Economies In sub-Saharan Africa Research Articles

Towards Pragmatic Economic Policies: Economic Transformation and Industrialization for Revival of Zimbabwe in the New Dispensation Era

Whilst literature has many monetary and economic policies that were enacted before and after the dawn of the New Dispensation in Zimbabwe the country still faces a downward trend in terms of economic recovery. This study reviews the various policies put in place by the government and their impact on socio-economic development of Zimbabwe. A review of Zimbabwe’s economic history shows that the country dropped from being one of the best economies in Sub-Saharan Africa and now ailing and characterised by hyperinflation, agricultural challenges, corruption, very high tax regime, huge domestic and foreign debts, increase in consumer prices and being a chief net importer of most goods or services. The study was underpinned by a case study survey from Singapore’s revival with both qualitative and quantitative instruments used. The study found out that even though the land reform had an impact on economic performance, corruption, party-power politics and absence of an economic institute eroded any necessary contribution to economic transformation and industrialization in Zimbabwe. The study also revealed that the bilateral and multi-lateral agreements that were enacted in the dawn of the new dispensation have not yielded the desired economic revival transformations. The study recommended establishment of an economic institute to direct policy as well as removal of unethical practices in both public and private sectors so as to ensure financial and economic discipline.

Investigating the dynamic relationships between credit supply, economic growth, and the environment: empirical evidence of sub-regional economies in Sub-Saharan Africa.

Sub-Saharan Africa (SSA) is considered the most vulnerable to challenges emanating from climate changes. A number of factors notably accelerated changes in growth influence SSA environment. Linking financial sector within growth and environmental outcomes has been the focus of policy makers and researchers. This study investigated the dynamic relationships between credit supply, economic growth, and the environment from the perspectives of the four sub-regional economies (Central, East, Southern, and West African regions) in SSA over the period 1990-2018. In addition, the study tested Environmental Kuznets Curve hypothesis across sub-regions. We employed panel vector autoregressive (panel VAR) model in a generalized method of moment framework to investigate the topic. The panel VAR results revealed that (i) economic growth negatively influence on carbon emissions of Central African countries but not in the East, Southern and West African sub-regions, (ii) credit supply had significantly positive influence on carbon emissions and economic growth of Central and East African sub-regions but negative influence on carbon emissions and economic growth West African sub-regions in SSA, and (iii) carbon emissions had significantly negatively influence on credit supply of East and West African sub-regions. The granger causality results revealed bidirectional causal links between credit supply and carbon emissions, economic growth, and credit supply in the Central and East African sub-regions, while most of the relationships were unidirectional. The impulse response function revealed that the impact of one variable on another vary throughout the periods and across sub-regions. Similarly, the elasticity of the variables to each other varies across sub-regions over the period studied. EKC hypothesis was validated in East African sub-region but was rejected in Central (u-shape relationship), Southern, and West African sub-regional economies indicating variations in growth and environmental outcomes among the sub-regional economies. Specific sub-regional policy recommendations are discussed.

Innovation, institutions and economic growth in sub-Saharan Africa – an IV estimation of a panel threshold model

PurposeThe significant impact of innovation in stimulating economic growth cannot be overemphasized, more importantly from policy perspective. For this reason, the relationship between innovation and economic growth in developing economies such as the ones in Africa has remained topical. Yet, innovation as a concept is multi-dimensional and cannot be measured by just one single variable. With hindsight of the traditional measures of innovation in literature, we augment it with the number of scientific journals published in the region to enrich this discourse.Design/methodology/approachWe focus on an approach that explores innovation policy qualitatively from various policy documents of selected countries in the region from three policy perspectives (i.e. institutional framework, financing and diffusion and interaction). We further investigate whether innovation as perceived differently is important for economic growth in 25 economies in sub-Saharan Africa over the period 1990–2016. Instrumental variable estimation of a threshold regression is used to capture the contributions of innovation as a multi-dimensional concept on economic growth, while dealing with endogeneity between the regressors and error term.FindingsThe results from both traditional panel regressions and IV panel threshold regressions show a positive relationship between innovation and economic growth, although the impact seems negligible. Institutional quality dampens innovation among low-regime economies, and the relation is persistent regardless of when the focus is on aggregate or decomposed institutional factors. The impact of innovation on economic growth in most regressions is robust to different dimensions of innovation. Yet, the coefficients of the innovation variables in the two regimes are quite dissimilar. While most countries in the region have offered financial support in the form of budgetary allocations to strengthen institutions, barriers to the design and implementation of innovation policies may be responsible for the sluggish contribution of innovation to the growth pattern of the region.Originality/valueSegregating economies of Africa into two distinct regimes based on a threshold of investment in education as a share of GDP in order to understand the relationship between innovation and economic growth is quite novel. This lends credence to the fact that innovation as a multifaceted concept does not take place by chance – it is carefully planned. We have enriched the discourse of innovation and thus helped in deepening understanding on this contentious subject.

Landscapes of opportunity: patterns of young people’s engagement with the rural economy in sub-Saharan Africa

While much has been said in recent years about the importance of engaging rural youth in sub-Saharan Africa’s development, the factual data about how African youth currently engage in rural economies remain sparse. We use recent nationally representative household survey data from six countries to describe the patterns of such engagement. We find that young people participate in agriculture at similar rates to older people. However, participation in non-farm wage employment and business activity changes with age, peaking in the 30s. The likelihood of reporting no activity is greatest for people in their 20s. In more remote places, people leave school earlier and are less likely to engage in the non-farm sector, compared with people in more accessible places. We also find evidence that the non-farm economy is more diversified in relatively more accessible places, offering a larger set of options for economic engagement. We show that ‘landscapes of opportunity’ , defined by economic remoteness and agricultural potential, are an important way of assessing the choices available to young rural people. A key conclusion is that efforts to develop a ‘youth lens’ for rural development should not abandon the mainstays of rural investment strategies such as infrastructure, education, and agricultural R&D.

Dynamics of population, urban agglomeration, and economic growths in Sub‐Saharan Africa: Evidence from panel data

This study analyses population, urban agglomeration (UAG), and economic growths dynamics in Sub-Saharan Africa (SSA) using the World Bank panel data ranging from 1970 to 2019. The study utilized a panel fixed effect (FE) model after verifying the suitability of the model using a Hausman test. The estimation result from the panel FE model reveals remarkable findings which conform to some extent, the theoretical a priori expectations. The result shows that growth in rural as well as urban population growth and total trade (TRD) have negative relationships with UAG. On the other hand, gross domestic product (GDP, a better proxy for income) and foreign direct investment (FDI) have a positive association with UAG in the economies of SSA thereby validating the existence of the Williamson–Kuznets hypothesis. Based on the findings, it is advised amongst other policy recommendations that the governments of the Sub-Saharan African countries should pursue inward-looking policies targeted toward encouraging the local processing of agricultural raw materials—possibly to finished products to boost foreign exchange earnings through trade in other to engender sustainability in both the economic growth and UAG in the region.

Effects of Pandemic on Economy in Sub-Saharan Africa: A Case of Coronavirus (COVID-19)

The Outbreak of the COVID-19 had presented an unprecedented threat to the global economy. The contemporary disease is spreading exponentially across the continent of Africa and the pandemic has been felt in all the countries of Africa. In this study we examined the effects of the pandemic on economy in Sub-Saharan Africa (SSA) using the COVID-19 as a case study, we adopted the envisage model in explaining the interaction between economic agents and how the outbreak of the COVID-19 has affected the relationships between them. We used probit regression model to analysis the effects of COVID-19 on the economic measures, we found unemployment rate and oil prices statistically significant at 5% and 10% respectively. All the price value are measured in US$. The study concluded that COVID-19 has affected the SSA economy negatively and we proffer that government should cut down their expenditure especially the salaries of political officers and appointees, however we accounted for the shortcomings of this paper which lies in the erratic and the unstable nature of COVID-19 data.

Effects of environmental quality on agricultural productivity in sub Saharan African countries: A second generation panel based empirical assessment

Agriculture is the backbone of most sub-Saharan Africa economies, but environmental quality, so vital for agricultural production, is being challenged by climate change. However, most studies measure environmental quality using one variable, CO2 emissions. In this study, a more enhanced measure of environmental quality, which incorporates three indicators (per capita CO2 emissions, energy intensity and adjusted national savings), is used. A set of second-generation panel data techniques that address some potentially crucial panel data estimation issues such as cross sectional dependence and cross country heterogeneity, are employed. Data on 24 sub-Saharan Africa countries over the period 1984 to 2016 were analysed. The impact on agricultural productivity of two of the three indicators of environmental quality, namely CO2 emissions and adjusted national savings, has expected signs, negative and positive, respectively. Estimates using different methods suggest a detrimental effect of per capita CO2 emissions on agricultural productivity in sub-Saharan Africa. A 1% rise in per capita CO2 emissions induces a 0.04% to 0.06% decline in agricultural productivity. Deteriorating environment quality as a result of climate change is slowly but negatively impacting sub-Saharan Africa agricultural productivity.

Entrepreneurship and innovation in Africa's artisanal and small-scale mining sector: Developments and trajectories

This paper explores how artisanal and small-scale mining (ASM) – low-tech, labour-intensive mineral processing and extraction – has evolved in sub-Saharan Africa in recent decades. The analysis focuses specifically on the types of entrepreneurs who pursue work at, and innovation that occurs in, the region's ASM sites, using ideas debated heavily in the management literature, as well as complementary theories and concepts from other disciplines, including development studies, anthropology and human geography. Drawing on findings from ongoing research in Sierra Leone and Liberia, the locations of two of the largest and most complex ASM economies in sub-Saharan Africa, it is argued that legal and policy frameworks implemented for the sector are not aligned with the needs and capabilities of operators, and have therefore impeded efforts to formalize activities. In both countries, these frameworks have created and subsequently galvanized the boundary between two very different ‘worlds’: on the one hand, that of a burgeoning semi-formal artisanal group with limited capacity to mechanize, and on the other hand, that of a small number of individuals who have managed to overcome crippling financial barriers to secure titles to mine using more advanced technology.

Leveraging Africa's preparedness towards the next phase of the COVID-19 pandemic

Leveraging Africa's preparedness towards the next phase of the COVID-19 pandemic

‘People are willing to fight to the end’. Romanticising the ‘moral’ in moral economies of irrigation

This article is about the continued salience of a particular understanding of moral economy in sub-Saharan Africa. Despite the fact that a significant body of anthropological theory argues against simplified binaries of market and moral economies, such binaries persist. These either romanticise or vilify moral economies and exist in both policy and academic contexts. Thus, moral economies are said to drive corruption or shape anti-market cultural stances. Meanwhile, a romantic fantasy of a non-capitalist rural economy oriented by morality rather than economic rationality continues to animate areas of development policy and to direct funding. My argument is not with the concept of moral economy itself, but with how it is marshalled in support of both romantic and sometimes negatively essentialised conceptions of people and places. The article sets out the case for the persistence of these ideas, focusing on their application to irrigation development and the problems with this. I then use an example from southern Malawi to illustrate how moral ideas of fairness and reciprocity interplay with processes of differentiation in access to (and exclusion from) land and labour and influence how people manage scarce resources. Whilst there are moral discourses and a mutual embeddedness of the moral and economic, these reflect a range of ethically informed positions which are influenced by social position and power. However, this emic perspective is largely absent from the more romanticised models. I conclude by reflecting on the politics of their persistence.

Trade and FDI Thresholds of CO <sub>2</sub> emissions for a Green Economy in Sub-Saharan Africa

This research focuses on assessing how improving openness influences CO2 emissions in Sub-Saharan Africa. It is based on 49 countries in SSA for the period 2000-2018 divided into: (i) 44 countries in SSA for the period 2000-2012; and (ii) 49 countries for the period 2006-2018. Openness is measured in terms of trade and foreign direct investment (FDI) inflows. The empirical evidence is based on the Generalised Method of Moments. The following main findings are established. First, enhancing trade openness has a net positive impact on CO2 emissions, while increasing FDI has a net negative impact. Second, the relationship between CO2 emissions and trade is a Kuznets shape, while the nexus between CO2 emissions and FDI inflows is a U-shape. Third, a minimum trade openness (imports plus exports) threshold of 100 (% of GDP) and 200 (% of GDP) is beneficial in promoting a green economy for the first and second sample, respectively. Fourth, FDI is beneficial for the green economy below critical masses of 28.571 of Net FDI inflows (% of GDP) and 33.333 of net FDI inflows (% of GDP) for first and second samples, respectively. It follows from findings that while FDI can be effectively managed to reduce CO2 emissions, this may not be the case with trade openness because the corresponding thresholds for trade openness are closer to the maximum limit. This study complements the extant literature by providing critical masses of Trade and FDI that are relevant in promoting the green economy in Sub-Saharan Africa.

Financial development and health care expenditure in Sub Saharan Africa Countries

The study aimed to examine the relationship between financial development and health care expenditure in 46 Sub Saharan Africa (SSA) countries. The paper argues that health care expenditure is a key transmission mechanism through which financial development influences better health outcomes. The study used random and fixed effects as well as instrumental variable estimation methods using data from 1995 to 2014. The results showed that financial development leads to increased health care expenditure. In terms of policy implications, the findings underscore the need to foster financial development in SSA economies to assist with domestic resource mobilisation to finance health care expenditure.

Трансформаційні процеси в контексті сталого розвитку країн Субсахарної зони

The article analyzes the state of the economy of Sub-Saharan Africa. The paper analyzes the implementation of the sustainable development program "Sustainable Development Goals" by the countries of the region, which was launched in 2015 and is planned until 2030. The analysis identified the biggest development problems in Sub-Saharan Africa as poverty (more than a third of all employed people in Sub-Saharan Africa live on less than $ 1.9 a day), lack of quality education (more than a quarter of the world's illiterate people). live in Sub-Saharan Africa) and the lack of secure housing for a large section of the population (about a third of the region's population lives in slums or informal settlements). The article analyzes the indicators of the region in terms of the level of human development. The article focuses on finding ways to solve social problems in the region. The article offers an analysis of the impact of the level of education on the transformation processes of the countries of the Sub-Saharan zone.

Foreign aid and economic growth in sub-Saharan Africa

PurposeThe purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the sub-Saharan Africa (SSA) region from 1993 to 2017.Design/methodology/approachA sample of 45 SSA countries for the period 1993–2017 is considered for this study. The study uses various econometrics tools such as Pedroni and Kao’s cointegration test, Johansen-Fisher Panel cointegration test, FMOLS and PDOLS in order to ascertain the long-run and short-run dynamics among the variables under consideration.FindingsThe empirical results find that long-run and short-run relationships exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the SSA economies. The authors also find unidirectional causality running from foreign aid to economic growth. The policymakers in these countries are well-advised to implement suitable policy measures to build on the growth momentum created by foreign aid inflows.Originality/valueThe study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in the SSA region. Taking into account the diversity of level of growth experienced by the 45 countries in the region, the study uses an appropriate regression technique, i.e., panel dynamic OLS whose results are robust. The finding is also supported by the Granger-causality test and robust cointegration techniques.

Urban sanitation in Nigeria: the past, current and future status of access, policies and institutions.

Though rated among the largest economies in sub-Saharan Africa, Nigeria is currently grappling with enormous socio-economic challenges such as high poverty rate, power and water supply shortages, large-scale unemployment ratio, economic recession and underperforming agricultural sector. Judging by the scale of urgent political and economic importance, urban sanitation definitely ranks low among the government's priorities. No wonder political slogans and manifestos of political parties feature provision of water supply while sanitation is conspicuously usually omitted. This is suggestive of the opinion that having not critically understood the status, challenges and opportunities associated with sanitation in the country's urban areas might be partly responsible for this. Thus, the current work presents a detailed review of the past, current and future status of urban sanitation in Nigeria in terms of access coverage, policies, institutions and future challenges and opportunities. The past status was difficult to evaluate because of the absence of data and unclear definitions of the term 'sanitation'. The current status shows among other findings that water supply issues receive domineering attention than sanitation, mainly due to merging together of discussions, policies and implementation of the two issues together. In cases where sanitation crops up in the agenda, rural areas are favored more than the urban areas. This pattern is also common in the literature. But the future of urban sanitation in Nigeria is double-edged depending on actions or inactions of the government and other stakeholders. The study further makes recommendations for - balanced and sustainable urban development planning, restructuring of land and housing policies and creation of enabling market environment that could trigger a viable sanitation industry - as the way forward.

Electronic wallet technology and the enabling environment of smallholder farmers in Nigeria

PurposeThe purpose of this paper is to critically examine the impact of a growth enhancement support scheme (GESS) on the enabling environment of smallholder farmers in sub-Saharan Africa. The main aim is to investigate the impact of the GESS on access to rural farm credit and the transport cost of smallholder farmers in the agricultural transformation agenda (ATA) in Nigeria.Design/methodology/approachThis paper adopts a survey research technique, aimed at gathering information from a representative sample of the population, as it is essentially cross-sectional, describing and interpreting the current situation. A total of 1,200 were sampled across the six geopolitical zones of Nigeria.FindingsThe results from the use of a double-hurdle model indicate that the GESS has a significant impact on farmers’ access to credit, but does not significantly impact on rural farm transport cost, which subsequently influences the price of food in the country.Practical implicationsThis implies that if the Federal Government of Nigeria is to work toward an ideal agricultural transformation agenda, transport networks should be closely aligned with the GESS priorities to provide connectivity to rural areas that provide most of the country’s agricultural output.Originality/valueThis research adds to the literature on the agricultural and rural development debate in developing countries. It concludes that embracing a rural finance and transportation infrastructure should form the foundation of the ATA in Nigeria, which, in turn, would provide a conducive environment for a more widespread rural economy in sub-Saharan Africa.

Rural-Urban Population Growth, Economic Growth and Urban Agglomeration in Sub-Saharan Africa: What Does Williamson-Kuznets Hypothesis Say?

The study analyses the dynamic effect of rural-urban relationship, economic growth and urban agglomeration in sub-Saharan Africa with a view of testing the validity of the Williamson-Kuznets hypothesis. The study utilized panel data analysis with pooled ordinary least squares with secondary annual time series data ranging from 1970 to 2017 and sourced from the World Bank database. The study equally employed both homogeneous and heterogeneous panel unit root tests to verify the stationarity of the panel data variables before estimating the model. However, the estimation result revealed that both rural and urban population growth has a negative impact as well as a statistically significant result on urban agglomeration in sub-Saharan Africa. The result equally showed a negative impact but statistically insignificant relationship between urban agglomeration and foreign direct investment. Also, a statistically significant and positive relationship was recorded between economic growth and urban agglomeration, thereby validating the Williamson-Kuznets hypothesis in sub-Saharan Africa. Based on the findings, the study among other numerous policy recommendations calls for a critical review of policies in the economies of sub-Saharan Africa to ensure effective utilization of the foreign direct investment net inflows towards initiating more and robust development projects both in the cities and rural areas, as well as expand the provisions of the basic infrastructural facilities and development projects. This would aim to curtail any perceived and unwarranted influx to the urban areas by the rural dwellers, hence they do not contribute significantly to growth in urban agglomeration.

Urbanization-globalization-CO2 emissions nexus revisited: empirical evidence from South Africa

The environmental effects of urbanization and globalization are still subject to debate among scholars. South Africa is the most globalized, most urbanized and the most carbon-intensive economy in Sub Saharan Africa (SSA) region. Taking this into cognizance, this study examines the effects of urbanization and globalization on CO2 emissions for South Africa using time series annual data for the period 1980–2017. Zivot and Andrews single and Bai and Perron multiple structural break unit root tests are employed to assess if all the series are stationary. This procedure follows ARDL cointegration test to check the presence of a long-run association among variables. Having been confirmed about such a cointegrating relation, ARDL short-run and long run coefficients indicate that urbanization induces CO2 emissions while only long-run significant emissions effect of globalization was noted. Toda-Yamamoto non-causality test reports a bi-directional causal link between urbanization and CO2 emissions. No causal link is observed between globalization and CO2 emissions. Variance decomposition results do not rule out these effects in future. Policy implications are discussed.

Issues and Challenges for the Development of the Knowledge Economy in Sub-Saharan Africa

Africa and particularly Sub-Saharan Africa has the lowest tertiary gross enrolment ratio globally, significantly lower than South Asia. This low enrolment is happening at the time when the population of the region is growing at unprecedented rates creating a population age structure dominated by young people under the age of 25 years. Unfortunately, the high population growth rate is not corresponding to the level of adequate human capital required for economic growth. For the region to gain from its youthful population, there must be concerted efforts to enhance productivity through education and skills development. In other words, governments in the region must ensure that the growth in the youthful population must be such that they are capable of contributing to the economy through productive jobs. While higher education institutions in the continent, continue to fall short in number of students they enroll and the quality and relevance of training they offer. This paper argues that both the number, length and quality of schooling in Africa is responsible for low economic growth. The paper proposes that unless investment in higher education is enhanced, countries in the Sub Saharan Africa will not attain requisite economic growth commanded by knowledge in science, technology and innovation. The paper recommends that since higher education generally has a greater effect on development outcomes, there is a need for develop policies and strategies to ensure investment in higher education is given high priority. Keywords: Knowledge economy, Sab-Saharan Africa, higher education DOI : 10.7176/JEP/10-17-06 Publication date :June 30 th 2019

Investigating the Banking Sector Development Transmission Mechanism of Financial Development to Growth: Evidence from Sub-Saharan Africa (SSA)

The search for financial development’s transmission channel to growth has always been updated in the literature. While there has not been a consensus on this matter, empirical findings on finance-growth nexus have been ambiguous. Relying on this, we investigate its bank development transmission channel to growth in a panel of twenty-eight Sub-Saharan Africa (SSA) countries from 2000-2016. Having adopted the augmented Solow (1956) and Mankiw et al. (1992) growth model, the fixed effect and dynamic system GMM estimation techniques reveals a negative non-significant and positive significant direct impact of finance on growth in the static and dynamic models respectively, thereby suggesting institutional (dynamic) factors that can spur finance. Secondly, the non-linear effects of bank development had a direct positive significant impact on growth and its marginal-effects before and after the financial crisis of 2007/08 were relatively stable. This implies that banks in SSA were relatively stable in financial intermediation; therefore SSA countries need to reinforce and improve its banking policy through FinTechs adoption. Finally, the interaction between bank development and financial development significantly increase steady-state growth. This implies that SSA economies can promote steady-state growth from financial development only when a threshold of bank development is reached.