Poverty Reduction In Africa Research Articles

Financial inclusion, financial stability, and poverty reduction in Africa

AbstractFinancial inclusion universally remains one of the critical means to end poverty in the world, especially Africa, where the level of poverty is high. It has however been argued that financial inclusion equally has the tendency to destabilize the financial system, thwarting the poverty reduction efforts, which necessitates the interrogation of the relationship between the variables. This study therefore investigates how financial stability mediates the financial inclusion and poverty reduction relationship in Africa. Using the panel Autoregressive Distributive Lag model, covering a period of 2004–2020, the study found that financial inclusion is positively related to financial stability in both short and long‐run, with education, Gross National Income per capita (GNI) and domestic credit to private sector, contributing to financial stability, and trade openness negatively related to financial stability in the long‐run. The study further established that financial stability is positively related to household consumption expenditure as such leads to poverty reduction with trade openness, government expenditure, GNI, education, domestic credit to private sector, and institutional quality contributing significantly to poverty reduction. This confirms the mediating role financial stability plays in enhancing the impact of financial inclusion on poverty reduction in Africa and must therefore be given the necessary attention, through proper regulatory mechanisms.

Gender analysis of chickpea (Cicer arietinum) yield gap: the case of Ada’a, Ethiopia

One of the primary development challenges hindering poverty reduction in Africa is the existence of a yield gap between female and male farmers. However, previous studies conducted in Ethiopia have largely overlooked the role of gender-related factors in influencing this gap. This article aims to address this gap by examining the chickpea yield disparity between female and male farmers and identifying its determinants. Data were gathered from 325 respondents (163 male and 162 female farmers) in 2019, combining survey responses with qualitative insights from discussions in two women farmers' groups, two men farmers' groups, and four key informant interviews. T-tests and linear regression models were applied to quantify the extent of the yield gap and analyze the factors contributing to it. Additionally, thematic analysis of the qualitative data was conducted to complement the quantitative findings. The study revealed that female farmers produced 29% less chickpea yield in the 2019 production year compared to their male counterparts, and this difference was statistically significant. Factors such as land allocation for chickpea cultivation, soil fertility, labor availability, chickpea variety (improved or local), access to extension services, and participation in farmers' cooperatives were identified as significant contributors to the yield gap. Beyond these technical aspects, gender-related challenges like unequal treatment, restricted mobility, labor demands, and religious/cultural taboos were also factors impeding the productivity of women farmers. Addressing the yield gap necessitates an inclusive approach in all agricultural development endeavors, recognizing and rectifying gender-based disparities to enhance the productivity and livelihoods of female farmers.

Digital Economy and Poverty Reduction in Africa: The Role of Governance Quality

Digital Economy and Poverty Reduction in Africa: The Role of Governance Quality

Threshold Effect of Financial Inclusion on Poverty Reduction in Africa: Does institutional quality play a role?

ABSTRACT In Africa, poverty levels are still very high, especially with the advent of the COVID-19 pandemic, despite efforts by governments and development partners to address it. Financial inclusion has been identified as an important concept in fighting poverty due to its ability to increase the income level of households. This study sought to estimate the threshold level at which financial inclusion, aided by strong institutions, will lead to poverty reduction in Africa, using Hansen’s threshold estimation method, covering a period of 2004–2020. The Hansen threshold estimation method uses an endogenous approach to identify threshold values, which eliminates deterministic process by using a systematic approach, as compared to the linear methods of sample-splitting of threshold-level specifications by other methods. This therefore makes the Hansen threshold estimation method robust in threshold estimations compared to other methods. The study found double threshold values of 0.0534 and 0.341, indicating that a financial inclusion value below 0.0534 would increase household consumption expenditure, leading to poverty reduction. However, a threshold value between 0.0534 and 0.3141 has a negative impact on poverty reduction. Furthermore, beyond a threshold value of 0.3141, financial inclusion will improve household consumption and as such reduce poverty in Africa. The study also established a threshold value of institutional quality index of −1.6325, indicating that below that institutional quality index, financial inclusion will have a negative impact on household consumption as well as poverty reduction in Africa. The results further indicated that dependency ratio, gross national income, interest rate, inflation, education, and government expenditure contribute significantly to poverty reduction in Africa. It is recommended that development partners, central banks and governments in the region should consciously develop and implement financial literacy policies, with the collaboration of all financial institutions that are aimed at promoting financial inclusion due to its ability to end poverty.

Localising decent work for poverty reduction in Africa: a case study of the decent work pilot project in Ghana

AbstractSince the adoption of Local Agenda 21, local governments have been enjoined to become active players in major development agendas, including the Sustainable Development Goals (SDGs). Despite the proliferation of literature on localisation strategies adopted by sub-national governments in pursuance of the 17 SDGs, little is known about localised efforts to fulfil SDG 8: “Promote inclusive and sustainable economic growth, employment and decent work for all”, particularly in Africa. Through a qualitative case study of the Ghana Decent Work Pilot Project, this paper examines how two local districts adapted and implemented the principles of decent work in a rural setting to improve the well-being of informal workers. The findings reveal that decent work was conceptualised by local authorities to mean the achievement of four main goals: the stimulation of local employment, extension of social security to informal entrepreneurs, adoption of best business practices and enhancement of entrepreneurs’ participation in local assembly decision-making. To enhance the achievement of these goals, the local authorities launched four main interventions in a gender- and poverty-sensitive manner. These interventions include institutional embedding of the project, capacity building for entrepreneurs, the unionisation of entrepreneurs and the introduction of local health and financing schemes. The study concludes with policy recommendations that, if adopted, would help to upscale and out-scale local efforts to promote decent work across Africa.

Can technological innovations contribute to more overcome the issue of poverty reduction in africa?

Although recent years have shown that innovation can also thrive in economies where the challenges of absolute poverty and inequality remain long-standing problems, the effects of innovation on poverty reduction has remained a largely unexplored field of investigation. . So this study assesses the effect of technological innovations on poverty reduction using a panel of 36 sub-Saharan African countries over the period 2008 to 2019. More specifically, the study examines the influence of technological innovation on poverty reduction. Using the principal component analysis (PCA) we constructed an indicator of the use, adoption and adaptation of technological innovations and that of multidimensional poverty. After applying several estimation techniques for panel data such as fixed effects, Driscoll and Kraay, kiviet (2020), Lewbel two stage least square (Lewbel 2SLS), mediating effects, the results shows that technological innovations significantly reduce poverty in sub-Saharan Africa. Our results survive several robustness checks. Taking into account the level of urbanization, it appears that technological innovations reduce poverty in countries with low urbanisation rates and increase it in countries with high urbanization rates. Finally, the analysis of mediation effects suggests that almost 30 % of the total effect of the use, adoption and adaptation of technological innovations on multidimensional poverty reduction is through the improvement of productivity in the industrial sector while 62.5 % is through the productivity of the agricultural sector. These results imply that poverty reduction policies in sub-Saharan Africa need to refocus on capacity building in the use, adoption and adaptation of technological innovations, particularly in the agricultural and industrial sectors.

Poverty Reduction Strategies: An Assessment of Development Initiatives in Africa

The objective of virtually all development initiatives in Africa is poverty reduction. The crippling challenge of poverty facing most African states is, by no means, a fresh one. However, the problem has assumed a disturbing dimension at the turn of the 21st Century, if we compare African states with emerging economies in the global south. The paper adopts functionalism as a theoretical framework due to the fact that African states have embraced the idea of integration, with African Union (AU) being a potential instrument of realising their d `evelopment aspirations. Relying on secondary sources of data collection, it sought to gain in-depth understanding of previous studies, in order to gain fresh insight and enriched perspectives. The paper examined selected continental and global development initiatives, as well as their impact towards achieving the goal of poverty reduction in Africa. While noting that political stability is a major precondition for economic growth, the paper noted that most African states are at sub-optimal level of economic performance because of high level of impunity among the political leadership, abuse of due process and failure to adhere to global best practices. The paper observed that the realities of the present interdependent world system dictate that there is no alternative to global partnership if African states are desirous to make a break from their stunted growth and vicious cycle of poverty. The paper recommends that African states need to re- tool and refine their development strategies along the Asian trajectory. It concludes that only an African consensus on the utility of an integration framework can help advance the goal of poverty reduction in the continent.

Social Policies and Poverty Reduction in Africa: A Nigeria-centered Perspective

This study focuses on the impact of social policies on poverty reduction in Africa, specifically in Nigeria. Poverty is a major challenge to social development, and its effects are exacerbated by factors such as terrorism and insurgency. The study uses a comprehensive literature review to examine the social policies implemented in Nigeria to address poverty, including initiatives like the National Accelerated Food Production Project and the Conditional Cash Transfer program. The study also explores the theoretical framework of poverty reduction, considering theories such as the Capability Approach and the Dependency Theory. The findings emphasize the importance of a multi-faceted approach to poverty reduction, recommending actions such as strengthening social policies, diversifying economic growth, improving access to education, enhancing infrastructure development, addressing governance and corruption issues, and fostering regional and international cooperation. By implementing these recommendations, it is anticipated that Nigeria and other African countries can effectively reduce poverty and improve social development, ultimately enhancing the quality of life and preserving human dignity.

Poverty, entrepreneurship, and economic growth in Africa

AbstractLiterature abounds on the impact of entrepreneurship on economic growth, but with little attention to the role of entrepreneurship in poverty reduction. Furthermore, little attention has been paid to the triangular relationship among poverty reduction, entrepreneurship, and growth in Africa. In this study, we examine the dynamic relationship among these three variables using data collected from 18 African countries. Data are sourced from World Bank development indicators and the World Bank's entrepreneurship database. The study uses batteries of panel data estimation techniques to analyze the data. The following findings emerged: (1) there is bidirectional causality between poverty reduction and growth. (2) There is bidirectional causality between growth and entrepreneurship in Africa. (3) There is unidirectional causality moving from entrepreneurship to poverty reduction. (4) Entrepreneurship significantly reduces poverty in Africa. (5) Impulse response shows that all the variables positively respond to shocks in each other. The study concludes that entrepreneurship enhances poverty reduction in Africa and has a significant impact on economic growth.

The inclusiveness of China’s development finance: China’s hybrid approach to aid and poverty reduction in Africa

Recent years have seen China emerging as a new donor outside of the West’s club of traditional donors, seeking to fill the financing gap for the Sustainable Development Goals (SDGs). The Chinese government has adopted a hybrid approach to international aid, in which it supplies trade credit and other types of loans to underdeveloped countries through its policy banks and state-owned enterprises in addition to traditional aid. As such a hybrid approach is considered more market-oriented than traditional donors, much of the literature on it has focused on its impact on economic growth rather than on social welfare and poverty reduction. It is critical to note, however, that in reality, the Chinese government has long-valued poverty reduction as a priority of the SDGs, regardless of the context of domestic governance or international aid. Therefore, this article used the panel data of African countries between 2000 and 2016 to test the relationship between China’s development finance and its corresponding poverty-reduction effect in Africa. Empirical results shown that China’s hybrid approach reduced poverty in Africa, particularly in poorer sub-Saharan countries and “heavily indebted poor countries.” Further, in a similar vein to China’s domestic inclusive-growth model, its poverty reduction in Africa tended to be achieved indirectly through production sectors rather than directly through the provision of social relief.

The Growth–Employment–Poverty Nexus in Africa

AbstractThis paper focuses on employment and the labour market as a key mechanism leading from growth to poverty reduction in Africa. Given that the development goals are economy-wide outcomes—less poverty, shared prosperity, more and better job opportunities, etc.—the required analysis must be at the market level. Individual-level analysis is not enough. The paper brings together insights from labour economics and from development economics. It draws upon Fields’ work over decades at the intersection of these two fields. A concluding section presents suggestions for policy analysis.

Effectiveness of Foreign Aid in Poverty Reduction in Africa: The Role of Fiscal Policy

This study examines foreign aid effectiveness in poverty reduction in Africa with focus on the role of regional fiscal policy on education and health. The study employs panel dynamic ordinary least squares (DOLS) estimation technique and covers the period 1980-2017. The results reveal that foreign aid augmented with effective fiscal policy on education significantly improves the income level in all the regions except Central Africa, and consumption in the Western and Central regions. When augmented with effective fiscal policy on health foreign aid enhances households’ income in West and Central Africa and consumption in West and Southern regions. Furthermore, foreign aid augmented with effective fiscal policy in education (health) reduces poverty headcount in the West and Central (in all regions except Central) regions of Africa. The study concludes that foreign aid augmented with fiscal policy on education improves income in all regions except Central Africa; and West and East Africa when augmented with health expenditure. To sustain the effectiveness of foreign aid in Africa there is the need to improve governments’ allocation to the health and education sectors to deepen households’ income.

The Role of Intergovernmental Organizations on Poverty Reduction in Africa. A Critical Literature Review.

Purpose: Fiscal decentralization will increase the degree of efficiency in the allocation of resources because sub-national governments have an information and proximity advantage over central governments when it comes to responding to the needs and preferences of local citizens. The overall objective of this study was to examine role of intergovernmental organizations on poverty reduction.
 Methodology: The paper used a desk study review methodology where relevant empirical literature was reviewed to identify main themes and to extract knowledge gaps.
 Findings: The study concluded that fiscal decentralization has distributive effects. The effect of fiscal decentralization on poverty reduction outcomes and human developments depends on the nature and design of fiscal decentralization, the extent of fiscal decentralization and county specifics. Since fiscal decentralization is implemented in various forms such as intergovernmental transfers, own source revenue assignment and expenditure decentralization, the effects of each of these were analyzed. The conclusions from the findings are presented in the following paragraphs. From the findings related to intergovernmental transfers the study concludes that intergovernmental transfers increase poverty incidence at low levels below 18.42 percent.
 Unique Contribution to Theory, Policy and Practice: It is recommended that it’s most appropriate for national government to be in charge of administration of welfare and equity programmes. This is because intergovernmental transfers and county expenditure were associated with increasing poverty and also have no effect on income inequality and health outcomes in the counties in Kenya. The administration of welfare and equity programmes such as cash transfer programmes, child nutrition, and maternal health care will be more beneficial if implemented and coordinated by the national government.

The role of foreign aids and income inequality in poverty reduction: A sustainable development approach for Africa?

In the last decades, international interventions mostly through foreign aids have consistently been directed toward sustainable development objectives such as reduction of poverty in African countries. Thus, this study investigates the effect of foreign aids and income inequality in poverty reduction in Africa for 1990–2016. The novelty lies in the investigation of the effectiveness of aid remittances to Africa from the United Nations and Organization for Economic Cooperation and Development (OECD) which has previously been overlooked in extant studies. By using the system Generalized Method of Moments, the study showed that the interaction of inequality with the United Nations Development Programme (UNDP) funds and OECD Official Development Assistance is not statistically significant. Meanwhile, the interventions from the UNDP funds and OECD Official Development Assistance statistically yield significant and expected results of reducing poverty in the poor continent. However, the study surprisingly failed to establish that remittances from the UNDP have significantly mitigated poverty in Africa. Importantly, this study presents a significant policy guide for the governments and the stakeholders and recommends that the donor agencies adopt poverty-reduction, and income distribution-based criteria for the allocation of their resources to reduce poverty in the continent.

Response to ‘Polarization and Poverty Reduction in Africa: The Devil Is in the Choice of Equivalence Relation’

Thank you very much for asking us to respond to this very interesting paper and give the opportunity to shed additional light on a debate that we find extremely relevant for Africa. We take Partridge’s (2022) criticism as an opportunity to reflect not only on the methodology we suggest but also on the broad message we want to convey. The paper questions the validity of our results (Clementi et al., 2018, 2019) by basically attempting to confute two claims made in our work. Claim 1 states that our work can account for ‘distributional changes that went undetected by standard inequality measures’, and Claim 2 states that ‘there was an increase in polarization caused by a ‘hollowing out’ of the middle and a ‘concentration’ in the lowest and highest deciles of the distribution’. The author attempts to disprove both claims, concluding that we misinterpreted our results. We plan to articulate our answer by discussing the two claims and explaining the methodological assumptions at the ground of our choices.

Editorial Introduction

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Polarisation and Poverty Reduction in Africa: The Devil Is in the Choice of Equivalence Relation

AbstractThe focus of this paper is the low observed mean consumption elasticity of poverty in Africa, and the suggestion that polarisation of national distributions, specifically the non-parametric ‘relative distribution’ method, is essential to understand the low regional elasticity. The version of the methodology adopted results in a measure of absolute polarisation. We show that the results obtained for 24 countries in the region are entirely a product of this choice, and while preference for translation invariance is a normative matter, claims regarding changes in distributions are not. There is no evidence of distributional changes unaccounted for by standard measures of inequality and mean consumption. These variables also explain the evolution of poverty levels in the 24-country sample. Given that changes in mean consumption and inequality account for both the changes in the chosen measure of polarisation and the evolution of poverty, there is no distinct role for the chosen measure of polarisation in accounting for the evolution of poverty in the region.

The contribution of cooperative irrigation scheme to poverty reduction in Tanzania

Irrigation system is a scare resource in most of drought-stricken Africa. How to manage and maintain the existing irrigation facilities in Africa is a debatable issue to both policy makers and beneficiaries. Irrigation facilities run by farmer cooperatives are considered ineffective, unsuccessful and dysfunctional in Tanzania by many researchers. A cooperative irrigation scheme is a mechanism that features the collective management of rural irrigation facilities by farmers’ cooperative with some government intervention and external support. There is an increasing emphasis on the roles of cooperative irrigation scheme in the development of the agriculture sector and poverty reduction of smallholder farmers. In this study, the authors investigated the management and services of this scheme and analyzed its contribution to poverty reduction of smallholder rice farmers and community development in Tanzania through both quantitative and qualitative methods. The results showed that the scheme helped smallholder farmers increase the rice production and brought better market opportunities. The farmers’ net income was also increased. Profit generated from rice farming not only improved the livelihoods of smallholder farmers but also created more employment opportunities in the rural communities. The research also revealed that the scheme was faced with a number of challenges due to resource and institutional constraints and low-level human capacity for both management and members. The research provides a feasible approach to effective management of small-scale agricultural infrastructure for poverty reduction in Africa.

Does Financial Development Really Matter for Poverty Reduction in Africa?

This paper revisits the financial development–poverty nexus. The study builds a robust measure of financial development that captures the state of financial development in Africa. We adopt the measure for examining the relationship between 1996 and 2015. Our results agree with a priori expectation. Overall, we find a reducing effect of financial development on absolute poverty but this does not affect relative poverty. Private credit has a poverty-reducing effect; however, total financial development and financial inclusion do not affect poverty in African countries. Also, stability and efficiency increase poverty levels. Considering the low level of financial inclusion in the continent, it is likely that financial development will reduce poverty in the continent if the poor can access credits. Our results should be interpreted with caution, the commercial banking model may not adequately address poverty in Africa. Hence, much should not be expected in policy circles from financial development for poverty reduction in the present state of financial development in Africa.

The Nexus Between Financial Development, Economic Growth and Poverty Alleviation: PMG-ARDL Estimation

This study aims to find out the connections between financial development, economic growth, and poverty using panel data from 1985 to 2017 in fourteen African countries that many previous researchers ignore. The study deploys a dynamic Granger causality test to trace the nexus between financial development, economic growth, and poverty reduction in Africa in the long run. First, the upshots suggest a gross domestic product, gross capital formation, price of household consumption, and government expenditure substantially impacting poverty. Besides that, the result also shows a bi-directional in the long run using a PMG estimator. The findings broadly support the view that there is a stable, short-run relationship between financial development, economic growth, and poverty in the error correction terms. However, other variables show no causal relationship in the short run. In practicality, this study suggested some policy implications and supported governmental policies to reduce economic hardship on financial institutions.JEL Classification: G10, O47, I39, C33How to Cite:Korankye, B., Wen, X., Appiah, M., & Antwi, L. (2021). The Nexus Between Financial Development, Economic Growth, and Poverty Alleviation: PMG-ARDL Estimation. Etikonomi: Jurnal Ekonomi, 20(1), 1 – 12. https://doi.org/10.15408/etk.v20i1.15908.