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41. China as an International Lender of Last Resort

Author:
Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent.
Topic:
Debt, Emerging Markets, International Trade and Finance, Financial Crisis, Belt and Road Initiative (BRI), and Sovereign Debt
Political Geography:
Africa, China, and Asia

42. Patterns of Global and Regional Value Chain Participation in the EAC

Author:
Sebastian Krantz
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Using global Multi-Region Input-Output (MRIO) data from 2005-2015, this paper empirically investigates the extent and patterns by which East African Community (EAC) countries have integrated into Global Value Chains (GVCs) and Regional Value Chains (RVCs). Results imply that the foreign content of exports (I2E) and the share of exports being re-exported (E2R) are stably between 10% and 20% in most EAC countries. Trade in intermediates with the rest of the world remains 12-14 times greater in value-added (VA) terms than the trade in intermediates inside the EAC. During 2005-2015, Kenya expanded its role as a regional supplier of manufactured inputs (higher E2R with EAC partners), and Uganda slightly increased its agricultural input to the Kenyan and Rwandan food processing sectors. Overall, however, a downstream shift is evident, by which more VA (both domestic and foreign) is used for the production of final goods while maintaining high levels of exports in primary agriculture and mining. This shift goes alongside a loss of comparative advantage in manufacturing in all EAC countries apart from Kenya. Econometric analysis suggests that higher I2E and E2R shares increase GDP with an average elasticity of ≥ 0.25 over 2 years. Estimates for manufacturing sectors were slightly higher at elasticities ≥ 0.3 in response to E2R shifts. These results imply that policy measures to increase manufacturing competitiveness and promote more horizontal RVCs would benefit EAC economic growth in the medium run.
Topic:
Globalization, Regional Integration, and Global Value Chains
Political Geography:
Africa

43. Africa’s Businesswomen – Underfunded or Underperforming?

Author:
Charles Ackah, Holger Görg, Aoife Hanley, and Cecília Hornok
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
While the recent success of Africa’s ‘Lionesses’ – successful female entrepreneurs - is internationally celebrated, less is known about how liquidity can fuel the success of the ‘Lionesses’ and other businesswomen. Using information from a panel of over 800 male- and female-owned businesses in Ghana (ISSER-IGC survey), we capture a measure of underfunding, in addition to data on supplier credit, equity and other finance sources. Our regressions reveal a female-to-male productivity gap of between -11 to -19 percent, values similar to estimates for other African countries. However, when the relationship between gender and productivity is mediated by financial constraints, the gender performance gap disappears. Accordingly, female business-owners who indicate that funding is not a problem, are associated with higher productivity than males, all things equal. In a finding new to the literature, our regressions reveal the importance of supplier credit for Africa’s businesswomen.
Topic:
Globalization, International Trade and Finance, Women, Business, Productivity, and Liquidity
Political Geography:
Africa and Ghana

44. China’s Provinces as Global Actors: Evidence from China-Africa Relations

Author:
Charlotte Lenz
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
With the launch in the early 2000s of China’s ‘Going Global’ Strategy, Chinese provinces became one group of actors participating in China’s South-South relations. In this Strategic Update, Charlotte Lenz investigates the role of Chinese provinces as foreign policy actors and explains their internationalisation strategies, challenging the prevalent perception of China as a unitary actor on the world stage. Drawing on evidence from Africa-China relations, the report identifies two strategies employed by Chinese provinces in pursuit of their foreign policy interests: (1) Formal and informal “twinning” as a collaborative model between central and local actors, wherein central actors design policies and provincial governments execute projects; (2) and “clustering” according to a sectoral logic of investment and diplomacy in which a certain Chinese province engages a certain foreign country. Despite ongoing bureaucratic centralisation under Xi Jinping, provinces continue to pursue their own internationalisation strategies to help meet local economic and employment targets. Understanding their agency, interests and limitations is thus key to deriving a better understanding of China’s evolving global presence.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, Investment, and Internationalization
Political Geography:
Africa, China, and Asia

45. Growth Through Inclusion in South Africa

Author:
Ricardo Hausmann, Tim O'Brien, Andrés Fortunato, Alexia Lochmann, and Kishan Shah
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
It is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion. The economy’s ability to create jobs is slowing, worsening South Africa’s extreme levels of unemployment and inequality. South Africans are deeply disappointed with social progress and dislike the direction where the country seems to be heading. Despite its enviable productive capabilities, the national economy is losing international competitiveness. As the economy staggers, South Africa faces deteriorating social indicators and declining levels of public satisfaction with the status quo. After 15 years, attempts to stimulate the economy through fiscal policy and to address exclusion through social grants have failed to achieve their goals. Instead, they have sacrificed the country's investment grade, increasing the cost of capital to the whole economy, with little social progress to show for it. The underlying capabilities to achieve sustained growth by leveraging the full capability of its people, companies, assets, and knowhow remain underutilized. Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice. This report asks the question of why. Why is the economy growing far slower than any reasonable comparator countries? Why is exclusion so extraordinarily high, even after decades of various policies that have aimed to support socio-economic transformation? What would it take for South Africa to include more of its people, capabilities, assets, and ideas in the functioning of the economy, and why aren’t such actions being undertaken already? The Growth Lab has completed a deep diagnostic of potential causes of South Africa’s prolonged underperformance over a two-year research project. Building on the findings of nine papers and widespread collaboration with government, academics, business and NGOs, this report documents the project’s central findings. Bluntly speaking, the report finds that South Africa is not accomplishing its goals of inclusion, empowerment and transformation, and new strategies and instruments will be needed to do so. We found two broad classes of problems that undermine inclusive growth in the Rainbow Nation: collapsing state capacity and spatial exclusion.
Topic:
Inequality, Economic Growth, Unemployment, and Inclusion
Political Geography:
Africa and South Africa

46. Gold in Ghana: A Story of Unbalanced Exchange

Author:
Léonce Ndikumana and William Godfred Cantah
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
his paper presents the historical and institutional context of the development of the gold sector in Ghana, which sets the stage for examining the contribution of the sector to the economy and its exposure to capital flight. The analysis sheds light on the important role that the regulatory framework and the fiscal regime that govern the gold sector have played in perpetuating a system of unequal distribution of gains from gold exploitation in terms of tax revenue and foreign exchange earnings in favour of foreign gold companies. The statistical analysis of gold export statistics reveals substantial discrepancies between Ghana’s gold exports and the recorded value of imports by its trading partners. These differences point to export underinvoicing as a conduit of capital flight, while also exhibiting a systematic lack of transparency and inconsistencies vis-a-vis established international conventions governing the recording of trade transactions, especially in the case of gold destined for South Africa which does not show up in the latter’s import statistics. Overall, the analysis suggests that the gains from the gold sector remain much below potential, but that at the same time there may be room for reforms that can improve the benefits from gold exploitation for the country.
Topic:
Development, Regulation, Capital Flight, Exchange Rates, and Gold
Political Geography:
Africa, South Africa, and Ghana

47. Cocoa in Ghana, the ‘Political Crop’: Does State Control Shield the Cocoa Sector from Exposure to Capital Flight?

Author:
Léonce Ndikumana and Kwame Adjai-Mantey
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Since its introduction into Ghana in the 19th century, cocoa has been considered a strategic crop, over which the post-independence governments have maintained substantial control. Cocoa is indeed referred to as a ‘political crop.’ The cocoa sector is closely regulated by the government through the Ghana Cocoa Board (COCOBOD). This paper aims to investigate whether this special industrial organization structure and the strict regulation help minimize the sector’s exposure to capital flight that would otherwise occur through export misinvoicing and leakage of foreign exchange earnings from cocoa exports. Indeed, compared to the gold sector in Ghana and the cocoa sector in neighboring Côte d’Ivoire, both of which are fully liberalized and dominated by foreign corporations, the cocoa sector in Ghana exhibits relatively little evidence of export misinvoicing. Moreover, cocoa export earnings are fully repatriated as they are in the hands of COCOBOD. The analysis, however, indicates that the gains from the cocoa sector in terms of contributions to GDP, tax revenue, and poverty reduction remain sub-optimal. This suggests that there is substantial room for improvement of these outcomes through targeted reforms and policy interventions at the sectoral level.
Topic:
Political Economy, Reform, Exports, Capital Flight, and Cocoa
Political Geography:
Africa and Ghana

48. Capital Flight from Natural Resource-Dependent African Countries: Updated Estimates and Analysis for the Cases of Cameroon, Ghana, and Zambia, 1970-2021

Author:
Léonce Ndikumana
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper is part of a project that investigates domestic and global drivers and enablers of capital flight from Cameroon, Ghana, and Zambia, three countries that are significantly endowed in natural resources. It presents estimates of capital flight from these three countries and discusses the key drivers of the phenomenon. The results show that as of 2021, estimated total capital flight stood at $71.1 billion for Cameroon, $50 billion for Ghana, and $71.5 billion for Zambia. External borrowing and, in the cases of Zambia and Cameroon, trade misinvoicing, are key correlates of capital flight. While external borrowing directly and indirectly drives capital flight, trade misinvoicing constitutes an important mechanism of unrecorded cross-border capital flows. This study contributes to the efforts to uncover the mechanisms and enablers of capital flight from Africa, with the aim of shedding light on possible strategies to curb further capital outflows in the context of efforts to scale up and diversify development financing to support recovery from global crises, the transition to green growth, and sustainable development in Africa.
Topic:
Development, Political Economy, Natural Resources, Capital Flight, and Trade
Political Geography:
Africa, Zambia, Ghana, and Cameroon

49. Policy Responses to COVID-19: Why Social Cohesion and Social Protection Matter in Africa

Author:
Julia Leininger, Armin von Schiller, Christoph Strupat, and Daniele Malerba
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This empirical analysis investigates whether and to what extent social cohesion and the coverage of social protection schemes influence governments’ decisions about the stringency of COVID-19 containment policies during the first and second waves in 2020 in Africa. Our results indicate that societal and social factors influenced the stringency of containment policies. Social cohesion has a negative effect on the stringency of containment policies in response to COVID-19 over time. Social protection coverage has a positive effect on the stringency of containment policies in response to COVID-19 over time. States implemented more stringent containment policies in less cohesive societies if they already had social protection schemes in place before the pandemic. Contextual factors mediated these effects. While stringency of containment policies softened over time where levels of democracy, poverty, and inequality were higher, social protection made a mediating difference only in autocratic states and societies with higher poverty. Three contributions of the empirical analysis stand out. First, the conceptual integration of societal and social factors (“societal triangle”) provides a novel basis from which to analyse policy responses during external shocks like a global pandemic. Second, to overcome the limitations of current measurements of social cohesion, we use a novel measurement to determine pre-pandemic levels of social cohesion. Third, this is the first cross-national study that addresses a world region, Africa, which has gained little attention in the study of policy responses to the COVID-19 pandemic.
Topic:
Public Health, Social Cohesion, COVID-19, and Protection
Political Geography:
Africa

50. The Effects of a Private-Sector-Driven Smallholder Support Programme on Productivity, Market Participation and Food and Nutrition Security: Evidence of a Nucleus-Outgrower Scheme from Zambia

Author:
Tekalign Gutu Sakketa, Raoul Herrmann, Chewe Nkonde, Mwelwa Lukonde, and Michael Brüntrup
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Nucleus-outgrower schemes (NOSs) are supposed to be a particularly effective private-sector mechanism to support smallholder farmers and contribute towards mitigating the problematic aspects of pure large-scale agricultural investments. This discussion paper uses panel household survey data collected in two rounds in Zambia to analyse some agro-ecological and socio-economic impacts of the outgrower programme of one of the largest agricultural investments in Zambia: Amatheon Agri Zambia (AAZ) Limited. The descriptive results show that the type of participation in the programme varies across participants and components, with most participating in trainings. Econometric results suggest the following key findings. First, although the overall impact of the AAZ outgrower programme on the uptake of conservation agriculture practices is robust and promising, impacts on the adoption of other agricultural technologies is less obvious and the effect depends on the type of support provided. Second, the programme has had a significant impact on maize productivity promoted in the initial phase but not on the other crops – mainly oilseeds – promoted later. Third, the initially less productive farmers seem to benefit slightly more than already better performing ones. Fourth, although the impact on overall household security was insignificant, there is some suggestive evidence (although the effect is weak) that the programme has a positive effect on improving women’s uptake of micronutrients. Finally, our findings show that the three components of the programme (trainings, seed loans and output purchases) have different effects on the adoption of sustainable agricultural practices and productivity, and to some extent on food security. Overall, the results suggest that NOSs, with all their risks, can play a role in the adoption of sustainable agricultural practices, improving farm-level agricultural technologies, providing input credit, and thereby improving productivity and smallholder livelihoods. However, this is not automatically the case, as it crucially depends on the design and management of the project; the availability of good policies and institutions governing the rules of operation; the types of crops promoted; the duration of the project; and the political commitment of host countries, among others.
Topic:
Markets, Food Security, Participation, Farming, and Productivity
Political Geography:
Africa and Zambia

51. Inequality and Social Cohesion in Africa: Theoretical Insights and an Exploratory Empirical Investigation

Author:
Francesco Burchi and Gabriela Zapata-Román
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Inequality is bad per se and has adverse effects, among other things, on economic development and the environment. It is also often argued that high and increasing inequalities put societies under stress, which increases the likelihood of social conflicts. However, the literature on this topic is scarce and some of the conclusions are not adequately supported by empirical evidence. This is mainly because there are different definitions and measurements of social cohesion. Moreover, some definitions of social cohesion incorporate inequality, thus making it impossible to examine how these two phenomena interact with one another. This paper analyses both theoretically and empirically, the relationship between inequality and social cohesion. To do so, it employs a recent definition of social cohesion provided by Leininger et al. (2021). According to this definition, social cohesion is composed of three core attributes, namely trust, inclusive identity and cooperation for the common good. These attributes are examined in two dimensions, namely the horizontal (relationship among individuals) and vertical (relationship between individuals and state institutions) dimensions of social cohesion. This paper provides an overview of the empirical evidence regarding the relationship between inequality and the three attributes of social cohesion. We find that while inequality is likely to have a negative effect on all three attributes, the intensity of the relationship may depend on some key mediating factors. Moreover, we highlight the main pathways through which inequality could affect each of the three key attributes. The empirical analysis focuses on Africa. While there is some work in this field in Europe and Asia, to the best of our knowledge, there has not been any related empirical work thus far that has focused on African countries. To measure the three attributes of social cohesion, we use a database generated by Leininger et al. (2021), which is based on data from Afrobarometer and the V-Dem Institute. Inequality is mainly measured by the Gini coefficient and data are sourced from the World Income Distribution dataset. As expected, our analysis shows that countries with higher inequality usually have lower levels of social cohesion, which is measured by an aggregate index. This negative correlation holds when we analyse the relationship between the Gini coefficient and the three attributes separately; however, the intensity varies. It is stronger for trust (rho=0.25) compared with the other two attributes (both of which have a rho equal to approximately 0.1). Additional investigations point to substantially different results for the horizontal and vertical dimensions of social cohesion. Higher levels of inequality are associated with lower levels of horizontal trust and horizontal cooperation. On the other hand, higher levels of inequality are associated with higher levels of vertical trust and are essentially uncorrelated with vertical cooperation. These relationships remain substantially unchanged when we use measures of income inequality other than the Gini coefficient. Further analyses that aim to explain the puzzling results for the vertical dimension of social cohesion reveal that our findings are not clearly driven by trust in a specific institution and are also not an artefact of the specific data we used. Indeed, we obtain similar results using data from the World Values Survey. At the same time, it appears that the positive relationship between inequality and vertical trust is visible only among African countries, whereas it is not observed at the global level or for other regions. Further research is needed to confirm whether Africa is truly exceptional in this regard, and if so, why that may be the case.
Topic:
Development, Inequality, Economy, and Social Cohesion
Political Geography:
Africa

52. Social Cohesion and Firms’ Access to Finance in Africa

Author:
Yabibal M. Walle
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Social cohesion has recently gained increasing attention in academic and policy circles. Apart from being a necessary feature of stable societies per se, social cohesion is also a key factor for sustainable economic development. One potential means through which social cohesion could foster economic development is by enhancing financial development. In this paper, we examine whether social cohesion is significantly associated with firms’ access to finance in Africa. To this end, we use a recently constructed dataset on social cohesion in Africa, which is based on the Afrobarometer survey and the Varieties of Democracy database. The dataset contains indices for the three pillars of social cohesion – trust, inclusive identity and cooperation for the common good. Combining this dataset with that of the World Bank Enterprise Surveys, we build a sample which covers more than 12,500 firms and 27 African countries. Our results show that all three components of social cohesion are positively associated with at least one measure of firms’ access to external finance. In particular, trust – but not inclusive identity and cooperation for the common good – is significantly associated with the likelihood that firms have a checking or savings account, or are financially constrained. When we measure access to finance with respect to having a line of credit or a loan from a financial institution, all the three pillars of social cohesion, including inclusive identity and cooperation for the common good, are related to access to finance. The results are robust to addressing endogeneity concerns using a heteroskedasticity-based identification strategy. Overall, our results suggest that improving social cohesion (e.g. through social protection, education, strengthening civil society organisations) could do more than hold society together; it could also promote access to finance, growth of firms, and thus economic development and job creation.
Topic:
Finance, Business, Economic Development, and Social Cohesion
Political Geography:
Africa

53. Green Jobs in Cities: Challenges and Opportunities in African and Asian Intermediary Cities

Author:
Wolfgang Scholz and Michael Fink
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Cities account for approximately 70 per cent of global energy consumption and about 75 per cent of greenhouse gas emissions due to the density of economic activities and infrastructure and their often path-dependent development patterns. Cities adopting a green transformation process can minimise their environmental impact and maximise opportunities to improve and support the natural environment. Topics to address are energy efficiency and reduction of non-renewable energy sources to reduce their carbon footprint; actively support waste reduction and management; establish green and resilient infrastructure; encourage nature-based solutions; enhance the efficiency of new buildings; encourage low-carbon transport; and improve water cycle management. Also, these fields will lead to a greener urban economy, create more green jobs – or respectively change jobs towards becoming green – and deliver improved quality of life outcomes for residents. The aim of this discussion paper is to address the challenges, opportunities and fields of actions – respectively interventions – of these economic, but also social transformations on the job market on the level of cities. The regional focus is on African and Asian cities in developing countries. A special focus is on intermediary cities with between 1 to 5 million inhabitants since they constitute the fastest-growing urban areas today and more importantly, they have both the capacity and expertise to guide an economic transformation while still being, at the same time, not too large to be managed effectively, as outlined above. The fields of action for cities in a transformation towards a green economy, thereby creating green jobs, can be clustered into: • land use planning • green buildings and construction • sustainable mobility and urban transport • green and blue urban infrastructure services with nature-based solutions (NBSs) as a cross-cutting issue • renewable energy and energy efficiency The employment effects of a transformation towards a green economy play an important role. The opportunities for cities in Africa and Asia to create green jobs under their own local mandates of decision-making in urban planning and within their own service providers, and/or to support the “greening” of the private sector, will obviously create more green jobs, and respectively shift current jobs into green jobs.
Topic:
Development, Cities, Carbon Emissions, Opportunity, Energy, and Green Jobs
Political Geography:
Africa and Asia

54. Urbanisation and Rural Development in Developing Countries: A Review of Pathways and Impacts

Author:
Tekalign Gutu Sakketa
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper reviews the current state of literature on the impacts of urbanisation on rural development in developing countries, with an emphasis on Sub-Saharan Africa (SSA). Assessments of these effects diverge greatly. While some authors see urbanisation as strongly benefitting rural areas, for instance, through increased demand for agricultural goods and services, others highlight negative effects, for example, through the loss of livelihoods emanating from displacements and the conversion of agricultural land. Given this complexity, a review that thoroughly analyses the causal relationships between urbanisation and rural development is warranted. To do this, this Discussion Paper identifies seven channels through which urbanisation affects rural development: i) production and consumption linkages; ii) employment linkages; iii) financial linkages; iv) land market linkages; v) information and public service linkages; vi) social interactions linkages; and vii) environmental externalities. As to the first channel, production and consumption linkages, the review suggests that urbanisation has increased demand for agricultural products and services; natural resources; commercialisation and modernisation of agricultural technologies; and smallholders’ participation in modern agricultural value chains. The employment channel suggests that rapid urbanisation is enabling the diversification of rural livelihoods by bringing new eco­nomic opportunities to rural areas, but the effects have not been uniform across countries and communities. With regard to financial linkages, flows from cities have increased in many developing countries, benefitting rural areas; yet some studies point to no or to negative effects due to reduced agricultural productivity from the loss of labour and technology, and the crowding out of investment. Land market effects are particularly heterogeneous. While urbanisation tends to drive land value up and encourages investments, there are also negative developments in terms of crowding out and speculation. As to information and public service linkages, the review suggests that urbanisation has fostered information and knowledge flows from urban areas to rural areas which have improved income, innovation, and employment. Social interactions among urban and rural citizens more generally may bridge cultural gaps, improve the flow of information, knowledge, and resources pertinent for rural economic transformation, and thereby enhance social cohesion; yet little empirical evidence exists so far in terms of effects and causalities. Finally, urbanisation affects rural development through the environmental externalities it generates: waste disposal, environ­mental degradation, and loss of biodiversity. If appropriate technologies are put in place, urbanisation can also improve waste management and soil fertility, thus reducing the cost of agricultural production. To this end, the review has identified research gaps that have important policy implications. First, although effective rural-urban planning, monitoring and evaluation of rural-urban devel­opment policies require better data, there is lack of data collection systems or their quality is poor. In this respect, investing in emerging data sources such as satellites data can help countries improve their data collection systems and measures. Second, research is needed to revise and re­formulate better theoretical frameworks that take into account the uniqueness of African urban cities. Third, empirical evidence which documents to what extent and how rural-urban linkages provide an important arena for improving social interactions among neighbours, societies, and communities is needed. Finally, as many African countries continue to experience rapid urbani­sation (mostly urban sprawl), a thorough study of the impacts of urban externalities on agri­cultural productivity, food security, biodiversity, and the health of rural communities is necessary.
Topic:
Development, Environment, Urbanization, Employment, Finance, and Public Service
Political Geography:
Africa and Sub-Saharan Africa

55. Only game in town? Inequality and demand for democracy in Africa – a micro perspective

Author:
Thomas Isbell
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
In this paper, the author explores whether perceived inequality is associated with demand for democracy among Africans. Past research has diverged on whether macro-level inequality should increase or decrease support for democracy, with some arguing that people might see democracy as a solution to inequality, and others that people might see it as a cause. I advance this literature by using a perceptual measure of inequality from Afrobarometer: how people feel their living situation compares to others’ in their country. I find that perceived equality is significantly associated with greater demand for democracy, while perceptions of relative deprivation and relative advantage are both associated with lower democratic demand. These effects are largely significant above and beyond the effect of absolute poverty and known predictors of support for democracy, such as free and fair elections and level of education.
Topic:
Education, Elections, Democracy, Inequality, and Social Order
Political Geography:
Africa

56. Measuring the impact of self-censorship on political party support in Afrobarometer data using machine learning

Author:
Paul Friesen
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
Measures of political party support are viewed suspiciously in hybrid and authoritarian regimes where the two core indicators of political support – elections and public opinion polling – cannot be readily trusted. More accurately, the degree of measurement error is unknown, though scholars presume support for incumbent leaders and parties is exaggerated. This paper scrutinizes the degree to which political opinions on Afrobarometer surveys can be trusted by re-estimating voting preferences for 34 African countries. First, a range of demographic and interview metadata are regressed upon vote choice to see if they systematically influence vote-preference responses. Next, key markers of potential self-censorship are identified and used to create pools of “clean” and “polluted” data. Clean data are used to train a machine learning model to predict voting intentions, and then all data with self-censorship markers are recalculated. The results show that ruling party support is broadly similar in most countries but exaggerated by more than 10 percentage points in Sudan and Uganda and by between 5 and 10 points in Burundi, Tanzania, Togo, and Zimbabwe. Declines in ruling party support due to self-censorship are concurrent with increases in both non-responses and opposition party support.
Topic:
Politics, Censorship, Party System, and Partisanship
Political Geography:
Africa

57. Population density and governance in Africa

Author:
Pranish Desai
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
Across Africa, denser populations are associated with less confidence in institutions and the rule of law. What does that mean for the world’s fastest-urbanising continent?
Topic:
Governance, Population, Urbanization, and Rule of Law
Political Geography:
Africa

58. Declining poverty level in Ghana: Exploring the role of migrants’ remittances

Author:
Daniel Armah-Attoh
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
Ghana has a long history of citizens migrating to other countries. Many of these migrants send remittances to relations and acquaintances back home, often to help recipients experiencing poverty and a lack of employment and economic opportunities. Empirical studies have established the poverty-alleviation impact of remittances in Africa, including Ghana. This study uses pooled Afrobarometer survey data collected between 2002 and 2017 to assess the relationship between migrants’ remittances and lived poverty in Ghana. Multiple statistical approaches suggest that remittances have a negative and statistically significant impact on lived poverty. We therefore recommend that the government institute policy measures to encourage the use of formal channels for such transfers to enable the country to harness the full development potential, including the poverty-reduction benefits, of migrants’ remittances.
Topic:
Humanitarian Aid, Poverty, Migrants, and Cost of Living
Political Geography:
Africa and Ghana

59. New Paradigm for Electrification in Sub-Saharan Africa: How Are Decentralized Hybrid Systems Changing the Game?

Author:
Hugo Le Picard
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
After several decades of reforms, the situation in centralized power sectors has hardly changed. The sub-Saharan power sector remains underdeveloped, and power sectors are experiencing significant financial difficulties that have been further exacerbated first by the effects of the pandemic and then the war in Ukraine. The operating losses of all African power sectors exceeded $150 billion in 2020. In view of the region’s population growth, centralized grids cannot fully meet their electricity needs, even in areas with access. Consequently, individuals and businesses are motivated to become more independent from the centralized grid to meet their electricity consumption needs. Market mechanisms are at work to fill the gaps created by the weakness of the centralized grid. The market for decentralized systems is experiencing strong growth in the region and has enormous potential in light of the grid's weakness: in addition to 600 million sub-Saharans without access to electricity, there are 500 million with access but who are coping with an unreliable or expensive grid. On a continent-wide basis, this is an opportunity worth more than $350 billion by 2030. The large-scale expansion of the market for decentralized systems in areas covered by the grid is significant for the development of the sector. In view of the significant increase in urban population and the increasing attractiveness of decentralized systems, it cannot be excluded that the existing, yet weak, centralized grid may become partly redundant. However, a power sector that develops around decentralized systems can also have advantages, if these new uses are designed and integrated into the development policies of power grids. These systems can provide faster access to electricity than the centralized grid for people without access. Similarly, the high modularity of these systems allows consumers with existing access to electricity to climb the energy ladder, enabling them to access new electrical services depending on their budget and needs. The lower cost of decentralized, renewable systems can also reduce the cost of electricity for commercial and industrial consumers, promoting their economic competitiveness and the penetration of renewable technologies across the continent. Decentralized generation capacity can also increase grid resilience, making consumers less dependent on centralized infrastructure. Finally, in the longer term, if electricity is generated primarily where it is consumed, it does not need to transit through transmission lines. It would also prevent electricity losses along transmission lines, that are high in many countries in the region. It would also limit the need for substantial investment in grid infrastructure which is difficult to raise private funds for and for which the International Energy Agency (IEA) estimates an average of $40 billion per year is needed in the coming years. While the region’s centralized power sectors are experiencing increasing difficulties due to Covid-19 and the war in Ukraine, decentralized systems will be called upon to play a key role in expanding access to electricity on the continent now more than ever. With the availability of capital dwindling in emerging countries, development finance institutions (DFI) could further support investment in the ecosystem of businesses trading in green decentralized solutions to facilitate access to clean electricity on the continent.
Topic:
Business, Electricity, Energy, and Russia-Ukraine War
Political Geography:
Africa and Sub-Saharan Africa

60. Africa’s Infrastructure-Led Growth Experiment Is Faltering. It Is Time to Focus on Agriculture

Author:
David Ndii
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Over the past few decades, several low- and middle-income economies in Africa and elsewhere have sought to turbocharge growth by adopting an export-led economic model premised on heavy investments in infrastructure and building up domestic manufacturing capacity. But this strategy has often not produced the economic gains that have been promised for a variety of reasons. The continued emphasis on infrastructure investment fails to account for the fact that even those African countries that have invested a great deal in infrastructure continue to lag other countries in Asia (like Bangladesh) in key manufacturing sectors like textiles regardless of infrastructure quality. In addition, this approach overlooks the fact that African countries do not have the same comparative advantages as the Asian Tigers that perfected and popularized the export-led growth model: while those Asian countries had an abundance of low-wage labor, wages in Africa are typically higher than those of other countries at comparable development levels. Instead of fixating on infrastructure, African countries should look to the experience of Latin American countries with similar resource endowments: a greater relative abundance of land than low-cost labor. As this experience shows, countries can make far more durable, sustainable economic gains by focusing on improving agricultural productivity with relatively low-cost improvements targeted at smallholder farmers for whom a boost in productivity would have the largest impact.
Topic:
Agriculture, Infrastructure, and Economic Growth
Political Geography:
Africa