Showing papers in "African Development Review in 2013"

How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa

Abstract: Our generation is experiencing the greatest demographic transition and Africa is at the center of it. There is mounting concern over rising unemployment and depleting per capita income accruing there-from. We look at the issue in this paper from a long run perspective by examining the nature of the relationship between population growth and a plethora of investment indicators: public, private, foreign and domestic investments. Using asymmetric panels on data spanning from 1977 to 2007, we investigate effects of population growth on investment from Granger causality models. Our findings reveal a long-run positive causal linkage from population growth to only public investment. But for domestic investment, permanent fluctuations in human capital affect changes in other forms of investments. Not unexpected, no significant short-run causal relationship is found. For economic implications, sampled countries should take family planning and birth control policies seriously. Though growth in population may appear not to have an impact on investment in the short spell, in the distant future, it strangles public finances. Therefore measures should be adopted such that, rising unemployment rate resulting from population growth be accommodated by private sector investments. Seemingly, structural adjustments policies implemented by sampled countries have not had the desired investment effects.

Determinants of unemployment in Ghana

Abstract: Unemployment is often cited as a measure of the low employment content of Ghana's strong growth performance over the past three decades. The paper presents evidence to suggest that employment growth in Ghana continues to trail economic growth due to high growth of low employment generating sectors against sluggish growth of high labour absorption sectors. A cross-sectional estimation of a probit regression model also indicates a strong effect of demand factors on unemployment, indicating a weak employment generating impact of economic growth. Empirical analysis also confirms higher vulnerability of youth and urban dwellers to unemployment with education and gender explaining unemployment in some instances. Reservation wage is also observed to have an increasing effect of unemployment. The paper recommends policies that promote investment in agriculture and manufacturing which is associated with higher employment elasticity of output. High incidence of unemployment among the youth and secondary school leavers in the most recent period requires targeted intervention including support for entrepreneurial training and start-up capital to attract young school leavers to become ‘creators’ rather than ‘seekers’ of jobs. A downward review of expectations on the part of jobseekers in terms of their reservation wage could help reduce unemployment in Ghana.

Characteristics and Macroeconomic Determinants of Youth Employment in Africa

Abstract: The purpose of this paper is to present the characteristics of youth employment in Africa as well as investigate its macroeconomic determinants, with a view to proffering some solutions. Our empirical estimates, using available cross-sectional data over the period 1991–2009 show that a nation's domestic investment rate is found to be positively and significantly associated with youth employment in the overall Africa and sub-Saharan estimations. However, domestic investment rate is negatively and significantly associated with youth employment in North Africa. Government consumption expenditures negatively and significantly affect youth employment in sub-Saharan Africa. Rising inflation is negatively and significantly associated with youth employment in North Africa. The level of real GDP per capita has a negative and statistically significant effect in both the overall Africa and North Africa youth employment. The quadratic term of real GDP per capita is positive in sign and significant only in the youth employment estimation for the whole of Africa. We find that real GDP growth positively and significantly affects youth employment in the overall Africa, sub-Saharan and North Africa estimations. Other important variables considered are globalization indicators (FDI and trade openness), credit to the private sector, ICT infrastructure, education, demographic factors, institutionalized democracy, time trend, net oil-exporting/importing country, and regional dummies. Key policy implications include increased productive domestic investment; promoting government expenditure effectiveness; reforming the fiscal systems for consolidation by all levels of government; effective regulation of FDI for domestic job creation; improvements in the diversification, competitiveness and value addition of African export commodities; encouragement of entrepreneurship and access to financing for the youth; greater productive infrastructure development; up-skilling, better training and education for the low-skilled workforce; the promotion of effective democracy that will design policies friendly to youth job creation; and efficient management of oil and other natural resources throughout the value chain.

Gender Equality in Employment in Africa: Empirical Analysis and Policy Implications

Abstract: Gender equality in employment is currently one of the greatest development challenges facing countries globally, including those in Africa. In 2011, the male employment-to-population ratio, globally, was estimated at about 72.7 per cent compared to the female employment-to-population ratio of only 47.9 per cent. For Africa as a whole, the male employment-to-population ratio was estimated at about 69.2 per cent compared to the female employment-to-population ratio of only 39.2 per cent. In addition to analysing the characteristics of gender equality in employment in Africa, this paper empirically studies the key drivers of gender equality in employment (proxied by the ratio of female employment rate to male employment rate for the age group 15–64 over the period, 1991 and 2009), using cross-sectional data. Our results suggest that for the all-Africa and sub-Saharan African samples, increased democracy (and its quadratic form), higher gross domestic investment, more primary education, and higher urban share of the population increase gender equality in employment while higher level of real GDP per capita, higher foreign direct investment, sex population ratio, and being a net oil-exporting country tend to lower it. However, North Africa is different. Apart from a negative and highly significant North African dummy in the overall results, the North African specific sample result indicates that while the quadratic element of real GDP per capita, higher gross domestic investment, higher urban share of the population, more secondary education, and being an oil-exporting country increase gender equality in employment, higher levels of real GDP per capita, more primary education, and sex population ratio tend to lower gender equality in employment in the sub-region. The policy implications and lessons of these results are discussed. These policies are directed at making the African labor market more inclusive and hence enhancing women's employment for the purpose of greater economic empowerment, household welfare and poverty reduction, in particular.

Capital Structure and Corporate Performance of Nigerian Quoted Firms: A Panel Data Approach

Abstract: This paper presents empirical findings on the impact of capital structure (leverage) on performance of quoted firms in Nigeria. The main objective of this study is to determine the overall effect of capital structure on corporate performance of Nigerian quoted firms by establishing the relationship that exists between the capital structure choices of firms in Nigeria and their return on assets, return on equity and tobin’s Q (a market performance measure). The effect of institutional factors such as size, tax and industry on firms’ performance was also established. The study employed panel data analysis by using Fixed-effect estimation, Random-effect estimation and Pooled Regression Model. The usual identification tests and the Hausman’s Chi-square statistics for testing whether the Fixed Effects model estimator is an appropriate alternative to the Random Effects model were also computed for each model. The empirical results based on 2003 to 2007 accounting and marketing data for 101 quoted firms in Nigeria lend some support to the pecking order and static tradeoff theories of capital structure. A firm’s leverage was found to have a significant negative impact on the firm’s accounting performance measure (ROA). An interesting finding is that all the leverage measures have a positive and highly significant relationship with the market performance measure (Tobin’s Q). It was also established that the maturity structure of debts affect the performance of firms significantly and the size of the firm has a significant positive effect on the performance of firms in Nigeria The study further reveals a salient fact that Nigerian firms are either majorly financed by equity capital or a mix of equity capital and short term financing. It is therefore suggested that Nigerian firms should try to match their high market performance with real activities that can help make the market performance reflect on their internal growth and accounting performance

FDI, Employment and Economic Growth in Nigeria

Abstract: The study examines the links between Nigerian economic growth, employment and foreign direct investment (FDI) in the manufacturing and servicing sectors between 1990 and 2009. The significant results of the Johansen cointegration technique and the vector error correction model reveal that FDI in the servicing sector has a positive relationship with economic growth while FDI in the manufacturing sector has a negative relationship. FDI in the manufacturing sector has a positive relationship with employment rate while FDI in the servicing sector has a negative relationship with employment rate. Granger causal relationships among these variables exist. In the growth equation, causality runs from growth to FDI in the service sector while growth and FDI in the manufacturing sector have bidirectional causal effect. For the employment equation, unidirectional causality runs from FDI in the service and manufacturing sectors to employment rate.

Determinants of Microcredit Repayment: The Case of Tunisian Microfinance Bank

Abstract: Repayment of loans in microfinance is a very important subject for study. Microfinance institutions lend to poor and low-income borrowers and thus the terms of lending should be as easy as possible for more poor people to have access. On the other hand, poor and low-income borrowers tend to have no collateral and thus would constitute a considerable risk to lenders once they default. Lenders, therefore, have to devise a special system whereby to ensure that loan defaults are as low as possible in order to avoid charging a higher interest rate which will defeat the very purpose of microfinance-lending. In this paper, using a binary logistic regression model, we undertake to examine the factors that affect default among borrowers. It has been discovered that borrowers' socio-demographic characteristics, past participation in microcredit loans and past credit history have significant impacts, as special features, on their default rates.

Africa's Recent Economic Growth: What Are the Contributing Factors?

Abstract: This paper analyses the characteristics of the recent African economic growth. The data reveal that during the period 1995–2005, Africa caught up with East Asia in terms of economic growth and investment. However, East Asia has improved its advantage on Africa in terms of GDP per capita and growth fundamentals. African economic growth rate was 2.2 percentage points higher during the period 1995–2005 compared to the period 1975–94. However, between the two periods, only primary education, exports and urbanization have significantly increased in Africa. The other growth determinants have either slightly deteriorated or remained stagnant. The results of growth regressions over the period 1995–2005 indicate that investment, private sector access to credit, government effectiveness, exports and the share of agriculture value added in GDP are significantly linked with economic growth. Thus, compared to the statistical analysis, growth regressions suggest that most of the variables which have significantly contributed to growth recovery are not those variables which have positively evolved in Africa. The good news is that African economies have grown recently without changing many growth fundamentals. The bad news is that the recent African growth recovery may not be sustainable if efforts are not focused on right growth fundamentals.

Domestic Debt, Private Sector Credit and Economic Growth in Sub-Saharan Africa

Abstract: Exercising fiscal prudence in periods of deteriorating fiscal balance requires sound policies which promote debt sustainability. This paper estimates a dynamic cross-country model and investigates the impact of domestic debt on economic growth and private sector credit in a panel of 21 sub-Saharan African (SSA) countries over the period 1985 to 2010. System-GMM results reveal a non-linear relationship between domestic debt and economic growth, characterized by a maximum turning point of 11.4 per cent of GDP. In addition, domestic debt is found to crowd out private sector credit by an elasticity of negative 0.3 per cent of GDP, deterring capital accumulation and private sector growth. These findings underscore the need for effective debt management strategies which incorporate debt ceiling to limit domestic indebtedness, as well as the design of financial policies which enhance credit availability, promote fiscal discipline and deepen domestic debt markets on the continent.

Price Trends and Income Inequalities: Will Sub‐Saharan Africa Reduce the Gap?

Abstract: During the past decade, commodities prices have risen substantially and the trend is likely to persist as attested by recent OECD-FAO projections. The recent debate has not reached a clear consensus on the effects of this trend on poverty and income inequality in LDCs, thus complicating the policy planning process. Our paper aims at analyzing the likely welfare and income inequality impacts of food price trends in three Sub-Saharan countries, namely Tanzania, Ghana and Ethiopia. Moreover, we test the statistical significance of changes in income inequalities. Despite Tanzania is not affected, we find that price changes tend to exacerbate the income inequalities in Ethiopia and Ghana, especially for specific groups of households: the policy implications are relevant. Finally, our paper underlines the relevance of statistical inference in analysis on income inequalities, to conclude on welfare and inequalities effects of food price movements.

Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach

Abstract: The post-Apartheid South African corporate governance (CG) model is a unique hybridisation of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, employment equity, environment, HIV/Aids, and health and safety. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of post-Apartheid South African listed corporations, and controlling for potential interdependencies among block ownership, board size, leverage, institutional ownership, firm value and a broad CG index, we find a significant positive association between a composite CG index and firm value. Further, our two-stage least squares results show that there is also a reverse association between our broad CG index and firm value, emphasising the need for future research to adequately control for potential interrelationships between possible alternative CG mechanisms and firm value. Distinct from prior studies, we find that compliance with affirmative action CG provisions impacts positively on firm value. Our results are consistent with agency, legitimacy, political cost, and resource dependence theoretical predictions. Our findings are robust across a number of econometric models that adequately control for different types of endogeneity problems, and alternative accounting, and market-based firm valuation proxies.

Natural resources exports, diversification and economic growth of CEMAC countries: on the impact of trade with China

Abstract: This paper deals with the dynamics of growth in the countries of the Economic and Monetary Community of Central Africa (CEMAC), focusing on external trade, in particular with China. Its aim is to shed light on the increasing influence of China in Africa. It uses dynamic panel estimations to measure the impact of trade orientation on economic growth in the CEMAC countries and concludes that specialization in natural resources affects economic growth negatively. But this effect is somewhat mitigated by the orientation towards China. Moreover, the weak intraregional trade between CEMAC countries has failed to contribute to their economic growth.

The impact of foreign debt on economic growth in Malawi

Abstract: This study analysed the impact of foreign debt on economic growth in Malawi using time series. Data for the period 1975–2003 from the Reserve Bank of Malawi, the IMF and the National Statistical Office was regressed in basic time series analysis. The dependent variable was economic growth and independent variables included level of foreign debt as the main variable. Other variables considered are the inflation rate, exchange rate and the prime lending rate, private and public investment. The results show a statistically insignificant and negative relationship between foreign debt and economic growth for the case of Malawi. The country should strive to provide incentives to local manufacturers who would want to export rather than relying on borrowing for growth inducement. Of interest was the relationship between inflation and economic growth which was positive.

Financial Development and Economic Growth in the North African Region

Abstract: This paper empirically investigates the relationship between financial development and economic growth in the North Africa region, using a panel regression and different indicators of financial development. We find that the relation depends on the type of the indicator of financial development. In fact, while both financial institutions and markets in Morocco and Tunisia have a positive effect on the economic growth, only the financial markets in Egypt will improve economic growth by increasing the supply of financial services. For Algeria, the banking system has a positive effect on economic growth.

Competitive Conditions of the Tunisian Banking Industry: An Application of the Panzar–Rosse Model

Abstract: This study employs the Panzar–Rosse H-statistic to assess the competitive conditions of the Tunisian banking industry over the period 1999 to 2003. The results show that the banking market is in long-run equilibrium and the Panzar–Rosse H-statistic indicates that the Tunisian banking market is operating under conditions of monopoly. It seems therefore that the liberalization process and the reforms implemented since 1987 to the banking sector could not compensate, for the period under study, the existence of market power in this sector.

‘Angola‐mode’ Trade Deals and the Awakening of African Lion Economies

Abstract: After decades of continuous flows of mineral exports to rich Western countries and a failed development in Africa, the arrival of China on the African resource market with large infrastructure projects in exchange for access to resources has created completely new growth dynamics for oil-rich African economies. The Chinese strategy of swapping infrastructure projects for mineral resources, known as an ‘Angola-mode’ trade arrangement, has brought an army of Chinese infrastructure workers to Africa and contributed to the awakening of fast-growing African ‘lion economies’. This article examines the role played by Sino-African resource-for-infrastructure swap projects in Africa's new development dynamics. Using panel data of African countries over the period 2001–10, we find that by contributing to easing the infrastructural bottlenecks, Sino-African trade has played a key role in the fast growth of oil-rich African countries.

The Relationship between Information and Communication Technology Use and Firm Performance in Developing Countries: A Case Study of Electrical and Electronic Goods Manufacturing SMEs in Tunisia

Abstract: From the second half of the 1990s, increased investment in Information and Communication Technologies (ICTs) has led to an acceleration of productivity growth and performance in many developed and newly industrialized countries. However, less is known about the current situation of firms in developing countries. This article addresses this issue by examining the relationship between ICT use and the performance of Tunisian SMEs operating in the electrical and electronic industry based on net profit margin. Using an econometric approach (linear regression, Granger causality, Kruskal-Wallis test, Welch ANOVA test, and post hoc tests), the results show that there is a significant statistical relationship between the level of ICT use and the performance of Tunisian SMEs in the electrical and electronic industry.

Vulnerability to Food Poverty in Nigeria

Abstract: Economists have in recent times recognized that a household's sense of well-being depends not just on its average income or expenditure but on the risk it faces as well. Vulnerability is thus a very crucial issue in welfare analysis. This study estimated and analysed the magnitude of vulnerability to food poverty based on data from the 2004 Nigeria Living Standard Survey (NLSS) obtained from the National Bureau of Statistics. The three-step Feasible Generalized Least Squares (3FGLS) procedure was employed in estimating the extent of vulnerability to food poverty in Nigeria. The results show that 61.68 per cent of Nigerians were vulnerable to food poverty; the incidence of vulnerability to food poverty varied significantly across zones and between the urban and rural sectors; and was highest in the South West zone (68.32 per cent) and lowest in North East zone (50.19 per cent); and it is more in the urban sector (64.61 per cent) than in the rural (59.37 per cent). It is evident that the magnitude of vulnerability to food poverty is very high. Thus, policies that will enhance people's access to food should be adopted and targeted transfers of subsidized basic food items should be used to sufficiently reduce vulnerability to food poverty in the country.

Assessing the Short- and Long-run Real Effects of Public External Debt: The Case of Tunisia

Abstract: This study examines the effects of external debt on the economic growth of Tunisia both in the short run and the long run. We specify a growth equation based on the standard neoclassical growth model that we extend by adding public external debt indicators and some control variables. Annual time series data was gathered from 1970 to 2010. The Engel and Granger (1987) econometric techniques are employed in the empirical analysis in order to regress an error correction model (ECM) which allows estimating the short- and long-run consequences of debt on the Tunisian economic growth. The main results of this analysis can be summarized as follows: (1) Although the ratio of public external debt to GDP is relatively low in this country, the levels of external debt achieved are growth-damaging. We estimate that, on average, a 1 percentage point increase in the ratio of public external debt reduced annual growth rate by 0.15–0.17 percentage points. The impact is much higher in the long run in the sense that the long-run level of GDP per capita decreases by 0.27 per cent as this ratio increases by 1 per cent. (2) Our results also identified the existence, for Tunisia, of a threshold for the impact of external debt, which is evidence in agreement with the ‘debt overhang’ phenomenon. This threshold is estimated to around 30 per cent of GDP. (3) The traditional ‘crowding-out effect’ associated with service and interest payments of debt as well as the ‘resources-diversion effect’ associated with the extent of corruption in this country have been put forward in this analysis as two possible transmission channels of the detrimental consequences of external debt. (4) Finally, Tunisia will need to implement drastic policy changes that reduce fiscal deficit in order to prevent further deterioration.

African Emerging Equity Markets Re-examined: Testing the Weak Form Efficiency Theory

Abstract: This paper examines the weak form of market efficiency of five major stock markets; four African equity markets and one developed market. The weekly market index returns of the EGX 30, NSE 20, NSE All Share Index, FTSE-JSE All Share Index and the S&P 500 Index were analysed for the period 1998–2008. To determine if the stylized fact of stock returns in African markets violate the random walk hypothesis, numerous econometric and statistical techniques are employed. These methods include the autocorrelation test, the unit test, linear and non-linear models. The results indicate that the African markets do not behave in a manner consistent with the weak form of market efficiency. These results provide a contrast between the emerging African markets and the developed markets. It suggests that African emerging markets have higher average returns and volatility than developed markets. We argue that if the market could be made less volatile, it has the potential to attract more investment because of its attractive returns.

Inflation forecasting in angola: a fractional approach

Abstract: Resumo This paper forecasts inflation in Angola with an ARFIMA (AutoRegressive Fractionally Integrated Moving Average) model. It is found that inflation in Angola is a highly persistent variable with an order of integration constrained between 0 and 1. Moreover, a structural break is found in August, 1996. Using the second sub-sample for forecasting purposes, the results reveal that inflation will remain low, assuming that prudent macroeconomic policies are maintained.

Household Economic Well-being: Response to Micro-Credit Access in Cameroon

Abstract: This paper evaluates the determinants of borrowing, effects of borrowing on economic well-being, and potential disparity in responses by sources of well-being, location and gender, while controlling for other correlates. The 2001 Cameroon household consumption survey and a range of survey-based econometric methods that purge parameter estimates of potential intra-cluster correlation, endogeneity and sample selection biases were used. Access to credit/borrowing is strongly associated with household economic well-being irrespective of source of well-being. Rural well-being is significally more contingent on credit access than urban well-being. Male-headed households rely more significantly on credit access to enhance well-being than their female counterparts. Higher levels of education associate more significantly with well-being enhancement than lower levels, more so for female-headed households than their male counterparts. To sustain the impact of credit on well-being, accompanying measures — availability of sufficient funds, quality services by lenders, physical infrastructures, healthcare and training — are required. These findings are useful in the context of economic recovery and poverty reduction under the current situation in Cameroon, where financial intermediation is limited and penetration is shallow. To better serve the needs of the economically active poor, a microfinance delivery model is proposed.

Poverty–Lack of Access to Adequate Safe Water Nexus: Evidence from Rural Malawi

Abstract: This paper investigates the relationship between poverty and lack of access to adequate safe water in rural Malawi. Data used in the analysis was collected from a survey covering 1,651 randomly selected households. We use Canonical Correlation Analysis (CCA) as a distinct technique for understanding the poverty–rural water access nexus. CCA results indicate that poverty in the context of low income and expenditure is positively correlated with lack of access to safe and adequate water. Integrated Rural Water Resources Management (IRWM) interventions are therefore needed to address both challenges of poverty and poor access to adequate safe water in rural Malawi.

Gouvernance et croissance économique en Afrique

Abstract: Resume L'objectif majeur de ce travail est d'identifier les indicateurs de la gouvernance qui peuvent relancer la croissance economique en Afrique. Pour cela, l'auteur a integre les indicateurs de la gouvernance dans un modele de croissance. L'estimation en panel dynamique du modele ainsi concu, a partir des donnees de la Banque Mondiale ainsi que celles de la CNUCED pour la periode 1998–2011, a permis de relever que certains indicateurs de la gouvernance tels que la stabilite politique et la regulation de l'activite economique exercent une influence positive sur la croissance economique en Afrique. La lutte contre la corruption peut davantage booster la croissance economique dans les pays riches en ressources naturelles et qui appliquent les principes democratiques. Par contre, les autres indicateurs de la gouvernance en l'occurrence la maitrise de la corruption, le respect des principes de l'Etat de droit ne produisent pas encore des effets escomptes dans les pays pauvres en ressources naturelles qui sont surtout des PMA. De ce fait, les autorites politiques doivent ameliorer les indicateurs de la gouvernance, notamment la stabilite politique, la maitrise de la corruption.

Trade openness and inflation performance: a panel data analysis in the context of African countries

Abstract: This paper tests the hypothesis of a negative relation between openness and inflation in the context of African countries A dynamic model of inflation in which openness enters alternately as an endogenous and exogenous variable is estimated with different panel data estimation procedures The paper finds no robust evidence that openness served as a mechanism to restrain inflation in the region On the contrary, the results suggest that increased openness, treated as an endogenous variable, is associated with higher inflation on holding constant such factors as food supply constraint and level of economic development which are found significant co-determinants

Trade between China and South Africa: Prospects of a Successful SACU-China Free Trade Agreement

Abstract: China's trade with South Africa has become more important in recent years, and a SACU-China free trade agreement has been proposed to further strengthen this trade relationship. This paper examines the relevance of this proposed trade policy for further enhancing bilateral trade flows and development in SACU. The paper finds that tariff liberalization alone is inadequate for successful trade integration, as it benefits mostly South Africa only and harms some of SACU's internal and external trade and its welfare through trade diversion. Measures to improve trade complementarity, reduce barriers to intra-industry trade, and implement parallel MFN trade liberalization should also be undertaken by SACU in order to achieve successful trade integration with China.

Soutenabilité Economique d'une Ressource Epuisable: Cas du Pétrole Tchadien

Abstract: Resume L'objectif de cette etude est d'analyser la soutenabilite economique de l'exploitation des ressources petrolieres tchadiennes. Le present travail qui a le merite d'etre la premiere du genre au Tchad, fournit des elements d'analyse permettant de mieux apprecier l'exploitation actuelle du petrole tchadien dans la perspective d'une gestion durable de cette ressource. Le calcul des indicateurs de soutenabilite fait sur la base de donnees couvrant la periode 2000–2012 a permis de constater que les ressources petrolieres ont un impact positif sur le potentiel economique actuel du Tchad. Cependant, l'apres petrole merite une attention particuliere. L'epargne nette ajustee est egale a –27% du PNB et le revenu national soutenable est faible et represente 43% du PIB. Ces resultats montrent que les ressources petrolieres ne peuvent pas soutenir de maniere durable l'economie tchadienne. Le patrimoine petrolier tchadien est relativement restreint. Pour assurer la soutenabilite de ce patrimoine, il conviendrait d'epargner 35,9% du revenu petrolier par an et l'investir dans un fonds specifique pour soutenir les flux de richesse a long terme.

Trade policy inconsistency and maize price volatility: an ARCH approach in Kenya

Abstract: The 2007-2008 food crisis and current food price swings led economists to re-evaluate the potential for policy instruments to manage food price volatility. When world prices are unstable, the use of import tariffs in importing countries to stabilize price is theoretically not the first best policy. But in practice many countries use import tariffs with intention to stabilize price - and other reasons-, which sometimes achieve some price stabilization, sometimes not. We address the question why is this policy sometimes a success and sometimes a failure? In the context of Kenya, we show that while domestic price levels are mainly explained by seasonal cycles, pluri-annual cycles, and international prices, domestic price volatility is mainly explained by inconsistent moves of trade policy. Thus, the ability of a policy regime to lower food price volatility does not depend on the nature of the policy instrument only, but also on the government ability to implement it. We define a consistent policy adjustment as a tariff decrease when world price increases and a tariff increase when world price is decreasing. We use an autoregressive conditionally heteroskedastic model of price determination in which prices and prices volatility are jointly estimated, using monthly data over the 1994-2009 period in Kenya.

Relative Profitability of Cassava‐based Mixed Cropping Systems among Various Production Scale Operators in Ogun and Oyo States Southwest Nigeria

Abstract: Cassava is a very important crop in Nigeria by reason of its comparative production advantage over other staples. This study estimated the relative profitability of cassava producers and determined the effects of farm inputs on the level of profit of various scales of cassava producers in Ogun and Oyo States, Nigeria. Cross-sectional data were collected from 265 cassava-based farmers using a multistage sampling technique and were analysed using normalized profit function and budgetary analysis. Results showed that cassava/cowpea enterprise had the highest net margins of 127,249.63/ha and 122,325.73/ha in Ogun and Oyo States respectively. While the use of herbicides had a positive and significant effect on the profitability of small-scale cassava farmers in both states, cassava-cuttings had a positive and significant effect on medium-scale cassava farming in both states. Similarly, labour and farm size had a positive and significant effect on large-scale cassava farming in both states. The study recommends that small and medium-scale farmers should increase the application of herbicide, large-scale cassava operators in Oyo State should increase the use of labour, while those in Ogun State should also increase the cultivated acreage of land.

Estimation of Poverty in Greater Cairo: Case Study of Three ‘Unplanned’ Areas

Abstract: This paper aims to evaluate the poverty situation in the unplanned areas in Cairo as a case study. The unplanned areas, which are considered low-income areas, make up the majority of Cairo, and they have attracted the interest of policymakers and researchers because of their huge size and the political upheavals that have occurred since the 1990s. However, there have been no studies on poverty in these areas owing to a lack of data. The originality of this paper lies in employing three concepts of poverty: consumption-based poverty, a multidimensional poverty index (MPI), and subjective poverty. By using these different concepts of poverty, this paper contributes to the understanding of the nature of poverty and the interrelationship between these three measures of poverty in Greater Cairo. The main finding is that the three types of poverty are different. Households can be poor according to the MPI measure or can consider themselves to be poor, even though they are not objectively poor on the consumption-based measure. This implies that policies aiming at improving living standards in these areas should address and design strategies according to the types of poverty that are prevalent.