African Economies Research Articles

Does the Long-Term Developmental Effect of Mergers and Acquisitions and Greenfield Investment Differ in Host African Economies?

The choice between greenfield investment (GFIELDI) and mergers and acquisitions (M&As) is rarely straightforward for host developing countries (DCs), as this subject has not been thoroughly researched. Thus, this study fills this gap in the literature. It compares the overall long-term dynamic effect of GFIELDI and M&As on host African countries (ACs) from 1990 to 2020. The study, in particular, adopted a rigorous analytical framework that optimizes the welfare-decreasing and welfare-increasing effects of these two main FDI entry modes in the countries under study. The study used panel data from 15 African countries and adopted the PMG/ARDL approach. Therefore, the empirical findings of this study surprisingly contradict not only the preferred GFIELDI entry option of governments and development partners but also nearly all of the existing empirical literature in other developing regions. The results specifically demonstrate that while M&As outperform the GFIELDI in terms of their size effects, they both have net positive long-term dynamic effects on real GDP per capita in the studied countries. In practical terms, a 1% increase in GFIELDI has, on average, a weaker positive long-term dynamic effect on real GDP per capita than an equivalent investment in M&As. Except for Malawi and Botswana, evidence shows that the speed of adjustment parameter is consistently negative and statistically significant. South Africa (SA) has the lowest adjustment speed rate (=-0.157), while Morocco has the highest (=-1.554). Our findings have important policy implications, which are outlined in the conclusion of this study.

Crossbreeding and its implication for small-scale animal agriculture in Africa: Outcomes, both positive and negative, and future prospects

<p>African animal genetic resources are diverse and have been the subject of crossbreeding for decades to improve local livestock and poultry populations. However, the literature on crossbreeding performance has been inconsistent, with many projects failing due to various reasons. This has led to mixed support and criticism for crossbreeding in small-scale animal agriculture. The review examines the achievements, problems, and future prospects for livestock and poultry genetic improvement through crossbreeding in Africa’s small-scale animal agriculture. Community-based Breeding Practices (CBBP) can be seen as a community livestock development strategy that mobilizes local animal genetic resources and boosts smallholder livestock producers’ ability to collaborate in resource-scarce communities. Genome sequencing is seen as the future cornerstone of promoting crossbreeding in Africa, but it should be based on consideration of the socioeconomic context of small-scale animal husbandry and local livestock production conditions. Smallholder farmers, who are the major custodians of local animal biodiversity, have faced challenges such as genotype and environmental interaction, lack of funding, poor laws, and lack of farmer participation. In conclusion, the review highlights the importance of phenomics and genomic prediction in improving animal genetic resources in Africa, but it also emphasizes the need for further research and development in this area. The study suggests that modern breeding technologies (genomics and phenomics) and training of smallholder livestock farmers in improved animal husbandry management practices can be used to enhance food and nutrition security for African rural households. This review examines the effects of crossbreeding through the decades on small-scale livestock farming in Africa, including positive and negative outcomes as well as future implications.<strong></strong></p>

The creative economy in Africa: The focus and scope of the African Journal of Creative Economy

o abstract available.

The implications of the Russian invasion of Ukraine for African economies: A CGE analysis for Ethiopia

The Russian invasion of Ukraine contributed to soaring world market prices of many commodities with severe repercussions for many African countries. This study examines the implications of the 2022 world market price increases for wheat, fuels, and fertilizers for Ethiopia. Using a computable general equilibrium (CGE) model, the study shows negative impacts on GDP, wage rates, and households’ consumption in the country. The effects of fertilizer and petroleum price changes are notable and unequal across production sectors. With increasing import prices of inorganic fertilizers, crop growing activities substitute inorganic fertilizers with animal manure reducing the use of manure as cooking fuel. The effects on urban households are more severe than the effects on rural households. Policies supporting biofuels and biogas digesters may dampen the adverse effects stemming from petroleum price surges.

Methods and Tools Used for Biosecurity Assessment in Livestock Farms in Africa: A Scoping Review

Farm biosecurity has gained increasing attention worldwide during the last decades because of its role in reducing the occurrence of diseases and improving animal performance. Recently, recommendations to reinforce the concept of farm biosecurity in lower- and middle-income countries have been advised. Therefore, this review aims to provide a comprehensive description of the methods and tools used to assess biosecurity compliance in livestock farms in Africa and formulate recommendations. The present review followed the Preferred Reporting Items for Systematic Reviews and Meta-Analysis extension for scoping reviews guidelines. Peer-reviewed studies reporting biosecurity assessment in poultry, cattle, pig, goat, or sheep farms in Africa were included. Five databases were searched with no date restrictions. A total of 41 studies across 17 countries were finally selected. Selected studies were all published after 2008, and an increasing trend in the number of papers published per year was noticed. In total, 41 different methods for biosecurity assessment were found to be used in African countries, meaning that even within the same country, the same animal species, and the same farming system, different methods were utilized. In many papers, the methods used for biosecurity evaluation were poorly described. In addition, during the biosecurity assessment, measures related to the purchase of laying hens, egg transport and management, calves, calving and dairy management, and nursery units were almost not considered. These measures should be contemplated in future studies since they are related to important risk factors for the introduction and dissemination of infectious diseases. Interestingly, some measures not considered in European biosecurity tools were identified in the selected studies. The observed high difference in methods used may be due to the lack of regulations on biosecurity in African countries; therefore, the authors recommend the development and implementation of a harmonized and contextualized method for the assessment of biosecurity in livestock farms in Africa.

Digital Tools for Boosting the Impact of Fiscal Decentralization in Africa's Local Economies.

Fiscal decentralization offers potential for stimulating local economic development in Africa, empowering subnational governments to control revenue and spending. However, challenges such as urbanization, poverty, inequality, insufficient infrastructure, and governance issues hinder the successful implementation of the core tenets of fiscal decentralization. This paper explores the role of digital technologies in promoting greater fiscal decentralization and revenue enhancement, as a strategic response to these local economic development challenges in Africa. Through a systematic literature review, this study explores the role of fiscal decentralization in driving local economic development, with a focus on leveraging digital technologies to boost revenue generation and strengthen governance and institutional capacity at the subnational level. The research underscores the importance of investing in digital infrastructure, skill development, and regulatory frameworks, while addressing data privacy and security concerns. By emphasizing the transformative impact of digital technologies fiscal decentralization and property taxation, this paper contributes to the existing literature and highlights avenues for promoting local economic development across Africa.

Will Employees and Technology Continue to Coexist Despite Historic Tensions?

In developed economies, the integration of technology into the labour force has largely led to massive job losses, and workers have met this with stiff resistance. This has changed the dynamics of industrial relations in this era of digital age. The purpose of this study was to investigate the ways in which digitalisation has been affecting human labour in workplaces in South Africa and what can be done to enable employees–technology coexistence. In the study, I used qualitative data-collection methods—interviews, observation and document collection. I used purposive and convenience sampling to select the participants. Analysis of the collected data yielded six major findings. The major tenets of these findings were that digitalisation leads to job losses in South Africa and that the country was not sufficiently preparing students and workers for human–machine collaboration. Although the study was intended to focus on various sectors of the South African economy, I was more biased towards the local banking sector. This could be viewed as a limitation of this study. The study made practical and methodological contributions. It also made an essential contribution to digital transformation theory and employee relations body of knowledge. A major recommendation is that policymakers should mitigate against technology shocks and uneven geographical phenomenon by connecting major commercial hubs with major labour market hubs. Future studies should focus on the impact of technology on employees in each economic sector in South Africa.

Beyond traditional models: a focus on alternate pathways for managing Africa’s sovereign debt

ABSTRACT This paper explores the limitations of traditional sovereign debt management in Africa and introduces innovative strategies to address these challenges. It critically assesses current practices, identifying their inefficiencies and inadequacies in meeting the unique needs of African economies. The findings reveal a need for more flexible, context-specific approaches that consider the diverse economic landscapes of African nations. Additionally, it recommends a shift towards models that emphasise sustainable debt levels, local economic conditions and more inclusive stakeholder engagement. These strategies aim to provide African nations with more resilient and adaptable frameworks for managing sovereign debt, thereby fostering long-term economic stability and growth.

A COP28 Perspective: Does Chinese Investment and Fintech Help to Achieve the SDGs of African Economies?

Scientific consensus affirms human activity, particularly carbon emissions from market participants, drives global warming. Foreign investment, crucial for sustainability in developing nations, now faces scrutiny regarding its impact on environmental quality in emerging economies. This study examines the influence of Chinese Outward Foreign Direct Investment (OFDI) and fintech on environmental conditions in the top five Chinese-invested African economies, alongside factors such as energy consumption, economic performance, and unemployment affecting CO2 pollution. Quarterly data from 2006–2021 confirm cointegration among variables via panel unit root and cointegration tests. Panel ARDL method estimates coefficients for short and long-run effects. Our findings reveal: (1) A 1% increase in Chinese investment leads to a 0.56% decrease in CO2 emissions, supporting its positive environmental impact. (2) Fintech adoption also demonstrates a beneficial effect, with a 1% increase associated with a 0.18% reduction in CO2 levels. (3) Total energy consumption, as expected, has a detrimental impact, causing a 0.92% increase in CO2 emissions with a 1% rise. (4) Interestingly, economic growth fosters environmental sustainability, while unemployment correlates negatively with it. These findings suggest that targeted Chinese investments and fintech adoption can aid in mitigating CO2 pollution in African economies while balancing economic considerations.

Advancing agriculture extension models in Africa: bridging the gap for effective delivery of technologies and innovations

Agriculture in Africa is undergoing transformative shifts, driven by the need for sustainable food production, increased productivity, and resilience to challenges such as climate change. This paper explores the current state of agriculture extension models in Africa and their role in delivering technologies and innovations to target beneficiaries and other stakeholders in agricultural innovation systems. We delve into key challenges, promising approaches, and recommendations for enhancing the effectiveness of extension services in the dynamic agricultural landscapes of Africa. The paper showcases innovative extension models by Sasakawa Africa Association that have made a significant impact. These include Farmer Learning Platforms (FLPs) model, Private and Extension Service Provision (PESP), The Agro-Processing Enterprise Center (APEC) Model, Community-Based Seed Multiplication (CBSM) model, private and extension service provision Model (PESP), and the community savings for investment in Agribusiness (CSIA) model. The Sasakawa Africa Fund for Education (SAFE) Demand Driven Curriculum (SDDC) model is also highlighted. These examples highlight the importance of context-specific approaches and the role of extension in empowering farmers to embrace sustainable and resilient agricultural practices. By addressing key challenges and leveraging opportunities, this paper aims to contribute to the sustainable development of agriculture in Africa. Key words: Agriculture extension models, Technology Adoption, participatory approaches, Innovation, Sustainable Development

Informal land markets and ethnic kinship in West African cities

We present an urban land use model with land tenure insecurity and information asymmetry regarding risks of contested land ownership, a very common issue in West African cities. A market failure emerges as sellers do not internalize the impact of their market participation decision on the average quality of traded plots, which in turn affects other sellers and buyers’ decisions. The equilibrium is suboptimal and has too many transactions of insecure plots and too few transactions of secure plots. This market failure can be addressed when agents trade along trusted kinship lines that discourage undisclosed sales of insecure plots. Such kinship matching is an important feature of West African societies, including on the market for informal land, as illustrated by a unique survey administered in Bamako, Mali. In the model, the extent to which the market failure is addressed increases with the intensity of kinship ties. When sellers also have the possibility of registering their property right in a cadastre, this not only further attenuates information asymmetry but also helps reduce risk. We find complementarity between kinship matching and registration: As transactions along trusted kinship lines tend to involve plots that are more secure on average, kinship matching makes registration better targeted at insecure plots traded outside kinship ties. In this context, a partial registration fee subsidy can bring the economy to the social optimum.11We are grateful to the editor and two anonymous referees for comments that helped us substantively improve the paper as well as to Amadou Cissé for the many discussions about social structures in West Africa that initially motivated this paper, to Demba Karagnara who coordinated field surveys in Bamako in 2012 and 2022, and to Pierre M. Picard, Jan Brueckner and Tony Yezer for suggestions and technical comments on the model. We are also grateful to Eliana la Ferrara and Karen Macours for useful insights on kinship and land markets in developing countries, as well as to Thierry Verdier, Miren Lafourcade and the participants to the Labor and Public Economics Seminar at the Paris School of Economics, to the International Conference of Development Economics and to the Annual Conference of the Centre for the Study of African Economies for various suggestions. We gratefully acknowledge the funding of the World Bank and of the Paris School of Economics Mobility Grant, a public grant overseen by the French National Research Agency (ANR-18-CE22-0013-01), the Labex OSE and the Labor and Public Economics Group at the Paris School of Economics .

Drivers of Carbon Emissions in Kenya: The Perspective of Technology

The empirical studies have portrayed from a different perspective that technology, foreign direct investment (FDI), and economic growth have diverse outcomes on carbon dioxide (CO2) emissions. African economies specifically Kenya are currently threatened with more CO2 emissions for which proper strategies need to be adopted to reduce and mitigate this situation. To address this issue, the Autoregressive Distributed Lag (ARDL) technique was utilized, differentiating between the long-term and short-term effects of drivers of CO2. Granger causality was applied to analyze the causality between the series. The study uses time series data for Kenya from 1990 to 2022. The short-run and long-run results indicate a negative relationship between technology and carbon emissions. Specifically, an increase in technology reduces carbon emissions while an increase in economic growth and FDI inflow increases carbon emissions. The study has identified the negative nexus between technology and carbon emissions in Kenya. This means that technological innovation can increase labour productivity and utilization of resources, thereby reducing carbon emissions. Therefore, Kenya should increase research and utilization of low and efficient carbon technologies to decouple economic growth from environmental pollution. Based on the result, various strategies have been proposed, including using different clean technologies to produce renewable fuels. FDI that complies with environmental regulations, and the use of advanced green and clean technologies can help mitigate the negative impact of technological progress on the environment. Additionally, technological progress, particularly in information and communication technology, will reduce greenhouse gas emissions and improve environmental quality.

Domestic and international impacts of rice export restrictions: The recent case of indian non-basmati rice

This study examines the impact of India's export restrictions on domestic retail rice prices using a dynamic panel GARCH model. The findings suggest that export restrictions are not a sufficient condition to lower domestic prices. Export restrictions are associated with lower retail price volatility in the East Zone. Moreover, the international price transmission to a sample of Asian and African economies shows that all countries are vulnerable, but the degree and kinds of vulnerability differ. Rice exporters appear to be the most susceptible as domestic prices increase in these countries. Rice importers are also vulnerable because of price increases, but the increases are less than in countries where the private sector decides on import quantities.

Greening African economies: Investigating the role of financial development, green investments, and institutional quality

AbstractThis study investigates the impact of financial development (FD) and green investments (GIs) on environmental pollution in Eastern and Southern African countries from 1990 to 2020. The research not only investigates the direct impacts of FD and green finance on environmental pollution but also examines the moderating role of institutional quality (IQ) and possible nonlinear effects of FD and green finance. Our analysis from the Panel autoregressive distributed lag (ARDL) long‐run PMG reveals a negative association between FD, green investment, and environmental pollution, indicating that a well‐developed financial sector supports sustainable initiatives, leading to improved environmental outcomes. IQ moderates this relationship, with strong governance enhancing the positive effects of FD and green finance on environmental preservation. Interestingly, the study identifies nonlinear impacts, suggesting that beyond a certain threshold, the contributions of FD and GIs to environmental preservation may diminish. Recognizing these nonlinearities and the role of IQ can inform more targeted policies for maximizing efforts toward environmental conservation in African economies.

Characterization of urban agriculture and farmers’ climate change adaptation: the case of Urban Wa, Ghana

Urban agriculture in sub-Saharan Africa has the potential to significantly improve urban food security and feed the underprivileged when promoted. In Ghana, urban agriculture has several characteristics that distinguish it from traditional farming practices. However, climate change poses a significant threat to urban agriculture, as changing weather patterns can lead to droughts, floods, and extreme weather events that damage crops and animals. This study explored the characteristics of urban food crops and livestock production in the Wa township, Ghana. Mixed methods of data collection and analysis were employed. A sample of 362 urban households was administered survey questionnaires supplemented with 12 key informant interviews. Descriptive and content analysis were carried out, with the results presented in tables, graphs, and narratives. The study found that amidst climatic stressors, urban agriculture is characterized by the production of animals such as chickens, sheep, and goats and crops like maize, yam, beans, cabbage, and pumpkin. Land is acquired through purchasing, though other farmers obtain land from relatives and friends. There is a very strong relationship between residential class and the type of urban farming (Cramer’s V = 0.291 > 0.25) and a moderate relationship between residential class and land acquisition type (Cramer’s V = 0.108 > 0.10). The study concludes that urban farming is characterized by mixed farming coupled with crop diversification, which has implications for climate change adaptation measures. To adapt urban agriculture to climatic stressors, the study recommends that the Ministry of Food and Agriculture (MoFA) should streamline agricultural policy interventions in urban agriculture to promote agriculture intensification.

Gender economic inclusion, governance institutions and economic complexity in Africa

AbstractThis study examines the effects of gender economic inclusion on economic complexity in Africa, as well as the moderating role of governance institutions on the relationship between gender inclusion and economic complexity. The analysis was based on the pooled OLS and the system generalized method of moments (GMM) estimation techniques, with data from 34 African economies between 2010 and 2021. The analysis uncovered several important findings. First, from the most robust model (i.e., GMM), positive synergies are apparent because gender economic inclusion promotes economic complexity, and governance dynamics further enhance the positive effect of gender economic inclusion on economic complexity. Second, regardless of the adopted technique, a predominantly positive and statistically significant relationship was identified between gender economic inclusion and economic complexity. Third, it was observed that while governance institutions exhibit a negative relationship with economic complexity, they play a positive role in moderating the relationship between gender inclusion and economic complexity. Fourth, factors such as foreign direct investment inflow, trade openness, and international tourism were identified as potent drivers of economic complexity in Africa, while the impact of human capital appears to be relatively subdued. Consequently, the study emphasizes the need for institutional reforms to improve governance transparency, accountability, and efficiency, alongside advocating for gender‐inclusive policies and increased investment in education.

A systematic review identifying the drivers and barriers to the adoption of climate-smart agriculture by smallholder farmers in Africa

Climate change impact, food security concerns, and greenhouse gas emissions are pressuring agricultural production systems in developing countries. There is a need for a shift toward sustainable food systems. One of the concepts introduced to drive this shift is climate-smart agriculture (CSA), endorsed by international organizations to address multifaceted challenges. Despite widespread attention and support, the adoption of CSA among African farmers remains low. This systematic literature review aims to shed light on the factors influencing CSA adoption amongst African farmers. Within the articles identified as relevant, over 50 CSA practices and more than 40 factors influencing CSA adoption were distinguished. These influencing factors can be categorized as personal, farm-related, financial, environmental, and informational. The focus of this review is to identify and explain the overall impact (positive, negative, or mixed) of these factors on CSA adoption. Overall, many factors result in mixed effects, only some factors have an unambiguous positive or negative effect on CSA adoption. For instance, educational level emerges as a key personal factor, positively impacting CSA adoption, along with positive influences from farmers' experience and farm size among farm-related factors. Financial factors reveal distinct patterns, with income from farming and access to credit positively influencing adoption, while off-farm income exhibits a negative effect. Environmental factors, though less researched, indicate positive impacts related to changes in rainfall patterns, temperature, and droughts. Lastly, informational factors consistently exhibit a positive effect on CSA adoption, with training, access to extension, group memberships, climate information, and CSA awareness playing crucial roles. These findings provide valuable insights for policymakers seeking to enhance CSA adoption in Africa, offering a nuanced understanding of the multifaceted dynamics at play.

Ray Kea and the Historians of the Gold Coast: Debates Over Continuity and Rupture in African and African Diaspora Atlantic Histories

The central role of Gold Coast societies, ports, and cities in the emerging Atlantic circuit is critical to understanding the history of the Atlantic world. The study of the causes and effects of Gold Coast societies’ transition from African polities and economies to transatlantic entrepots and trading emporiums and their subsequent impact on the Americas has been the hallmark of Ray Kea's scholarship. Since the beginning of his career, Kea has been a significant contributor to the study of the African Atlantic, and the field's various debates and disciplinary evolutions. While many scholars of the Gold Coast recognize Kea's work as foundational to scholarship on the Gold Coast, engagement with his work has not been rigorous. Kea is often cited in bibliographies and aspects of his work have served as benchmarks for other forays into Gold Coast histories. However, there is a need to go beyond an appreciation for Kea as a trailblazer, passing reference of his scholarship, and bibliographic citation of his work to a more thorough and consistent discourse with his major ideas and propositions. Kea has been, for example, adept at integrating innovations and ideas in various disciplinary arenas. He dexterously applies Marxist and postmodernist theories, diverse historiographies of the Atlantic world, and conceptual tools to traditional archival and oral historical data in his analyses of Gold Coast and diasporic societies. This review essay argues for Kea's importance and the need for a deeper engagement with his work in the field by putting his work into conversation with both classic Atlantic historiographies and recent scholarship that has built off Kea's.

Energy poverty and shadow economy: evidence from Africa

PurposeEnergy poverty is a global phenomenon, but its prevalence is enormous in most African countries, with a potential impact on quality of life. This study aims to investigate the impact of energy poverty on the shadow economy.Design/methodology/approachThe study uses panel data from 45 countries in Africa over a period of 1996–2018. Using panel cointegrating regression and panel vector auto-regression model in the generalized method of moments technique.FindingsThis study provides that energy poverty deepens the size of the shadow economy in Africa. It also documents that there is a bidirectional causality between shadow economy and energy poverty. Therefore, the two variables can predict each other.Practical implicationsThe study suggests that lack of access to clean and modern energy services contributes to the depth of the shadow economy in Africa. African authorities are advised to strengthen rural and urban electrification initiatives by providing adequate energy infrastructure so as to reduce the level of energy poverty in the region. To ensure energy sustainability delivery, the study proposes that the creation of national and local capacities would be the most effective manner to guarantee energy accessibility and affordability. Also, priorities should be given to the local capital mobilization and energy subsidies for the energy poor. Energy literacy may also contribute to the sustainability and the usage of modern energy sources in Africa.Originality/valuePrevious studies reveal that income inequality contributes to the large size of shadow economy in developing economies. However, none of these studies analyzed the role of energy poverty and its implications for underground economic operations. Inadequate access to modern energy sources is likely to deepen the prevalence of informality in developing nations. Based on this, this study provides fresh evidence on the implications of energy deprivation on the shadow economy in Africa using a heterogeneous panel econometric framework. The study contributes to the literature by advocating that the provision of affordable modern energy sources for rural and urban settlements, and the creation of good energy infrastructure for the firms in the formal economy would not only improve the quality of life but also important to discourage underground economic operations in developing economies.

Does financing agriculture sustain economic growth in Africa? Implications for Africa Union’s Comprehensive Africa Agriculture Development Programme (CAADP)

Does financing agriculture sustain economic growth in Africa? Implications for Africa Union’s Comprehensive Africa Agriculture Development Programme (CAADP)