Sector Development In Africa Research Articles

The effect of ICT on financial sector development in Africa: does regulatory quality matter?

ABSTRACT The moderating role of regulatory quality in the relationship between ICT and financial development in Africa is investigated in this study. We employ data from 38 African countries from 2003 to 2020. For the analysis, a two-step system GMM is used. Our findings demonstrate that ICT and regulatory quality are essential for financial development. The net effect of ICT and regulatory quality on financial development is positive, implying that regulatory quality moderates upwards the nexus between ICT and financial development. On different financial development indicators, ICT improves financial depth and access but deteriorates financial efficiency and stability. The net effects of ICT and regulatory quality are positive for financial depth and efficiency and negative for financial access and stability. It is, therefore, imperative for the government to improve regulatory quality in Africa, given the significance of ICT and regulatory quality in supporting financial development.

The effects of foreign bank presence on financial development in Africa: The role of institutional quality

AbstractDespite the momentous rise in concentration and market share of foreign banks in overall bank assets in Africa, rigorous empirical work(s) examining their effect on financial sector development in Africa is hard to find. In view of this, the study seeks to investigate the moderating role of institutions/governance on the foreign bank presence‐financial development nexus. Employing the two‐step system generalized method of moment for a panel dataset of 28 economies in Africa over the period, 2000–2018, the results show that foreign bank presence has a positive effect on financial development. Also, the study finds evidence that foreign banks in host countries increase financial development in the presence of quality institutions. The study recommends improvement in institutional quality, which will help foreign banks to promote financial development.

Do women hold the key to financial sector development in Africa?

Do women hold the key to financial sector development in Africa?

Economic growth through digitalization in Africa: does financial sector development play a mediating role?

PurposeThis paper aims to analyse economic growth in Africa focussing on the role of digitalization and financial sector development.Design/methodology/approachThe authors employ country-level data from 36 African countries over the period 2000–2020 and used fixed effect, random effect and the Hausman–Taylor estimation techniques.FindingsThe study, first finds that, digitalization propels financial sector development in Africa. Building on this, the study further finds that, digitalization conditioned on financial sector development at best does not promote economic growth in Africa. However, results of the net effects suggest that digitalization, overall, improve economic growth in Africa.Social implicationsIn the current environment of a sluggish global economy, digitalization can play an important role in assisting policymakers to spur economic growth. This has attracted the attention of many researchers in the developed world. However, little is done about the subject matter in Africa.Originality/valueThe findings of this paper are novel in the African sub-region with important policy implications.

Harnessing the synergies of independent central banks and human capital for enhanced financial sector development in Africa

Using panel data from 2004 to 2012, we employ a two-step system GMM estimation technique, with robust standard errors, collapsed instruments and illus-trate marginal effects of central bank independence on financial development in Africa. We also examine the moderating roles of human capital, proxied by literacy rates on the CBI-financial development nexus. We find that, in countries with higher literacy rates/human capital, the positive impact of dejure CBI on financial development is enhanced. Higher literacy rates however, worsen the negative impact of de facto CBO on financial devel-opment. Independent central banks can be made more effective in achieving financial development through governments improving literacy rates. The study is the first to empirically examine the impact of central bank independence on financial development using both dejure and de facto CBI measures and literacy rates in explaining this relationship

What Drives Financial Sector Development in Africa? Insights from Machine Learning

ABSTRACT This study uses machine learning techniques to identify the key drivers of financial development in Africa. To this end, four regularization techniques – the Standard lasso, Adaptive lasso, the minimum Schwarz Bayesian information criterion lasso, and the Elasticnet– are trained based on a dataset containing 86 covariates of financial development for the period 1990 - 2019. The results show that variables such as cell phones, economic globalization, institutional effectiveness, and literacy are crucial for financial sector development in Africa. Evidence from the Partialing-out lasso instrumental variable regression reveals that while inflation and agricultural sector employment suppress financial sector development, cell phones and institutional effectiveness are remarkable in spurring financial sector development in Africa. Policy recommendations are provided in line with the rise in globalization, and technological progress in Africa.

Remittances and financial development in Africa

Despite the magnitude of remittances as an alternative source of investment financing in Africa, the financial sector in Africa has significantly remained underdeveloped and unstable. Finding a solution to Africa's financial deregulation problems has proved tenacious partly because of inadequate literature that explain the nature of Africa capital and financial markets which has shown to be unorganised, spatially fragmented, highly segmented and invariably externally dependent. We examine the structural linkages between remittances and financial sector development in Africa. Panel data on indices of remittances was regressed on indices of financial sector development in fifty‐three (53) African countries from 1986 through 2017 using the Pooled Mean Group estimation procedure. We accounted for cross‐sectional dependence inherent in ordinary panel estimation and found a basis for the strict orthogonal relationship among the variables. Findings revealed a positive long‐run relationship between remittances and financial development with a significant (positive) short‐run relationship. It is suggested that, while attracting migrants' transfers which can have significant short‐run poverty‐alleviating advantages, in the long run, it might be more beneficial for African governments to foster financial sector development using alternative financial development strategies.

Re-examining the causal relationships among FDI, economic growth and financial sector development in Africa

ABSTRACT Studies on the causal relationships among foreign direct investment (FDI), economic growth and financial sector developmentare far from being conclusive, a reflection of the different methodologies and country-settings employed. In this study, we depart from the use of single countrycases to relying on a panel data comprising 45 African countries over the period 1980 to 2016 in examining such causal linkages. By applying a panel Granger Non-Causality test,we find that the causal nexus between FDI and economic growth is conditioned on the indicator of economic growth while we observe feedback causality between (i) FDI and financialsector development, and (ii) financial sector development and economic growth. These findings hold irrespective of the proxy of finance and economic growth. The study concludes bydiscussing key implications for policy.

Nigerian Transnational Companies and Economic Development across Sub-Saharan Africa

In examining how the private sector could be gainfully engaged in economic development of African countries, issues such as corporate social responsibility (CSR) framework, multinational enterprise and livelihood option suffice. These are some key elements of a credible policy package that will promote private sector development and boost intra-African trade. Another vital area that needs to be creatively addressed in the capacitation of African enterprises is access to financial resources, which studies suggest is one of the major constraints to private sector development in Africa. As one of the largest economies in Africa, Nigeria has played a leading role in private sector engagement in economic development. A number of Nigerian transnational companies have extended their operations and maintained active presence in some other Africa countries, particularly Sub-Saharan African countries. In addition to their primary business, they have invested heavily in some human development sectors such as health, workforce development and infrastructure—initiatives which not only benefitted them, but create richer economies and enhance human capital development of the host countries. The study is mainly focused on the capital investments of two Nigerian Transnational Companies— Globalcom, a Telecommunication company and the Dangote Group—a manufacturing and trading firm. The study uses their operations and investments across Sub-Saharan Africa as case studies of Nigeria’s private firms’ contribution to economic development in Africa. The study will look into published statistical records and other materials to generate information on trade and foreign investment within the study area. Keywords : Transnational Companies, Economic Development, Africa DOI: 10.7176/IAGS/83-05 Publication date: June 30 th 2020

The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions. JEL codes: E02; E44; E58

Big data and the electricity sector in African countries

• Application of disruptive technologies for power sector development in Africa. • Use cases for infrastructure planning, off-grid electrification, and operations. • Technological, skills, and regulatory challenges impeding adoption of modern tech.

Financial sector development convergence in Africa: Evidence from bank- and market-based measures

In this paper, we employ data from 46 African countries over the period 1980–2014 to examine financial sector development convergence, using bank- and market-based measures of financial development. Within the framework of the generalized method of moments (GMM), we present evidence that both the bank– and market–based financial sector development in Africa diverge over time. However, we find strong evidence of financial development divergence when using bank-based financial sector development indicators whereas this evidence is weaker for market-based indicators. Given the divergence in the level of finance, the gap between countries with underdeveloped and well–developed financial markets will continue to widen as financially less developed countries do not appear to catch-up with the financially more developed economies. Keywords: Financial development; divergence, convergence, AfricaJEL Classification: F15, F36, G01, O55

The Mobile Phone, Information Sharing, and Financial Sector Development in Africa: a Quantile Regression Approach

This study investigates linkages between the mobile phone, information sharing offices (ISO) and financial sector development in 53 African countries for the period 2004-2011. ISO are private credit bureaus and public credit registries. The empirical evidence is based on contemporary and non-contemporary quantile regressions. Two main hypotheses are tested: mobile phones complement ISO to enhance the formal financial sector (Hypothesis 1) and mobile phones complement ISO to reduce the informal financial sector (Hypothesis 2). The hypotheses are largely confirmed. This research adds to the existing body of literature by engaging hitherto unexplored dimensions of financial sector development and investigating the role of mobile phones in information sharing for financial sector development.

The Mobile Phone, Information Sharing and Financial Sector Development in Africa: A Quantile Regressions Approach

This study investigates linkages between the mobile phone, information sharing offices (ISO) and financial sector development in 53 African countries for the period 2004-2011. ISO are private credit bureaus and public credit registries. The empirical evidence is based on contemporary and non-contemporary quantile regressions. Two main hypotheses are tested: mobile phones complement ISO to enhance the formal financial sector (Hypothesis 1) and mobile phones complement ISO to reduce the informal financial sector (Hypothesis 2). The hypotheses are largely confirmed. This research adds to the existing body of literature by engaging hitherto unexplored dimensions of financial sector development and investigating the role of mobile phones in information sharing for financial sector development.

Determinants of financial development in Africa: How robust is the interactive effect of trade openness and human capital?

This study examines the determinants of financial sector development in Africa relying on data for 46 countries spanning 1980–2015 using the system generalized method of moments. More importantly, we investigate the issue of whether the interaction of trade openness and human capital can explain financial development. Our findings show that, while human capital robustly influence financial development, trade openness robustly matter more for private credit than domestic credit. The interactive terms of openness and human capital are significantly related to financial development. Evaluation of the marginal effects reveal that trade openness (human capital) has greater impact on private (domestic) credit than human capital (trade openness). Our evidence largely suggests that human capital accumulation and trade openness are substitutable in influencing financial development in Africa.

Pharmaceutical Sector Development in Africa: Progress to Date

The African Union’s Pharmaceutical Manufacturing Plan for Africa was established to develop the African pharmaceutical industry, a sector with considerable promise for reducing the burden of disease in Africa. With a projected value of over US$40 billion by the next decade, the sector also has the potential to promote economic growth. Additionally, as a technology-based industry it is positioned to advance Africa’s aspiration to transition into a knowledge-based economy. Considerable progress has been made since the development of a business plan for implementing the Pharmaceutical Manufacturing Plan for Africa. This includes initiatives to harmonize medicine regulation on the continent, address human capacity and skills shortages, and to promote cooperation and advocacy in the industry. The promise of the sector has also galvanized countries and regions with manufacturing capacity to harness support for its development. The rate-limiting step in this quest is making funding available to build the needed capacity in infrastructure and in Good Manufacturing Practices, as stipulated by the Pharmaceutical Manufacturing Plan for Africa. A proposed new initiative, the Fund for African Pharmaceutical Development, currently under consideration by the African Union, may provide the boost needed to overcome this final hurdle.

Information Sharing and Financial Sector Development in Africa

ABSTRACTThis study investigates the effect information sharing has on financial sector development in 53 African countries for the period 2004 to 2011. Information sharing is measured with private credit bureaus and public credit registries. Hitherto unexplored dimensions of financial sector development are employed, namely: financial sector dynamics of formalization, informalization, and non-formalization. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM). The following findings are established. Information-sharing bureaus increase (reduce) formal (informal/non-formal) financial sector development. In order to ensure that information-sharing bureaus improve (decrease) formal (informal/non-formal) financial development, public credit registries should have between 45.45 and 50% coverage while private credit bureaus should have at least 26.25% coverage.

Party System Competition and Private Sector Development in Africa

Democratic transitions by many African countries have generated much analysis of the organisational features of political parties or their role in voter mobilisation during elections. Yet, scholars have largely overlooked how parties negotiate economic policymaking or interact with the private sector in countries that are incipient democracies and emerging markets. This article argues that the stability or fragmentation of the party system affects patterns of private sector development and shapes linkages between the state, business and labour. It compares Mozambique and Zambia to demonstrate how variations in party system characteristics influence the relationship between economic and political interests.

Information Sharing and Financial Sector Development in Africa

This study investigates the effect information sharing has on financial sector development in 53 African countries for the period 2004-2011. Information sharing is measured with private credit bureaus and public credit registries. Hitherto unexplored dimensions of financial sector development are employed, namely: financial sector dynamics of formalization, informalization and non-formalization. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalised Method of Moments (GMM). The following findings are established. Information sharing bureaus increase (reduce) formal (informal/non-formal) financial sector development. In order to ensure that information sharing bureaus improve (decrease) formal (informal/non-formal) financial development, public credit registries should have between 45.45 and 50 percent coverage while private credit bureaus should have at least 26.25 percent coverage.

Integrated Seed Sector Development in Africa: A Basis for Seed Policy and Law

Seed policies primarily concentrate on the formal seed system, which supplies Sub-Saharan African countries less than 20% of the total seed demand and involves only a limited number of crops and varieties. Seed laws, and the mechanisms and organizations involved in their implementation, are developed with varying degrees of success. We address the limitations of applying a linear model to seed sector development and introduce integrated seed sector development (ISSD). We assess seed systems in Ethiopia, Mali, and Zambia, and demonstrate that one single model cannot address the variations in realities within one country or the continent. ISSD provides opportunities for taking a pluralistic approach in strengthening multiple seed systems, and has the potential to combine objectives targeting food security, agricultural development, promoting entrepreneurship, and contributing to biodiversity management. We elaborate pathways for ISSD-guided policies that include variety release, seed quality management, and plant breeders' rights.