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- ItemAddressing the Challenges of Sustainable Electrification in Africa through Comprehensive Impact Evaluations(2021-09) Muchapondwa, Edwin; Jeuland, Marc; Shimeles, AbebeAccess to electricity leads to overall economic growth through improved agricultural and firm productivity, public service delivery, and enhanced household investment in human capital, net income, and general quality of life. Yet more than 540 million people in Africa still lack electricity today, and many more suffer from unreliable power supply. The considerable untapped renewable energy potential, and the associated rapid reductions in cost, make sustainable and decentralized electricity service a promising option for the continent, for transforming these deficits into opportunities. However, knowledge on how to finance and implement new models of electrification remains limited, because the results from prior impact evaluations are inconclusive and do not cover all relevant interventions or dimensions. Following a review of policy and research issues, we propose that five essential principles should guide future research efforts in this domain: (i) use of mixed/multi methods that adequately cover the varied implications of electricity access, (ii) choice of econometric methods that provide more credible estimates of impacts, (iii) use and combinations of more informative treatment data, (iv) careful theorizing and consideration of the potential for heterogeneous treatment effects, and (v) accounting for effects from treatments of different magnitudes. We demonstrate the last three of these with an illustrative application of the World Bank Multi-Tier Framework data for Kenya. New insights emerge as research moves from a focus on average treatment effects to heterogeneous and multi-valued treatment effects. Notably, the impacts of electrification may depend on the extent to which households and other economic agents can make complementary investments to benefit from an electricity connection. Thus, electrification may need to be combined with complementary programmes, for example, those that make appliances more accessible and affordable. A greater focus on holistic impact evaluation approaches is needed to make economic research on sustainable electrification more informative and policy-relevant.
- ItemAdoption and Impact of ICT on Labour Productivity in Africa: Evidence from CrossCountry Firm-Level Data(African Economic Research Consortium, 2021-07-12) Vaumi, Achille Tefong; Leudjou, Roland; Faha, Chistophe Péguy ChoubThis paper uses a large cross-country firm-level database that contains information of about 6,300 firms from 19 sub-Saharan Africa (SSA) countries, collected by the United Nations Industrial Development Organization (UNIDO) in 2010 and 2011, to assess the determinants of adoption and use of Information and Communication Technologies (ICT) in SSA firms, while controlling for the problem of censoring that would exist in the modelling of ICT-capital adoption choice. The gain obtained from the adoption of ICT-capital investment has been examined by estimating the impact of ICT-capital on labour productivity in adopters’ firms, while considering the role of Organizational Changes (OC). Compared to the Cobb-Douglas production function the Translog production function has been tested to be more adequate with our data. Unlike previous work on the estimation of a production function and given the simultaneity between labour productivity and ICT-capital investments, the Instrumental Variables (IV) method, has been used to address this endogeneity problem. The descriptive analysis shows that East African firms, on average, adopt ICT-capital more than other African countries, while Southern African firms, on average, use ICT-capital more intensively than other sub-regions. Finally, we find that income, wages, and firms’ size are significant determinants of ICTcapital adoption. Moreover, the study reveals that the impact of ICT-capital intensity on labour productivity in SSA countries is positive and statistically significant in the presence of OC, which is robust to several different specification tests.
- ItemAdoption of Information and Communications Technology (ICT) in Industrial Firms in Cameroon(African Economic Research Consortium, 2021-07-12) Fambeu, Ariel HerbertThe ICT revolution is already a reality for firms in developed countries and in many developing ones, especially that there is now solid evidence of how it has improved productivity and growth. But at the same time, the ICT penetration rate is still low in African firms. Using data on industrial firms in Cameroon, the present study is an attempt to establish the determinants of ICT adoption in the country. It uses a negative binomial model and a probit model selection bias correction. It transpires from the study’s econometric results that the size of the firm, the human capital of its employees, the proportion of its employees who are ICT-literate, its organizational practices, its manager’s qualities, and its regional location are the determinants of its ICT adoption rate. However, their discriminatory effect diminishes over time. From the study’s results, lessons can be drawn that can guide the development of an ICT diffusion policy, not only for the firms in Cameroon, but also for those in other similar African countries with a slow rate of ICT diffusion.
- ItemAfrica COVID-19 Update: Revisiting Policy Responses and the Long Road to Recovery(AERC, 2020-08-29) Ndung’u, Njuguna; Shimeles, AbebeThis brief looks at the experiences of the past four months in dealing and coping with COVID-19 pandemic in Africa and reflects on the responses governments have made in their fight against the pandemic and assesses how the dramatic steps such as restrictions on mobility of people, ‘lockdowns’, were effective in slowing down infections. Our assessment of the lockdowns shows patterns of strong compliance by citizens with significant variation by the number of confirmed cases and level of development. Countries that experienced higher number of cases and are relatively richer (they have the capability to mount a social protection program) witnessed large reductions in movement of people from their normal routine than those with lower confirmed cases or poorer economies. Reductions in mobility seem to have reduced infection rates, but the magnitude was not that large. A one standard deviation reduction in mobility (about 25%) was associated with 2.8 % reduction in infection rates. Generally, lockdowns (proxies for social distancing) accounted for 25% of the variation in infection rates in Africa. Other preventive measures such as the use of masks, frequent handwashing, and use of sanitizers remain very important, though quantifying the magnitude of their impact is difficult. We argue that lockdown is increasingly less popular and imposing it for extended period is an untenable strategy for many countries. We have also documented that even at the early stage its effectiveness is highly correlated with the institutional strength of a country, particularly in the area of political stability and adherence to the rule of law. Hence, the road ahead points towards developing public trust in following government guidelines and overhauling the health care financing system, including reforming its reach to the masses and increase its readiness to deal effectively with the pandemic. It is also time to rethink about the necessity of building an effective social protection program on the foundations of existing social and religious networks that have proved vital during this pandemic. More importantly, the developments of digital payments platform have been effective and efficient with social protection programs for countries that used them.
- ItemAnalysis of the Competitiveness and Sophistication of Exports in Ecowas Countries: The Case of Measuring Trade in Value Added Products(African Economic Research Consortium, 2021-07-12) Fofana, Abdul-FahdThe objective of this study was first to analyze the participation of Economic Community of West African States (ECOWAS) countries in the global value chain. Then, an analysis was done of the export performance of these countries in value added trade through export competitiveness and sophistication. The results show that the participation of these countries in the global value chain is strongly driven by downstream integration, that is, exports of primary products. About export performance in value added trade, the results suggest that the export basket of these countries is uncompetitive. The results also highlighted the low sophistication of the export basket with a very high degree of heterogeneity between countries.
- ItemAssessing User Satisfaction with the Quality of Healthcare Services in Cameroon(African Economic Research consortium, 2020-07-03) Njong, Aloysius Mom; Tchouapi, Rosy Pascale MeyetThis study aims to evaluate user satisfaction with, and perceptions about the quality of the healthcare services provided in health facilities in Cameroon. The analyses make use of the 2010 Quantitative Service Delivery Survey (QSDS), jointly carried out by the World Bank and the National Institute of Statistics in Cameroon. Confirmatory factor analysis is used to test the reliability and validity of the research instruments and hence facilitate the ranking of satisfaction indicators. We use ordered probit modelling to identify the covariates of user satisfaction. Results indicate that over 85% of users are satisfied with the overall quality of healthcare services in the country. There are some concerns about such dubiously high individual-level response rates, which are inconsistent with the poor reputation of the quality of healthcare services in Cameroon. It also emerges from the study that age, educational status and waiting time are prominent covariates of satisfaction. The major policy recommendation is that an exit user satisfaction survey should be conducted to reduce the approval response biases observed in the 2010 QSDS data.
- ItemAssessment of Nigeria’s Financial Services Sector Stability and Diversity(African Economic Research Consortium, 2021-07-12) Sunday, Enebeli-Uzor Emeka; Innocent, Ifelunini AbanumA key lesson from the global financial crisis of 2007-2009 and the ensuing widespread economic dislocations is the reminder of the nexus between financial system stability and resilience, and macroeconomic stability. Also, emerging research efforts at exploring financial system stability, resilience and economic welfare have underscored the importance of diversity in the financial system. This study assessed Nigeria’s financial system stability and diversity. Specifically, the study sought to develop an Aggregate Financial Stability Index that is reflective of the intrinsic structure of the Nigerian financial services sector; develop an Aggregate Financial Diversity Index for the Nigerian financial services sector; investigate the determinants of aggregate financial stability index; and investigate the relationship between the aggregate financial stability index and aggregate financial diversity index. Using annual and quarterly banking sector data for the period 2006-2015 and employing Principal Component Analysis, HirschmanHerfindahl (HH) Index, Simpson Index, Simple Regression and Granger Causality, the study establishes that the Nigerian financial system shows a cyclical movement, and yet to achieve diversity. The study also found that, financial diversity positively influences financial stability and that there exists a bidirectional causal relationship between financial diversity and financial stability running from diversity to stability and vice versa. The study recommends that regulatory and supervisory authorities in Nigeria should include the diversity of financial services in their policy design as this will enhance, not only the stability of financial system, but also the economy. The Central Bank of Nigeria can also regularly monitor banks’ funding models to ensure that banks set up diverse funding plans to preempt a systemic crisis.
- ItemBank Competition in Africa: Do Institutional Quality and CrossBorder Banking Matter?(African Economic Research consortium, 2020-07-03) Amidu, MohammedThis study analyses the implications of cross-border banking (CBB) and institutional quality (IQ) for bank competition in Africa. We apply a two-step estimation procedure using bank-level panel data for 29 African countries. In step one, the Boone indicator and the Lerner index are used to gauge bank competition in a given country in Africa. In the second step, we analyse the sources of bank competition, placing emphasis on the impact of CBB and IQ. The results suggest that competition increased in the period 2002-2005, before decreasing somewhat between 2006 and 2007 and increasing again thereafter. The results also show that cross-border banking enhances bank competition in African countries with stronger governance structures and institutional quality. Our results are robust to an array of controls, including an alternative methodology, variable specifications, and the regulatory environments that banks operate in.
- ItemBank-level Analysis of the Determinants of Lending Rate Stickiness in Uganda(African Economic Research consortium, 2020-11-15) Nampewo, DorothyThis study determines the existence and drivers of the asymmetrical response of lending rates to policy rate changes in Uganda’s banking sector. Uganda’s banking system seems to be faced with sticky adjustments of lending rates following changes in policy rates. Whereas interbank money-market rates have tended to track the evolution of the policy rate, bank lending rates have been stickier, only responding partially to changes in the policy rate, with lags. These lag periods appear to be longer when the policy rate is reduced than when it is raised, which has created challenges for monetary policy implementation. The analysis is based on bank-level data covering 17 commercial banks for the period 2009–2017. The econometric approach is based on panel error-correction methods. Results show that downward stickiness exists in bank-level lending rates. The factors identified as causing the asymmetrical response of interest rates to policy rates include: risk, cost, bank capability, banking sector concentration and government borrowing. These results provide new insights necessary for the design of appropriate policy measures to reduce high and sticky lending rates to, among other things, reduce the cost of finance and ensure effective implementation of monetary policy. In particular, the study recommends policies that improve cost efficiency, reduce government borrowing and support mostly small and indigenous banks to compete and penetrate the market, as well as measures towards minimizing credit risks that could help to achieve symmetric adjustment.
- ItemBanks and Monetary Policy Transmission in the West African Economic and Monetary Union(African Economic Research consortium, 2020-07-03) Kanga, DésiréThis paper aims at examining the role of banks in the transmission of the monetary policy in the West African Economic and Monetary Union (WAEMU). By using a simple theoretical model, this paper shows that improving the quality of institutions and an increase in competition strengthens the transmission of monetary policy while capital requirement behaves like an additional cost to the borrowers. Applying a dynamic panel estimator to a large sample of WAEMU banks, the paper finds that bank lending is sensitive to monetary policy and capital-constrained banks reduce further their lending following a tight monetary policy compared to less capital-constrained banks. Moreover, an improvement in the quality of institutions seems to strengthen the transmission of monetary policy. Keywords: Capital regulation; Quality of institutions; Monetary policy.
- ItemBrain Drain and External Imbalances in sub-Saharan Africa(African Economic Research consortium, 2020-11-15) Coulibaly, DramaneThe persistent nature of external deficits in sub-Saharan Africa (SSA) is a major concern. This paper examines the extent to which migration from SSA to OECD countries affects the dynamics of external balances in SSA countries. Based on panel regressions and gravity-based 2SLS estimation strategies on data from 46 SSA countries over the period 1990-2014, we establish that emigration— particularly of highly-skilled people—contributes to the persistence of external deficits in SSA countries. While emigration globally has a negative impact on the current account, only high-skilled emigration has a significant and robust impact. These findings are corroborated by the fact that highly skilled individuals emigrate with their saving potential as suggested by the life-cycle theory. In addition, while remittances to home countries can help to compensate this negative effect of brain drain, our results show that highly skilled emigrant’s contribution to remittances is less important compared to that of low-skilled emigrants. Therefore, policy makers in sub-Sharan (SSA) countries should implement policies to attract more remittances, particularly from highly skilled emigrants, to reduce their external imbalances or external financing needs.
- ItemCan a Mother"s Education Affect Child Malnutrition?(2007-12-01) Kumchulesi, Grace
- ItemThe Challenge of Unemployment and Youth Unemployment amidst Fast Economic Growth in Ethiopia(2022-02) Geda, Alemayehu
- ItemClimate Change and Agricultural Trade in sub-Saharan Africa(African Economic Research Consortium, 2021-11-15) Mahof, GodfreyClimate change is a threat to the agricultural sector and food security of many countries in sub-Saharan Africa (SSA). However, changes in climate across the continent are not expected to be consistent as some countries will experience huge declines in rainfall and increases in temperature. This implies that changes in agricultural productivity due to climate change will not be uniform and this is likely to affect trade patterns on the continent. Using a combination of climate change scenarios from the Food and Agriculture Organization of the United Nations’ Global Agro-Ecological Zones (FAO-GAEZ), cereals production data from the Food and Agriculture Organization of the United Nation’s FAOSTAT, and trade data from the United Nation’s UN Comtrade database, this study explores the impact of climate change on agricultural trade, particularly trade in major cereals, within SSA. Results show that by the 2050s, climate change will lead to most countries experiencing an increase in their need to import cereals. However, some countries such as Burundi, Tanzania and Zambia could have the potential to increase their exports. This suggests that trade flows are likely to be important in strengthening the resilience of African food systems from shocks emanating from climate change. For example, countries in East Africa such as Tanzania could export maize to countries in Southern Africa that could experience maize deficits. Delivering food from surplus to deficit areas is likely to be important in the future, hence the need to improve the movement of food products across borders. Policies to be adopted may include improving trade facilitation, reducing intra-SSA tariffs, avoiding trade policy uncertainty, removing export bans, and encouraging the production of cereal crops where countries have gained a comparative advantage
- ItemCommodities Price Cycles and their Interdependence with Equity Markets in Africa(African Economic Research consortium, 2020-11-15) Boako, Gideon; Alagidede, Imhotep P.This study examined time-scale connectedness between returns on African stock markets and commodities across the energy, agriculture, metals, and beverage markets with wavelet-based coherency, wavelet multiple crosscorrelation analysis, and wavelet-based Sharpe ratio and generalized Sharpe ratio diversification analysis. We find evidence of increased performance of risk-minimizing portfolios during crisis that are broadly narrowed to long-run fluctuations (shorter scales). Such higher performances at shorter scales suggest that, during crises, investors show some levels of risk-aversion towards African equity investments over long term horizons. This explains why some African markets experienced first-round effect of the global financial crisis despite the theoretical view that African economies could potentially be decoupled from global economic shocks during crisis. Thus, although the decoupling phenomenon may hold for African markets during global financial crisis, if investors decide to balance their portfolios only for the short term, the portfolio reversals may cause serious effects to the continent. Further, of all the nine stock markets, it is only the Ivory Coast regional bourse that maximizes the multiple correlations against the linear combinations of the aggregate commodity indices. Lastly, the results confirm that having a combined portfolio of commodities and equities improves performance for different investment horizons.
- ItemThe Conditional Pricing of Currency and Inflation Risks in Africa;s Equity Markets(AERC, 2007-12-01) Kodongo, Odongo; Ojah, Kalu
- ItemContract Type and Teacher Absenteeism in Benin: The Role of Teacher’s Supplemental Income(African Economic Research consortium, 2020-11-15) Senou, Barthelemy MahugnonAbsenteeism is a phenomenon that has been noted in professional circles with consequences on the income of the wage earner as well as the profits of the firm, consequences that led, according to statistics from 2005, to losses in public finance amounting to close to 70 billion francs for the Government of Benin. Despite such losses, very few studies in economics have focused on the subject to try and give an understanding of the real causes of absenteeism and its consequences. The objective of this study is to explore the relationship between the status of the teacher, supplemental income of the teacher, and the absenteeism of the teacher. Using data from PASEC-CONFEMEN 2005, that will be applied to a theoretical model that we are developing, and through the use of a Tobit empirical method, after having taken the endogeneity bias on the practice of supplemental income generating activities by the teacher into account, this study demonstrates that the practice of income generating activities by teachers positively influences their absenteeism, with contract teachers being more frequently absent than those who are on permanent and pensionable employment contracts. Through linking the level of prices in a locality with absenteeism behaviours, we make it clear that the reasons for absenteeism are mostly related to low purchasing power in the context of earning relatively meagre salaries. These results elicit a set of recommendations that essentially suggest that there should be an improvement in the salaries and working conditions of teachers.
- ItemCrop Diversification Increases Household Diets and Improves Child Growth in Ethiopia(African Economic Research Consortium, 2021-08-18) Tesfaye, Wondimagegn
- ItemCrop Production Diversity and Women Dietary Diversity in Rural Kenya(African Economic Research Consortium, 2021-08-18) Cheruiyot, Kiplangat Josea
- ItemDeterminants and Economic Impact of International Tourist Arrivals in Ghana(AERC, 2007-02) Bentum-Ennin, Isaac