement are handled. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.06651 |
| By: | Wabenga, James Yango; Nlemfu Mukoko, Jean Blaise |
| Abstract: | This paper examines the transmission of external monetary disturbances in a highly dollarized small open economy, using the Democratic Republic of Congo (DRC) as a representative case. We develop a tractable open-economy model featuring partial dollarization, incomplete price adjustment, and an endogenous risk premium linked to interest rate differentials. The framework captures the key mechanisms through which foreign financial conditions interact with domestic monetary dynamics. Model simulations indicate that a U.S. interest rate tightening generates an immediate and significant depreciation of the domestic currency, accompanied by rising risk premia and inflationary pressures. Money supply shocks produce amplified exchange rate and price level responses due to weakened real money demand under dollarization, while risk premium shocks generate additional volatility through expectation-driven dynamics. Across all shock types, domestic monetary policy exhibits limited capacity to counteract external disturbances. The results show that dollarization changes how monetary shocks spread by reducing policy independence and increasing the impact of global financial conditions. The analysis provides a quantitative foundation for understanding macroeconomic swings in dollarized economies and indicates that stabilization requires additional tools beyond traditional interest-rate policies. |
| Keywords: | Exchange rate dynamics, dollarization, monetary policy spillovers, Democratic Republic of Congo, commodity prices |
| JEL: | E52 F31 F41 O55 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129083 |
| By: | Mdhlalose, Dickson |
| Abstract: | This research examines how Quantum-Native structures outperform standard linear ones. Using information from 384 companies in South Africa and a statistical method called AMOS Structural Equation Modelling, this study looked at whether Quantum-Native organisations (with 'strategic superposition' holding multiple strategies at once, flexible departments, and intentionally following strategies that seem to oppose each other) do better than traditional, straightforward ones. And the results are very clear. Businesses using quantum-native principles are much more adaptable (β = 0.67, p |
| Keywords: | Quantum-Native Design, Strategic Superposition, Organisational Agility, Quantum Management, South African Enterprises. |
| JEL: | L20 M10 O32 M14 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341044 |
| By: | Tiamiyu, Kehinde |
| Abstract: | This study verified the crowding-out hypothesis in the Nigerian economy for the period 1981 to 2020. This was done in a bid to refute or otherwise the age-old claim in economic literature that government budget deficits trigger both aggregate demand and interest rates, thereby crowding out private investment. The analysis was done with the aid of the ARDL technique, given the fact that there was an admixture of stationary and nonstationary series in the model, as found out in the ADF unit root test. This study confirms the presence of the crowding-out effect in both the short run and the long run. Irrespective of the model considered, whether in the short run or long run, GDP has been a strong fundamental driver of private investment in Nigeria. Both the short-run and long-run estimates are statistically significant at the 1% level, suggesting that investment typically exceeds savings when income grows in Nigeria. In other words, private investment in Nigeria is income-driven. This result is in line with Duesenberry’s financial theory of investment. Although a positive relationship between government capital expenditure and private investment in Nigeria was confirmed in both the short run and the long run, capital expenditure is not yet a significant determinant of private investment growth. This suggests that Nigeria has not yet achieved a breakthrough in infrastructure development, particularly in critical sectors such as transportation and communication, which are essential for attracting private investment. Furthermore, the findings reiterate that most private investments in Nigeria are income-induced rather than autonomous. Consequently, the government is strongly advised to provide more incentives to indigenous manufacturers and businesses, invest heavily in infrastructure to secure Nigeria's economic future, and create a more conducive macroeconomic environment for businesses. In addition, government spending should be directed towards stimulating the productive sectors of the economy, rather than supporting consumptive activities. |
| Keywords: | Budget deficit, private investment, interest rate, government expenditure, ARDL Model |
| JEL: | C5 E2 E22 E4 E6 E62 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129249 |