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on Africa |
| By: | Kodongo, Odongo |
| Abstract: | This paper sought to establish the linkages between bank performance and real sector productivity. We use data for five East African countries (Ethiopia, Kenya, Rwanda, Tanzania, and Uganda) for the period 2014-2022. We initially deploy the traditional panel fixed effects regression and subsequently the instrument variable fixed effects estimation for robustness checks. Our results show a robust negative nexus between banking sector performance and real sector productivity. Second, we find that noninterest charges is the major channel of transmission of adverse effects from the banking sector to real sectors such as manufacturing, while the interest channel tends to transmit positive effects especially to the services sector. Based on these findings, we make several policy recommendations. |
| Keywords: | Real sector productivity, sectoral value-added, bank profitability, cost efficiency, East Africa |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:297986&r= |
| By: | Han, Seoni (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | Digital technology is gaining attention as a game changer to reshape the landscape of Africa’s financial industry. This widespread adoption of mobile money has significantly broadened financial accessibility and reduced the proportion of the financially excluded population. The transformation of the financial industry was further accelerated by the COVID-19 pandemic with a surge in online payments and increased fintech activities. Digital finance has arisen as a solution to address the economic and non-economic constraints in the financial market, such as transaction costs, information asymmetry between financial institutions and customers, and uncertainty in outcomes of financial services. Digital finance strengthens economic resilience of individuals and households by offering a broader spectrum of strategies for risk mitigation and risk sharing. In Kenya, mobile money penetration has facilitated financial management for low-income groups, increased women’s labor market participation, and reduced poverty rates. The access to finance of small and medium-sized enterprises is especially crucial in developing countries. Limited access to financial services poses significant challenges for SMEs, obstructing their ability to operate seamlessly, increase sales, and boost exports. In Sub-Saharan Africa, only about one-fifth of SMEs can gain access to loans through traditional financial institutions. Han et al. (2023) conducts on an empirical analysis of Kenyan firms and finds that the firms’ use of mobile money is positively correlated with their financial accessibility, and their investment activities in both tangible assets (fixed assets) and intangible assets (R&D expenditure). Korea has the potential to strengthen its cooperation with Africa in digital finance and the financial sector by actively participating in international initiatives for financial inclusion, promoting more private investments into the financial sector or fintech industry in Africa, enhancing Africa's digital competitiveness in digital infrastructure and skilled workforce, and finally supporting digital transformation in the context of regional integration. |
| Keywords: | Africa; Digital technology; Digital Finance; Financial Inclusion |
| Date: | 2024–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kiepwe:2024_015&r= |
| By: | Mame Astou Diouf; Leonardo Pio Perez; Felix F. Simione; Arina Viseth; Jiaxiong Yao |
| Abstract: | The need for Sub-Saharan African (SSA) countries to diversify their economies is more urgent than ever. However, despite its established economic benefits, several challenges have precluded diversification in SSA. Against this backdrop, interesting initiatives to further adopt digital technologies, particularly during the COVID-19 pandemic, suggest that digitalization is a promising avenue to overcome barriers to diversification. Fast-paced advances in the diffusion of digital technologies and knowledge have the potential to transform SSA economies through several channels. By connecting people and facilitating the rapid diffusion of information, digitalization also promises to reshape the industrial structure of activities in new and unprecedented ways. Therefore, digitalization has the potential to promote diversification and growth in SSA by acting both as an enabler and driver of economic activities, helping support resilience. Yet, while the empirical literature on SSA suggests that digitalization can provide new opportunities for growth, employment, productivity, and inclusion, the impact on diversification has not been studied. This paper aims to fill this important gap in the literature. It also aims to strengthen IMF engagement with SSA policy makers by providing a conceptual policy framework, encompassing both horizontal and sectoral policies, on how to leverage digitalization to support diversification and boost resilience in a post-COVID world. |
| Keywords: | digitalization; diversification; growth; industrial policy |
| Date: | 2024–06–21 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/123&r= |
| By: | Larabi Jaïdi; Bruce Byiers; Saloi El Yamani |
| Abstract: | As the African Continental Free Trade Area (AfCFTA) enters its fifth year, the rules of origin for trade in goods are still being finalised, but the institutional architecture is nearly complete with increased capacity, technical committees and new supporting instruments. Despite this progress in AfCFTA ‘policy supply’, meaningful trade under the AfCFTA is still to begin. For this to happen, there must be ‘policy demand’ from the private sector to use the agreement’s range of protocols in shaping their investment and trade decisions and relations. Private sector engagement has so far varied across member states, with some demonstrating robust integration of business feedback while others lag in private sector consultation and involvement. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:ppaper:pb24-25vc&r= |
| By: | Ofori, Isaac K. |
| Abstract: | The proliferation of frontier technologies in the Global South has increased over the past decade. Despite this development, evidence-based policy recommendations regarding their socioeconomic impacts within the context of Africa are scarce. This study addresses this gap by employing macro data from 39 African countries to investigate the impact of frontier technology adoption (FTR) on income inequality. Additionally, the study explores whether democracy serves as a moderator of FTR, influencing a more equitable income distribution. Furthermore, this study assesses the inequality impacts of FTR across various policy thresholds of democracy. Results from the dynamic system GMM estimator reveal that: (i) FTR increases income inequality, (ii) democracy, particularly electoral and participatory democracy, mitigates income inequality, and (iii) FTR reduces income inequality only at a higher threshold of democracy (0.5 or better). This leads to the conclusion that, without inclusive democracy, FTR may impede Africa's social progress agenda by widening the income disparity gap. |
| Keywords: | Africa; Frontier Technology Readiness; Democracy; Income Inequality. |
| JEL: | I3 O31 O33 O55 Q01 |
| Date: | 2024–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121243&r= |