West African Economies Research Articles

Exchange rates and trade balance in West African economy and monetary union countries: does the content of the traded goods matter?

Exchange rates and trade balance in West African economy and monetary union countries: does the content of the traded goods matter?

Shadow economy-income inequality nexus: a panel analysis of West African countries

ABSTRACT This paper examines the nexus between shadow economy and income inequality in the West African region. The study applies second-generation panel estimation techniques to analyze the effect and the direction of causation between the variables. The results reveal that the shadow economy reduces income inequality in the region in both short-run and long-run estimations. A similar result is documented when alternative estimation techniques are employed. In addition, the panel causality results show a bidirectional relationship between shadow economy and income inequality in the West African economy. The implications of the study are discussed.

West African Pidgin: World Language Against the Grain

West African Pidgin (“Pidgin”) is a cluster of related, mutually intelligible, restructured Englishes with up to 140 million speakers in Nigeria, Cameroon, Ghana, Sierra Leone, Equatorial Guinea, and The Gambia. Spoken by just few thousand people two centuries ago, “modernisation” and “shallow social entrenchment” have driven the transformation of Pidgin into a “super-central” world language. Demographic growth, migration, the expansion of West African cultural industries and economies, and people-to-people contacts are likely to expand Pidgin further. Already the largest language of West Africa, Pidgin may be spoken by 400 million people by 2100. The rise of Pidgin goes against the grain. World languages like English, French, Chinese, or Arabic mostly spread through colonisation, elite engineering, and state intervention. The trajectory of Pidgin, therefore, holds great potential for exploring the dynamics of large-scale natural language evolution in the twenty-first century.

Resilience and adaptation of third sector organizations (TSOs) during crisis situations: Insights from a West African economy

Resilience and adaptation of third sector organizations (TSOs) during crisis situations: Insights from a West African economy

Assessing Inequality and Its Translation on Economic Growth and Human Development in West Africa

Sub-Saharan Africa in general and West Africa in particular are ranked as one of the most unequal regions of the world. This study aims at investigating the direct effect of inequality on economic growth and human development (HD). To assess this effect, we use three variables and rigorous estimation techniques. The indirect effect of inequality on the economic growth–HD nexus in West Africa is analyzed with a view to identifying ways of realigning the policies to bring down inequality in West African economies. For this, we compare different standpoints on how inequality affects this nexus. Then, we run fixed effect panel regression and random effect panel regression on various models to test the hypotheses. We find that the positive impact of inequality on HD and economic growth in the most developed economies of the region results from deliberate policies coupled with strong economic and socio-political foundation.

Trade openness, poverty, and sustainable development: Testing for causality using Dumitrescu-Hurlin approach

Purpose — This research paper explores the causal links between trade openness, poverty, and sustainable development, shedding light on the potential impact of trade policies on poverty reduction and sustainable development in the Economic Community of West African States (ECOWAS) region.Method — We utilize the Dumitrescu-Hurlin (DH) panel causality test, a robust econometric approach capable of discerning the direction and magnitude of causal relationships among variables. We employ a comprehensive dataset spanning from 1986 to 2020, covering ECOWAS countries, to conduct a rigorous empirical analysis.Result — The empirical findings from the DH causality analysis reveal a unidirectional relationship between trade openness, human capital investment, and both sustainable development and poverty. Additionally, bidirectional causality relationships are observed between human capital investment and poverty. The results also highlight the absence of a consistent and uniform pattern of Granger causality between poverty and sustainability across individual West African economies. This heterogeneity underscores the need for customized policy approaches based on empirical evidence derived from country-specific causality analyses, rather than adopting one-size-fits-all solutions.Novelty — This research stands out by exploring the causal connections among trade openness, poverty, and sustainable development within the Economic Community of West African States (ECOWAS) region. The adoption of the Dumitrescu-Hurlin (DH) panel causality test enhances the empirical analysis, offering a comprehensive understanding of both the direction and magnitude of these relationships.

Paradoxes of West African Warlord Conflict Economy as a Part of Global Market

This essay is devoted to the examination of the way globalization is connected to the conflict emergence in the developing world (with focus on the warfare in Liberia and Sierra Leone in 1989–2003). The key paradox of intensified conflicts in the developing world in the 1990s against the backdrop of deeper globalization is reviewed through the lens of civil wars in West Africa and their interconnection with the globalizing markets. Geo-economic foundations and structure of trans-border war zones with links to global markets are analyzed using this material. Overall, the essay seeks to examine the complexity and extent of the role globalization had on the fragile West African states in the post-Cold War context.

Scientific agenda for climate risk and impact assessment of West African cropping systems

Rainfed agriculture is at the centre of many West African economies and a key livelihood strategy in the region. Highly variable rainfall patterns lead to a situation in which farmers’ investments to increase productivity are very risky and will become more risky with climate change. Process-based cropping system models are a key tool to assess the impact of weather variability and climate change, as well as the effect of crop management options on crop yields, soil fertility and farming system resilience and widely used by the West African scientific community. Challenges to use are related to their consideration of the prevailing systems and conditions of West African farms, as well as limited data availability for calibration. We outline here a number of factors need to be considered if they are to contribute to the scientific basis underlying transformation of farming systems towards sustainability. These include: capacity building, improved models, FAIR data, research partnerships and using models in co-development settings.

Accreditation of Agri-Food and Medical Laboratories in the UEMOA Region: An Opportunity for the Promotion of Sustainable Public Health

In an increasingly changing and demanding world, Quality Infrastructure is an instrument that is both important and essential in a context marked by health, environmental, economic, and social issues. Among the pillars of Quality Infrastructure, accreditation plays an important role, ensuring the technical competence and integrity of bodies offering conformity assessment services, such as testing, medical testing, calibration, certification, inspection, and validation/verification based on recognized international standards. The objective of this article is to highlight the importance and role of the Système Ouest Africain d’Accréditation/West African Accreditation System (SOAC-WAAS) in preserving and promoting the health of populations and the competitiveness of West African economies. Given the importance of accreditation, the West African Economic and Monetary Union (UEMOA) that gathers eight countries (Benin, Burkina Faso, Côte d'Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo) created, in 2005, SOAC-WAAS, a multi-economy accreditation body. The latter is the only authorized accreditation body for the eight UEMOA member states. Its mission is to deliver and promote accreditation in the community area, particularly through the issuance of accreditation certificates to conformity assessment bodies (CABs). To date, SOAC-WAAS has accredited forty-six (46) conformity assessment bodies, including four (4) calibration laboratories, three (3) certification bodies, and thirty-nine (39) testing laboratories. Among the SOAC accredited testing laboratories, one (1) is in the field of forensics and ten (10) are medical laboratories. Fourteen (14) testing laboratories and the three (3) accredited certification bodies are operating in the agri-food sector. This result, which is certainly insufficient for the entire UEMOA region, is still encouraging and contributes to the preservation of health and protection of the population, particularly with regard to accredited agri-food and medical testing laboratories.

The impact of customer-focus on the performance of business organizations: evidence from SMEs in an emerging West African economy

PurposeThe purpose of this paper is to investigate the impact of customer-focus on small medium enterprise (SME) performance from the perspective of a resource-based view (RBV).Design/methodology/approachThis research study implemented a survey strategy to gather data from 255 respondents on the registered list of Ghana Enterprise Agency (GEA) in the eastern region of Ghana. Scales used to gather data were operationalized from previous research studies. A structural equation modeling (SEM) path analysis was used to estimate the impact of customer-focus on the performance of SMEs.FindingsThe outcomes of this study indicate that customer-focus has a significant positive impact on SME performance, hence backing the current demand for investigating the distinct influence of customer-focus on SME performance. The results show that customer-focus has a positive and significant relationship with financial performance, customer performance, internal business process performance and learning and growth performance, thus supporting the literature on the positive impact of customer-focus on SME performance. Therefore, customer-focus determinants used in this study, including co-creation, networking ties, customer insight and artificial intelligence marketing (AIM), are critical to the optimization of SME performance.Research limitations/implicationsNotwithstanding the importance of this research study mentioned earlier, the study has limitations. Notably, the sample size of this study can be increased to capture SME respondents in other geographical zones that were not included in this study. Future research studies may address how business environment conditions moderate the relationship between customer focus and performance, and also the cause-effect of the relationship between customer focus and business environment conditions on SME performance.Practical implicationsThe practical implications consist of two main items. First, this study empowers SME owners and managers to develop a customer focus technique as a central strategic goal in their quest for SME performance optimization. Second, SME owners and managers should progressively exploit the four determinants of customer focus which include co-creation, networking ties, customer insight and (AIM in order to accrue important resources for effective utilization of their customer focus competences as a way to enhance their performance.Social implicationsThis study is targeted at the sound development of SMEs to bring about poverty alleviation and employment. Poverty, unemployment and poor living standards are recognized as vital social challenges in most emerging economies. The establishment of customer focus as an important strategic capability provides opportunities for SME survival, profitability and growth.Originality/valueGenerally, the findings of this research study provide a strong backing to RBV perspective and the proposition that customer-focus and its determinants (i.e. co-creation, networking ties, customer insight and AIM) should be acknowledged as a vital strategic resource for optimizing the performance of SMEs. This research study also provides new knowledge contribution to the present body of knowledge on customer-focus orientation and management literature, particularly in the context of an emerging economy.

Do educational inequalities between marital partners influence the empowerment of educated women in ECOWAS?

ABSTRACT In an environment where the question of women’s empowerment is a burning issue and where inequalities against women in education persist even though they are increasingly educated, it made sense to study the effect of educational inequalities between marital partners on women’s empowerment. Thus, using the latest rounds of the Demographic and Health Survey (DHS) women’s file from the four major West African economies including Nigeria (2013), Côte d’Ivoire (2011–12), Ghana (2014) and Senegal (2017), and then using a combination of internal and external instruments to better address issues related to the endogeneity of variables, we show that strong gender disparities in education negatively influence women’s financial and non-financial empowerment. The former is seen as the power of women to make decisions about spending their own and their spouse’s income and major household purchases. The second is the woman’s power to decide on health-related expenses and visits to relatives. Several other socio-demographic variables were likely to influence women’s empowerment. These include the woman’s household social status, age, labour market participation and religion.

Convergence économique au sein de l’espace ouest-africain: L’intégration économique régionale à l’épreuve des faits

Dans cet article nous proposons d'abord une discussion à la lumière des travaux récents sur la convergence économique ou non des pays ouest-africains qui sont dans le processus de régionalisation des échanges depuis 1975. Nous examinons, ensuite, les déterminants de la convergence en prenant appui sur une analyse économétrique spatiale de tous ces États sur la période 1990-2021. Les résultats obtenus font ressortir que les économies sont globalement et fortement divergentes ; les convergences absolue et conditionnelle n'étant pas réalisées. Mais trois clubs de convergence ont été décelés, avec le Sénégal qui fait bande à part. Le taux d'investissement, les dépenses publiques, le taux d'inflation, la parité du pouvoir d'achat, le taux d'ouverture commerciale, le taux de scolarisation et le taux de croissance démographique, variables structurelles de contrôle, ont joué un rôle important dans l'appréciation de la vitesse et du niveau de divergence des économies ouest-africaines. Ceci a mis en évidence les écarts des revenus par tête, le retard dans les mécanismes intégrateurs et les effets des chocs auxquels ces économies sont soumises.

Sustainable development of West African economies to achieve environmental quality.

The deterioration of environmental quality spurred on by rising greenhouse gas (GHG) emissions is the main threat to reducing carbon footprint. Africa has recently been identified as having experienced excessive temperatures above pre-industrial standards. Despite its lower GHG emissions, Africa continues to be among the most impacted areas of the world by global warming. However, this research scrutinizes the effect of human capital and trade openness on the ecological footprint (ECF) and carbon dioxide (CO2) emissions using data from West Africa from 1995 to 2016. The research used dynamic ordinary least squares, fully modified ordinary least squares, and paired Dumitrescu-Hurlin panel causality tests for its assessment. The study's findings are as follows: (1) The study found that human capital and trade openness decrease the ecological footprint in West Africa; (2) globalization reduces CO2 emissions while also increasing the ecological footprint; (3) the analysis reveals that natural resources and the population improve environmental quality in West Africa, while biocapacity reduces the ecological footprint and improves CO2 emissions in the region; and (4) the study revealed the bidirectional causality between biocapacity, the population, and ECF. The study also revealed the bidirectional causality between biocapacity, population, human capital, natural resources, and CO2 emissions, while ecological footprint is unidirectionally causally related to globalization, human capital, and trade capital. Unidirectional causality runs from the ecological footprint, globalization, and trade openness to CO2 emissions. To ensure their countries have a long-term future, policymakers in West Africa should take action to limit overexploitation of natural resources and encourage people to live more sustainably. The study suggested that West African countries adopt "green growth" policies and improve technology to help their economies and the environment.

On the Macroeconomic Conditions of West African Economies to External Uncertainty Shocks

This study provides a detailed investigation of the time–frequency and frequency-domain analysis of the interconnectedness of country-level macroeconomic variables. Hence, the wavelet techniques—vector wavelet and wavelet multiple—employed with TVP-VAR are utilised as a robustness check. The macroeconomic variables considered are consumer price index (CPI), real exchange rate (EXR) and nominal effective exchange rate (NEER) for four selected West African economies—Côte d’Ivoire, Gambia, Ghana and Nigeria. The findings of the study reveal that there are significant comovements between the macroeconomic dynamics in a time–frequency domain for the selected economies. From the wavelet multiple technique, the study finds three interesting outcomes. First, there are traces of high comovements between the macroeconomic conditions of some countries in the long term. In addition, NEER has a strong exposure to external shocks due to the presence of periodic swings such as inflation, which makes it largely susceptible to shocks. Second, a high integration of macroeconomic variables, in the long term is found. Third, Global Economic Policy Uncertainty (GEPU) lags in the long term within the interdependencies of CPI as well as NEER but not EXR. This suggests that the presence of inflation most likely exposes these economies to external shocks. However, when this happens, external shocks act as a follower to influence economic activities within this region. The study advocates that governments and policymakers should deploy efficient inflation-targeting monetary policies to enhance price stability and minimise the adverse impact of GEPU for future monetary convergence.

Exploring the Dynamic Nexus Among Economic Growth, Industrialization, Medical Technology, and Healthcare Expenditure: A PMG-ARDL Panel Data Analysis on Income-Level Classification Along West African Economies.

This article explored the dynamic nexus among economic growth, industrialization, medical technology, and healthcare expenditure in West Africa while using urbanization and aged population as control variables. West African countries were sub-sectioned into low-income (LI) and lower-middle-income (LMI) countries. Panel data extracted from the World Development Indicators (WDI) from 2000 to 2019 were used for the study. More modern econometric techniques that are vigorous to cross-sectional dependence and slope heterogeneity were employed in the analytical process in order to provide accurate and trustworthy results. The homogeneity test and cross-sectional dependency test confirmed the studied panels to be heterogeneous and cross-sectionally dependent, respectively. Moreover, the CADF and CIPS unit root tests showed that the variables were not integrated in the same order. This, thus, leads to the employment of the PMG-ARDL estimation approach, which unveiled economic growth and urbanization as trivial determinants of healthcare expenditure in the LI and LMI panels. However, the results affirmed industrialization as a major determinant of healthcare expenditure in the LI and LMI panels. Additionally, medical technology was confirmed to decrease healthcare expenditure in the LMI panel, whereas in the LI panel, an insignificant impact was witnessed. Also, the aged population was found to intensify healthcare expenditure in both the LI and LMI panels. Lastly, on the causal connection between the series, the outcome revealed a mixture of causal paths among the variables in all the panels. Policy recommendations have therefore been proposed based on the study's findings.

Renewable energy demand, financial reforms, and environmental quality in West Africa.

Sustainable Development Goal (SDG-7) stipulates the need for clean energy, reduced carbondioxide emissions, prevention of environmental degradation, promotion of biodiversity, and ecosystem preservation. Toward achieving these goals, this study provides new evidence on the causal link between renewable energy demand, financial reforms, economic growth, foreign direct investment, and environmental quality among emerging West African economies. The study adopted the fully modified ordinary least squares, dynamic ordinary least squares, pooled mean group estimation, and Granger causality test for its analysis. It was found that renewable energy demand has been favorable to the environmental health of West African economies. Also, financial reforms made within the region contributed to increasing the ecological footprints of the region. Direct investments from foreigners showed encouraging results as they improved the quality of the environment. We also found a unidirectional causality from ecological footprints to renewable energy demand and financial reforms but a bidirectional relationship with economic growth and foreign direct investment. Moreover, it was evident that ecological footprints Granger cause financial reforms and economic growth but not vice versa. Policy recommendations outlined encourage governments and policymakers to embark on intensive clean energy technologies and effective green financial reforms to help achieve Sustainable Development Goals.

Comparative analysis of the growth impact of pollution and energy use in selected West African nations.

We adopt the FMOLS and Granger causality technique to analyse the effect of energy use and carbon emissions on output growth in selected West African economies, which includes Nigeria, Gambia and Ghana, from 1970 to 2019. Findings confirm that energy use enhances growth in the three selected West African economies. But in terms of significance, energy consumption is significant in Nigeria and Gambia at a 1% level of significance while it is insignificant for the Gambia. CO2 emission positively and significantly propels economic growth for the three selected West African economies. For Nigeria, causality evidence shows no direct influence among the variables. For Ghana, we find a bi-causal association between output growth and carbon emissions and a unidirectional causality from pollution to energy consumption. For Gambia, economic growth causes CO2 emissions. We recommend that the West African government reinforce their stand on a sustainable growth path through energy conservation.

Monetary Convergence Across the Economic Community of West African States: Lessons for the Envisioned West African Monetary Union

Since its inauguration, the Economic Community of West African States has stressed its desire to advance regional integration through the establishment of a common single currency (the Eco). This policy has been considered advantageous given the economic benefits derived from the existence of one of the oldest sub-regional monetary unions across French-speaking West African Economies. For this reason, the West African Monetary Zone was created as a suggested second monetary zone consisting of English-speaking countries in the region in anticipation that in the long run, the two would converge. While empirical studies into the feasibility of achieving monetary integration in West Africa have provided some understanding of causal notions and possible effects, very few studies embrace complexity theory or attempt to use complexity-related conceptual notions in the identification and interpretation of patterns produced in longitudinal applications. Using both empirical and theoretical methods, this paper provides a unique longitudinal application of Dynamic Patterns Synthesis as an exploratory tool for observing the potential complexities that the proposed single currency arrangement across West Africa is likely to pose. The findings highlight multiple conjunctural causation in observing convergence and unpredictability across the Monetary Zone. These observations suggest more time is needed to achieve an established single currency.

Natural resources endowment: What more does West Africa need in order to grow?

Notwithstanding a huge deposit of natural resources in West Africa, the region has consistently recorded unimpressive economic performances, thus prompting an important question: what other things, besides resources endowment, does the region need in order to grow? In an attempt to look into this, we examine the roles of FDI, globalisation, and economic-governance alongside that of natural resources endowment on the growth of the West African economy. Using the panel ARDL technique on the West African data covering 1996–2016, we confirm that the impact of natural resources endowment on economic growth is significant and positive. Also, FDI exerts a positive effect on economic growth, while the coefficient of globalisation is mixed. Finally, we find that government effectiveness stimulates the growth of the region; it, however, reduces the positive effect of natural resources endowment while regulatory quality enhances the positive effect of natural resources endowment on economic growth. Given these findings, the governments of West African countries are enjoined to further promote the economic institutions of the states – entrench public and civil services efficiency, promote the formulation and strict implementation of regulations and sound policies – in order to promote both domestic and foreign (private) investments. Also, the governments of the West African states should key-in to the globalisation agenda by enhancing the competitiveness of local markets in order to compete meritoriously with foreign firms.

Effects of Exchange Rate Volatility on Economic Growth: Evidence from West Africa

The implications of exchange rate movement for economic growth have become a growing focus of attention in the recent policy debate and the debate concentrate on the degree of volatility in the exchange rate. Exchange rate volatility is usually a risk that will result in higher costs for risk-averse investors, who may adopt a wait-and-see policy until the uncertainty subsides, thereby leading to reduced employment opportunities and slower growth. Thus, in judging the desirability of exchange rate volatility, this paper studies the effects of exchange rate volatility on economic growth for twelve West African countries: The Gambia, Ghana, Cote d'Ivoire, Mali, Niger, Nigeria, Senegal, Togo, Benin, Burkina Faso, Guinea Bissau, and Sierra Leone. Furthermore, the almost complete neglect of the financial sector development in the growth prospect of West African countries is still rather surprising since economic intuition and theory suggest that the growth of the financial sector by means of indebtedness and credit expansion does provide an average GDP growth rate. However, the financial markets and institutions in the West African countries are narrow and shallow. Thus, these countries do not have the tools to hedge exchange rate risks. Hence, fluctuating exchange rates often generate uncertainty, which leads to a decline in economic activity. Therefore, this study also analyzes the role of financial sector development on the impact of exchange rate volatility on economic growth of the West African economies. The random-effects and the two-step difference Generalized Method of Moment GMM estimation techniques are used in this analysis. The “Ad hoc method” is employed by using the lagged term of exchange rate movements for a robustness check in the random-effects model. The results support that the depreciation of the real effective exchange rate volatility has a contractionary effect on economic growth in West African countries and this contractionary effect decreases with countries’ financial sector development. Our results are also support the random effect “Ad hoc methodology” and the GMM procedure implying that they are robust to the cross-section correlation and reverse causality considerations. We also showed that depreciation of real exchange rate is again contractionary for the West African countries in the short run as well as in the long run using GMM procedures. The study recommends that the authorities in the West African countries should speed up the development of their financial sector to decrease the negative effects of exchange rate volatility thereby encouraging economic growth.