African Economies Research Articles

Effect of Economic Growth on CO2 Emission in Africa: Do Financial Development and Globalization Matter?

Carbon emissions are a global issue that has drawn policymakers' and scholars' attention. This study delved into examining the effect of globalization and financial development on carbon emissions within 52 African economies from 1997 to 2002. Energy consumption and population size were also considered controlling factors influencing carbon emissions. The study employs a two-step system-generalized method of moment (GMM) to analyze the effects, using the KOF Globalization Index and the IMF's Financial Development Index. The results indicate that carbon emissions increase with economic growth, energy consumption, and population size. Moreover, this study supports the Environmental Kuznets Curve (EKC) hypothesis. The study also reveals that globalization and its sub-indices, financial development, and financial institutions exhibit a linearly increasing role in carbon emissions. However, financial markets have a negligible effect. Nonlinearly, the squared of globalization and its sub-indices of economic and social dimensions, squared financial development, and its sub-indices exhibit a negative impact, portraying an inverted U-shaped association with carbon emissions. Meanwhile, political globalization follows a U-shaped trend. Additionally, globalization, financial development, and their sub-indices moderate carbon emissions. The implications of these findings underscore the importance of sustainable practices, green financing, and collaborative partnerships for a more environmentally sustainable path.

The fiscal effects of natural resource dependency in sub‐Saharan Africa

AbstractThis study investigates the fiscal implications of natural resource dependence in resource‐rich sub‐Saharan African economies, particularly focusing on the impact of resource revenues on tax revenues, government spending and national savings to assess the sustainability of natural resource reinvestments. Employing a two‐step system Generalized Method of Moments on a dataset with 672 observations, the study identifies significant reductions in non‐resource tax revenues, government current consumption and overall savings associated with an increase in resource revenues. Conversely, a positive coefficient is noted for public investment. The study underscores the importance of high‐quality institutions in mitigating adverse effects and controlling increased public investments. Recommendations include directing resource revenues towards well‐structured taxation frameworks and investing in efficient institutions to manage current consumption, monitor public investment growth and enhance savings. These measures are crucial for curbing procyclical spending and promoting sustainable development in resource‐rich sub‐Saharan African economies.

Low-carbon energy transition in oil-dependent African countries: implication on fiscal revenue

PurposeThe purpose of this study is to empirically analyse the fiscal revenue implications for oil-dependent African countries in the face of low-carbon energy transition (LET).Design/methodology/approachThe study combined the novel fully modified ordinary least squares, dynamic ordinary least squares and canonical cointegrating regressions estimators to analyse secondary data between 1990 and 2020 for the three major oil-dependent African Countries (Algeria, Angola and Nigeria).FindingsThe result shows that LET reduces oil revenue and non-revenue for specific countries (Algeria, Angola and Nigeria) and the panel, suggesting that low-carbon energy transiting is lowering the fiscal revenue of oil-dependent African nations.Research limitations/implicationsThe seeming weakness of this study is its inability to broaden the scope to include all oil-producing African economies. However, since the study selected Africa’s top three oil-producing states, the sample can serve as a model for others with lesser crude oil outputs.Practical implicationsOil-dependent African countries must urgently engage in sincere economic diversification in sectors like industry and manufacturing, the service sector and human capital development to promote economic transformation that will enhance fiscal revenue.Originality/valueWith the pace of energy transition towards low-carbon energy, it is not business as usual for oil-rich African countries (Algeria, Angola and Nigeria) due to fluctuating demand and price. As a result, it becomes worthy to examine how the transition is affecting oil-dependent economies in Africa. Also, this study’s method is unique as it has not been used in a similar study for Africa.

Shadow economy implications of financial development in Africa: Do income groups also matter?

This study explores the link between financial development and the shadow economy in 45 African economies from 1991 to 2019. While overall financial indices show no clear impact on the shadow economy across the entire sample, a nuanced pattern emerges when considering income groups. In low-income countries, financial institutions' index significantly amplify the shadow economy, whereas in lower middle-income nations, broader financial market measures independently contribute to its expansion. This reveals a heterogeneous relationship between financial development and the shadow economy in Africa, emphasizing the income-specific dynamics influencing these interactions.

Novel approach for concentrating and harvesting solar radiation in hybrid transparent photovoltaic façade’s in Southern Africa.

Electrical consumption and the price thereof is rapidly increasing in South Africa. Finding alternatives to the current grid-tied electricity supply in the country is a prodigious concern to the South African economy due to historic unreliability. The national power grid and the South African economy can extensively benefit from utilizing solar energy as an abundant clean and renewable energy source. This paper considers and further investigates power generation utilising a novel approach to transparent solar façades (windows). Harvesting solar energy is consequently included in the building envelope, which improves building efficiency while reducing demand on the national electric grid. The impacts, design, modelling and results of this novel approach to Photo Voltaic (PV) systems, is further examined in this paper. These systems are aimed to be used in the commercial and residential market. Factoring in the location, design and installation of the solar façade, geographical conditions relevant to South Africa were used to evaluate the transparent façade’s performance. The generated power from a façade depends on solar irradiation, orientation, (Azimuth and Zenith angles); climate conditions such as temperature and rainfall; and other solar constraints. These factors were incorporated using average values from meteorological data.

Cancer incidence, mortality, and survivorship in African women: a comparative analysis (2016-2020).

This research aims to provide concrete insight into cancer incidence, mortality, and survivorship dynamics among African women between 2016 and 2020. The study computes the Mortality-to-Incidence Ratio (MIR) for 53 countries in Africa with available mortality and incidence data. It uses relevant Life Tables to obtain the 5-year Relative Survival rate for women in different age cohorts based on General Survival Rate and 5-year Cancer Prevalence data from the World Health Organization (WHO). The study performs an analysis of variance tests. The results of the initial data analysis show that women in the top economies in Africa have the highest cancer incidence and mortality. The study also finds that women in Northern and Southern African countries have higher relative survival rates and lower MIR than other African regions. ANOVA results confirm statistically significant differences in 5-year relative survival across the African regions. The relative survival at 5 years was an average of 45% across all age groups within the continent although relative survival is highest among females aged 5-19 and 80-84. The lowest relative survival rates are seen for infants (0-4), adolescents and young adults (25-29), and the very elderly (85+). The study concludes that while cancer incidence in Africa is linked to affluence, survival is very challenging, especially for the least developed economies in Western, Eastern, and Central Africa. The results indicate the need for crucial intervention in the continent concerning awareness, research, and data collection methodology.

An extended Taylor rule for a small open African economy

This paper estimated a monetary policy rule for Nigeria by augmenting the traditional Taylor rule model, using data spanning 2010Q1 to 2023Q2 in a Dynamic Ordinary Least Square regression. The results from competing models – the Taylor rule and extended Taylor rule (exchange rate augmented) – were subjected to forecast evaluation to ascertain their relative predictive power. Same models were estimated for South Africa for the purposes of comparison, and the results were consistent with Nigeria's. The findings indicate the predictors of the policy rate – monetary policy inertia, inflation, output gap and exchange rate – to be significant and with the expected signs. Forecast evaluation of the estimated extended Taylor rule model produced lower Root Mean Square Error (RMSE) and Theil statistics, compared with the traditional Taylor rule model, reflecting the higher predictive power of the former. The baseline and unequally-weighted two-quarter-ahead forecast of the extended model predicts a maximum inflation rate of 20.77 % and 21.04 % in 2023Q3 and 2023Q4, respectively, suggesting lower inflationary episode for Nigeria. The implication of the finding is that the extant monetary policy rule based on the traditional Taylor rule is inadequate in setting the nominal interest rate by the Central Bank of Nigeria, and recommends the adoption of the extended Taylor rule to enhance the effectiveness of monetary policy in Nigeria.

Проблемы и перспективы реализации политики справедливого энергетического перехода в ЮАР

South Africa is the one of leading African economies and the one of the major global greenhouse gas emitters. Actively participating in international climate and energy frameworks, South Africa sets an ambitious goal of achieving net zero emissions by 2050. The climate agenda is a sphere of crucial importance for South Africa due to explicit systemic vulnerabilities of the national economy in the face of expected changes. This article analyzes problems and prospects in achieving South Africa’s climate policy goals, as well as the availability of resources necessary to achieve these goals. The analysis finds that South Africa does not possess the resources to achieve its climate goals. South Africa remains dependent on polluting fossil fuels, especially coal, due to enormous available natural deposits. Climate financing covers only a portion of necessary financial placing. In the long run, established international agreements may aggravate the country’s international debt problem. South Africa’s leaders recognize the necessity of climate-related policy measures, but such measures cannot be characterized as the main drivers of the country's development.

COVID-19 and SMEs deposits with commercial banks: evidence from African economies

<p><span style="font-family: 'times new roman', times, serif; font-size: 14pt;"><span lang="EN-US">This paper examines the impact of COVID-19 on Small and medium-sized enterprises (SMEs) deposits across 13 African nations from 2016 to 2022, using a seven-year dataset and Ordinary Least Squares estimator. Notably, it uncovers a significant positive link between the pandemic and SMEs deposits, indicating heightened reserves amidst economic uncertainty, potentially driven by risk mitigation or government support. Associations between gross domestic product (GDP), inflation, unemployment, foreign direct investment (FDI), exchange rates, and SMEs deposits were evident, showcasing higher GDP aligning with increased deposits, while inflation and unemployment linked to reduced ones. FDI showed a positive influence, and exchange rate fluctuations notably affected SMEs deposits, especially for those in international trade. These findings emphasize policy reconsideration for crisis strategies supporting SMEs reserves during uncertainty and interventions addressing inflation, unemployment, and exchange rate risks. Future research exploring regional nuances and global comparisons could further enrich policymaking for resilient SMEs amid evolving economic landscapes</span><span dir="RTL" lang="AR-SA">.</span></span></p>

Financial deepening and economic growth nexus in emerging economies in Africa: does supply-leading or demand-following hold?

ABSTRACT This research examines the long-term causation between financial deepening and economic growth in African-emerging economies. The fully modified and dynamic ordinary least square methods are used. Bidirectional causality exists between domestic credit to the private sector, money supply ratio, trade openness and gross domestic product per capita. Unidirectional causality flows from capital formation to gross domestic product per capita. The central banks should apply policies which encourage credit flow to private enterprises via banks’ intermediation and eliminate the bottlenecks undermining credit flow. The governments should establish an investment friendly environment in all sectors and upgrade the productive capacity. Studies have been conducted on the nexus of financial deepening and economic growth with debatable outcomes. Some studies illustrate a positive alliance between financial deepening and economic growth, supporting the supply-leading model. Other findings support the demand-following theory, while some demonstrate mutuality in the nexus between financial deepening and economic growth. Nevertheless, limited studies have been conducted on the nexus between financial deepening and economic growth to ascertain if the supply-leading or demand-following hypotheses hold.

Terrorism and economic complexity in Africa: The unconditional impact of military expenditure

AbstractFollowing the rising wave of terrorism in Africa, particularly in the last decade, this study investigated the effect of terrorism on economic complexity in the region as well as the moderating role of military expenditure in the terrorism–economic complexity relationship. A panel of 34 African economies was used over the period 2010–2021. The study also used the dynamic system generalized method of moments framework. We find that the unconditional effect of terrorism on economic complexity in Africa is predominantly negative and significant, and that military expenditure in the region has been ineffective in moderating this adverse effect. This finding remained robust regardless of whether terrorism is measured by the number of terrorism incidents, fatalities, injuries, or hostages. However, our results showed that industrialization, urbanization, and governance institutional quality are potent channels for promoting economic complexity in Africa. Among others, the study emphasized the need for policymakers and leaders in Africa to collaborate at the level of the African Union to address the detrimental effects of terrorism on the continent.

The impact of public infrastructure investment on South Africa’s economy: evidence from social accounting matrix and computable general equilibrium-based approaches

This paper assesses the general equilibrium impacts of public infrastructure investment in the South African economy, as a case of an emerging economy, by making use of complementary general equilibrium models, such as the social accounting matrix (SAM) multiplier, the Structural Path Analyses (SPA) and the Computable General Equilibrium (CGE) models. Contrary to studies that use partial equilibrium models, this paper shows the importance of an economy-wide model to analyse the effects of public infrastructure investment in an emerging economy. The results of the analysis, based on the SAM and CGE analyses using a 2015 SAM for South Africa, indicate that increasing public economic infrastructure can be an effective way of stimulating the economy in a way that has a positive impact on labour. SPA shows that the leading and most important path of influence is the direct influence of the public infrastructure investment on each formal labour category. However, because the public infrastructure investment does not employ informal labour, this labour account is only indirectly connected via intermediate consumption of the output of the construction sector. These results suggest that an increase in public economic infrastructure could help address the unemployment problem that exacerbates poverty in South Africa.

Identifying key sectors of sustainable development: A Bayesian framework estimating policy‐impacts in a general equilibrium

AbstractTransformation of the previous centrally growth‐oriented economic systems to a sustainable bio‐economy is a global political trend, where public policy is a key factor in making this successful. Designing effective and efficient policies requires understanding the linkages between policy choices and outcomes. Most existing studies are missing a direct link to policy choices and ignore fundamental model uncertainty present in policy analysis. We empirically estimate a sector‐specific, nested two‐stage policy impact function to address these shortcomings. We apply a Bayesian estimation approach that combines existing statistical data with a priori information from political experts, thus reducing data and estimation problems. This is linked with a Computable General Equilibrium to model the entire link from policies to outcomes. We derive a theoretical framework that allows the definition of indicators for key sectors of an efficient Pro‐Poor‐Growth strategy. In our generalized framework, we show that indicators based only on growth‐poverty linkages might be misleading. To deal with model uncertainty inherent in the application, we derive a set of metamodels via simulations conducted under different model parameter settings and apply Markov Chain Monte Carlo sampling. Applying Bayesian model selection allows drawing statistical inferences on competing models to generate relatively robust policy‐relevant messages even under model uncertainty. The approach is empirically applied to Ghana, Senegal, and Uganda, analyzing the allocation of public spending on agriculture under the Comprehensive Africa Agriculture Development Programme. [EconLit Citations: C11—Bayesian Analysis: General; C63—Computational Techniques, Simulation Modeling; D58—Computable and Other Applied General Equilibrium Models; O55—Africa; Q01—Sustainable Development; Q18—Agricultural Policy].

Mathematical Modelling of Host-Pest Interaction in the Presence of Insecticides and Resistance: A Case of Fall Armyworm

Several pest management programs have been developed to control rising agricultural pest populations. However, the challenge of rapid evolution and pest resistance towards control measures continues to cause high production losses to maize farmers in Africa. Few models have attempted to address the issue of fall armyworm (FAW) but have barely incorporated the effect of insecticide resistance. Models with resistance would help predict the dynamics of the FAW population, thus mitigating losses. The main objectives of this work were to develop, analyze, and numerically simulate a susceptible-infected deterministic mathematical model expressing the FAW-maize interaction and population dynamics under insecticidal sprays and resistance FAW larvae. Three model steady states are established. Their local stability is conducted using either the eigenvalue or the Routh–Hurwitz stability criteria, and their global stability is analyzed using either the Castillo–Chavez, Perron eigenvector, or the Lyapunov methods. An expression for the basic reproduction number R0, together with the sensitivity analysis of its parameter values, is provided. Numerical analysis is conducted on various model parameter values. The results established all the model steady states to be locally and globally asymptotically stable at R0≤1. Also, resistance ω increased the infection rates by increasing the FAW larvae survival rate λ and reducing the insecticidal efficacy δR and δN. This work informs the agriculturists and policymakers on pest control with the best ways to use insecticides to minimize pest resistance and enhance efficacy in production. Pest control measures should be modified to lower the FAW survival rate and all model parameters contributing to resistance formation by FAW larvae to minimize FAW-host interaction, thus reducing crop damage.

The influence of good governance on the tourism sector: The case of South Africa

Over the last decades, the tourism sector has contributed to the national and regional economies in South Africa, while governance levels have regressed over time. The study’s objective was to investigate the impact of good governance on the success and growth of the tourism sector in South Africa, a proxy for developing countries. The hypothesis is that good and effective governance could positively impact tourism growth. A quantitative research methodology was used with econometric methods such as an Autoregressive Distributed Lag Error Correction (ARDL-ECM) process. The estimation indicated a long-run relationship between the variables. The tourism sector contributes significantly to the South African economy, and the government should note the importance of good governance, as indicated through this study, in the success and development of the sector. Given tourism's potential to achieve some of the Sustainable Development Goals and positively influence economic growth and development, relevant parties are urged to pursue good governance in the sector.

The changing foreign policy dynamics of GCC States: a study through the lens of positive interdependence

Foreign policy behaviour of the GCC members is changing. The countries are embracing discussion and diplomacy rather than focusing on contention and opposition. They are looking beyond traditional partners and are diversifying their support base within the region as well as outside while expressing interest in being part of multilateral institutions. GCC countries have recognised that securing economic interests is of paramount interest and political leverages and geo-political maneuverings are secondary in the changing world and to that end are engaging with the Asian, African and Latin American economies. Further the countries have understood the significance of non-traditional issues of energy, food, water and environment security along with waste management. The paper is an attempt to study this shift through the lens of positive interdependence. Embracing positive interdependence, the states focus on mutual dependence with an intention to achieve growth and prosperity and propagating one’s national interests without intending to sabotage the interests of the other party.

Economic growth and the proliferation of ICT infrastructures: which causes the other?

This study explored the causal association between Information and Communications Technology (ICT) infrastructure development, measured by an ICT index, and the economic growth of 42 African economies between 2000 and 2019. Whether ICT development has contributed to real per capita GDP growth or ICT infrastructure expansion has just been a consequence of growth in real per capita GDP has been overlooked in prior studies concerning Africa. The econometric techniques used to analyse the data included robust second-generation tools to investigate cross-sectional dependence, slope homogeneity, and panel causality. The findings detected significant independence between the variables across countries, the slope was heterogeneous, and there was a long-run association between all of the economies in the sample. Dumitrescu and Hurlin’s panel causality analysis indicated a unidirectional causal association between per capita income and the ICT index. The results also demonstrated that capital and employment were the leading causes of per capita GDP growth. The findings suggested that accelerating economic growth in developing economies was essential to promoting ICT investment.

Digital economy in Africa: condition and problems of development

Today, much attention is paid to the development of the digital economy in most countries of the world. African countries are no exception. The purpose is to provide a general analysis of the digital economy in Africa and to assess the correlation between the digitalization and the economic growth. As the main research methods, rating and statistical approaches were used to analyze the development of the digital economy in Africa, as well as correlation analysis to identify the relationship between digitalization and economic growth. The hypothesis of the significance of digitalization as a factor in the economic growth of African countries is being tested. The results confirmed the hypothesis only partially. It was found that for most African states, such a relationship exists and varies depending on the country from medium (Senegal, Cameroon, Tunisia) to very strong (Morocco, Rwanda, Kenya). At the same time, there is a whole group of countries, for which digitalization and economic growth are poorly interconnected. Ranking African countries according to the degree of interconnection between digitalization and economic growth should be the basis for further research in order to determine the place of digitalization in a number of factors of economic growth and development. The article identifies key problems in the development of the digital economy on the continent, including limited access to electricity, the low level of development of the Internet infrastructure, the gender gap in the use of digital technologies, as well as the insufficient level of funding for digital transformation.

Farm-Level Adaptation Strategies to Weather Variability and its Perception by Smallholder Farmers in Osun State

The prevailing ideas about adaptation are vague, conducting focused research on potential adaptation practices and formulating appropriate advice for implementing new practices is difficult. Therefore, the debate about the adaptation of small-scale farmers in Africa to Weather Variability has occurred in the absence of knowledge about existing and potential adaptation practices. This study examines the various Adaptation Strategies to Weather Variability and its Perception by Smallholder Farmers in Osun State Nigeria. The analytical techniques adopted include descriptive statistics and adaptation Strategies Used Index (ASUI), The results of the study showed that Use of fertilizer to replenish the soil was paramount out of fourteen adaptation strategies employed by the farmers. The t-test indicated that there were significant differences between pairs of socio-economic characteristics and adoption of adaptation strategies. The result from the Analysis of Variance (F (13, 2255) df=26.79; p<0.01) showed that there were significant differences among the costs of adaptation strategies employed by the smallholder farmers. Smallholder farmers in Osun State have problem of capital to effectively combat Weather Variability. The study concludes that the use of adaptation strategies available and accessible in the study area is a function of their personal characteristics and other socio-environmental factors.

An adjuvant formulation containing Toll-like Receptor 7 agonist stimulates protection against morbidity and mortality due to Anaplasma marginale in a highly endemic region of west Africa.

Efficient cattle production and provision of animal-sourced foods in much of Africa is constrained by vector-borne bacterial and protozoal diseases. Effective vaccines are not currently available for most of these infections resulting in a continuous disease burden that limits genetic improvement. We tested whether stimulation of innate immunity using the Toll-like Receptor (TLR) 7 agonist imiquimod, formulated with saponin and water-in-oil emulsion, would protect against morbidity and mortality due to Anaplasma marginale, a tick-borne pathogen of cattle highly endemic in west Africa. In Trial 1, haplotype matched Friesian x Sanga (F1) A. marginale negative calves were allocated to either the experimental group (n = 10) and injected with the synthetic TLR 7 agonist/saponin formulation or to an untreated control group (n = 10). TLR7 agonist/saponin injected calves responded with significantly elevated rectal temperature, enlarged regional lymph nodes, and elevated levels of IL-6 post-injection as compared to control group calves. All calves were then allowed to graze in pasture for natural exposure to tick transmission. All calves in both groups acquired A. marginale, consistent with the high transmission rate in the endemic region. The need for antibiotic treatment, using pre-existing criteria, was significantly lower in the experimental group (odds ratio for not requiring treatment was 9.3, p = 0.03) as compared to the control group. Despite treatment, 6/10 calves in the control group died, reflecting treatment failures that are typical of anaplasmosis in the acute phase, while mortality in the experimental group was 1/10 (odds ratio for survival was 13.5, p = 0.03). The trial was then repeated using 45 Friesian x Sanga calves per group. In Trial 2, the odds ratios for preventing the need for treatment and for mortality in the TLR7 agonist/saponin experimental group versus the control group were 5.6 (p = 0.0002) and 7.0 (p = 0.004), respectively, reproducing the findings of the initial trial. Together these findings demonstrate that innate immune stimulation using a TLR7 agonist formulated with saponin and water-in-oil emulsion provides significant protection against disease caused by tick borne A. marginale in highly susceptible cross-bred cattle, critically important for their potential to increase productivity for smallholder farmers in Africa.