3. Working Papers

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A Comparative Assessment of the Impacts of Malawi Farm Input Subsidy and Irrigation Policies on Child Nutrition Status
(African Economic Research Consortium,, 2023-07) Chiwaula, Levison; Cassim, Lucius; Manja, Laston
Farm input subsidy (FISP) and irrigation programmes are two of the top agricultural policy interventions that compete for resources in Malawi. Although pockets of information exist on the impacts of these policies, there is no study that compares the respective intervention impacts on child nutrition status to guide policymakers in the face of competing needs. Therefore, this study aims to fill this gap. Using data from the Fourth Integrated Household Survey (IHS4), an instrumental variables (IV) approach and quasi-experimental techniques of propensity score matching (PSM) were used to measure the impacts. The findings show that children from households that are beneficiaries of FISP have better nutrition statuses than children from non FISP or irrigation-practising households. However, the study fails to find a significant joint impact on child nutrition status, much less an individual impact, of irrigation policies, partly due to data limitations, which calls for a further, well-designed study to validate findings.
Access to Digital Financial Services and Women Empowerment: Evidence from Rural Rwanda
(African Economic Research Consortium, 2024-07-17) Botha, Rosemary; Kamninga, Tony Mwenda; Tuyisenge, Methode
This study investigated the extent to which access to digital financial services empowers women to engage in more high value activities within the household. The study used the 2020 Rwanda FinScope Survey data, a nationally representative data set covering 12,480 individual respondents from all the districts in the country. Using a control function (CF) instrumental variable technique, the study found that mobile money increased women’s ability to make decisions about the management of household income on their own or jointly with their partner (agency). The results further indicate that mobile money increased female access to credit. Usage of mobile money had a positive and significant effect on agency for women residing in rural Rwanda. Although females residing in female-headed households experienced an increase in agency and access to credit, the rate of change for females residing in male-headed households were comparatively higher. The results provide evidence of incremental agency benefits that digital financial inclusion has for women whose baseline decision-making power is low, especially in patriarchal societies where women have been historically disenfranchised in household decision-making. Thus, mobile money could be used as a tool for poverty reduction and service providers; can invest in developing services that deepen household savings and credit through mobile money to further contribute to improvement of household welfare.
Accord Commercial Régional Approfondi Comme Moteur des Chaînes de Valeur Mondiales en Afrique : Le Cas de la Région de la Cedeao
(African Economic Research Consortium, 2022-10) Balaki, Afi; Mamba, Essotanam
Cette étude examine les effets des accords commerciaux régionaux approfondis (ACR) sur les chaînes de valeur mondiales (CVM) pour 11 pays de la Communauté économique des États de l'Afrique de l'Ouest (CEDEAO) sur la période 1996-2018 en appliquant la technique de régression logit fractionnelle. Les chaînes de valeur mondiales sont calculées en tant que parts de la valeur ajoutée étrangère (VAE), de la valeur ajoutée nationale (VAD) et des exportations de VAD (VAD) dans les exportations brutes. Contrairement aux travaux précédents qui utilisent souvent la variable binaire, l'approfondissement de l'ACR est mesuré par un nouvel indicateur continu, le rapport entre le nombre cumulatif de protocoles et conventions ratifiés et le nombre cumulatif de protocoles et conventions signés. Deuxièmement, la présente étude analyse le contrôle de la corruption en tant que canal par lequel l'approfondissement de l'ACR influence les chaînes de valeur mondiales. Les résultats révèlent que l'approfondissement de l'ACR augmente significativement la FVA alors qu'il réduit la DVA, mais seulement au niveau de 10% et les résultats deviennent non significatifs avec l'inclusion de variables de contrôle. En outre, nos résultats indiquent l'existence d'une relation de complémentarité entre l'approfondissement de l'ACR et le contrôle de la corruption dans le modèle DVX. Les gouvernements de la CEDEAO devraient poursuivre la ratification des protocoles et des conventions et la lutte contre la corruption pour tirer parti de l'intégration profonde en termes de participation aux chaînes de valeur mondiales
Addressing Climate Change Cause and Effect on Land Cover and Land Use in Africa
(African Economic Research Consortium, 2021-10-25) Adjaye, John Asafu-
This study investigates the impact of climate change on land-use change and land cover (LCLUC)-induced greenhouse gas emissions in Africa. In particular, it tests the hypothesis that increasing agricultural productivity can be a land-based climate mitigation strategy to address the issue of LCLUC-induced emissions. The results confirm the well-known fact that climate change will have a devastating impact on Africa’s agricultural sector and therefore the welfare of the people. However, the results also clearly demonstrate that technology can be leveraged to improve agricultural productivity, which will not only enhance food production and improve food security but also mitigate greenhouse gas emissions. Specifically, we show that employing agricultural intensification strategies based on lifting total factor productivity can increase agricultural output with less land use, thereby saving millions of hectares of land from being brought into cultivation for staple crop production.
Addressing the Challenges of Sustainable Electrification in Africa through Comprehensive Impact Evaluations
(African Economic Research Consortium, 2021-10-04) Muchapondwa, Edwin; Jeuland, Marc; Shimeles, Abebe
Access 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.
African Firms in Global Value Chains: What Can We Learn from Firm-Level Data in Cameroon and Côte d'Ivoire?
(African Economic Research Consortium, 2022-07) Coulibaly, Romaric; Moreno, Heddie; Akiko, Suwa-Eisenmann; Traore, Nouhoum
This scoping paper exploits information from a unique data set constructed by merging firm census and custom data sets from Cameroon and Côte d'Ivoire to analyse the characteristics of firms that participate in global value chains (GVCs) in sub-Saharan Africa. These “GVC firms” are defined as firms that both export and import, with positive production and labour. The paper provides a detailed review of the state of firms' participation in GVCs in Africa and its consequences on trade, employment, and growth. The evidence in Cameroon and Côte d'Ivoire suggests that, in line with literature on firm heterogeneity and trade, firms engaged in GVCs are larger, more productive, and live longer than one-way-traders or domestic firms. Surprisingly, however, there are more GVC firms than pure exporters, a sign of the challenges faced by firms in those countries if they want to sell abroad. The probability of moving into a GVC is higher for exporters than for importers, showing that exporting is a stepping stone for firms to join a GVC.
Africa’s Chronic Liquidity Challenges and the Role of SDR Allocations
(African Economic Research Consortium, 2024-05-14) Shimeles, Abebe; Gallagher, Kevin
The triple and overlapping global shocks faced by African countries have caused severe liquidity challenges in recent years. Many countries are currently experiencing low real GDP growth, higher inflation, exchange rate instability, balance of payments crisis, and a high risk of debt distress. The most critical is the increasing disruption that climate change risks pose to the macroeconomy, including worsening conditions of conflict and instability. In this regard, Africa is at a significant historic moment to resolve its development finance challenges to ensure a transition to a low-carbon economy while achieving the targets set in the Sustainable Development Goals. This paper outlines potential areas of reform in both the domestic and global arenas. It argues that the existing debt resolution mechanisms are obsolete, requiring novel and bold approaches, such as revising the role of Special Drawing Rights in relieving liquidity challenges in developing countries, mainly in Africa. In addition, the paper also notes that African governments need to seize opportunities created by the shocks to implement long-overdue structural and governance reforms to realize the continent’s enormous development potential.
Agricultural Marketing Policies and Household Dietary Diversity and Nutrition in Tanzania
(African Economic Research Consortium, 2023-07) Martin, Julius Chegere; Kauky, Monica Sebastian
The consumption of nutrient-rich foods is sensitive to changes in income and price shocks, especially for low-income consumers. This study employs Tanzania National Panel Survey data to explore the linkage between agricultural marketing, dietary diversity and nutrition status in Tanzania. Findings reveal that market orientation significantly affect dietary diversity for lower income groups, while for the whole sample, the effect is indirect through overall income. Household dietary diversity significantly correlates with a lower probability of child stunting, which becomes insignificant when overall income is controlled; and female education and overall income have significant effects on dietary diversity and child nutrition. The findings suggest a judicious use of money obtained from the sales of agricultural products.
Analysing the Determinants of Healthcare Insurance Uptake in Nigeria
(African Economic Research Consortium, 2024-08-05) Adekunle, Wasiu; Oluwaseyi, Vincent
The challenge of low health insurance coverage in Nigeria has persisted for decades, hindering access to healthcare, and impacting human capital development negatively. This is despite the diverse types of health insurance schemes co-existing in the country. The current study, therefore, sought to identify the potential factors driving the uptake of health insurance and its types (private and public health insurance) in Nigeria. To achieve the objective, the study assessed cross-sectional data across the 36 States in Nigeria (including the Federal Capital Territory -FCT) obtained from the 2018 Nigeria Demographic and Health Survey (DHS). Accordingly, this study highlighted stylised facts about health insurance and key socio-economic factors, while regression analysis was explored to determine the crucial factors motivating health insurance uptake in Nigeria. The analysis showed that the positive drivers of health insurance uptake (mainly private) include the financial inclusion rate and employment level. The study also observed that due to financial constraints, low-income groups might be less likely to enrol on health insurance than the middle-income and high-income groups. Education is found to have a statistically significant and negative effect on health insurance uptake in the country. On the other hand, health access problems and age of the household head did not have statistically significant effects on health insurance uptake. With the National Health Insurance Authority (NHIA) Act 2021 making health insurance mandatory, it is imperative for the Nigerian government to strengthen the identified positive drivers of health insurance uptake across the country.
Analysis of the Effects of COVID-19 on the Trade, Transport and Health Sectors of Burundi
(African Economic Research Consortium, 2021-10-08) Ndayitwayeko, Willy Marcel; Ntawiratsa, Rédempteur; Nkurunziza, Désiré
The unprecedented crisis caused by COVID-19 is affecting all aspects of society and the economies of many countries. This study aims at analysing the impact of this pandemic on the trade, transport and health sectors of Burundi. It is based on data collected using semi-structured questionnaires and interview guides applied on key informants. In addition, the analysis relied on monthly trade data from some ministries and public databases. The results reveal that there was a decline in trade when one compares values of exports and imports during the second quarter of 2020, which is the quarter when the country was in the pandemic compared to the same period in 2019, which is the period before the pandemic. Exports decreased from 99.1 billion BIF in the second quarter in 2019 to 30.8 billion BIF in the second quarter of 2020 due to COVID-19, translating to a decline of 68.92% for exports. Restrictions on movement of people and goods have also impacted on the imports of Burundi. Imports increased from 368.5 billion BIF in the second quarter in 2019 to 416.7 billion BIF, translating to a growth of 13.08%. However, imports are estimated at 433.00 billion BIF in the first quarter of 2020 from 436 billion BIF of last quarter of 2019, meaning a slight decrease of 0.6% from the first quarter to the second quarter. The results indicate that there is a very considerable drop in the value of goods that pass through these different modes of transport. For example, there was a 73.41% drop in value of goods passing through Melchior Ndadaye International Airport. The percentage drop registered by other transport companies are: Balloré Logistics (46.75%), Maritime Rail and Port Authority (54.89%), Volcano Transport Agency (83.97%) and Memento Transport Agency (84.84%). The results of the survey indicate that there was a very considerable drop in number of passengers using the different modes of transport. The percentage drop in passengers travelling through Melchior Ndadaye International Airport, Volcano transport and Memento transport were 99.99%, 78.74% and 77.55%, respectively. In the health sector, the results indicate that the weekly positive case rate has been consistently very low. This low rate could be explained by the decline of the voluntary COVID-19 test in the designated places by government. On average, the weekly testing rate since the beginning of the pandemic in Burundi is 2 per 10,000 inhabitants (per week); this is very low compared to the average threshold of at least 10 tests per week in the WHO African region. In addition, there has been a gradual decline in the screening rate. The overall screening rate estimated at 70 tests per 10,000 inhabitants remains low, with an average number of tests of about 290 per day since the beginning of the pandemic in Burundi. From the survey results, the study recommends provision of financial incentives and subsidies for transport, storage and cold chain costs for essential products; to provide non-contact food delivery mechanisms for high-risk or infected populations; prioritization of essential transport needs in supply chains; and periodic update priorities based on current risk assessments, for example at the height of an outbreak. On the transport and health sectors, transport of medical supplies and food is to be prioritized and given the "green light" (fewer stops, controls, tolls) when crossing administrative borders. Emergency transport for essential needs, fuel, food, medical supplies and equipment need to well planned, and planning for rationing of essential food and fuel. Information and awareness actions of the population on preventive measures should be reinforced, in particular on the effective implementation of barrier measures. There is need to build capacity in human resources, and ensure cross-border surveillance.
Approximating the First order Effects of AfCFTA Tariff Reductions on CO2 Emissions
(AERC, 2024) De Melo, Jaime; Solleder, Jean-Marc
This paper explores the likely effects of tariff reductions under the African Continental Free Trade Area (AfCFTA) on carbon dioxide (CO2) emissions. It proceeds in three steps, with all estimates relying on the most recent, i.e. 2015, disaggregated data on emissions intensities. First, we show that, across African countries, CO2 intensities are higher in the more protected sectors, so that, at unchanged emission intensities, tariff elimination on intra-African trade during AfCFTA should favour CO2 intensive activities. Second, for the EAC and ECOWAS, the two RECs for which AfCFTA-compliant tariff reduction schedules are available, we estimate that removing tariffs on goods in the tariff elimination list would reduce progressively the carbon intensity of trade for these goods. The estimates suggest that an increase of 1% of the emission intensity is associated with a decrease of about 0.09% of the MFN tariff. Third, to see which effect will dominate, we estimate partial equilibrium effects of ‘full’ tariff elimination under AfCFTA and find that intra-African trade would increase by 32% and emissions embedded in trade by 24%, implying a CO2 elasticity to trade of 0.74, thus, reducing the CO2 emission intensity of Intra-African trade.
Assessing Export Supply Constraints: Methodology, Data, Measurement
(AERC, 2007-06-07) Tyler Biggs
Assessing the Drivers of Firm Participation in Global Value Chains: Empirical Evidence from Tanzania
(AERC, 2024-11-27) Kweka, Josaphat; Sooi, Fadhili
Using firm-level data from the recently available Tanzania Enterprise Survey (TES) 2022, this paper provides empirical analysis of drivers of firm participation in global value chains (GVCs), and implication of such participation on firm performance in Tanzania. The findings show that, firm size, awareness of external markets, investment in Research and Development (RandD), and engagement in innovation and technology upgrading are significant drivers of firm participation in GVCs for Tanzania. The paper confirms the widely acclaimed conclusions in the literature that firm participation in GVCs is positively and significantly associated with higher firm performance. However, despite the positive role of GVC, the extent of firm participation appears low for Tanzania, mainly on account of low level of capacity of often small and informal firms. The findings underscore the need to increase government's efforts to improve environment and incentive for small firms to formalize and grow. The results are also supportive of the need for policy to promote regional integration, investment in RandD, innovation, and technology upgrading.
Assessing the Role of Innovation in Cameroonian Firms’ Participation in Global Value Chains
(AERC, 2024-11-27) Malah-Kuete, Flora Yselle; Avom, Desire
This study aims to contribute to the empirical literature on the drivers of Cameroonian firms’ participation in Global Value Chains (GVCs) by examining the role of innovation. We use logistic regressions and matching techniques to analyse pooled cross-sectional data from the 2008 and 2016 Cameroonian Enterprise Censuses. Our findings indicate that investments in innovation, particularly in machinery and equipment, as well as software and technology, significantly enhance the probability of Cameroonian firms participating in GVCs through subsidiary ties with foreign firms. Building upon these results, we discuss the implications of promoting innovation and making strategic investments in critical sectors of the economy to facilitate greater engagement of local firms in GVCs.
Assessing the Systemic Importance of Banks in Rwanda using Portfolio Similarity and Clustering Methods
(African Economic Research Consortium, 2021-11-18) Ntirushwamaboko, Dominique; Mugenzi, Patrick; Nyalihama, Christian
This paper assesses the similarity among Rwandan banks, especially looking at how the assets side and lending portfolios have been evolving, and their implications on systemic risks in the Rwandan banking system. The aim was to gauge a systemic risk that might originate from a cluster(s) of small banks, which is not well captured by traditional means of using the size or interconnectedness in network analysis. We used a variety of empirical approaches to tackle this aspect in the context of Rwanda, with data from 2016 to 2019. Our key findings suggest that the general measure of the portfolio similarity between individual banks is quite stable over time and driven predominantly by big banks. Conversely, we noted that some medium-sized banks have been consistently similar in terms of the loan portfolio and associated risks in the last four years, and therefore they can be exposed to common risks with impactful consequences, as the cluster is more sizeable than banks have taken individually
An assessment of the Impact of China s Investments in Sudan
(AERC, 2010-04-27) Kabbashi M. Suliman; Ahmed A. A. Badawi
Assurance Maladie et État de Santé au Kenya : Vers une Couverture Sanitaire Universelle
(African Economic Research Consortium, 2022-07) Mugo, Mercy
Le troisième objectif de développement durable des Nations unies, qui vise à garantir une vie saine et à promouvoir le bien-être de tous à tout âge, souligne la priorité de la santé dans le programme de développement international. La réalisation de cet objectif au niveau national est toutefois entravée par les problèmes de financement des soins de santé. La plupart des pays d'Afrique subsaharienne, y compris le Kenya, sont confrontés à une charge de morbidité élevée et à des ressources financières insuffisantes pour financer la fourniture de services de santé. C'est pourquoi le financement des soins de santé par le biais de l'assurance maladie gagne en popularité dans les pays en développement dans leur quête d'une couverture sanitaire universelle. Cependant, il y a peu de preuves de l'impact de l'assurance maladie sur l'état de santé de la population au Kenya. Cette étude a cherché à comprendre et à analyser les liens de causalité entre le statut d'assurance maladie et les résultats de santé parmi les populations assurées et non assurées au Kenya. L'approche d'estimation adoptée est la méthode IV 2SLS et la méthode de la fonction de contrôle afin de tenir compte des biais d'endogénéité et d'hétérogénéité présents dans les estimateurs MCO. En outre, les techniques d'estimation probit et logit ont été adoptées pour analyser les déterminants de l'adhésion à l'assurance maladie. La principale conclusion est que l'assurance maladie réduit la mortalité, améliorant ainsi l'état de santé de la population kenyane. Et ce, malgré le faible taux d'adhésion à l'assurance, notamment à l'assurance maladie privée. L'étude recommande de promouvoir la couverture de l'assurance maladie par la restructuration des régimes fragmentés du NHIF en consolidant les différents régimes d'assurance afin de servir les différents groupes de population de manière plus efficace et plus équitable. Une autre recommandation est d'encourager l'adhésion volontaire privée et publique à l'assurance maladie en légiférant et en concevant des régimes de prestations complets et attrayants destinés aux acteurs du secteur informel ayant la capacité de payer. Le gouvernement devrait toutefois continuer à offrir des subventions sous forme d'assurance maladie aux populations marginalisées, vulnérables et pauvres.
Asymmetric Response of Poverty to Growth and Inequality in South Africa: Implications for Current and Future Shocks
(African Economic Research Consortium, 2024-04-10) Ngepah, Nicholas
This study investigates the effect of economic growth on poverty reduction, given inequality in South Africa. It focuses on whether the poor suffer more losses of welfare during economic recessions and depressions than they gain during expansions, and the factors that can assist the poor to stay afloat during times of economic shocks. Individuals in micro data set are matches with municipality-level data and in binary, truncated, panel, instrumental variables, and quantile regression techniques to estimate poverty and welfare effects of positive and negative economic growth rates. The study finds that, while economic growth reduces poverty, it is not enough to compensate for the poverty-raising effects of inequality. Moreover, economic decline raises poverty, but economic prosperity more than compensates by a higher magnitude. The study also reveals that, social grants and free health care and education policies have limited effects on poverty reduction during economic downturns. The findings call for policy measures that reduce inequality and promote economic growth to help cushion the poor during times of significant economic decline. Additionally, programmes that provide good education up to tertiary level and access to the labour market are crucial for sustaining poverty reduction efforts in South Africa.
Autonomisation des Femmes et Dépenses Sociales des Ménages dans les États Fragiles : Le Cas du Tchad
(2022-03) KINDA, Aristide MABALI, Somlanare Romuald; MALLAYE, Douzounet
La fragilité de l'État au Tchad a été étroitement associée à l'insécurité due à un long cycle de conflits violents et à des sécheresses récurrentes, entraînant un faible développement social. Dans cet article, nous avons étudié l'impact de l'autonomisation des femmes sur les dépenses sociales des ménages en utilisant les données de l'enquête tchadienne sur la consommation des ménages et le secteur informel réalisée en 2011, et de l'appariement par score de propension comme modèle empirique. Les dépenses sociales utilisées comme variables de résultat sont l'éducation, la santé et l'alimentation. Nous constatons que les dépenses sociales sont plus élevées lorsqu'un ménage est dirigé par une femme que lorsqu'il est dirigé par un homme, à caractéristiques observées similaires. En particulier, les différences entre les ménages dirigés par une femme et ceux dirigés par un homme sont plus élevées pour les dépenses alimentaires après contrôle des caractéristiques observées (covariables). Les résultats montrent également qu'il existe un effet de composition dans les dépenses des ménages. Alors que les ménages dirigés par des femmes dépensent leurs revenus dans les secteurs sociaux (santé, alimentation et éducation), ceux dirigés par des hommes dépensent pour des biens dits de désir (alcool et loisirs). Ces résultats se maintiennent lorsque nous contrôlons à la fois la spécification du modèle et l'hypothèse de soutien commun. Nos résultats fournissent aux décideurs des outils de politique économique pour promouvoir le développement social en mettant l'accent sur l'autonomisation des femmes.
Bank Competition, Digital Finance, and Gender Differences in Financial Inclusion in East Africa
(African Economic Research Consortium, 2024-08-15) Wamalwa, Peter; Tiriongo, Samuel; Mulindi, Hillary
Competition in the banking sector is a catalyst for innovation and the adoption of digital channels to provide financial services. The low cost of providing financial services through digital channels has been leveraged on by banks to extend services to the underserved and the excluded. This paper deploys panel regressions and binary response models to analyse the impact of competition in the banking sector on penetration and utilization of digital financial services across gender in Kenya, Uganda, and Tanzania, controlling for competition in the telecommunications sector. The latest wave of Finscope Survey (2017) and financial inclusion household survey (FinAccess, 2021) datasets are used. The analysis shows that males have a higher probability of using digital financial services than females. Females in rural areas, engaged in the agriculture, services, trade and casual labour are less likely to use digital financial services compared to their male counterparts. Competition in the banking industry increases utilization of digital financial services due to banks leveraging on innovation to provide relevant services at low cost. Therefore, a policy approach that considers gender differences and fosters competition in banking and mobile telecommunication industries will encourage providers of financial services providers to effectively leverage on mobile money and digital finance to close gender gaps in the utilization of digital financial services in the EAC region.

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