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Proceedings of the Workshop
Held on 11 March 2004,
Nairobi, Kenya
Edited by
Walter Odhiambo
John M. Omiti
David I. Muthaka
©KIPPRA 2005

From James Currey, Publishers

The Economy of Ghana
See Table of Contents

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SAGA PUBLICATIONS — Conference Papers

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Publications on this page are organized by publication date. Alternatively, you may view papers by:
green diamond bulletResearch Theme           green diamond bulletCountry/Region            green diamond bulletAuthor

  1. Bottom-Up Interventions and Economic Growth in Sub-Saharan Africa—Nairobi, Kenya, May 31-June 1, 2007

  2. Pastoralism and Poverty Reduction in East Africa—Kenya, June 2006

  3. Pastoralism and Poverty Reduction in East Africa—Kenya, June 2006

  4. Education in West Africa: Constraints and Opportunities—Senegal, November 2005

  5. Shared Growth in Africa—Ghana, July 2005

  6. Empowering the Rural Poor and Reducing Their Risk and Vulnerability—Nairobi, Kenya, February 2005

  7. African Development and Poverty Reduction: The Macro-Micro Linkage—South Africa, October 2004

  8. Ghana at the Half Century—Ghana, July 2004

  9. Qualitative and Quantitative Methods for Poverty Analysis—Kenya, March 2004

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Bottom-Up Interventions and Economic Growth in Sub-Saharan Africa
May 31 - June 1, 2007
Hotel Intercontinental, Nairobi, Kenya

  • Nutrition, Health and Productivity in Urban Ethiopia: Panel Evidence using Instrumental Variables (IV) Quantile Regression Framework
    March 2007
    Kedir, Abbi M.

    Using the panel data (1994-2000) on individuals who reported their wages in urban Ethiopia, we have estimated a relationship between health measures (i.e. height and BMI) and wages (which proxies productivity). Our preliminary findings from the IV quantile regression estimates (which controls for the endogeneity) indicates that productivity of individuals is significantly and positively affected by both human capital measures. The returns to BMI or current bodily strength is important at the lower end of the wage distribution. The return to height (a measure of long term nutrition investment) also falls starting from the 75th wage quintile. Our estimates are robust to specification. The substantive content of the results (i.e. the high-nutrition and high-productivity equilibrium story) does not change even if we did not control for endogeneity of schooling. Non-parametric evidence also supports the strong and positive relationship between productivity and the two key indicators of human capital. There are surprising findings such as the lack of statistically significant link between schooling and wage. This will further be investigated along with other empirical issues such as outliers.

  • Heterogeneous Impacts of Cooperatives on Smallholders’ Commercialization Behavior: Evidence from Ethiopia
    May 2007
    Tanguy, Bernard, Eleni Gabre-Madhin and Alemayehu Seyoum Taffesse

    This paper examines the impact of marketing cooperatives on smallholder commercialization of cereals using detailed household data in rural Ethiopia. We use the strong government role in promoting the establishment of cooperatives to justify the use of propensity score matching in order to compare households that are cooperative members to similar households in comparable areas without cooperatives. The analysis reveals that while cooperatives obtain higher prices for their members, they are not associated with a significant increase in the overall share of surplus cereal production sold commercially by their members. However, these average results hide considerable heterogeneity in the impact across households. In particular, we find smaller farmers tend reduce their marketable surplus as a result of higher prices, while the opposite is true for larger farmers.

  • Trade Reforms, Human Capital and Poverty: A Pseudo-Panel Analysis for Ghana
    March 2007
    Ackah, Charles

    In this paper, we present one of the first direct microeconometric studies of the impact of trade protection on household income in Ghana. Tariff measures at the two-digit ISIC level are matched to Ghanaian household survey data for 1991/92 and 1998/99 to represent the tariff for the industry in which the household head is employed. We examine the possibility that the effect of protection on income might not be uniform across households characterized by different skill levels. Specifically, we allow the relationship between welfare and trade policy to differ for households with different levels of education. In the absence of suitable panel data, the analysis applies pseudo-panel econometric techniques to our repeated cross-section data. This method has rarely been used in poverty analysis. The results suggest that higher tariffs are associated with higher incomes for households employed in the sector, so tariff reductions may reduce incomes (and increase poverty), at least in the short run, but with differing effects across skill groups. We find that this positive effect of protection is disproportionately greater for low skilled labour households, suggesting an erosion of welfare of unskilled labour households would result from trade liberalization. We conclude that contemplating trade liberalization without recognizing the complementary role of human capital investment may be a sub-optimal policy for the poor, at least in the short-run.

  • Sex Work as a Response to Risk in Western Kenya
    March 2007
    Robinson, Jonathan and Ethan Yeh

    Formal and informal commercial sex work is a way of life for many poor women in developing countries. Though sex workers have long been identified as crucial in affecting the spread of HIV/AIDS, particularly in sub-Saharan Africa, the nature of sex-for-money transactions remains poorly understood. This paper investigates sex worker behavior using daily self-reported data on sexual behavior, income shocks, expenditures, and labor supply for a sample of 237 women in Western Kenya. We find significant day-to-day fluctuations in sex worker decisions, and that women engage in sex-for-money transactions in part to deal with unexpected non-labor income shocks. Riskier sex is better compensated in Western Kenya, and we find that women increase their supply of riskier, better compensated sex on days in which a household member falls ill. In particular, women are 23.6% more likely to have unprotected sex, 16.8% more likely to have anal sex, and increase the number of unprotected sexual acts by 21.7% on such days. These increases in risky sexual behavior have important health consequences for these women and on the spread of HIV/AIDS. While not denying the need for interventions that encourage women to leave the commercial sex industry, our research suggests that important opportunities exist to reduce the health risks of sex work within sex work beyond HIV education and condom distribution.

  • Boda Bodas Rule: Non-agricultural Activities and Their Inequality Implications in Western Kenya
    March 2007
    Lay, Jann, George Michuki M’Mukaria and Toman Omar Mahmoud

    Engagement in non-agricultural activities in rural areas can be classified into survival-led or opportunity-led. Survival-led diversification would decrease inequality by increasing the incomes of poorer households and thus reduce poverty. By contrast, opportunity-led diversification would increase inequality and have a minor effect on poverty, as it tends to be confined to non-poor households. Using data from Western Kenya, we confirm the existence of the differently motivated diversification strategies. Yet, the poverty and inequality implications differ somewhat from our expectations. Our findings indicate that in addition to asset constraints, rural households also face limited or relatively risky high-return opportunities outside agriculture.

  • Can Information Campaigns Eradicate AIDS? The Effect of HIV Knowledge and Risk Behavior on HIV Status: The Case of Three Sub-Saharan Countries
    February 2007
    Frölich, Markus and Rosalia Vazquez-Alvarez

    AIDS continues to have a devastating effect on many developing economies, par- ticularly in Sub-Saharan Africa. Given the lack of a vaccine to stop HIV transmission and the very expensive medical treatment, most public policy emphasis has been placed on edu- cation and particular information campaigns. In this paper, we examine the impact of AIDS education from two sides. First, we examine to what extent information campaigns have been successful in reducing HIV prevalence and incidence. Second, we examine the impact of actual AIDS knowledge on HIV rates. The basic policy issue can be expressed as follows: Suppose that everyone knew and understood the basic facts about AIDS, would this reduce HIV rates to (almost) zero? If so, public policy should target groups with incomplete knowledge. If not, information campaigns alone are bound to fail and much stronger interventions are required to eradicate AIDS. Using rich data sets from three Sub-Saharan economies (Kenya, Tanzania and Ethiopia) we investigate the effect of observed HIV related knowledge on the probability of catching the virus using data on individuals. Our analysis controls for detailed individual specific characteristics including variables reflecting innate risk behaviour that may drive the risk of becoming HIV positive irrespective of HIV related health knowledge. We examine fur- ther how these effects differ between different groups, thereby identifying target groups that public information campaigns should direct more attention to. Results so far are preliminary.

  • HIV/AIDS and Rural Livelihoods in Zambia: A Test of the New Variant Famine Hypothesis
    May 2007
    Mason, Nicole M., Antony Chapoto, Thomas S. Jayne and Robert J. Myers

    The ‘new variant famine’ (NVF) hypothesis postulates that the HIV/AIDS pandemic is eroding rural livelihoods and making rural households more vulnerable to drought and other transitory shocks. Despite limited empirical evidence, the NVF hypothesis has become an important part of the conventional wisdom surrounding the relationship between HIV/AIDS and food crises in southern Africa. This study provides a new empirical test of the NVF hypothesis via econometric estimation of the relationship between AIDS-related morbidity and mortality and indicators of rural livelihoods. District longitudinal data from smallholder farmers in Zambia surveyed annually between 1991 and 2003 are used to estimate several econometric models in order to: (1) understand the effects of HIV/AIDS on rural farm production; (2) measure whether HIV/AIDS exacerbates the impacts of drought and other factors affecting rural farm production; and (3) determine whether these results are consistent with the predictions of the NVF hypothesis. We find little evidence of a systematic decline in rural livelihoods at the national or provincial level as measured by mean household agricultural production, area cultivated, or the value of production per unit of land. Furthermore, contrary to a priori expectations, we do not find evidence of a robust negative direct effect of HIV/AIDS on any of these three agricultural production outcomes. We do find some evidence that HIV/AIDS may have negative indirect effects on rural farm production by exacerbating the impacts of drought, gender inequalities and agricultural sector policy changes related to structural adjustment. This final finding is consistent with the predictions of the NVF hypothesis.

  • Malaria in Rural Nigeria: Implications for the Millennium Development Goals
    May 2007
    Alaba, Olufunke A. and Olumuyiwa B. Alaba

    In recent years, there has been increase in human and financial commitments to malaria control, nationally and internationally, partly due to the need to meet the development targets set in the millennium development goals (MDGs). However, these efforts have not translated into significant decrease in the disease incidence and its impact in Nigeria. Using the cost of illness analysis, the paper found that an estimate of about 10% of gross domestic output of Oyo state is lost annually to malaria attack. This has serious implications for the achievement of development blueprint in the National Economic Empowerment and Development Strategies (NEEDS) and the MDG target. Effective control of malaria is capable of reducing household poverty, inequality, welfare and aggregate national development.

  • Understanding the Differential Impact of Institutions and Institutional Interventions on Smallholder Behavior and Livelihoods in Rural Ethiopia
    May 2007
    Liverpool, Saweda Onipede, Alex Winter-Nelson and Shahidur Rashid

    This paper focuses on making the case that: 1) there is differential impact of modern technology adoption on livelihoods for rural households of different asset poverty typologies; 2) this difference can be explained in part, by the differential impact of services provided by various institutions on participation in these modern agriculture practices amongst rural households in different poverty classes; 3) there is a need to assess more closely the nature of constraints faced by different classes of poor agricultural households and the packages offered by different institutional interventions geared towards encouraging farmer participation in various agricultural practices expected to increase their productivity and improve livelihood; and 4) this analysis shows that recognizing target group differences (e.g. using asset poverty typologies) are an important consideration in program development as well as program evaluation.

  • The Economic Impact of AIDS Treatment: Labor Supply in Western Kenya
    February 2007
    Thirumurthy, Harsha, Joshua Graff Zivin, and Markus Goldstein

    Using longitudinal survey data collected in collaboration with a treatment program, this paper is the first to estimate the economic impacts of antiretroviral treatment in Africa. The responses in two important outcomes are studied: (1) labor supply of adult AIDS patients receiving treatment; and (2) labor supply of children and adults living in the patients’ households. We find that within six months after the initiation of treatment, there is a 20 percent increase in the likelihood of the patient participating in the labor force and a 35 percent increase in weekly hours worked. These results indicate that the labor supply response to treatment is both rapid and large. Since patient health would continue to decline without treatment, these labor supply responses are underestimates of the impact of treatment on the treated. The upper bound of the treatment impact, which is based on plausible assumptions about the counterfactual, is considerably larger and also implies that the wage benefit from treatment is roughly equal to the costs of treatment provision. The responses in the labor supply of patients’ household members are heterogeneous. Young boys work considerably less after initiation of treatment, while girls and other adults in the household do not change their labor supply. In multiple-patient households, only the labor supply of girls remains unaffected. The effects on child labor are particularly important since they suggest significant spillover effects from individual treatment.

From the International Conference on
Poverty and Economic Growth: The Impact of Population Dynamics and Reproductive Health Outcomes in Africa
Presented by The William and Flora Hewlett Foundation and
the African Economic Research Consortium (AERC)
November 5-6, 2006
Brussels, Belgium

  • The Relationship between Poverty and Maternal Morbidity and Mortality in Sub-Saharan Africa
    December 2006
    Meyerhoefer, Chad and David E. Sahn

    “ Good maternal health is of fundamental importance to a country’s well-being and ability to prosper, and there are few times when maternal health is more at risk than in the period surrounding childbirth. Protecting the health of mothers during reproduction safeguards their future contributions to society and ensures the health and productivity of future generations. If either the health of mothers or their newborn offspring is compromised, there will be serious negative consequences for their families, communities, and the entire process of economic and social development. This is why the United Nations has set as one of its eight Millennium Development Goals (MDGs), the reduction of the maternal mortality ratio (MMR) by two-thirds in the developing world by the year 2015... ”
    In Reproductive Health, Economic Growth and Poverty Reduction in Africa: Frameworks of Analysis, edited by Olu Ajakaiye and Germano Mwabu. University of Nairobi Press, 2010

  • Labor Market Activities and Fertility
    December 2006
    Younger, Stephen D.

    “This paper focuses on one aspect of the demographic transition, women’s labor market activity, and how it relates to the basic variables of fertility and poverty. Just as there are differences in fertility and mortality in rich and poor countries, there are differences in women’s time use. In rich countries, women tend to work outside the home, usually in wage employment on a fixed hourly schedule. In poor countries, women tend to work at home or, especially in Africa, on their family’s farm or at own- account activities where time use is more flexible. Understanding the relationship between the demographic transition and these differences in time use is our main theme...”

  • Reproductive Health and Behavior, HIV/AIDS, and Poverty in Africa
    May 2007 (updated)
    Glick, Peter

    This paper examines the complex linkages of poverty, reproductive/sexual health and behavior, and HIV/AIDS in Africa. It addresses the following questions: (1) what have we learned to date about these links and what are the gaps in knowledge to be addressed by further research; (2) what is known about the effectiveness for HIV prevention of reproductive health and HIV/AIDS interventions and policies in Africa; and (3) what are the appropriate methodological approaches to research on these questions. With regard to what has been learned so far, the paper pays considerable attention in particular to the evidence regarding the impacts of a range of HIV interventions on risk behaviors and HIV incidence. Other sections review the extensive microeconomic literature on the impacts of AIDS on households and children in Africa and the effects of the epidemic on sexual risk behavior and fertility decisions. With regard to methodology, the paper assesses the approaches used in the literature to deal with, among other things, the problem of self-selection and non- randomness in the placement of HIV and reproductive health programs. Data requirements for different research questions are discussed, and an effort is made to assess what researchers can learn from existing sources such as Demographic and Health Surveys.

From the Research Conference on
Pastoralism and Poverty Reduction in East Africa
Organized by the International Livestock Research Institute (ILRI)
Co-organizers: Prof. Chris Barrett (Cornell University), Prof. Peter Little (University of Kentucky), Prof. John McPeak (Syracuse University), and the Arid Lands Resource Management Project
June 27-28, 2006
Nairobi, Kenya

  • Challenging Orthodoxies: Understanding Poverty in Pastoral Areas of East Africa
    June 2006 (revised March 2008)
    Little, Peter, John McPeak, Christopher B. Barrett, Patti Kristjanson

    Understanding and alleviating poverty in Africa continues to receive considerable attention by a range of diverse actors, including politicians, international celebrities, academics, activists, and practitioners. Despite the onslaught of interest, there surprisingly is little agreement on what constitutes poverty in rural Africa, how it should be assessed, and what should be done to alleviate it. Based on data from an interdisciplinary study of pastoralism in northern Kenya, this article examines issues of poverty among one of the continent’s most vulnerable groups, pastoralists, and challenges the application of such orthodox proxies as incomes/expenditures, geographic remoteness, and market integration. It argues that current poverty debates ’homogenize‚ the concept of ’pastoralist‚ by failing to acknowledge the diverse livelihoods and wealth differentiation that fall under the term. The article concludes that what is not needed is another development label (stereotype) that equates pastoralism with poverty, thereby empowering outside interests to transform rather than strengthen pastoral livelihoods.
    In Development and Change 39(4), pp. 587-611, 2008

  • Beyond Group Ranch Subdivision: Collective Action for Livestock Mobility, Ecological Viability and Livelihoods
    June 2006
    BurnSilver, S. and E. Mwangi

    Pastoralism is the dominant land use in 25% of the world’s landscapes and comprises the basic subsistence strategy of 20 million households (Galaty and Johnson 1990). These rangeland ecosystems largely occur in regions too dry for rainfed agriculture, and are characterized by recurrent drought and strong intra- and inter-seasonal variability in climate (Ellis and Galvin 1994, Galvin et al. 2001). Historically, the primary pastoral response to minimize risk has been mobility. Opportunistic and extensive seasonal livestock movements provided access to water and forage resources that were heterogeneous (i.e., patchy) in space and time. This mobility occurred largely in the context of communal land tenure systems – wherein flexible use rights were negotiated through layered memberships in kinship, clan, and lineage groupings (Bekure et al. 1991, Lane and Moorehead 1994, Turner 1999). Recent developments in ecological and common property theories clearly support the logic of pastoral mobility to compensate for resource heterogeneity (Ellis and Swift 1988, Ostrom et al. 1999, Illius and O’Connor 2000). However, over the past three decades, a combination of government policy and internal drivers has pushed pastoral systems in the opposite direction, towards privatization of communal rangelands characterized by little flexibility (Galaty 1992, Niamir-Fuller 1999, Blench 2001). Many scientists are concerned this transition from mobile systems to continuous grazing of private parcels will lead to ecological degradation and spiraling poverty among pastoral households, and a gradual decrease in both system stability and sustainability (Ellis et al. 2001, Agrawal 2002, Reid et al. 2003, Boone and Hobbs 2004)

  • The Policy and Practice of Educational Service Provision for Pastoralists in Tanzania
    June 2006
    Bishop, Elizabeth

    This paper will explore the context within which policies concerning education in pastoralist areas in Tanzania have been formulated and implemented. It will look at the way in which international and national agendas concerning pastoralism and education are manifested in the policy and practice of educational service provision in pastoralist areas in Tanzania. It will also examine the practice of educational provision in these areas, and assess the impact this provision is likely to have in terms of pastoralist poverty.

  • Is Settling Good for Pastoralists? The Effects of Pastoral Sedentarization on Children’s Nutrition, Growth, and Health Among Rendille and Ariaal of Marsabit District, Northern Kenya
    June 2006
    Fratkin, Elliot, Martha A. Nathan, and Eric A. Roth

    The settling of formerly mobile pastoral populations is occurring rapidly throughout East Africa. Pastoral sedentarization has been encouraged by international development agencies and national governments to alleviate problems of food insecurity, health care delivery, and national integration. However, it has not been demonstrated that abandoning the pastoral way of life, and particularly access to livestock products, has been beneficial to the health and well-being of pastoral populations. This paper reports the results of a three-year study of pastoral and settled Rendille and Ariaal (mixed Samburu/Rendille) communities in Marsabit District northern Kenya, which compares levels of child malnutrition and illness between five different Rendille communities, ranging from purely pastoral to agricultural and urban communities. Analysis of bimonthly dietary recalls, anthropometric measurements, morbidity data, and economic differentiation and specialization among 202 mothers and their 488 children under age 9 reveals large differences in the growth patterns and morbidity of nomadic vs. settled children. In particular, age-specific height and weight measurements for the nomadic pastoral community are significantly higher than same-aged measurements of children from the sedentary villages. Furthermore, women and especially pregnant women showed higher levels of malnutrition in the settled communities. Both women and children showed higher rates of respiratory and diarrheal morbidity in settled versus nomadic communities, although malaria rates were uniformly higher in lowland communities than in the highlands. Differences in child growth are attributed mainly to better nutrition, and particularly access to camel’s milk within the nomadic communities. The striking decrease in diarrheal and respiratory diseases for the nomadic children vs. settled children coupled with the findings of a relative decrease in malnutrition and stunting indicate an unexpected edge for health and growth of nomadic Rendille children. The policy implications of our findings are significant. Although pastoralism is not an option for everyone living in dry regions like northern Kenya, the decrease in diarrheal and respiratory illness and for pastoralist children, and the higher levels of stunting in settled children from pastoral populations, should be part of decisions affecting social, economic, and health policy for pastoral regions.

  • Livelihood Diversification in Borana Pastoral Communities of Ethiopia—Prospects and Challenges
    June 2006
    Gemtessa, Kejela, Bezabih Emana, and Waktole Tiki

    This paper analyzes the livelihood of the Borana pastoral communities of Southern Oromiya in Ethiopia. The study employed Participatory Rural Appraisal and survey methods. Stakeholders’ consultations were carried out at community, district, and regional levels. The study shows that livestock mobility would continue to ensure high productivity due to changing environment, change water and feed sources, better pasture supply, etc. However, mobility is curtailed by combination of factors such as population growth and settlement in remote grazing areas, existence of claims by different ethnic groups on rangelands, the impartial impact of drought, increasing settlement to get social services, and the declining number of cattle holding per household. In both pastoral and agro-pastoral communities, the contribution of livestock and livestock products to the household's income is the highest for the rich and smallest for the poor owing to the size of livestock they hold. The destitute households have no livestock. Yet the number of poor households is increasing due to drought. The livelihood of the pastoralists diversified into crop production, petty trades, wage, remittance, firewood and charcoal production, and incense collection. The study revealed that the agro-pastoralists are poorer than the pure pastoral communities indicating that farming has been adopted to cope with food insecurity caused by declining livestock herd. But the income discrepancy between the social groups is significantly high. The rich could generate four folds of the income the poor earns. Finally, the researchers recommended that the need for mobility in the use of range resources in order to cope with the ecosystem vulnerability should be understood by the federal and regional governments. Appropriate land use planning for appropriate use of rangeland and delimiting cropland from rangeland is an essential intervention in a participatory manner.

  • Longitudinal Analysis of the Impact of Land Privatization on Samburu Pastoralist Livelihood Strategies: 2000-2005
    June 2006
    Lesorogol, Carolyn K.

    Extensive pastoralism as practiced by East African pastoralists such as the Samburu of Northern Kenya, is premised on access to relatively large tracts of rangeland. Most pastoral land has been communally managed by groups of pastoralists who have, over time, developed rules and norms for regulating access to and use of the resources. In recent years, however, a number of pastoral groups have begun to privatize land, raising questions about the implications of this shift for pastoral livelihoods and the future of commonly held rangelands themselves (Ensminger and Rutten 1991, Rutten 1992, Kimani and Pickard 1998). The “new thinking” about pastoralism, which emerged during the 1990s, suggests that maintaining pastoralists’ mobility is critical to enabling them to remain successful herders (Behnke 1993, Scoones 1994, McCabe 2004). Accordingly, privatization of pastoral lands and the trend toward increasing sedentarization of pastoralists, appears to be a threat to the continued viability of pastoral production and livelihoods (Fratkin and Roth 2005). However, there is little empirical data demonstrating the effect of a shift from communal to private rangeland on household well-being or economic survival strategies. More information is needed to determine the effects of privatization on livestock production and livelihood strategies of pastoral households. This paper presents findings from an ongoing research project inquiring into these questions.

  • Women’s Groups in Arid Northern Kenya: Origins, Governance, and Roles in Poverty Reduction
    June 2006
    Coppock, D. Layne, Solomon Desta, Adan Wako, Ibrahim Aden, Getachew Gebru, Seyoum Tezera, and Chachu Tadecha

    Collective action can be effective means of local development and risk reduction among rural people, but few examples have been documented in pastoral rangeland areas. We conducted extensive qualitative interviews for 16 women’s groups residing in settlements in northern Kenya during early 2005. Our objectives were to understand how groups were formed and governed and what activities they have pursued. Other questions included to what extent such groups can mitigate drought crises and reduce poverty for their members, and what most threatens group sustainability. At the time of interviews, our groups had existed for an average of 10 years, with two being 18-19 years old. Charter memberships averaged about 24 women, 20 of whom were typically illiterate. Half of the groups had been formed after facilitation by a GO or NGO partner and half formed spontaneously. Groups are governed under detailed constitutional frameworks outlining rights and responsibilities of members. All groups have eventually been registered with the Kenya government. Chairladies of the groups are typically elected to two-year terms. Group applicants and candidates for office are carefully screened. Groups primarily form to improve living standards of the members. Groups undertake a wide variety of social and economic activities founded on savings and credit schemes, income diversification, small business development, and expansion of education, health service, and natural resource management functions. The livestock and non-livestock economies become intermixed—commercialized livestock activities provide capital for small business ventures as well as the reverse. Groups have taken an active role in mitigating drought impacts on their members and the scope of drought mitigation appears to expand as groups mature over time. Interview respondents gave many examples of group members that have lifted themselves up from destitution. Relatively few of the groups we interviewed have experienced abject failure, but many have struggled. The greatest threats to the sustainability of these women’s groups come from external factors such as drought, resource scarcity, poverty, and political incitement as well as internal factors such as unfavorable group dynamics and illiteracy. Principles of good group governance and wisdom in business creation and management were repeatedly stated by respondents as the key ingredients for long-term success; making linkages to external development partners is also vital to secure access to technology and small grants. Groups have ambitious plans to further improve their social and economic circumstances; evidence is shown that rates of group formation in the region appear to be increasing. In a highly risky and poverty-stricken environment such as northern Kenya, such groups help create relatively deep pools of social, human, and diversified economic capital. Many of these processes fill large gaps in public service delivery and should be encouraged by policy makers. At the micro-level groups and their GO and NGO facilitators need continued support to strengthen groups. At a macro-level, investments that lead to broader economic development and greater access to formal education in the rangelands may permit further proliferation of sustainable efforts towards collective action.

  • Influencing and Developing Good Policy in Early Childhood Development (ECD) amongst Pastoralist Communities in East Africa: The Case of Samburu in Kenya
    June 2006
    van de Linde, Tanja

    What do we mean by a good ECD policy and are there special elements that are particularly relevant to children from pastoralist societies? Let’s start by a quick deconstruction of ECD: early childhood and development. By early childhood we mean the period of a child’s life, starting at conception and including the first years of primary school usually up to age eight. We look at child development holistically, meaning physical, social, intellectual, language, cultural and emotional development. A working definition of “good” or “quality” ECD is “one that meets the developmental and cultural needs of young children and their families in ways that enable them to thrive”. (Bernard van Leer Foundation). It can also be defined as that program which does not alienate the developing young generation but prepares them to fit into their society.

  • Heterogeneous Wealth Dynamics: On the Roles of Risk and Ability
    June 2006
    Santos, Paulo and Christopher B. Barrett

    This paper studies the causal mechanisms behind poverty traps, building on evidence of nonlinear wealth dynamics among a poor pastoralist population, the Boran from southern Ethiopia. In particular, it explores the roles of adverse weather shocks and individual ability to cope with such shocks in conditioning wealth dynamics. Using original data, we establish pastoralists’ expectations of herd dynamics and show both that pastoralists perceive the nonlinear long-term dynamics that characterize livestock wealth in the region and that this pattern results from adverse weather shocks. We estimate a stochastic herd growth frontier that yields herder-specific estimates of unobservable ability on which we then condition our simulations of wealth dynamics. We find that those with lower ability converge to a unique dynamic equilibrium at a small herd size, while those with higher ability exhibit multiple stable dynamic wealth equilibria. Our results underscore the criticality of asset protection against exogenous shocks in order to facilitate wealth accumulation and economic growth and the importance of incorporating indicators of ability in the targeting of asset transfers, as we demonstrate with simulations of alternative asset transfer designs.

  • Conservation, Land Rights and Livelihoods in the Tarangire Ecosystem of Tanzania: Increasing Incentives for Non-conservation Compatible Land Use Change through Conservation Policy
    June 2006
    Sachedina, Hassan

    For millennia, pastoralists have shared landscapes with wildlife throughout Africa (Pilgram, Siiriäinen et al. 1990; Homewood and Rodgers 1991; Little, Dyson-Hudson et al. 1999). Throughout the 20th century, this co-existence has been in decline as conservation policy excluded people and livestock from protected areas, and demographic growth and expanding agriculture excluded wildlife use (Ellis and Swift 1988; Pagiola, Kellenberg et al. 1998; Homewood, Lambin et al. 2001; Serneels and Lambin 2001). Concurrently, many pastoral systems across the globe, including those of Maasai pastoralists in Tanzania, are believed to be in decline and under unprecedented pressure to diversify livestock based economies. In East Africa, an estimated 70 percent of wildlife populations are dispersed outside protected areas on land which overlaps with pastoralism (Western and Gichohi 1993). The presence of unfenced and uncultivated rangelands adjacent to protected areas increases the total range of resources available to wildlife, and enhances long-term survival as predicted by island bio-geographic theory (Western and Ssemakula 1981). Community Based Natural Resource Management (CBRNM) is one approach that has been proposed as a way of enhancing protected areas by creating economic incentives for local communities to manage wildlife on their lands and enable wildlife to compete as a form of land use. The economic and ecological impacts of CBNRM in pastoral communities are still largely unknown (Caro 1998). CBNRM projects are being initiated across northern Tanzania encouraged by central government agencies and international conservation organisations, with a focus on establishing revenue generating, community based tourism projects on Village land that has been zoned for conservation.

  • Livelihood Choices and Returns among Agro-Pastoralists in Southern Kenya
    June 2006
    Radeny, M., D. Nkedianye, P. Kristjanson, and M. Herrero

    This article addresses livelihood choices and income diversification strategies among agro-pastoralists and pastoralists in southern Kenya, and the factors influencing the returns to the diverse livelihood strategies being pursued. We explore how variability in income and wealth levels across households can be explained by household-level versus geographic factors. We find that household livestock asset levels, education level, landholdings, and diversification of household income sources can largely explain how well households are doing. Geographic factors such as distance to the nearest town, permanent water source, and Nairobi National Park, as well as pasture potential also matter in some cases, but relatively little compared to household-level factors. Investments in livestock remain key to how well households are doing and in some cases appear to be driving livelihood diversification strategies that keep them from falling into poverty. While relatively few households are yet receiving wildlife conservation-related income, for those that are, it is a more lucrative option than cropping, from which very few are earning positive returns. This information can contribute to more evidence-based decision making occurring across pastoral areas and inform policy decisions regarding conservation of wildlife and poverty reduction strategies.

  • Pastoralists Preferences for Cattle Traits: Letting Them Be Heard
    June 2006
    Ouma, Emily, Awudu Abdulai and Adam Drucker

    This paper investigates preferences for cattle traits among a pastoral community in a trypanosomosis prevalent area in Kenya. Choice experiments and mixed logit models are employed to estimate economic values of preferred traits which could be introduced through systematic breeding in breed improvement programs that utilise trypanotolerance trait. The findings suggest preference for traits linked to drought tolerance, high live weight, trypanotolerance and fecundity. Identification and estimation of preferred traits provides useful information for breeding policy and provides a framework for promoting conservation of breeds that possess adaptability traits, critical for arid and semi-arid areas.

  • Cattle Breeding Strategies using Genetic Markers as a Pathway for Improving Competitiveness of Pastoral Systems in Kenya
    June 2006
    Janssen-Tapken, Ulrike, Haja N. Kadarmideen and Peter von Rohr

    Pastoralists in Kenya have increasingly become less food secure and vulnerable to poverty over the last two decades. This is due to increasing human population and changes in land tenure system as well as the harsh agro-climatic conditions associated with their environments. (Rushton, et al., 2002, Wollny, 2003) Livestock keeping is the mainstay of the pastoral systems and 15 million livestock keepers in rangeland-based systems in Sub-Saharan Africa are poor according to the national poverty rate (Thornton, et al., 2003). The enterprise is beset by several constraints, one of the most important of which is livestock diseases, particularly endemic diseases transmitted by vectors such as ticks and tsetse flies (Rushton, et al., 2002). Resistance against trypanocides for controlling tsetse-transmitted trypanosomiasis becomes increasingly a problem (Geerts, et al., 2001, Sinyangwe, et al., 2004). Owing to the strong attachment to livestock by the pastoral communities, any poverty alleviation goal targeted at pastoral communities will have to focus on strategies to improve livestock productivity by minimizing some of the livestock enterprise constraints. One of the issues that this paper focuses on is the breeding strategies as a pathway to minimize cattle disease constraints, especially trypanosomosis, which is ranked among the top ten global cattle diseases impacting on the poor in pastoral systems (Thornton, et al., 2002) As will be shown, our strategy is to develop cattle breeding schemes to ensure genetic gain through selection programs that utilize identified trypanotolerant genotypes, using conventional genetic evaluation techniques with or without the use of genetic (DNA) markers for trypanotolerance.

  • Conflict Minimizing Strategies on Natural Resource Management and Use: The Case for Managing and Coping with Conflicts between Wildlife and Agropastoral Production Resources in Transmara District, Kenya
    June 2006
    Nyamwaro, S.O., G.A. Murilla, M.O.K. Mochabo and K.B. Wanjala

    It is now well known that a large proportion (up to 90%) of the wildlife population is not contained within the designated areas (the national parks and game reserves) in Kenya. The wildlife thus coexists and interacts with humans and livestock. Research was initiated in Transmara district of Kenya to identify and document factors contributing to competition for and conflicts over management and use of wildlife interactions with agro-pastoral production resources. The research was aimed at finding out: (a) causes leading to competition for and conflicts over multiple land uses, (b) whether the policy on Wildlife Compensation Schemes* is necessary and sufficient, (c) extent of losses incurred and benefits received by local communities due to wildlife interactions, and (d) how the conflicts are managed. Informal and formal socioeconomic surveys were undertaken to collect both secondary and primary information on perceptions of communities about the stated issues. About 97% of the respondents indicated that wildlife is the major cause of conflicts affecting local human communities. Elephants, baboons and leopards were the most destructive and dreadful wild animals. Losses that were incurred by the local communities in the past one year were in the form of human deaths (9%) and injuries (7%), cattle deaths (35%) and injuries (15%), and sheep and goats’ deaths (80%) and injuries (23%). The most affected gender groups were the school-going children (56%) and male adults (21%). Some of the local people (32%) indicated that they used to receive indirect benefits in terms of social amenities that are no longer being received. Most respondents (65%) pointed to a unanimous view that wild animals provided little benefits but destruction to people. Majority of the respondents (72%) appeared to be aware that Wildlife Compensation Schemes were in existence but on the other hand most of them (73%) did not necessarily know why the schemes are there for or how they operated. The most cited solutions to minimize and manage such conflicts were putting up a perimeter fence around Mara National Game Reserve, getting rid of wildlife using every means possible, and increasing and expanding wildlife compensation rates. Respondents also proposed that equitable sharing of earnings from wildlife resources be initiated and implemented in an acceptable and amicable manner. The respondents further suggested that for the new proposals to be actualized they should be incorporated into a reviewed broad-based wildlife policy. This would go a long way in contributing to poverty alleviation for the Maasai pastoralists and agropastolarists.
    *Compensation Schemes are Acts of Parliament first enacted in 1976 and amended in 1989 stating the rules, regulations and procedures of getting compensated either in monetary terms or in kind by the government when land owners and their livestock are killed or injured and their properties destroyed.

  • Empirical Forecasting of Slow-Onset Disasters for Improved Emergency Response: An Application to Kenya’s Arid North
    August 2009
    Mude, Andrew, Christopher B. Barrett, John G. McPeak, Robert Kaitho and Patti Kristjansen

    Mitigating the negative welfare consequences of crises such as droughts, floods, and disease outbreaks, is a major challenge in many areas of the world, especially in highly vulnerable areas insufficiently equipped to prevent food and livelihood security crisis in the face of adverse shocks. Given the finite resources allocated for emergency response, and the expected increase in incidences of humanitarian catastrophe due to changing climate patterns, there is a need for rigorous and efficient methods of early warning and emergency needs assessment. In this paper we develop an empirical model, based on a relatively parsimonious set of regularly measured variables from communities in Kenya’s arid north, that generates remarkably accurate forecasts of the likelihood of famine with at least three months lead time. Such a forecasting model is a potentially valuable tool for enhancing early warning capacity.
    In Food Policy 34(4): 329-339, August, 2009

  • Property Rights among Afar Pastoralists of Northeastern Ethiopia: Forms, Changes and Conflicts
    June 2006
    Hundie, Bekele

    This study has been conducted in three districts in Afar of Northeastern Ethiopia. The objective is to (1) describe the traditional land use arrangements among pastoralists; (2) explain changes in pastoral customary rights; (2) explain resource-based conflicts among various pastoral groups. The results show that the state is the giant actor behind property right changes especially in areas with better resource endowments. The state-driven changes in customary rights have led to increasing conflicts between pastoralists and the state. It also created disparity among clan members in the level of resource use as it facilitated the exclusion of some clan members. In addition to the state, natural as well as socioeconomic challenges are important in explaining the current changes in land use arrangements. It is also evident that, conflicts nurtured by obscurely defined property rights are extensive among pastoral groups causing humanitarian crisis (especially of the active labor force), loss of assets (primarily livestock), underutilization of pastoral resources by creating “no go” areas, and underutilization of market opportunities.

  • Maasai Pastoralists: Diversification and Poverty
    June 2006
    Homewood, K., E. Coast, S. Kiruswa, S. Serneels, M. Thompson, and P. Trench

    Sub-Saharan African pastoralism involves highly fluid production systems responding flexibly to variable and unpredictable arid and semi arid rangeland environments. Household wealth is typically subject to stochastic events and most pastoralist groups have a history of entire families shifting in and out of the system as their fortunes have changed. This potential to re-enter the system has been maintained by the often communal nature of land tenure in pastoral societies, alongside the potential to restock through raiding, trading (including wild resources), or cultivation. However, the last hundred years have seen a drastic decline in the commons available for extensive pastoralism. Large areas of land have been given over to alternative uses as pastoral populations have become marginalized within most African nation states. Extensive land loss to conservation and rapid piecemeal privatisation of formerly communal rangelands for agriculture and ranching enterprises are framed within an environmental discourse that invokes Hardin’s Tragedy of the Commons to justify land alienation and subdivision. This process has entailed the loss of access to key dry season land and water resources.

  • Contextualising Conflict: Introduced Institutions and Political Networks Combating Pastoral Poverty
    June 2006
    Zaal, Fred and Morgan Ole Siloma

    Poverty and conflict both bring to mind images of destitution. Conflict causes destruction, destitution and disruption of society. The resources to which people have access are damaged to the degree that livelihoods are threatened and poverty is increased. Poverty may also lead to conflict as righteous claims on resources are not met (Verstegen 2001) and scarce resources are competed about (Homer-Dixon 1999). However, this last relationship may be a simplification, as there are many other causes for conflict that hide behind this simple explanation. For example, it may be that not the poor among themselves compete for scarce resources, but that parties previously not involved start to compete with the local poor. The poor may not even have the resources to start a conflict, but rather the well off who through a lack of political, social and cultural mechanisms for control, compete freely for access to resources. As conflict-resolution mechanisms are likely to be absent in those cases, there is very little likelihood of conflicts being moderated once they break out unhindered. In fact, conflicts may be the unavoidable outcome in any society where processes of resource access and distribution are not handled through established political institutions and their controlling elites (Verstegen 2001).

  • Strengthening Pastoralists’ Voice in Shaping Policies for Sustainable Poverty Reduction in ASAL Regions of East Africa
    June 2006
    Hesse, Ced and Michael Ochieng Odhiambo

    The absence of a representative and effective pastoral civil society movement capable of articulating its members’ vision of their development is one of the key factors explaining why policies for pastoral development continue to fail, and poverty and conflict still characterise many pastoral communities in East Africa. Development experience in pastoral regions, particularly since independence, has clearly shown that pastoral people tend to lack the knowledge, political clout and resources with which to fight their own cause, and thus remain vulnerable to other people’s interpretation of what is best for them. In particular, policy makers continue to impose on pastoralists what they perceive to be good for them with little or no reference to the communities themselves. That these perceptions are for the most part founded on stereotypes of what pastoralism and pastoral land use is, only serves to compound the problem.

  • Collective Action and Informal Institutions: The Case of Agropastoralists of Eastern Ethiopia
    June 2006
    Beyene, Fekadu

    An increasing scarcity of water for crop farming and livestock watering among agropastoralists of Mieso in Eastern Ethiopia has largely disrupted their livelihoods. Indigenous water well maintenance and government initiated rainwater harvesting are two important collective actions common among these communities. With the aim of examining collective action institutions in both cases, we collected data from different stakeholders and individual members. Theoretically, low level of physical assets (action resource) limits participation of an individual in collective action. In our case, other factors such as environmental uncertainty and lower level of dependence on the resource have been found to be more significant in limiting membership than limitation of assets. Poor agropastoralists depend on their informal networks to have access to other assets. This enables them to maintain their membership. Moreover, there is a difference between self-organized and imposed collective action in terms of rule enforcement and sanctioning. Institutions also produce different incentives in that free riding leads to automatic exclusion in water harvesting, whereas poor members who continue free riding can benefit from the water well. In evaluating the success, we conclude that technical capacity of members in benefiting from their collective action is limited and deserves more attention than their ability to develop effective collective action institutions. Technical capacity development of user groups needs to be central in policy and programs addressing this.

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From the Regional Conference on
Education in West Africa: Constraints and Opportunities
sponsored by Cornell University, CREA, and Ministère de l’Education du Sénégal
November 1-2, 2005
Dakar, Senegal

  • Public Education Expenditure and Defence Spending in Nigeria: An Empirical Investigation
    November 2005
    Adebiyi, Michael Adebayo and Oderinde Oladele

    In this study, we set out to empirically investigate the empirical relationship between public education expenditure and defence spending in Nigeria, using annual time series data from 1970 to 2003. Some statistical tools are employed to explore the relationship between these variables. The study examines stochastic characteristics of each time series by testing their stationarity using Augmented Dickey Fuller (ADF) and Phillip Perron (PP) tests. This is followed by estimating the error correction model of public education expenditure. The effects of stochastic shocks of public education expenditure and defence spending are explored, using vector autoregressive (VAR) model. Although it is contended by some that the military may contribute towards the promotion of the modernization of developing societies through the enhancement of the quality and quantity of human capital by, among others, dismantling social rigidities, there is limited conclusive evidence to support this view. In fact, a negative trade-off between defence spending and public education expenditure (used as a proxy for human capital formation) is generally expected. A regression analysis of the relationship between military spending and public education expenditure in Nigeria between 1970 and 2003 is positive and statistically significant in all the techniques employed. It should be pointed out that the statistical analyses conducted in this study are concerned only with reported public expenditures on education. Inasmuch as private education and private expenditures on public education are excluded, the data employed understate the country’s commitment to education. With this caveat in mind, the study concludes that it is not unlikely that military activity has served to enhance the productive capability of the Nigerian economy via some modernizing effect. Thus, in the short and long run, the impact of military expenditure on Nigeria’s stock of human capital, particularly education, has been positive.

  • Impact de la pauvreté sur la scolarisation et le travail des enfants de 6-14 ans au Togo (Effect of poverty on schooling and child labor in Togo)
    November 2005
    Adjiwanou, Vissého

    Based on “Family, migrations and urbanizations” the survey was carried out on 2000 by the Unity of Research in Demography (University of Lomé). This paper aims to estimate the effect of poverty on schooling and child labor. About 2946 children were interviewed with 46% girls; 28% go only to school, 49% combine school and work, 15% work only, and 7% do neither work nor go school. The obtained results are based upon the bivariate probit model. The results point out that household poverty is one of the factor that discourages parents to send children to school.

  • Education, Allocation, Unemployment and Economy Growth in Nigeria: 1970-2004
    November 2005
    Ajetomobi, J. O. and A. B. Ayanwale

    This paper examined education expenditure trend, higher education student enrolment and linkage with unemployment and economic growth in Nigeria. Data for the study came from several issues of Central Bank of Nigeria annual reports and statement of account, Federal Ministry of Education and National University Commission (N.U.C). The results show that Government funding is unstable and unpredictable, capital and recurrent funding since 1970 are only a very small fraction of the nation’s budget, total enrolment contrasts sharply with level of employment because government could not limit enrolment to a level which fund made available could adequately cater for and the proportion of GDP that goes to education is still low.

  • Economic Analysis of Private Returns to Investment in Education in Cameroon
    November 2005
    Amin, Aloysius Ajab and Wilfred J. Awung

    Since 1960, the Cameroon Government has invested very heavily in Cameroon’s educational system—nursery through to higher education level. There has been pressure on the government to put more emphasis on the primary level rather than on tertiary level. The paper’s findings strongly suggest that emphasis should be on all the educational levels, and more so, on the tertiary level. The conclusion is drawn from the earnings function model from which estimates are brought out on the average rate of return to education with the marginal return referring to additional year of education at the different levels.

  • Long Run Relationship between Education and Economic Growth in Nigeria: Evidence from the Johansen’s Cointegration Approach
    November 2005
    Babatunde, Musibau Adetunji and Adefabi, Rasak Adetunji

    This paper investigates the long run relationship between education and economic growth in Nigeria between 1970 and 2003 through the application of Johansen Cointegration technique and Vector Error Correction Methodology. It examines two different channels through which human capital can affect long run economic growth in Nigeria. The first channel is when human capital is a direct input in the production function and the second channel is when the human capital affects the technology parameter. The Johansen Cointegration result establishes a long run relationship between education and economic growth. A well educated labour force appears to significantly influence economic growth both as a factor in the production function and through total factor productivity.

  • Improving Schools in a Context of Decentralization: Findings from Research in West Africa – Benin, Guinea, Mali and Senegal
    November 2005
    De Grauwe, A. and C. Lugaz (IIEP); D. Odushina and M. Moustapha (Bénin) ; D. Baldé (Guinée) ; D. Dougnon (Mali); and C. Diakhaté (Sénégal)

    Discussions on decentralization have increased in complexity in recent years because of the deepened realization that the ‘school’ as an institutional unit is a core actor in ensuring educational quality. A growing number of studies demonstrate that the management of a school, the relationships between the different actors (the head teacher, the teachers and the community) and the school’s own involvement in defining and evaluating its improvement have a profound impact on the quality of education. This ‘autonomization’ of the school in combination with the more traditional forms of decentralization, has led to greater diversity in the policies implemented in different countries.

  • L’impact des niveaux de qualification de la main d’oeuvre sur la productivité des enterprises: analyse appliquée au secteur industriel sénégalais
    November 2005
    Dia, Abdoul Alpha

    Sur la question des effets du capital humain, les études consacrées aux pays africains sont relativement rares, et en grande majorité, il s’agit d’ailleurs soit d’analyses macroéconomiques, soit d’études consacrées au secteur agricole. Dans le cadre de cette étude, nous nous proposons d’analyser l’impact des niveaux de qualification de la main d’oeuvre industrielle sur les performances productives des entreprises. Plus particulièrement, quatre catégories de main d’oeuvre sont ici prises en compte : (i) les cadres, (ii) les techniciens supérieurs, (iii) les techniciens et agents de maîtrise, et enfin (iv) les employés ouvriers et manoeuvres. Les résultats obtenus ici n’indiquent globalement pas un impact considérable de la structure des qualifications (et plus particulièrement des catégories de main d’oeuvre les plus qualifiées) sur les performances productives, et ce quelle que soit la spécification retenue (Cobb-Douglas ou Translog). Assurément, il s’agit ici d’un résultat très largement contre-intuitif, qui s’oppose autant aux postulats de la théorie économique qu’aux résultats de la recherche internationale consacrée à cette question (cf. plus particulièrement les études conduites en France, aux Etats Unis ou en Grande Bretagne). En ce qui concerne les facteurs en mesure d’expliquer un tel résultat, ils sont de plusieurs ordres : la faible qualité des formations dispensées (et donc la forte inadéquation formation/emploi), le poids très minime de la main d’oeuvre qualifiée au sein des entreprises (on serait donc en présence d’un effet de seuil), la répartition très inégale de la main d’oeuvre industrielle (et plus particulièrement l’hypertrophie des services administratifs au détriment des services “productifs”), et enfin les caractéristiques structurelles du secteur industriel sénégalais (cf. notamment le faible niveau de progrès technique caractérisant la plupart des entreprises, lequel aurait donc globalement tendance à limiter le potentiel productif du capital humain).

  • La dimension économique de l’efficacité externe de l’éducation en Afrique de l’Ouest
    November 2005
    Duret, Elsa, Mathias Kuepie, Christophe Nordman, and François Roubaud

    Les analyses ciblant l’efficacité externe1 des systèmes éducatifs s’intéressent à l’influence de l’éducation reçue par les individus après qu’ils sont sortis des écoles et établissements de formation pour mener à bien leur vie d’adulte au sein de la société. Ces effets sont de deux ordres, économiques dans un sens étroit, sociaux dans une conception plus large, et peuvent être lus à travers deux dimensions complémentaires : individuelle d’une part, collective d’autre part. Le croisement de ces deux perspectives offre un tableau synthétique des différentes analyses qui peuvent être conduites dans ce domaine...

  • Causes of low academic performance of primary school pupils in the Shama Sub-Metro of Shama Ahanta East Metropolitan Assembly (SAEMA) in Ghana
    November 2005
    Kafui Etsey

    Shama Ahanta East Metropolitan Assembly (SAEMA) is one of the district assemblies in the Western Region of Ghana. It is one of the three metropolitan assemblies in the country. The other two are Accra-Tema and Kumasi. SAEMA is located about 210 kilometres along the coast, west of Accra and is divided into three sub-metro district councils which are Shama, Sekondi and Takoradi. The twin city of Sekondi-Takoradi is both the district capital and the regional capital. The Shama sub-metro is made up of Shama and Inchaban circuits. The poor academic performance of pupils in the Shama sub-metro of the Shama Ahanta Metropolis has been a concern for the metropolitan assembly over the past few years. The schools have shown poor performances in all public examinations and as one director puts it, ‘their BECE results have been appalling’...The purpose of this study therefore is to obtain evidence of the factors that are responsible for the poor academic performance of pupils in the Shama sub-metro...

  • Strategies to Reduce Repetition in Cameroon Primary School
    November 2005
    Fonkeng, George

    Repetition is one indicator of the internal inefficiency of an educational system. In Cameroon, primary school repetition is high (40%) and as such, constitutes wastage particularly, and of course problematic to the state, parents and individual pupils/victims. It is conceptualized that efficiency as applied to educational achievement combines both qualitative and quantitative variables and relates inputs to outputs. An efficient educational system should enable students graduate within the time frame prescribed. If students spend more time than is required there is wastage. To combat this phenomenon in the primary school system in Cameroon, the government has resorted to experiment on some strategies namely: Compensatory Education, Competency-Based Teaching Approach, Automatic/ Administrative Promotion in addition to the New Pedagogic Approach with apparently, significant results in the reduction of repeating. It is concluded that these strategies based on a pupil-centred philosophy/pedagogy tend to promote learning and consequently, increase promotion in primary schools.

  • Household Level Social Capital and Children’s Schooling Decision in Cameroon: A Gender Analysis
    November 2005
    Johannes, Tabi Atemnkeng

    This paper re-examines and incorporates household level social capital amongst the determinants of children schooling in Cameroon. Reduced form demand equations of schooling for the entire sample, male and female children as well as for rural and urban children are estimated separately. Results indicate that social capital especially female related, mothers’ education and income strongly influences parental decisions towards a child schooling. However, social capital as well as its female component is more important as both male and female children are equally given the opportunity to school and there is neither gender bias nor rural-urban difference in children schooling outcome when parents participate in groups or associations. Thus, we recommend the building of social capital by strengthening local community networks.

  • Income Risk and School Decisions in Burkina Faso
    December 2005
    Kazianga, Harounan

    There is a large literature which explores how negative income shocks impact human capital accumulation (especially education) when financial markets are incomplete and households can neither insure nor borrow to smooth their consumption. The main conclusion is that households in these circumstances allocate child time to more labor and to less schooling. Such ex-post use of child time as a self-insurance mechanism translates into lower human capital (lower years of education completed) over time which is detrimental to economic growth. There has been, however, little research on the cumulative effects of (perceived) income uncertainty on child education. The intuition is that households that face more a volatile income stream have greater incentives to build up a buffer stock to insure against unforeseen adverse shocks, and non-enrollment can be part of such strategy. This paper fills this gap on the literature which focuses on income shocks and education in developing countries. The empirical work uses data from rural Burkina Faso, an environment where school enrollment rates are low and households face frequent income shocks. Controlling for current economic shocks, household wealth levels and child characteristics, I find that income uncertainty (expressed as income variance) consistently reduces a number of education outcomes, including current enrollment status, education expenditures per child, the number of years of education completed and the probability of having been ever enrolled. The estimation results suggest that income uncertainty might have large welfare costs in terms of human capital.

  • Les dépenses publiques d’éducation sont elles pro pauvres? Analyse et Application au cas du Sénégal
    November 2005
    Niang, Birahim Bouna

    La lutte contre la pauvreté constitue aujourd’hui une des principales priorités des pouvoirs publics des pays d’Afrique au Sud du Sahara et des partenaires au développement qui apportent leur soutien à cette région du monde. Le Sénégal n’est pas une exception à cette règle. La volonté de faire reculer la pauvreté apparaît àtravers la structure des dépenses publiques qui est caractérisée par un arbitrage en faveur des secteurs sociaux notamment l’éducation. En effet, les dépenses d’éducation représentent le premier poste du budget de l’Etat alors que les dépenses sociales représentent près du tiers des dépenses totales...

  • Earning and Learning in the Rural Area of Sub-Saharan Africa: An Inquiry into the Cocoa Sector
    November 2005
    Nkamleu, Guy Blaise

    The challenge of a child labor policy is to remove children away from work and toward schooling. To this end, there is a need to better understand the reality of the interplay between work and schooling as well as household’s behavior with respect to child’s time allocation. This paper investigates child labor issue in the cocoa sector in Cote d’Ivoire, with the aim to identify determinant factors that can help to design a multi-angle policy approach towards the elimination of child labor. The present study is based on a survey done in 2002, over a representative sample of more than 11000 cocoa-households’ members. The paper presents model, which portrays the child labor decision as a three-stage sequential process. Study reveals that child labor’s contribution in cocoa farm as well as non-enrollment in school are considerable. More, numerous children are involved in potentially dangerous and/or injurious tasks. Results of econometric analysis using sequential probit model show that child Characteristics, parent characteristic as well as household characteristics are all pertinent in explaining the child work/schooling outcome in the cocoa sector of Cote d’Ivoire. Confirming the need of a multi-angled policy approach towards the elimination of child labor. The important variables highlight in this study should be taken into consideration in efforts to design an array of policy instruments to promote good development of children in the cocoa sector.

  • Child Schooling in Nigeria: The Role of Gender in Urban, Rural, North and South Nigeria
    November 2005
    Okpukpara, Benjamin Chiedozie and Nnaemeka A. Chukwuone

    This research was conceived as a result of increasing drop out of children from school as well as high incidence of children combining schooling with some economic activities in Nigeria. Though many researches have been conducted in areas of school enrolment of the children in Nigeria, little or none of these researchers has bordered much on the role of child, parent, household and community characteristics on child schooling. Previous works centre mainly on explorative studies rather than econometric causes of the observed trends in school enrollment.

  • L’augmentation des budgets suffit-elle à la qualité des systèmes éducatifs? Cas du Gabon (Is a rise of public expenditures enough to improve the quality of educational systems? The Gabonese evidence.)
    November 2005
    Oyaya, Jean Rémy

    The present survey is a contribution to the means to reach the objective education of quality for all. So it contributes at first to set out the dysfunctions of the Gabonese education system to justify the rise of the budget for the education. Using an econometric model of analysis, it thereafter contributes to the identification of the main determinants of the evolution of these public expenditures. But a rise of these expenditures is not enough to improve the quality of the educational system. So the study pleads subsequently for the stake of a preventive system of education. It concludes while putting the accent on the necessity of the State to fight against the corruption and to hold its liability, the one guarantee to the success of the reforms that a quality system of education for all supposes.

  • Do Mothers’ Educational Levels Matter in Child Malnutrition and Health Outcomes in Gambia and Niger?
    November 2005
    Oyekale, A. S. and T. O. Oyekale

    Despite past policy interventions and supports, malnutrition remains one of the major problems confronting children in Sub-Sahara Africa (SSA). This study analyzed the effect of mothers’ educational levels on child malnutrition. Data from the 2000 End-Decade Multiple Indicator Cluster Survey by the United Nations International Children Emergency Funds (UNICEF) for Gambia and Niger were used. Data were analyzed with Foster-Greer-Thorbeck approach and Probit regression. Results show stunting, wasting and underweight head counts are higher in Niger rural and urban areas, while stunting, wasting and underweight head count, depth and severity are higher among children whose mothers had no secondary education for all the countries. The Probit analysis reveals that attainment of secondary education by the mothers, urbanization, presence of pipe water, presence of mother and father at home, polio vaccination, ever breast fed and access to radio and television significantly reduce the probability of stunting, wasting and underweight, while infection with diarrhea, fever and age at first polio vaccine significantly increase it. It was recommended that to reduce malnutrition and achieve the Millennium Development Goals (MDGs) in Gambia and Niger, institutional arrangements for catering for secondary education of girls and ensuring consistency in child health programs must be strengthened, among others.

  • Analyse critique des normes EFA-FT de production de service éducatif dans l’enseignement primaire des pays de l’UEMOA
    November 2005
    Quenum, Célestin Venant C.

    The West African Economic and Monetary Union (WAEMU) countries adopted the program “Education For All Fast Track Initiative” (EFA-FT) to achieve the goal of universal elementary education. Although the EFA-FT deals with some constraints that hinder universal education, it has some shortcomings that should be addressed to avoid any perverse effects in the short to medium run. For instance, the teachers’ pay under the EFA-FT seems unequitable and may even be counterproductive in the national context. Moreover, under the current terms the states will be unable to sustain the funding required for this program beyond the year 2015.

  • Primary School Enrollment and Gender Gap of Rural Households’ Children in South Western Nigeria
    November 2005
    Rahji, M. A. Y.

    The study examined school enrollment and gender gap of rural household children at the primary level. A multi-stage sampling technique was used in data collection. Probit model was used in analyzing the data set. Evidence from the analysis indicated that more boys were enrolled than girls. The factors considered affect male and female children differently. Father’s education variable is significant for boys. It is not significant for girls. Mother's education variable though positive in both cases is not significant. The probit model predicted a gender gap of 12.56% in favour of boys. Most of the gap is due to differences in the ways households perceive male and female children. There is thus a preference for boys over girls in the demand for schooling. Based on the findings of this study, incentives for the enrollment of more girls were recommended. These include: differential fees, free tuition, and increased public subsidies for female education.

  • Education et développement humain en Afrique de l’Ouest: des hauts et des bas. Les cas du Burkina-Faso, de la Côte d’Ivoire et du Sénégal
    November 2005
    Saha, Jean Claude

    Nous proposons une estimation de l’apport de l’éducation au processus de développement humain au Burkina-Faso, en Côte-d’Ivoire et au Sénégal. Le développement humain est entendu au sens du Programme des Nations Unies pour le Développement (PNUD). Suivant une approche par la valeur de Shapley, nous décomposons les variations annuelles de l’Indicateur de Développement Humain (IDH) de ces pays. D’après les résultats obtenus, le secteur éducatif ivoirien a contribué pour 146,75% au progrès de développement humain réalisé par ce pays entre 1990 et 2004, celui du Sénégal pour 23,77% et celui du Burkina-Faso pour –13,35 %. Mais on déplore l’absence de synergie entre le secteur éducatif ivoirien et les autres aspects du développement humain dans le pays (la santé et le revenu par tête), tout autant que l’on s’inquiète devant le rôle marginal que joue l’éducation au Sénégal et surtout devant le sort du Burkina-Faso où le secteur éducatif a considérablement freiné le développement humain depuis 1990. Un échange d’expérience entre pays de la sous-région est alors souhaitable.

  • Corruption, Croissance et Capital Humain: Quels Rapports
    November 2005
    Seka, Pierre Roche

    The objective of this paper is to explain some of the reasons of the high rate of dropout observed in the system of higher education. It has been shown theoretically that corruption is one of the major factors. Indeed, very talented students, who otherwise could have pushed further their studies, suddenly drop out when they compare the level of well being of those who are well educated with that of those who are not but enriched through corruption. Where do they go? They join the latter in their corruptive activities. Such practice, that somehow is rational, endangers the whole education system. An econometric model has been estimated to show the negative impact of corruption on the registration rate for higher education. The paper ends by calling for the attention of the public authority that if nothing is done to retribute better well educated people, the education system is at high risk of extinction, endangering development efforts that have been made so far.

  • Optimiser la participation communautaire au financement et à l’accroissement de l’offre éducative
    November 2005
    Wallace, Servais Edoh

    La situation de l’éducation de base au Togo reste critique. Elle pâtit lourdement des difficultés sociopolitiques de cette dernière décennie. “Aujourd’hui, environ, 30% de la population scolarisable n’a pas encore accès à l’éducation de base.” Le taux net de scolarisation se situe autour de 65% pour le cycle primaire en 2000. Une décadence effroyable quand on sait qu’au début des années 1980, le Togo faisait partie des pays à fort taux de scolarisation de la sous région ouest africaine. En effet, à partir de 1985, les conditions macro-économiques particulièrement difficiles conjuguées aux effets du programme d’ajustement structurel conduisent à un ralentissement de l’expansion du système éducatif.

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From the International Conference on
Shared Growth in Africa
sponsored by Cornell University, The Institute of Statistical, Social and Economic Research (ISSER-University of Ghana), and The Africa Region of the World Bank
July 21-22, 2005
Accra, Ghana

  • Unemployment in South Africa, 1995 - 2003: Causes, Problems and Policies
    January 2005
    Geeta Kingdon and John Knight

    It is our view that developments in the labour market hold the key to South African prosperity or penury. It is from the labour market that the income benefits from growing labour scarcity, or the threat to social and political stability from growing unemployment and underemployment, could emerge. The government response should be to keep this issue at the forefront and to pursue whatever policies will improve labour market outcomes. Our primary concern in this paper is with unemployment and the informal employment that often disguises unemployment. However, in order to understand these phenomena it is necessary to consider a range of related indicators such as the adult population, the labour force, labour force participation, employment, distinguishing here between formal and informal employment, or between wage- and self-employment, and real wages and incomes.
    Forthcoming in Journal of African Economies

  • Analysis of farmers’ preferences for development intervention programs: A case study of subsistence farmers from Eastern Ethiopian Highlands.
    July 2005
    Wagayehu Bekele

    The aim of this paper is to better understand farmers’ perception of the relevance of different development intervention programs. Farmers’ subjective ranking of agricultural problems and their preference for development intervention are elicited using a stated preference method. The factors influencing these preferences are determined using a random utility model. The study is based on a survey conducted in the Hunde-Lafto area of the Eastern Ethiopian Highlands. Individual interviews were conducted with 145 randomly selected farm households using semi-structured questionnaires. The study suggests that drought, soil erosion and, shortage of cultivable land are high priority agricultural production problems for farmers. Low market prices for farm products and high prices of purchased inputs also came out as major problems for the majority of farmers. Farmers’ preferences for development intervention fall into four major categories, market, irrigation, resettlement, and soil and water conservation. Multinomial logit analysis of the factors influencing these preferences revealed that farmer’s specific socio-economic circumstances, and subjective ranking of agricultural problems play a major role. It is also shown that preferences for some interventions are complimentary and need to be addressed simultaneously. Recognition and understanding of these factors, affecting the acceptability of development policies for micro level implementation, will have significant contribution to improve macro level policy
    In African Development Review, 18(2): 183-204, 2006.

  • Socioeconomic Impact of Export Oriented Agricultural Production on Farmers, in Eastern Ethiopia
    July 2005
    Adem Kedir

    This study was undertaken to assess the socio-economic impact of producing export oriented agricultural crops on the livelihoods of the farmers in eastern Ethiopia. A random sample of 305 farmers was studied. Comparisons were made between producers and non-producers using the Z-test and regression analysis. It was found that producers of export oriented crops are better off than the non-producers in terms of sending their children to school, housing conditions and ability to finance their families’ food requirements. The impact of father’s education, number of children and livestock ownership on the improvements in the livelihoods of the farmers and the problems facing the farmers were also emphasized. The implications of the findings for the policy makers were also pointed out.

  • Is Sub-Saharan Africa a Convergence Club?
    July 2005
    Johnson P. Asiama and Maurice Kugler

    The African growth effect has been found to be significant in many empirical growth research papers — suggesting that even after controlling for a wide range of variables that potentially affect growth, the Sub-Saharan African dummy has an adverse impact on economic growth. This has thus remained one of the unexplained empirical puzzles in the growth literature. Earlier studies have attributed this growth tragedy to factors such as macroeconomic instability; external shocks; human capital inadequacies, institutional and political uncertainty, geography, ethnic fractionalisation, etc. Moreover, the recent perspective about the effect of colonial, geographical and disease factors in previously colonised regions such as Africa, also offers significant insights about the growth situation in Sub-Saharan Africa. On the other hand, some have suggested that Sub-Sahara Africa could simply be an example of club convergence from the lower end. We evaluate the latter view, and provide some new evidence on long run growth dynamics in Sub- Sahara Africa. We make use of the dynamic panel GMM methodology, which by construction controls for such country-specific and time-invariant effects due to history, disease or geographic factors. Our findings suggest that Sub-Saharan Africa is not an example of a convergence club. Rather, countries conditionally converge to their own steady states, and this could explain the increasing heterogeneity in economic conditions across the sub-region. In addition, we found openness, the extent of financial development, and foreign direct investment provide beneficial marginal effects on the steady state growth path of each country in the region. By contrast, government consumption, inflation, and excessive monetization have a negative effect on growth.

  • An Inquiry into the role of personal wealth in the pastoralist - agropastoralist conflict resolution in Yerer and Daketa Valleys, Eastern Ethiopia
    May 2005
    Ayalneh Bogale and Benedikt Korf

    Capitalizing on the mobility of livestock is one of the major ways in which pastoralists have managed ecological uncertainties and risks, as it enables them the opportunistic use of the resources. However, agricultural encroachment onto rangelands by nearby agro-pastoralists has led to a shortage in grazing area and threatened the mobility of the pastoralists. As this process leads to a significant disruption and weakening of the risk-management systems of pastoralists, they seek for various institutional arrangements with agropastoralists to enable them access to common grazing land. Based on an exploratory survey and data derived from interview of 146 households in eastern Ethiopia, this paper uses an adaptation of the sequential rationality game theoretical model and institutional analysis to discrete choice models. The analytical framework, in its entirety, presents a simple model of household and community level decision-making, in which they are concerned about their welfare along many different dimensions. Choice of institutional arrangement, namely no opinion, reciprocal, sharing milk and the right to use milk, is modelled using multinomial logit discrete choice procedure. The model chi-squared statistic is significant at the 1% level of probability. For all arrangements, there are three to five observable characteristics of household that provide statistically significant predictive power for practicing a given arrangement. The paper argues resource scarcity may enhance the bargaining position of asset-poor members of an agro-pastoral society and urges the wealthier agropastoralists to comply with a nonviolent resolution of competing claims towards a resource sharing arrangement.

  • Stochastic Technology and Crop Production Risk: The Case of Small-Scale Farmers in East Hararghe Zone of Oromiya Regional State in Ethiopia
    July 2005
    Bekabil Fufa and R. M. Hassan

    This study used the Just and Pope stochastic production technology specification to analyse the crop production and supply response behaviour of farmers in East Hararghe zone of Ethiopia under production risk. The results showed that improved seed, human labour, oxen labour and planting date were the most important determinants of yield levels of the crops grown in the area. On the other hand, the use of improved seed and fertilizer were yield risk increasing inputs in the production of maize and sorghum crops. However, early planting for all the annual crops grown, use of human labour for the package crops and oxen labour for all food crops grown in Faddis district were found to have yield risk reducing effects. The results have important implications for agricultural technology development and transfer in the study area. To reduce the yield risk increasing effect of fertilizer, the development and promotion of new crop varieties should consider fertilizer application trails for different levels across different agro-ecologies and farmers’ conditions. Also, farmers need to be provided with adequate advice and information on the use and application of fertilizer. Moreover, to overcome the yield risk increasing effect of improved seed, varieties should be tested for their suitability to varying agro-ecologies and management conditions of the farmers in the area. Extension advice and information on the management of the improved crop varieties need to be provided to the farmers to improve the yield stability of the crops. In addition, extension advice on early planting, provision of meteorological information to farmers to aid them in planting date decisions and development of short period maturing varieties could help to reduce variability in the yield levels of crops grown in the area. Finally, improving the small-scale farmers’ access to oxen would also enable the farmers to achieve stable yields from crop production.

  • Can Africa Reduce Poverty by Half by 2015? The Case for a Pro-Poor Growth Strategy
    June 2005
    Arne Bigsten and Abebe Shimeles

    This study uses simulations to explore the possibility of achieving the target of halving the percentage of people living in extreme poverty in Africa by 2015. A pro-poor growth scenario and a constant inequality scenario are compared. It is shown how initial levels of inequality and mean per capita income determine the cumulative growth and inequality reduction required to achieve the target. The simulations show that small changes in income distribution have a large impact on the possibility of halving poverty. It is shown that the trade-off between growth and inequality varies greatly among countries and that their policy choices thus are quite different. In some cases small changes in income distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option.

  • Shared Sectoral Growth: Evidence from Côte d’Ivoire, Ghana, and Zimbabwe
    June 2005
    Niels-Hugo Blunch and Dorte Verner

    This paper examines agriculture, industry and service sector growth in Côte d’Ivoire, Ghana, and Zimbabwe over more than three decades. The analyses find at least one long-run sectoral relationship in each country. This indicates the existence of a large degree of interdependence in long-run sectoral growth, implying that the sectors “grow together” or, similarly, that there are externalities or spillovers between sectors. This also provides evidence against the basic dual economy model, which implies that a long-run relation cannot exist between agricultural and industrial output. The impulse response and short-run sectoral growth analyses support these results, as both imply the existence of a positive link between growth in industry and growth in agriculture. Policy implications are also discussed; these include directing more attention towards the interdependencies in sectoral growth broadly defined. In particular, our findings have implications for the design of education and health programs, as well. This improved understanding of intersectoral dynamics at all levels may facilitate policy implementation aimed at increasing economic growth—and thereby ultimately improving peoples’ livelihoods—in Africa.

  • Why Has Burundi Grown So Slowly? The Political Economy of Redistribution
    June 2005
    Janvier D. Nkurunziza and Floribert Ngaruko

    This study analyses Burundi’s economic performance over the period 1960-2000 and finds that it has been catastrophic. The usual economic factors determining growth are endogenous to political objectives, suggesting that politics explains the dismal performance. This finding limits the relevance of textbook models of growth relying on the assumption of a competitive resource allocation environment. When cronies rather than qualified managers are running the economy, when priority is given to investment projects in function of their location rather than the objective needs of the economy, economic models lose their explanatory power. Economic performance has been shaped by the occurrence of violent conflicts caused by factions fighting for the control of the state and its rents. The capture of rents by a small group has become the overarching objective of the governments that have ruled the country since the mid-1960s. In this regard, economic performance will not improve unless the political system is modernised from a dictatorial regime playing a zero-sum game to a more democratic and accountable regime. It would be naïve to advocate economic reforms as a way of boosting the country’s economy if they are not preceded or at least accompanied by political reforms. One central message of this study is that Burundi’s growth failure is the result of specific identifiable factors evolving around governance. There is nothing fundamentally wrong with Burundi: Development failure may be reversed if the problems identified in this study are properly addressed.

  • Organizational Culture, Performance and Public Sector Reforms in Africa: The Ghanaian Case
    July 2005
    Francis Owusu

    Public sector reform programs implemented across Africa, including the World Bank’s “first” and ‘second” generation reforms, are based on the assumption that all public organizations are inefficient. This paper argues that this assumption is problematic and has had significant implications for policy. By failing to recognize that not all public organizations perform poorly, we ignore any potential lessons that could have been learnt from the experiences of organizations that have managed to perform effectively under the same social, political, economic and institutional environment. The study is based on the premise that the performance of an organization is influenced by the culture within the organization—which results from the ways in which organizations adapts to the external environment and the ways they ensure internal integration. Some organizations develop cultures that support, encourage and reward high performance; whereas others adopt a culture that perpetuates poor performance. Thus, public-sector reforms must be viewed as changing, or in some cases sustaining, organizational culture. Using Ghana as a case study, the study highlights lessons that can be learnt from studying differences in the performances of public organizations. It focuses on three-related issues. First, it addresses one major flaw of past reform policies—the assumption that all public organizations are ineffective. Second, it explores the relationship between organizational culture and performance. Third, it provides broad outlines of a comprehensive public sector reform strategy, centered on changing organizational cultures.

  • Local Governance and Resource Allocation
    July 2005
    Sagre Bambangi and Al-hassan Seidu

    An important function of District Assemblies in Ghana is to ensure that the benefits of growth are shared equitably and fairly. One way of achieving this is to promote efficiency in resource allocation at both individual and community levels. This paper utilizes the case study approach to assess efficiency of resource distribution in four Districts in the Northern and Upper East regions of Ghana with emphasis on infrastructure, micro-credit, human and information resources. The conclusion is that the Medium Term Development plan prepared within the framework of the themes of the Ghana Poverty Reduction Strategy (GPRS) is an important guiding document in resource allocation. The allocation of community facilities such as schools, health and administrative infrastructure have been found generally to conform to the plan in spite of occasional erratic influences and decisions of some personalities. However, in terms of resources that are allocated to individuals such as the Poverty Alleviation Fund (PAF) the guidelines are often circumvented. It is recommended that Government policy of zero tolerance for corruption needs to be demonstrated at the local level in terms of the disbursement of the PAF. Priority must be given to development considerations instead of partisan party loyalty in appointing DCEs in order to check politicisation of resource allocation. A serious consideration must be given to the full implementation of the sub-district structures to facilitate information dissemination. For the people to “feel the growth in their pockets” resource allocation at the local level needs to be closely monitored to ensure compliance with guidelines.

  • Growth Options and Poverty Reduction in Ethiopia - A Spatial Economy-Wide Model Analysis for 2004-2015
    July 2005
    Xinshen Diao and Alejandro Nin Pratt

  • How will US Reforms of Settlement Rates Affect Telecom Investments in Africa
    July 2005
    Kwabena Gyimah-Brempong and John Agyei-Karikari

  • An Analysis of the Impact of HIPC Initiative on Poverty Alleviation in Developing Countries: Evidence from Cameroon
    June 2005
    Arsene Honore Gideon Nkama

    After independence in 1960, Cameroon’s real economic growth was optimistic. Growth averaged 6 per cent during the 65-86 with agriculture being the main source of growth. When oil production started by the end of the 70s, Cameroon experienced a boom period. Its external resources balance that was negative in 1977 became positive. Gross domestic investment increased from 21% of GDP in 1977 to more than 30% in 1986. GDP per capita increased at about 4 percent during the 65-86. The boom period led to traditional growth sectors carelessness so their productivity declined. Public enterprises created during this period were highly inefficient. The banking system became very dependent on oil revenue as well as on government deposits….

  • Economic Success or Human Development Failure? Development Partners or Development Parasites? The truth behind the truth: Evidence from Uganda
    July 2005
    Diego Angemi

    During the 1990s, and especially over the second half of the decade, Uganda experienced high economic growth, falling income poverty, and relative political stability. In addition, while it’s still too early to assess properly the medium term impact of direct budget support (DBS) on the lives of poor people, Uganda features among the few countries where real gains have been made in terms of scaling up the delivery of basic health and education services, increasing the focus of the budget, and giving people confidence to claim their rights (DFID, 2004). There is evidence to support the claim that the period between 1992 and 2000 may mark the transition of Uganda from recovery to fresh growth. Recovery has necessitated the rehabilitation of traditional export crops, the restoration of the public sector and a reversal of the retreat to subsistence. In this economic environment, the percentage of Ugandans who were poor decreased sharply from 56% in 1992 to 34% in 2000. . . .

  • Public Expenditure and Human Capital in Nigeria: An Autoregressive Model
    July 2005
    Michael Adebayo Adebiyi

    In this study, we set out to empirically investigate the direction of causality between human capital (i.e. education and health) expenditures and defence spending including debt service obligations in Nigeria, using annual time series data from 1970 to 2000. Some statistical tools are employed to explore the relationship among these variables. The study examines stochastic characteristics of each time series by testing their stationarity using Augmented Dickey Fuller (ADF) and Phillip Perron (PP) tests. Then, the effects of stochastic shocks of each of the endogenous variables are explored, using vector autoregressive (VAR) model. The evidence from the Granger causality tests shows that, in Nigeria, debt service obligations determine human capital expenditure such as education. Also, from impulse response analysis, the result shows that unanticipated effect of debt service obligations or defence spending on human capital expenditure is ambiguous in Nigeria.

  • Agricultural Growth, Non-Agricultural Growth and Poverty Reduction: Evidence from an African Perspective
    July 2005
    Luc Christiaensen, Lionel Demery and Jesper Kuhl

  • Does Oil Corrupt? Theory and Evidence from Natural Experiment in West Africa
    July 2005
    Pedro Camarinha Vincente

  • Operationalizing Pro-Poor Growth: A Country Case Study of Ghana
    October 2004
    Andrew McKay and Ernest Aryeetey

    This paper is prepared as part of the multi-donor Operationalising Pro-Poor Growth study, which is focusing on aiming to provide advice to governments on how to facilitate the involvement of poor people in the growth process. It is prepared as one of 14 case studies prepared as part of this project, and following a common outline structure and analytic approach. The case study papers are prepared to assess country-level evidence on the relationships between growth performance and trends in poverty, and on how this can be enhanced. This implies therefore an analysis which combines macro and sectoral analysis of the determinants of growth and its distributional pattern, with more micro-level poverty analysis. While much of the analysis investigating the links between pat-terns of growth and changes in poverty is historical, assessing past evidence, there is also an important forward looking component on how poverty-reducing growth can be initiated, sustained or enhanced….

  • Characteristics and Determinants of Urban Youth Unemployment in Umuahia, Nigeria: Implications for Rural Development and Alternative Labour Market Variables
    June 2005
    Raphael N. Echebiri

    Umuahia metropolis typifies a fast growing capital city in terms of population growth rate. Its population grew from less than 20,000 residents in 1991 to an estimated excess over a million at present. This astronomical growth in population followed the creation of Abia State in 1991 and the subsequent change in the status of Umuahia as a state capital territory. Following this tremendous rise in population, Umuahia North metropolis which is the core capital city now has a teaming population of youths, most of whom are unemployed. This study was conceptualized against the backdrop of the increasing social and economic problems associated with youth unemployment in the metropolis. Some effort was made to characterize youth unemployment in the city from the perspective of the socio-economic and labour market perceptions of a sample of 220 youths drawn from areas with varying residential configurations. The sample randomly included youths, unemployed and employed in order to provide some basic counterbalancing assessment of the situation. It was found that youth unemployment in the town shared common characteristics with that observed in several other cities in the developing world. In particular, age of respondent was found to be inversely related to level of unemployment, hence suggesting that unemployment in the city was most pronounced among youths. Educational attainment and job preference were interrelated variables which had direct relationship with unemployment level. It was particularly noted that majority of the unemployed and first-time job seekers preferred salaried employment to self-employment. This orientation, although deriving from the economic and human capital development realities of the country, could be retrogressive in a liberalized market-driven economy. The youths showed strong aversion to rural-residency for several reasons prominent among which were lack of employment opportunities and poor social and physical infrastructures. Some policy issues were raised to provide a basis for a stronger community-driven rural and agricultural development strategy and alternative labour market variables.

  • Structure of Sectoral Decomposition of Aggregate Poverty Changes in Cameroon
    July 2005
    Francis Menjo Baye

    This paper defines an exact decomposition rule based on the Shapley Value for assigning entitlements in distributive analysis and assesses the within- and between-sector contributions to changes in aggregate poverty. Between 1984 and 1996 poverty remained a rural phenomenon in Cameroon. It became more widespread, deeper and severer in both rural and urban areas, but more so in urban than rural areas. While the within sector effects disproportionately accounted for the increase in poverty in the period 1984-1996, the between-sector contributions in both rural and semi-urban areas played a mitigating role on the worse effects of the increase in poverty. These findings indicate the potential positive feedback effects of migration and the associated remittances as an effective strategy used by migrants to left their families and villages out of the worse effects of poverty. The implication of this interpretation is that decision-makers need to better understand the factors that push or pull potential migrants. Rural-urban mobility could, therefore, be viewed as a strategy used by households to moderate the worse effects of poverty and a vector of shared growth. The implications for public policy, in terms of open unemployment and associated social and insecurity problems at the receiving end, point to the wisdom of addressing the push-factors via targeting more in favour of rural areas.

  • Gender Inequalities and Economic Growth: New Evidence from Cassava-based Farm Holdings in Rural South-Western Nigeria
    July 2005
    Awoyemi Taiwo Timothy

    It is a widely accepted fact that persistent inequality between men and women constraints a society’s productivity and ultimately slows its rate of economic growth. The economy pays for this inequality in reduced labour productivity today and diminished national output tomorrow. Motivated by this the study aim is to assess the possibilities of enhancing productivity gains by improving the efficiency of small-scale agriculture through gender-responsive intra-household allocation of resources in South-Western Nigeria. It adopts a stochastic parametric decomposition method which yields efficiency measures that are not distorted by statistical noise to estimate the efficiency level of resource allocation by small-scale cassava producers. The results indicate that average overall productive efficiency in the sample was 75.78 per cent implying that small scale cassava farmers in the sample could reduce total variable cost by 24.22 per cent if they reduce labour, fertilizer, land and capital applications to levels observed in the changing input mix (technical efficiency) and then obtain optimal input mix for the given input prices and technology (allocative efficiency). The average technical efficiency and allocative efficiency indexes for the sample were 82.2 per cent and 92.2 per cent respectively. Also, evidence from empirical analysis of data from the male respondents showed that the average economic, technical and allocative efficiency indexes were 88.06 per cent, 89.34 per cent and 78.67 per cent respectively while the same computed for the female sample were 94.9 per cent 74.85 per cent and 71.03 per cent respectively. Labour was the most limiting factor in cassava production suggesting that the technologies that enhance the productivity of labour are likely to achieve significant positive effects on cassava production. The paper shares the notion that producers control over the means of production and impact of development are related and has influence on the economic efficiency and growth of society. Again, technical inefficiency constituted a more serious problem than allocative inefficiency thus most cost savings will accrue to improvement in technical efficiency.

  • Labor Market Flexibility, Wages and Incomes in sub-Saharan Africa in the 1990s
    June 2005
    Geeta Kingdon, Justin Sandefur and Francis Teal

    This paper provides an overview of how African labor markets have performed in the 1990s. It is argued that the failure of African labor markets to create good paying jobs has resulted in excess labor supply in the form of either open unemployment or a growing self-employment sector. One explanation for this outcome is a lack of labor market ‘flexibility’ keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labor market flexibility. First whether real wages decline over time, secondly the tendency for wages to adjust in the face of unemployment, and thirdly the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term inflexibility can explain a common factor across diverse African economies - the high income divide between those working in large firms and those not. Those working in the thriving self-employment sector in Ghana have something in common with the unemployed in South Africa - both have very low income opportunities relative to those in large firms.

  • Institutional Foundations for Shared Growth in Sub-Saharan Africa
    July 2005
    Machiko Nissanke and Alice Sindzingre

    The paper examines the dynamically evolving triangular relationships between institutions, growth and inequality in the process of economic development, in order to deepen the understanding on institutional conditions for pro-poor growth and shared growth. In this specific context, the paper discusses the institutional conditions found in Sub-Saharan Africa, which may have produced the growth pattern that are unequal and against the poor. The analysis shows that Sub-Saharan African countries require transforming institutions for embarking upon and sustaining a development path which would ensure shared growth in years to come. The paper first evaluates the growth-inequality-poverty nexus, as found in the recent literature, which increasingly challenges the trade-off between growth and equity, as postulated in the traditional theories. Various definitions of pro-poor growth are discussed and a sharper definition of the concept of ‘shared’ growth is provided. Definitions of institutions are then examined, as well as the triangular interrelationships between institutions, inequality and poverty. The paper finally analyses specific institutional conditions found in Sub-Saharan Africa that prevent economies from emerging out of low-equilibrium poverty traps that are characterised by low economic growth, unequal distribution of income and wealth as well as unequal access to resources and power.

  • Market Structure and Productivity Growth in Ghanaian Cocoa Production
    June 2005
    Andrew Zeitlin

    This paper argues that market structure, and in particular the degree of competition among Licensed Buying Companies, is an important determinant of productivity in the Ghanaian cocoa industry. This issue is studied in the context of a two-year doubling of cocoa output at the national level. Evidence from microeconomic data confirms a significant increase among existing farmers, although this rate of in- crease is smaller than that observed at the national level. Analysis of production reveals an economically significant and statistically robust relationship between village-level Licensed Buying Company competition and the level and growth rate of total factor productivity.

  • Does Female Schooling Reduce Fertility? Evidence from Nigeria
    July 2005
    Una Okonkwo Osili and Bridget Terry Long

  • Can Africa Achieve Millennium Development Growth Targets Through Effective Negotiations of the Doha Development Mandate?
    June 2005
    William A. Amponsah

    The general consensus of opinion in international economic development circles is that Africa is lagging far behind in global efforts to meet the Millennium Development Goals (MDGs) by its target date of 2015. Africa is still far from reaching the targeted goal of an annual growth rate above 7 percent a year required to achieve economic convergence with other developing countries and to maintain similar quality of life. In particular, sub-Saharan Africa (SSA) has seen poverty rise and life expectancy decline in the five years since the Goals were declared in 2000 (United Nations Economic Commission for Africa, 2005). But achieving the MDGs would provide a unique opportunity for Africa and its development partners to seriously tackle the important issue of reducing endemic poverty for the continent.

  • Welfare-Improving Tax Policy Reforms: A Computable General Equilibrium Analysis for Nigeria
    July 2005
    Abdul-Razaq A. Olopoenia and Alarudeen Aminu

  • Social Exclusion and Insurance Failure for the Poorest: On Informal Finance through Social Networks in Kenya’s Smallholder Sector
    April 2005
    Heidi Hogset

    This study looks at informal finance through social networks among smallholder farmers in Kenya. This paper explores the patterns of economic transfers within networks, and characterizes recipients and providers of informal credit and insurance, as well as the relationship between them and the purposes such transfers serve. Participation in transfer networks depends on one’s resources. The poor engage in frequent, low-value transfers in kind and in exchange labor. The poorest do not engage in cash transfers. Those of intermediate wealth engage more actively in transfers in kind, but not cash. The rich (or non-poor) are also active in transfer networks, and it is they who are able to raise large cash amounts through social networks, either as loans or gifts. As people get wealthier, they engage more in cash transfers and less in transfers in kind. People who have access to formal financial services, i.e., formal banks or Savings and Credit Cooperatives (SACCOs) participate less in transfers through networks. Those who are able to save in banks are less vulnerable to shocks. Women are more active than men in Rotating Savings and Credit Associations (ROSCAs), and they also engage more frequently in bilateral transactions within networks, especially for transfers in kind. Transfer networks are correctly perceived as kinship-based and family members are important sources of unearned income (remittances). Transfers through networks are important for consumption smoothing, in addition to investments in income-generating activities and payment of school fees, but not for assistance when a household member is seriously ill. The failure of social networks to provide support during sickness and death is particularly disturbing viewed in light of the ongoing AIDS crisis which is keenly felt in the villages where the study took place.

  • Ghana: Recent Trends in Growth and Poverty Reduction
    July 2005
    Carlos B. Cavalcanti

    The received wisdom about poverty and growth in Ghana is that poverty is mostly rural and that its economic structure has changed little since independence. As a result, the country’s poverty reduction record has been mixed, with growth benefiting primarily urban and export producing regions, leaving behind deep poverty in regions of subsistence agriculture, especially in Northern Ghana. Recent evidenced indicates, however, that poverty continuous declining, especially in rural areas, with slight increases in urban areas, albeit from much lower levels. This development reflects the fact that the structure of employment in the Ghanaian economy has changed quite significantly, with a shift away from agriculture and toward urban activities linked to trade and other services, as well as to manufacturing and construction. These labor market transitions are even more pronounced among younger workers, reflecting rapid urbanization and rising rates of educational attainment. While this virtuous cycle of urbanization has lead to progress in poverty reduction, sustaining the progress achieved so far will depend on maintaining the current economic expansion and raising the rate of job creation. The economic expansion of the last three years has been driven by the exceptional combination of record cocoa crops and historically high world market prices for cocoa and gold. Export growth, combined with rising workers remittances from abroad and continuous aid flows, have allowed the urban economy to expand and workers to move from rural to urban areas. This transition is still unfinished, however, as most of the new jobs are being created in the informal sector, meaning lower wages, greater job insecurity and lower productivity. Lower productivity, in turn, means less scope for raising real wages, and is a reminder that removing obstacles for the growth of private sector firms is essential for the sustainability of poverty reduction and the economic expansion. The rest of this paper elaborates on these points. It begins with a quick overview of changes in Ghana’s poverty profile. It considers next the transitions in the labor market, and how these reflect broader changes in the economy. It proceeds then to investigate the factors driving or hindering these labor market transitions. The last section concludes with a summary of the main findings.

  • Women Education and Economic Empowerment in Tanzania: A Women Business Survival Model Analysis
    July 2005
    Aurelia N. Kamuzora

    This paper examines the survival analysis of credit supported women businesses in Tanzania using various survival models. Survival models have been used in studies of lifetime bonds, labour strikes, market preferences, and business survival. By examining several predictor variables, the analysis demonstrates some variables can be used to business mortality. We use Product limit estimators, life table method, Cox Product Hazard Models to investigate women businesses over 22 years period. The median (half-life) of all businesses is exact 3.6 years. It was found, however, that level training and level of education before credit provision to have an impact on business survival. In this paper, the dataset of women businesses in Kagera region-Tanzania was analyzed by employing Survival models. Through applied non-nested econometric model that was conceptualized in order to determine the women business survival, we have found out that there many variables that can predict women business survival in Tanzania. Two of them were found to be the level of profit and training. The baseline hazard ration was estimated. It was found out that after receiving credits so as to start businesses, the women in Tanzania the median (half-life) survival time of all women business in Kagera region were found to be 3.06 years. The methods used in estimating survival function are no-parametric univariate model (KM), parametric (Weibull distribution), and semi parametric multivariate models. Then the product limit estimator (Kaplan-Meyer), life table method, and Cox proportional hazards model was used. They’re several types of Cox hazard models. In this study, Weibull distribution function was used. Weibull distribution is the commonly used in econometric (Greene, 2003). This paper examines the survival analysis of women businesses in Tanzania, using various survival models. Survival analysis have been used to study life unemployment spell, labor strike, household of durable goods, number of women worked in the labourforce, vocational expenditure (Greene, 2003), market preferences, life time bonds and many other areas (Gregoriuou, 2002). During recent years there has been a great deal of interest in the analysis of clustered data. Observations from the same cluster usually share certain unobserved characteristics and as a result tend to be correlated (Hung, 2004). Data are analyzed based on index function and latent regression function of duration models based on survival and hazard functions.

  • The Road to Pro-Poor Growth in Zambia: Past Lessons and Future Challenges
    December 2004
    James Thurlow and Peter Wobst

    Zambia is one of the poorest countries in Sub-Saharan Africa. Almost three-quarters of the population were considered poor at the start of the 1990s, with a vast majority of these people concentrated in rural and remote areas. This extreme poverty arose in spite of Zambia’s seemingly promising prospects following independence. To better understand the failure of growth and poverty-reduction this paper first considers the relationship between the structure of growth and Zambia’s evolving political economy. A strong urban-bias has shaped the country’s growth path leading to a economy both artificially and unsustainably distorted in favor of manufacturing and mining at the expense of rural areas. For agriculture it was the maize-bias of public policies that undermined export and growth potential within this sector. A series of poverty profiles are developed and compared to the structure of growth during the structural adjustment period. Substantial policy-changes led to rapidly rising poverty, especially in urban areas. The costs of adjustment were particularly pronounced given the big bang approach to reform. Concurrent trade liberalization and privatization collapsed the formal sector with persistent macro-economic instability undermining necessary private investment. Middle income urban households were hardest hit, with more-educated workers moving into informal activities and the less educated migrating to rural areas. Agricultural liberalization prompted changes in the structure of rural production, with a general shift away from maize towards export-crops for medium-scale farmers and more sustainable staples crops for small-scale farmers. While overall rural poverty increased during the 1990s, its depth has declined considerably. Poor market access and low agricultural productivity were key constraints facing small-scale and more remote rural households. The urban core of the economy therefore collapsed under structural adjustment but agriculture and rural areas have continued to grow. Since this growth has occurred at the lowest end of the income distribution, there is some evidence of ‘pro-poor’ growth in Zambia under structural adjustment despite national stagnation. Sustained investment and economic growth during recent years suggest a possible change of fortune for Zambia. In light of this renewed growth, the paper uses a dynamic and spatially-disaggregated economy-wide model linked to a household survey to examine the potential for future poverty-reduction. The findings indicate that the current growth path, while positive, will be insufficient to substantially alleviate poverty. The large increases in growth that would be required suggest that finding a more pro-poor growth path should be a priority for public policy. The paper examines alternative growth paths and finds that diversification through an agriculture-led development strategy is likely to prove the most pro-poor. This is particularly pronounced for staples-led growth, although this option is contingent on improving productivity and market access, especially in remoter rural areas. Although agricultural growth is essential for substantial poverty-reduction, the country’s large poor urban population necessitates growth in non-agriculture. The findings suggest that returning to a copper-led growth path is not pro-poor and that non-mining urban growth, although undermined by foreign exchange shortages and inadequate private investment, is likely to be preferable for reducing poverty.

  • The role of local organizations in risk management: Some evidence from rural Chad
    July 2005
    Katinka Weinberger and Johannes P. Jütting

    This paper analyses the role of local organizations in Southern Chad in helping poor people to deal with risk. Different categories of risks are identified and set into relation to response strategies at the community level. Membership in local organizations is mainly motivated by the desire to reduce the occurrence of risks, however the actual impact of membership is risk mitigation. Using regression analysis we establish that while local organizations help people to mitigate risks via access to information, saving and credit and social networks, a “middle class effect” of participation materializes. The exclusion of the poorest parts of the population should seriously be taken into account when donors set up or support local organizations.

  • Shared Growth in Ghana: Do migrant remittances have a role?
    July 2005
    Peter Quartey

    The economy of Ghana has recorded modest net growth rates over the past decade. However, the current growth rates are inadequate to move the economy to a middle income status by 2015. Besides, not all benefited from the growth recorded so far and there is no doubt that the level of growth necessary to propel the country towards middle-income status cannot be achieved with the current levels of savings and investments within the domestic economy. The obvious issues are: how do we fill the savings gap and ensure shared growth? And how do we ensure that growth trickles down to the poor? The study believes that migrant remittances can serve the dual purpose; fill the savings gap, ensure shared growth and poverty reduction.

  • Managing Oil Rent for Shared Growth in Africa
    July 2005
    Afeikhena Jerome

  • Agricultural subsidies removal in North countries: what about the effects in Senegal?
    July 2005
    François Joseph Cabral

    In this paper, experiments of the impact north countries subsidies removal on Senegal is performed based on a general equilibrium framework. The model that we suggest includes 19 sectors and four factors: capital, labour, land and water. In agriculture, we distinguish two sub-sectors: the set of the irrigated sectors and that of the non-irrigated sectors. An export demand function unable us take into account constraints facing local producers on international markets. A simulation is performed based on ICAC, IFPRI, IADB and Iowa state university predictions on the impact of subsidies removal on world prices. It appears from the experiments carried out that the elimination of agricultural subsidies in developed countries will result in a shift of agricultural supply toward external markets. However, this will induce an increase in the cost of imported cereals, in particular rice and will have an adverse effect on households, worsening their well-being, except those of Delta rural households.

  • Achieving Human Development in Sub-Saharan Africa: The Role of Governance
    July 2005
    Augustin Kwasi Fosu

  • Labour Supply and Demand Constraints on Employment Creation: A Microeconomic
    July 2005
    Haroon Bhorat

  • The Relative Inflation Experience of Poor Urban South African Households: 1997-2002
    October 2005
    Bhorat, Haroon and Morné J. Oosthuizen

    Much work has been done in South Africa on the relationship between the labour market and household poverty, as well as more generally the association of differentially sourced incomes to household poverty and inequality. The notion is that it is access to incomes, or lack thereof, which lies at the heart of characterising inequality and poverty in the society. Clearly though, a critical intermediary to income access remains the fluctuations in the real values of these incomes, despite controlling for access to income. This line of enquiry – namely the role of relative final price movements in affecting households across the income distribution –is a new one for the post-apartheid period, with its local intellectual origins lying in Kahn (1985). At one level the study aims to identify and quantify the impact of relative price movements on household poverty levels, with a key aim being to identify those products that are critical to indigent households’ vulnerability. At a more generic level, the paper is implicitly a representation of how the macroeconomic environment is able to, and indeed does, impact on household welfare. Ultimately, the paper hopes to deliver a detailed analysis not only of the construction of an appropriate consumer price index for South Africa, but also, through the use of income and expenditure survey data, the impact of reported price movements on inflation for households at different points in the national income distribution. Specifically, this study’s two main objectives are, firstly, to derive inflation rates for urban households grouped according to expenditure deciles and, secondly, to identify some of the key product categories responsible for the largest shares of inflation of the poorest 40% of urban households.

  • Operationalizing Pro-Poor Growth: A Case Study of Uganda
    July 2005
    John Okidi

  • The Potential for Horticultural Development in a Pro-Poor Growth Strategy for Ghana
    July 2005
    Jean-Michel Voisard

  • Natural Resources and Sustainable Growth and Development in Ghana
    July 2005
    Daniel Bruce Sarpong

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From the SAGA Conference on
Empowering the Rural Poor and Reducing Their Risk and Vulnerability
February 10, 2005
Nairobi, Kenya
An International Conference sponsored by
Cornell University and
Institute of Policy Analysis and Research (IPAR)

Policy Briefs (available as PDF):

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From the DPRU-TIPS-Cornell University Forum on
African Development and Poverty Reduction: The Macro-Micro Linkage
October 13-15, 2004, Cape Town, South Africa

  • Banking Competition and Efficiency in Ghana
    October 2004
    Thierry Buchs and Johan Mathisen

    This paper assesses the degree of bank competition and discusses efficiency with regard to banks’ financial intermediation in Ghana. By applying panel data to variables derived from a theoretical model, we find evidence for a noncompetitive market structure in the Ghanaian banking system, which may be hampering financial intermediation. We argue that the structure, as well as the other market characteristics, constitutes an indirect barrier to entry shielding the large profits in the Ghanaian banking system. In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Changes in HIV/AIDS Knowledge and Testing Behavior in Africa: How Much and for Whom?
    April 2007
    Peter Glick and David E. Sahn

    Demographic and Health Survey data from six African countries indicate that HIV prevention knowledge is improving and that more Africans are getting tested. Still, in many cases fewer than half of adult respondents can identify specific prevention behaviors; knowledge appears particularly inadequate in countries not yet fully gripped by the epidemic. Schooling and wealth impacts on prevention knowledge generally have either not changed or have increased, meaning that initial disparities in knowledge by education and wealth levels have persisted or widened. HIV messages therefore need to be made more accessible to and/or better understood by the poor and less educated. In Journal of Population Economics 20(2): 383-422, April, 2007

  • Modelling pro-poor agricultural growth strategies in Malawi: lessons for policy and analysis
    October 2004
    Andrew Dorward and Jamie Morrison

    This paper pulls together insights from related farm-household and CGE modelling for Malawi to suggest wider methodological and policy lessons for pro-poor policy analysis in poor agrarian economies. The farm-household and CGE models and the principal results are summarised, and their strengths and weaknesses discussed. The discussion demonstrates the potential benefits of greater integration between farm household and economy wide models, and suggests ways in which this should be achieved. A number of conclusions also emerge regarding policies promoting pro-poor economic growth.

  • Growth and redistribution effects of poverty changes in Cameroon
    December 2006
    Francis Baye

    This paper studies the decomposition of poverty changes in Cameroon. Specifically, it reviews theoretical frameworks for growth-redistribution decomposition analyses, presents the data and poverty measures and estimates the growth-redistribution components of changes in measured poverty by the Shapley value-based approach using Cameroon’s household surveys. By all the P class of measures, poverty increased significantly between 1984 and 1996. The growth components overaccounted for the increase, although shifts in national, rural and semi-urban distributions marginally mitigated the worse effects on the population. A decline in mean incomes as well as adverse distributional shifts contributed to a significant increase in urban poverty during the same period. These findings corroborate the general information in the literature that growth effects tend to dominate the effects of changes in the distribution of income. These results illustrate the potential contribution of distributionally neutral growth in household incomes to poverty alleviation in Cameroon. Although redistribution also has an important role to play, it should be accepted that there must be severe limits to what can be achieved by growth neutral redistribution. Growth in household incomes appears more likely to be essential for long-term poverty reduction and will be more effective if poverty alleviation programmes are targeted disproportionately in favour of rural and semi-urban areas.
    In Journal of African Economies 15(4): 543-570, 2006

  • Inequality in South Africa: Nature, Causes and Responses
    November 2003
    Stephen Gelb

    Speaking in South Africa’s parliament in 1998 in the debate on the report of the Truth and Reconciliation Commission, (then-Deputy) President Thabo Mbeki argued that "material conditions have divided our country into two nations, the one black, the other white. [the latter] is relatively prosperous and has ready access to a developed economic, physical, educational, communication and other infrastructure...The second, and larger, nation of South Africa is black and poor, [and] lives under conditions of a grossly underdeveloped infrastructure... Neither are we becoming one nation. Unlike the German people [after unification in 1990] we have not made the extra effort to generate the material resources we have to invest to change the condition of the black poor more rapidly than is possible if we depend solely on severely limited public funds, whose volume is governed by the need to maintain certain macroeconomic balances and the impact of a growing economy." This paper examines the nature of the divide which Mbeki pointed to between the ‘two nations’ and the reasons for the limited response to this divide during the post-apartheid era since 1994 at which he hints. This paper argues that this response can be understood only through an historical analysis of the transition to democracy. Section 2 provides an overview of inequality, poverty and economic growth in South Africa and their trends during the past ten years.

  • Are wealthier nations healthier nations? A panel data approach to the determination of human development in Africa
    October 2004
    Issidor Noumba

    Many authors did not expect a bright future for the sub-Saharan African countries at the outset of independence in the 1960s. Today, when we look at the African economic, social, and political indicators, we notice that these authors were right. African countries continue to tail the list of developing countries as far as human development is concerned. Poverty is endemic in the region, HIV/AIDS and traditional infectious diseases constitute a serious threat to African health status. Life expectancy at birth is very low and HIV/AIDS prevalence very high. Assuming that health status indicators are good proxies of human development, this paper intends to answer the following queries: (i) What is the extent of health disparities in Africa? (ii) Are wealthier African nations healthier nations? (iii) What are the main determinants of the health status in Africa. The incipient renewal of concern for poverty and equity in health leads us also to ask ourselves whether income inequality and inequality in health status are significant determinants of health outcomes. A simple descriptive statistics analysis show that health status seems to vary not only across countries, but also according to the level of economic development. The paradox story is that wealthier African nations are not necessarily healthier nations. We use the econometrics of panel data to estimate one version of the traditional production function of the health services. The results of our estimates show that GNP per capita is an important determinant of health outcome. Wealthier nations are not always healthier nations, but wealth (income) matters for health. Income inequality and inequality in health status are also strongly correlated with the health status indicators. At the end of the day, the study show that income and inequalities are important determinants of human development in Africa.

  • Macroeconomic growth, sectorial quality of growth and poverty in developing countries: measure and application to Burkina Faso
    October 2004
    Dorothée Boccanfuso and Tambi Samuel Kabore

    Economic growth generally refers to GDP growth. The studies on the link between growth and poverty dynamic (Datt and Ravallion, 1992; Kakwani, 1997; Shorrocks, 1999) measure growth by mean household per capita expenditures. Furthermore, many countries experience at the same time economic growth and growing poverty. It is therefore important to establish a link between these two types of growth. This key link allows a formal shift from macroeconomic growth (GDP growth) to mean per capita household expenditure growth. The purpose of this paper is to discuss the link between macroeconomic growth and mean per capita household expenditure growth with the evidence drawn from Burkina Faso data. The paper also analyzes the impact of sectoral growth on poverty using Shapley value-based decomposition approach. National Accounts consumption - which is smaller - gives greater poverty incidences for 1994 and 1998 compared to the incidence from the surveys’ consumption. An annual 3.99% increase in real per capita consumption based on the survey gives a 13.37% decrease in poverty incidence, while a 6.59% annual growth in GDP yields only 6.59% decrease in poverty incidence. Agricultural sector growth accounts for at least 80% of the decline in poverty incidence, gap and severity.

  • Budget Reform as a Means to Strengthen the Link Between Macro and Micro Policies
    October 2004
    Taz Chaponda, Neil Cole, Mickie Schoch, and Chris Gadsden

    The paper argues that a credible budget provides the link between broad macroeconomic policies and strategies and microeconomic policies facilitating the achievement of development and poverty reduction targets. The paper’s thesis centres around the Medium Term Expenditure Framework (MTEF) which has been lauded as the method to translate broad macroeconomic aggregates into effective public expenditure programmes based on a multi-year fiscal framework. While a number of countries in Africa – most notably South Africa and Uganda – have seen significant benefits, such as increased predictability in resource flows and better planning for microeconomic policies, experiences in other African countries have been mixed. The paper argues that developing credible budgets does not require an ambitious MTEF reform path. What is more important is a commitment to realistic macroeconomic projections, sensible budgeting norms, good accounting practices and regular reporting through transparent budget documents.

  • How responsive is capital formation to its user cost? An exploration of corporate tax effects
    October 2004
    Stephen F. Koch and Albert de Wet

    The responsiveness of business investment spending to price changes is central in economic analysis. Despite the key role played by the user cost of capital in economic analysis, there is less supporting evidence for the existence of a substantial user cost elasticity. This study investigates the empirical user cost of capital with specific focus on the contribution that corporate taxes has on the price elasticity of investment in the South African economy. Making use of a disaggregated data set of corporate tax revenues we are able to get better understanding of how firms perceive their tax burden. Using vector auto regression and cointegration techniques we estimate the long run user cost elasticity to be –0.18%. Average total elasticity of companies with respect to effective corporate taxes is estimated at 0.09% implying that taxes plays a very important role in the price determination of capital. We have also shown that additional taxes placed on companies like secondary taxes, are perceived in a different light than normal profit taxes inducing more and bigger changes investment behaviour.

  • An Improved Data set for Demographic Research: The KwaZulu-Natal Income Dynamics Survey (KIDS) 3rd Wave
    October 2004
    Julian May

    “Qualitative research such as the South African Participatory Poverty Appraisal has shown the extent to which change matters for those who are poor (May and Norton, 1997). Concern about future vulnerability and shocks, expectations that some event might dramatically transform their lives such as births, deaths and entry into the labour market, and anticipation of obtaining entitlements such as government grants are frequently described as being either features of poverty or as strategies that might offer pathways out of poverty. Each of these events is integrally caught up with the demographic and socio-economic life-cycle that individuals and families undergo as time passes (Chayanov, 1966). In South Africa, the analysis of such change has relied upon cross-sectional studies or upon census data. Although useful, these data are unable to address a variety of questions, particularly those concerning dynamic processes and causal linkages. To address this gap, the KwaZulu-Natal Income Dynamics Study (KIDS) was undertaken by a consortium of South African and international researchers in 1998 which re- interviewed 1100 households first surveyed in 1993 as a part of the national Project for Statistics on Living Standards and Development (PSLDS). KIDS has just been extended by a further 5 years with a resurvey conducted in 2004....

  • The Road to Pro-Poor Growth in Zambia
    October 2004
    James Thurlow and Peter Wobst

    Zambia is one of the poorest countries in Sub-Saharan Africa. However, in the 1960s it was a middle-income country believed to have considerable growth potential. The key to understanding the country’s economic history and its failure to develop lies in its natural resource endowments. Zambia is a land-abundant but sparsely-populated country in central Southern Africa. Agricultural potential is high due to considerable variation in rainfall patterns. However, like many other countries in the region, Zambia’s economy has been dominated by the discovery, expansion, and eventual decline of the minerals sector. Copper mining in particular has been central to the country’s development for almost a century, and the concentration of investment in this sector has generated one of the most urbanized populations in Africa. Despite urbanization, a majority of the population lives in rural areas, which are often isolated from urban centers and rural markets.

  • Financial Services and the informal economy
    October 2004
    Cally Ardington and Murray Leibbrandt

    This paper examines the impact of formality of employment on the utilisation of financial services, using data from the October 2000 Income and Expenditure Survey and the September 2000 Labour Force Survey. The presence of an employed member in the household is seen to be important for the utilisation of both bank accounts and funeral insurance, even after controlling for income. Furthermore there are strong links between the nature of this employment and utilisation of financial services. Employees are more likely to utilise financial services than the self-employed. Among employees, the probability of utilising financial services increases with the degree of formality of employment. These effects are stronger for formal banking services than for funeral insurance which includes informal burial societies.

  • The Missing Links—Uganda’s Economic Reforms and Pro-Poor Growth
    October 2004
    Robert Kappel, Jann Lay and Susan Steiner

    This article illustrates changing growth regimes in Uganda from pro-poor growth in the 1990s to growth without poverty reduction, actually even a slight increase in poverty, after 2000. Not surprisingly, we find that good agricultural performance is the key determinant of direct pro-poor growth in the 1990s as well as lower agricultural growth is the root cause of the recent increase in poverty. Yet after 2000, low agricultural growth appears to have induced important employment shifts out of agriculture, which have dampened the increase in poverty. We also assess the indirect way of pro-poor growth by analysing the incidence of public spending and the tax system and find that indirect pro-poor growth has only been achieved to a limited extend.

  • Impact of HIV/AIDS on saving behaviour in South Africa
    October 2004
    Sandra Freire

    The models measuring the macroeconomic impact of HIV/AIDS are heterogeneous : each one relies on a specific theoretical background. Nevertheless, there are, at least, three main common limits to those approaches : the authors concentrate on the impact on the labour market ; they neglect the potential implications on the capital market ; and they do not model some essential microeconomic impacts such as the change in the agents’ economic behaviour. More specifically, the analysis of the impact of HIV/AIDS on savings takes into account direct costs such as health expenditures, seldom indirect costs like the anticipation of funeral costs and they do not model differed indirect costs. The paper proposes an analysis of this last kind of implications through the impact of the epidemic on the saving behaviour. This paper focuses on the uncertainty of life expectancy and is based on two frameworks: the Galí (1990) model which considers the life cycle theory with a finite horizon at the aggregate level and the Moresi (1999) model which specifies a peculiar consumption utility function through uncertain lifetime. The calibration and simulations of our model reveal a significant drop in the future saving rate in South Africa under the hypothesis of a virus evolution similar to the one given by the UN Population Division : the saving rate in 2015, under those hypothesis, should be at least 5 percentage points inferior to the estimated saving rate that would then prevail in the absence of the epidemic.

  • Exporting from Manufacturing Firms in Sub-Saharan Africa
    December 2006
    Neil Rankin, Måns Söderbom and Francis Teal

    The poor performance of many African economies has been associated with low growth of exports in general and of manufacturing exports in particular. In this paper, we draw on micro-evidence of manufacturing firms in five African countries, Kenya, Ghana, Tanzania, South Africa and Nigeria, to investigate the causes of poor exporting performance. We exploit a data set which has a much longer panel dimension than that has been used before to assess the relative importance of self-selection based on efficiency and firm size as determinants of export participation. We show that firm size is a robust determinant of the decision to export. It is not a proxy for efficiency, for capital intensity, for sector or for time-invariant unobservables. In contrast, the evidence for self-selection into exporting is very weak. Finally, our use of a longer run panel than that has been available before has allowed us to separate out the roles of ownership and skills as possible determinants of participation in exporting. We find that both foreign ownership and skills are significant determinants of exporting.
    In Journal of African Economies 15(4):671-687, 2006

  • Economic Growth without Poverty Reduction: Identifying the Missing Links in Tanzania during Economic Reform
    October 2004
    Anders Danielson

    Studying the relation between economic growth and income poverty reduction without taking changes in the distribution of income into consideration is like setting up Othello without Iago in the play. Without any further references to Shakespeare, this paper examines the relations between poverty levels, economic growth and changes in inequality in Tanzania during the 1990s. It offers four conclusions. First, the efficiency with which growth reduces poverty increases with a country’s income level, so low-income countries should combine growth promotion with redistribution; second, growth in Tanzania during the 1990s, has accelerated, but has also been concentrated in sectors to which the majority of the poor have few links; third, the efficiency with which income growth reduces poverty in Tanzania appears very sensitive to the pattern of growth; fourth, recent poverty reduction strategies do not appear to recognize this fact and rely apparently instead on a strategy in which growth increases tax revenue that can be used to alleviate poverty through an expansion of publicly supplied (social) services. The selected strategy appears particularly ill-chosen, both because of Tanzania’s historical tax collection record and because of the emerging consensus on the state as a facilitator, not a producer, in the development process.

  • Labour force withdrawal of the elderly in South Africa
    February 2004
    David Lam, Murray Leibbrandt and Vimal Ranchhod

    The elderly in South Africa face a complex set of challenges. South Africans over age 50 spent most of their lives under apartheid. Levels of inequality in education between races and within races are far greater among these older cohorts than they are for younger South Africans. Elderly black South Africans lived their most productive years under the restrictions on employment, residency, and other opportunities that apartheid imposed. As they now enter retirement they face new pressures caused by the impact that HIV/AIDS and high unemployment rates are having on the next generation. At the same time, South Africa’s elderly have access to an old age pension system that is among the most generous in the developing world. The old age pension helps lift many older South Africans out of the most extreme forms of poverty, and puts many of them in a position supporting their children and grandchildren. Decisions of the elderly about work and retirement are made in this complex set of circumstances. Older workers face an increasingly competitive labor market characterized by high unemployment, with limited opportunities for those with poor education and training. They often live in large extended households in which their own resources may be an important source of economic support. The pension provides an important source of support, without necessarily competing with work. The state old age pension program has spawned a considerable body of research. This research is reviewed in the next section of the paper. The review shows that state old age pension is the key plank of South Africa’s social safety net, that these pensions are well targeted at the poor and, because of the large number of three-generation and skip-generation households in South Africa, this includes many poor children. In addition, it seems that many of the unemployed survive through their links to related pensioners. More recent research has begun to explore the impact of these pensions on labor participation behavior.

  • Small Business Entrepreneurship in Dar es salaam -Tanzania: Exploring Problems and Prospects for Future Development
    October 2004
    Rashid M. Mfaume and Wilhelm Leonard

    Small Business Entrepreneurship haves been seen as a hub in generating income for the majority of urban dwellers with no formal paid employment. In Tanzania, entry into small business entrepreneurship is usually not seen as a problem. One can start small business at any time and in any place. However, the development of this informal sector has been profoundly characterized by two parallel phenomena which are perhaps contradictory in character. One is the increasing politicization effort encouraging people to engage in Small and Medium Entrepreneurship (SME). This has led to the proliferation and mushrooming of small business most of which are in the form of petty trading, at least everywhere in the urban centres. The second is the parallel increase in events suggesting prevalence of crime and bureaucratic hurdles which affect SME and counter reaction from the small traders. While the second can be characterized as due to the increasing repressive action by city authority over vendors, the counter reaction behaviour of itinerant and small traders toward city authority is also evident in most urban areas. Generally, the sector is characterized by constant tension and feuds between small traders and urban authorities. Drawing on research findings, the present paper challenges the possibility of reducing poverty in Tanzania using the strategy of developing the small business entrepreneurship under the situation where there is an increasing level of petty crime and bureaucratic hurdles. It is argued and indeed, concluded that if the pres ent intricate and controversial situation surrounding SME and small business is not reversed, if not brought to rest, the development of SME is on slippery slope. The option suggested to tame the conundrum includes, developing discourse portfolio between small traders and bureaucratic authority and authorities formulating policies that can promote development of small business entrepreneurship.

  • Agricultural Sector Investment and the Role of Public-Private Partnership
    October 2004
    David J. Spielman

    Agricultural research and development (R&D) is critical to the improvement of incomes and livelihoods in sub-Saharan Africa. However, several studies on agricultural R&D suggest that many countries in the region are unable to bring public and private sector assets and resources together as a means of advancing agricultural R&D. This is true not only in the realm of advanced agricultural biotechnologies, but for more conventional forms of R&D as well. Evidence suggests that the constraints to greater cross-sectoral collaboration result from mutually negative perceptions between the sectors, unresolved issues of risk and liability, and high transactions and opportunity costs. A broad range of economic policies could change this, thereby putting the proper incentives in place to meet sub-Saharan Africa’s technological needs and to stimulate growth.

  • Macro-Micro Linkages in Trade: Trade, Efficiency and Competitiveness of Manufacturing Firms in Durban, South Africa
    December 2006
    Imraan Valodia and Myriam Velia

    This paper attempts to address the paucity in micro-level research on the impact of trade liberalisation on manufacturing firms in South Africa. Using data from a survey of manufacturing firms in the Durban area, the second largest concentration of manufacturing activity in South Africa, we explore how firms are responding to trade liberalisation. We explore three sets of issues: the export orientation of firms, the effects of volatility in exchange rates, and the links between exports and firm behaviour, including productivity growth. We find that firms engage with the international economy both as exporters and as importers. This suggests that analyses focusing exclusively on exporting may be misleading. Firm size is an important indicator of export success. Our results indicate that some of the benefits deemed to accrue from trade liberalisation, such as reduction in the cost of inputs and productivity growth, are not evident among Durban firms. This poses a number of challenges for policymakers.
    In Journal of African Economies 15(4):688-721, 2006

  • Industrial Strategy and local economic development: manufacturing policy and technological capabilities in Ekurhulen
    October 2004
    Thandi Phele, Simon Roberts and Ian Steuart

    Ekurhuleni Metropolitan Municipality is one of six metropolitan municipalities created in major urban concentrations. More importantly, it covers the largest industrial concentration in South Africa and in sub-Saharan Africa. The economy of Ekurhuleni reflects the apartheid legacy of minerals-oriented industrialisation, and the growth of an urban labour pool to supply the mines. Ekurhuleni grew on the back of the main concentration of gold mining in the country. This is reflected in the structure of manufacturing. Ekurhuleni accounted for 37 per cent of South African output of machinery and 33 per cent of metal products in 1996, with major markets for each historically being mining.2 The performance of the Ekurhuleni economy has, however, been very poor in recent years and, with the decline in gold mining, unemployment increased sharply to reach 40 per cent in 2002.3 Manufacturing in Ekurhuleni recorded an average annual growth of va lue-added of just 0.4 per cent between 1997 and 2002 (much lower than the national manufacturing annual growth of 2.3 per cent). Regeneration of the industrial base is thus crucial to addressing unemployment and poverty in the region. This paper examines the impact of national developments and policies on the development of industry in Ekurhuleni. It assesses role of local government in industrial development in light of recent literature addressing agglomeration effects, industrial districts, and the deve lopment of local economic competencies and institutions. The analysis draws on recent work on the manufacturing sector in Ekurhuleni and a case study of the foundry industry in particular, focusing on its performance and recent development in terms of firm capabilities, orientation, and the institutional framework.

  • Agricultural Technology—Market Linkage under Liberalization in Ghana: Evidence from Micro Data
    October 2004
    Tsegaye Yilma, Ernst Berg and Thomas Berger

    There is a general consensus that bad economic policies, among other factors, are to blame for the poor performance of economies in sub Saharan African (SSA). However, there is no similar consensus on the effect of economic reforms on poverty alleviation, a primary goal of any economy in the region. This paper looked into the effect of macro-economic reforms, particularly the removal of subsidized agricultural credit for irrigator farmers in Ghana, a pioneering reform country in SSA. A theoretical model of this scenario is constructed in which it is shown that, under multiple market imperfection, farmers resort to alternative financial sources to finance irrigation. Particularly in the presence of off-farm alternative, farmers divide their labor resource between irrigation farming and off-farm employment. The long term implication of a predominant dependence on off-farm income for financing irrigation farming will be an induced increase in family size. This model is subsequently tested and validated with a household data collected from northern Ghana. Household labor endowment and off-farm participation have a positive and significant effect on household irrigation decisions. This implies that, irrigation and off-farm employment are complimentary activities, which indicates a possible induced family size increase.
    Forthcoming in Journal of African Economies (Access published online on April 26, 2007)

  • Analysis of farmers’ preferences for development intervention programs: A case study of subsistence farmers from Eastern Ethiopian Highlands
    October 2004
    Wagayehu Bekele

    The aim of this paper is to better understand farmers’ perception of the relevance of different development intervention programs. Farmers’ subjective ranking of agricultural problems and their preference for development intervention are elicited using a stated preference method. The factors influencing these preferences are determined using a random utility model. The study is based on a survey conducted in the Hunde-Lafto area of the Eastern Ethiopian Highlands. Individual interviews were conducted with 145 randomly selected farm households using semi-structured questionnaires. The study suggests that drought, soil erosion and, shortage of cultivable land are high priority agricultural production problems for farmers. Low market prices for farm products and high prices of purchased inputs also came out as major problems for the majority of farmers. Farmers’ preferences for development intervention fall into four major categories, market, irrigation, resettlement, and soil and water conservation. Multinomial logit analysis of the factors influencing these preferences revealed that farmer’s specific socio-economic circumstances, and subjective ranking of agricultural problems play a major role. It is also shown that preferences for some interventions are complimentary and need to be addressed simultaneously. Recognition and understanding of these factors, affecting the acceptability of development policies for micro level implementation, will have significant contribution to improve macro level policy formulation.

  • Institutional framework, interest rate policy and the Nigerian manufacturing sub-sector
    October 2004
    Michael Adebayo Adebiyi and Babasanmi Babatope-Obasa

    In this study, we set out to empirically investigate the impact of interest rates and other macroeconomic factors on manufacturing performance in Nigeria using cointegration and an error correction mechanism (ECM) technique with annual time series covering the period between 1970 and 2002. Some statistical tools are employed to explore the relationship between these variables. The analysis starts with examining stochastic characteristics of each time series by testing their stationarity using Augmented Dickey Fuller (ADF) test. Then, the study estimates error correction mechanism (ECM) model. From the error correction model, several interesting conclusions are drawn from the study. First, interest rate spread and government deficit financing have negative impact on the growth of manufacturing sub-sector in Nigeria. Secondly, the study empirically reveals that liberalization of the Nigerian economy has promoted manufacturing growth between 1970 and 2002. Lastly, the findings are further reinforced by the presence of a long-term equilibrium relationship, as evidenced by the cointegration, and stability in the model.

  • Labour migration and households: a reconsideration of the effects of the social pension on labour supply in South Africa
    September 2004
    Dorrit Posel, James Fairburn and Frances Lund

    This paper re-examines the effect of the South African social pension on the labour supply of working-age adults using data from 1993. We take account of the fact that households may include non-resident members, and therefore that the pension may play a role in facilitating migration to work or look for work. We find that rural African women are significantly more likely to be migrant workers when they are members of a household in receipt of a pension, and that it is female pension income that drives this result. We explore a number of possible reasons why pension income might have this effect.

  • Alleviating rural poverty through efficient small holders farming systems in Ethiopia: Relevance of macro policies with ground realities
    October 2004
    D. K. Grover and Anteneh Temesgen

    Ethiopia is one of the poorest and least developed countries in the world. The country had a real per capita GDP of less than US $100 in 1995, and over 60 per cent of its population lives in absolute poverty. The problem of rural poverty and underdeveloped agriculture are closely linked with both micro as well as macro dimensions. To tackle the challenges of poverty in Ethiopia, the policies need to be initiated both macro and micro in nature and especially the macro-micro linkages are extremely crucial. In order to formulate and implement the macro policies effectively, there is an urgent need to first understand the ground realities of the Ethiopian society in general and of agricultural economy in particular. The micro-level study has been conducted in North Wollo zone, situated in the northeastern part of the country. The linear programming model was used to study the existing farm income and scope of improvement through optimal and alternative plans. The optimal solutions in both base model and alternative optimal plan resulted in an increase in gross margin. This was obtained by using improved seed with fertilizer. Thus, the availability of improved seed, fertilizer, working capital and other inputs is crucial, i.e. modern inputs should be delivered at right time and place with a reasonable cost, so that all farmers can afford to use it. Agricultural and poverty related macro policies and strategies were reviewed to highlight that how effectively the ground realities of smallholders were addressed through the macro level government agricultural policy initiatives in Ethiopia. The utilization of improved seeds has not exceeded 2 per cent of the overall seed requirements of the country. Hence, pragmatic seed policy needs to be formulated and implemented effectively to make available improved seeds to the farmers for improving their income and reducing rural poverty. The macro fertilizer policy should be designed to encourage the farmers to make use of this crucial input for raising their income and reducing poverty. Contrary to it, the present macro policy of decontrolled fertilizer has discouraged the farmers to adopt crops with fertilizers. The credit extended by Commercial Bank of Ethiopia has been increasing yet it should be taken up on priority at macro level in order to improve the economic conditions of rural folk and hence reducing the poverty in the country. The Small Scale and Micro Industry Development Strategy (SSIMD) and related programs initiated by Government of Ethiopia are very much in line with the micro level requirements. Such efforts must be further strengthened for generating rural non-farm employment and hence tackling the problem of rural poverty in the country. On scarce land, improved technology needs to be made available to farmers through macro policies for intensive utilization of the existing land. Besides, government and NGO’s should promote subsidiary activities requiring less land such as poultry and bee keeping. Land-use-planning needs to be initiated to advise the smallholders to use their scarce land only for most desired enterprises and abandon the practice of growing trees like eucalyptus. Besides, Intensive Agricultural Technology Dissemination Programs needs to be chalked out and implemented to improve the efficiency of smallholders farming systems in terms of increasing farm income and reducing rural poverty in Ethiopia.

  • Multilateral Organisations: Instruments for Donors’ Foreign Policy?
    October 2004
    Espen Villanger

    The empirical literature on foreign aid emphasizes that foreign policy objectives are important motivations for giving multilateral aid (Cassen 1994, Alesina and Dollar 2000). Some of the recipients that receive the most aid per capita do so because they are favored in bilateral aid relationships due to their strategic importance. However, the opportunity for a donor country to use a multilateral organization strategically to promote its own policy goals has received far less attention. The gain to a donor that is able to make the World Bank or other multilaterals adapt to this donor’s view on an issue can be substantial. In that case, all the contributions from the other member nations will also stand behind the multilateral organizations’ stance in the particular issue, and recipients may feel compelled to comply with this massive counterpart. Thus, influencing the multilaterals may give much more leverage to a donor’s foreign assistance on the foreign policy arena compared to pursuing the same goals bilaterally with the same amount of aid. The U.S. General Accounting Office indicates the potential for increased influence when they state that about $2 billion in U.S. paid capital had supported World Bank loans of nearly $286 billion through cofinancing with other donors and the private sector. So, if the GOA is right in asserting that U.S. with its 22% of the total donor support to the World Bank is able to take the leadership in setting the bank’s agenda, then there is little doubt that this strategic behavior can be effective in achieving U.S. foreign policy goals... However, even if the principal-agent framework is the work-horse of the theoretical literature on foreign aid, this literature does not address how some donors’ can be able to influence the objectives of the multilaterals in order to achieve their aims for the recipient. This gap in the literature is unfortunate since this type of strategic behavior rise several important questions. First, which mechanisms allows for this type of interactions? Second, how will this type of influence change the aid allocation of the other donors? Third, what implications can we draw with regards to improving the efficiency of the multilateral infrastructure in general?

  • "Two million net new jobs": A reconsideration of the rise in employment in South Africa, 1995-2003
    April 2004
    Daniela Casale, Colette Muller and Dorrit Posel

    In this paper we investigate labour market trends in South Africa between October 1995 and March 2003. In particular, we evaluate the South African government’s claim that over this period, the economy created two million net new jobs. Using the same household survey data as that used to generate official employment estimates, we also find an almost two million net increase in employment. However, we show that this increase is likely to have been inflated by changes in data capture and definitions of employment over the years, and that the real increase may be considerably less, with a lower bound of approximately 1.4 million jobs. We argue further that the rise in employment over the period must be evaluated in the context of a dramatically larger growth in labour supply and therefore rising rates of unemployment, declining real earnings, and an increase in the number of the working poor, particularly among Africans.

  • Infrastructure privatisation and poverty reduction in Africa
    October 2004
    Afeikhena Jerome and Ademola Ariyo

    Despite the perceived role of efficient infrastructure as critical element for economic growth, poverty reduction and the attainment of the millennium development goals, there is clear evidence that the provision of infrastructure in Africa has been much below standard in terms of quantity and quality. Over the past decade, there has been a change in the perception of the roles of the public and private sectors in infrastructure development. This study evaluates the linkages between infrastructure reform and poverty reduction in Africa. The findings indicate that the results of a decade of regulatory reform, implementation of the privatization and liberalization agenda, combined with the influx of private investment in infrastructure have decidedly been mixed. In spite of modest achievements, especially in telecommunications, there has been a gap between popular perceptions and reality on ground. Africa’s atypical experience and unique socioeconomic characteristics are such that the policy preconditions that are indispensable for effective liberalization and privatization are rarely met. Overall, infrastructure privatization has proceeded without adequate consideration being given to the needs of the poor. Even in telecommunications where privatization has improved national access to services through network expansion, weak regulation has had a negative impact on the poor through poor service quality and service cutbacks. There is now a significant base of experience around the world from which lessons can be learned. Infrastructure privatization should be viewed as a means to an end, and not an end in itself. The goal should be a more efficient sector delivering quality service while fulfilling its social responsibilities. Privatization is only an effective means towards the achievement of this goal if it is done in the context of an appropriate market and regulatory framework.

  • Evolution of the Labour Market: 1995-2002
    December 2004
    Bhorat, Haroon, and Morné Oosthuizen

    Since 1994, the South African economy has undergone significant changes with the government implementing various policies aimed at redressing the injustices of the past, fleshing out the welfare system and improving competitiveness as South Africa becomes increasingly integrated into the global economy. These policies have, directly or indirectly, impacted on the labour market and, consequently, on the lives of millions of South Africans. This paper’s chief objective is the analysis of some of the changes in the South African labour market in the post-apartheid era. The period, between 1995 and 2002, began with much promise and many challenges as the economy liberalised and normal trade relations were resumed with the rest of the world. Soon after the African National Congress came into power, the macro-economic strategy named “Growth, Employment and Redistribution” (or GEAR) was unveiled in 1996. This strategy predicted, amongst other things, employment growth averaging 270 000 jobs per annum from 1996 to 2000, with the number of new jobs created rising over time from 126 000 in 1996 to 409 000 in 2000 (GEAR 1996). Unfortunately, for a variety of reasons, these projections were not realised. In fact, in terms of the labour market, the experience of the second half of the 1990s appears to have fallen short of even the baseline scenario contained in the GEAR document, which projected a net increase in (non-agricultural formal) employment of slightly more than 100 000 jobs per annum.
    In Poverty and Policy in Post Apartheid South Africa, edited by Haroon Bhorat and Ravi Kanbur. Cape Town, South Africa: HSRC Press, 2006.

  • Estimating utility consistent poverty lines
    July 2004
    Channing Arndt and Kenneth Simler

    The “Cost of Basic Needs” (CBN) approach to drawing consumption based poverty lines is widely applied and lays credible claim to being the best practice for estimating poverty measures. Unfortunately, a growing mass of evidence indicates that poverty estimates obtained under the CBN approach are often demonstrably utility inconsistent. Here, we introduce an information theoretic approach for estimating utility consistent poverty lines. An example of the approach is provided for the case of Mozambique. The approach represents a powerful addition to the poverty analyst’s toolkit and enhances the attractiveness of the CBN approach for practical poverty measurement problems.

  • Has the New Zealand/Australian Closer Economic Relationship (CER) been trade widening or deepening?
    October 2004
    Ron Sandrey and Dirk van Seventer

    This study finds that export trade widened rather than deepened as a result of the CER trade agreement with Australia. Trade has expanded in those products that were not heavily traded prior to the agreement as opposed to an expansion of “traditional” exports that were traded at the start of the agreement. This finding is therefore consistent with other recent empirical research undertaken on this new aspect of trade expansion, and gives weight to the suggestion that these agreements are beneficial not just in the short or “static” term, but in the longer or “dynamic” term. While often cited as a benefit of bilateral liberalisation, this widening feature of a trade agreement is not generally forecast in traditional computer modelling exercises. Importantly, the analysis of the trade expansion to the ‘rest of the world’ indicated that much of the result may be directly attributable to CER and not a change in worldwide trade patterns. Moreover, this widening was most pronounced in manufacturing lines, reinforcing the value of CER in that it had not merely diverted our traditional (and supply constrained) exports away from third markets. This was underlined by a similar analysis of the “mirror” imports of manufactured products from New Zealand into Australia. This showed an increase post-CER and confirms the trade widening hypothesis. As New Zealand prepares to begin negotiating an FTA with China, this study adds weight to the general conclusion that comprehensive bilateral agreements are likely to produce more welfare benefits than may be forecast by traditional means (ie computer models). It also supports the broad assumption that trade agreements are likely to significantly contribute to a growth and innovation export-oriented drive.

  • Food Security, Agricultural Technology and Policy - The Case of Maize in Sub-Saharan Africa
    October 2004
    Göran Djurfeldt and Rolf Larsson

    This paper deals with the importance of agricultural policy and technology for farmers’ food security and market integration. We draw on data recently collected in interviews with over 3000 farmers in eight sub-Saharan African countries. The results indicate that the food production among African smallholders is highly responsive to increased use of industrial inputs and to marketing opportunities for food crops. In the absence of a favourable macro environment enhancing increased use of inputs, however, the majority of farmers remain stuck in poverty and are barely able to meet their own food needs. In the following we will use maize as an example to demonstrate the crucial role of the African state in providing the necessary macro conditions for realising the production potential inherent in increased technology adoption and increased commercialisation of staple production. This conclusion suggests that development options in African agriculture are different from those often surmised in the general development debate. Hence, we argue that policy makers in governments and among donors often work from assumptions that badly fit existing realities in African agriculture. We criticise a number of tendencies that recur in debates on agricultural development in sub-Saharan Africa. They are not internally consistent, and they seldom occur together, since they typically are associated with different types of actors.

  • Swaziland: In the pursuit of economic liberalization and growth. How poverty is reproduced at the micro-level under changing labour market regimes?
    October 2004
    Gabriel Tati

    Why is poverty so pervasive in Swaziland despite substantial economic growth achieved through extreme economic openness over several years? Is poverty alleviation in Swaziland a more reachable goal than was in the past, as this country strives to restore rapid economic growth through AGOA facilitating greater insertion into the global commodity market chains? How have macroeconomic developments impacted on poverty within the labour markets, cross-border and domestic alike, and what measures can be taken to improve competitiveness in the labour market? The paper explores these issues by looking into some prominent structures of the labour market regimes in Swaziland from both the cross-border and domestic perspectives. Understanding the relationships between trade, labour market regimes and poverty reproduction is critical for this country, as insufficient analytical attention has been paid on what is happening at their interface. Economic growth has been exceptional over the past years, and the country strives to attract more investors to rip the benefits of African Growth Opportunity Act (AGOA). Yet efforts to reduce the high incidence of poverty affecting most Swazis remain very disappointing, and elusive as inequality of all forms is substantially in rise. The heavy concern put on opening up the national economy to foreign investors has tended to obscure the realities lived on the ground by most of those engaged in making this liberalisation possible: the ordinary Swazis workers. Public considerations at the macroeconomic level seem to have been disconnected from those at the micro-level, as lived by the actors engaged in the crossborder and domestic labour forces.

  • The conjuncture of poverty microsimulation linked to a macroeconomic forecasting model: A case study in Senegal
    September 2004
    Thierry Latreille

    Poverty reduction policies have become the main guidelines of economic policies in many Sub-Saharan African countries. Therefore the authorities need new social indicators in order to follow the application and the effectiveness of their policies. In recent years renewed efforts have been made to develop new policy tools aimed at better understanding the channels through which PRSP measures affect the poor. We present an approach to linking macro models with representative households and micro household income data in terms of measuring poverty and the distributional effects of poverty reduction policies. This is a simple micro-accounting method which presents an interesting opportunity for linkage to a macro economic forecasting model, the Jumbo model run by the AFD for the CFA Franc Zone. Our approach consists of using a macroeconomic forecasting model (Jumbo) that integrates several representative household groups. An output of the forecast is introduced into a simple model of microsimulation in order to obtain yearly poverty and income distribution indicators. The interpretation of the results with the help of the macroeconomic environment described in the Jumbo model allows an analysis of the conjuncture of poverty.

  • The Global Market Place: How far can Nigeria go with the present non-oil product mix?
    October 2004
    Rosemary N. Okoh

    This paper is an empirical analysis of the demand for Nigeria’s non-oil export merchandize with a view to providing an answer to the question of how far the present product mix would go in the global market. The study employed the Johansen’s test of co-integration and analysis of structural characteristics of the integrated stochastic variables in the error correction vector. The results of the study show that the present product mix of non-oil merchandize export, have low and negative long run income elasticity of demand, but high long run price elasticity of demand, such that prices rise and fall in response to the highly volatile global commodity market prices. This study has important implication for international trade policies in Nigeria and other Africa economies. Nigeria cannot maximize gains from global integration until the basic prerequisites for industrialization and modernization of the productive base have been properly established. Entering the global market prematurely is a deterrent to growth in export. Nigeria must do the first things first - invest on innovation and reduce the efforts towards global integration, since this will continue to be inimical to the Nigerian economy as long as the present mix of non-oil exports products remains.

  • South African Trade Reform since Democracy
    October 2004
    Rashad Cassim and Dirk van Seventer

    As part of a wider investigation by the National Institute for Economic Policy, covering a range of economic policy issues, the main aim of this paper is to provide an overview of how trade policy has evolved since democracy. We use standard quantities measures of trade policy analysis as an input into a discussion of the impact of the trade regime on the economy. The paper also undertakes some sensitivity analysis about how we think about some basic welfare concepts.

  • Youth labour markets in Africa
    October 2004
    Murray Leibbrandt and Cecil Mlatsheni

    This paper makes use of a review of the literature on African labour markets, the international literature on youth and the labour market and a fifteen country African data set to analyze the current situation of youth in sub-Saharan labour markets. Economies in Sub-Sahara Africa are generally viewed as having achieved poor economic growth over the past four decades or so (Bigsten 1996, Collier & Gunning 1999, Kaplan 1996). This has had an adverse impact on poverty and inequality. On the whole per capita incomes have fallen since the early 1970s (ADB 1997). Some of the reasons cited in this literature for the poor growth performance of sub-Saharan Africa include: lack of openness to trade, lack of financial depth, deficient public services, lack of social capital, high incidence of shocks and misguided economic policy. The process of economic development involves the allocation of labour within sectors and the reallocation of labour between sectors and to the extent that this process is impeded, the transformation of the economy is slowed and made less efficient (Bigsten and Horton 1997). Thus the functioning of the labour market is central to economic growth, income distribution and poverty alleviation and is thus an important (if not the most important) prong in the various areas that should be considered for policy intervention.

  • The Demand for Education for Orphans in Zimbabwe
    October 2004
    Craig Gundersen, Thomas Kelly and Kyle Jemison

    We examine the effect of orphan status on school enrolment in Zimbabwe, a country strongly impacted by the HIV/AIDS pandemic with a rapidly growing population of orphans. Using data from 2003, after controlling for other determinants of enrolment we find that orphans are less likely to attend school than non-orphans. The result is robust to our correction for selection bias. Two additional results have implications for targeting: we find that the effect of being an orphan is especially large for older children and that, after controlling for previous education, the effect of being an orphan on school enrolment is sharply diminished.

  • The mystery of South Africa’s ghost workers in 1996: measurement and mismeasurement in the manufacturing census, population census and October Household Surveys
    October 2004
    Martin Wittenberg

    Absences can be as telling as presences, as Sherlock Holmes reminds us. Some times, however, it is difficult to know whether one is really dealing with an absence or not. In the case of South African labour economics some absences have attracted attention: the surprisingly small size of the informal sector, or the surprisingly small rate of job creation during the 1990s. To these mysteries can be added another: the disappearance of about 300 000 manufacturing workers from the 1996 population census.

  • Geography as Destiny: Considering the spatial dimensions of poverty and deprivation in South Africa
    October 2004
    Ronelle Burger, Servaas van der Berg, Sarel van der Walt and Derek Yu

    This paper’s main contribution to the discussion about the geographical dimensions of poverty traps is a careful description of how the nature and depth of poverty and deprivation differ by geography. Conventionally, much of the analysis of poverty has focused on money-metric poverty lines. However, as Amartya Sen and others have shown, welfare is a rich and complex concept that cannot be adequately captured by income and expenditure. To avoid the arbitrariness of a poverty line and the one-dimensionality of money-metric poverty measure, the paper opts for Totally Fuzzy and Relative indices of poverty – as pioneered by Cheli and Lemmi (1995). It provides a multi-dimensional account of poverty and deprivation without assigning arbitrary weights to the different poverty dimensions. Rather, the method weighs poverty dimensions according to the frequency of deprivation in this dimension among members of the population: the more common deprivation is in a specific dimension, the less weight the specific dimension will receive in the calculation of the index. Instead of a sharp line dividing the rich from the poor, the variable’s bottom category is defined as marking extreme poverty and the top category as representing affluence, with everything in-between assigned a score to indicate the degree to which these individuals or households can be regarded as poor.

  • The dynamics of job search and the microfoundations of unemployment: Evidence from Duncan village
    October 2004
    Patrick Duff and David Fryer

    There is significant consensus that unemployment and more generally, exclusion from the labour market, is the central socio-economic problem in South Africa. Joblessness is strongly implicated in such socio-economic problems as crime, poverty, alcoholism, HIVAIDS, and even poor educational outcomes and low skill levels (see for example Bhorat et al. 2001; Fryer and Vencatachellum, 2004; Nattrass, 2003). The literature flowing from household survey data has however tended to confine itself to measuring unemployment and its consequences. In doing this, it tends to treat unemployment as something that happens to individuals and communities. However, factors such as unemployment and poverty will have obvious feedback effects on the current capabilities of individuals, on the intergenerational transmission of capital (and especially human capital) and on social and market structure. Below critical threshold levels, such factors can generate market and coordination failures. The distortions generated by unemployment can become endogenized in the sense that they become part of the cause of unemployment. To date, there is no clear understanding in the South African literature as to whether such endogenous factors are important and how they interact with other factors such as so-called imposed distortions (caused, for example by labour legislation and union wage premia) and other macroeconomic causes of unemployment.

  • Genocide and land scarcity: Can Rwandan rural households manage?
    October 2004
    Marijke Verpoorten and Lode Berlage

    During the nineties Rwandan households faced severe shocks of war and genocide. In addition, the structural problem of land scarcity remains unsolved. How did Rwandan households manage? This is an important question from a development perspective, but also from a security perspective, because uneven development raises the risk of renewed conflict. To find an answer, we study welfare gains and losses in a sample of 189 rural households in two Rwandan provinces over the period 1990-2002. In our sample, many households were severely affected by the genocide. In addition, poverty and inequality increased. Moreover, we observe a lot of income mobility. Only one quarter of the households remained in the same income quintile over time. Especially the households headed by widows and prisoner’s wives moved downward in the income distribution. Households who reduced their dependence on subsistence agriculture moved upward.

  • Implications of Genetically Modified Food Technology Policies for Sub-Saharan Africa
    October 2004
    Kym Anderson and Lee Ann Jackson

    The first generation of genetically modified (GM) crop varieties sought to increase farmer profitability through cost reductions or higher yields. The next generation of GM food research is focusing also on breeding for attributes of interest to consumers, beginning with ‘golden rice’, which has been genetically engineered to contain a higher level of vitamin A and thereby boost the health of unskilled laborers in developing countries. This paper analyzes empirically the potential economic effects of adopting both types of innovation in Sub-Saharan Africa (SSA). It does so using the global economy-wide computable general equilibrium model known as GTAP. The results suggest that the welfare gains are potentially very large, especially from nutritionally enhanced GM rice and wheat, and that – contrary to the claims of numerous interests – those estimated benefits are diminished only slightly by the presence of the European Union’s current barriers to imports of GM foods. In particular, if SSA countries impose bans on GM crop imports in an attempt to maintain access to EU markets for non-GM products, the loss to domestic consumers due to that protectionism boost to SSA farmers is far more than the small economic gain for those farmers from greater market access to the EU.

  • Have Minimum Wages Benefited South Africa’s Domestic Service Workers?
    October 2004
    Tom Hertz

    In September of 2002 South Africa’s roughly one million domestic workers – about 840,000 predominantly African and Coloured women who work as housekeepers, cooks and nannies, and another 180,000 men who work primarily as gardeners1 – were granted formal labor market protection, including the right to a written contract with their employers, the right to paid leave, to severance pay, and to notice prior to dismissal (Department of Labour, 2002). Employers were also required to register their domestic workers with the Unemployment Insurance Fund (UIF) and to withhold UIF contributions from their paychecks; (since April of 2003 domestic workers have been entitled to unemployment benefits). In November of 2002, a schedule of minimum wages, including time-and-a-half provisions for overtime work, went into effect. The minima were set above the median hourly wages that prevailed at the time, making this a significant intervention in the domestic worker labor market. This paper attempts to determine if these regulations have had any effect on wages, employment levels, hours of work, and the conditions of employment. I find that the regulations do appear to have raised wages: Average nominal hourly wages for domestic workers in September of 2003 were 23% higher than they had been in September 2002, while for demographically similar workers in other occupations the nominal wage increase was less than 5%. Econometric evidence supports the conclusion that the wage increases were caused by the regulations, since the largest increases are seen in places where the greatest number of workers were initially below the minimum wage.

  • Well-Being poverty versus income poverty and capabilities poverty in South Africa?
    December 2003
    Geeta Kingdon and John Knight

    The conventional approach of economists to the measurement of poverty in poor countries is to use measures of income or consumption. This has been challenged by those who favour broader criteria for poverty and its avoidance. These include the fulfilment of ‘basic needs’, the ‘capabilities’ to be and to do things of intrinsic worth, and safety from insecurity and vulnerability. This paper asks: to what extent are these different concepts measurable, to what extent are they competing and to what extent complementary, and is it possible for them to be accommodated within an encompassing framework? There are two remarkable gaps in the rapidly growing literature on subjective well-being. First, reflecting the availability of data, there is little research on poor countries. Second, within any country, there is little research on the relationship between well-being and the notion of poverty. This paper attempts to fill these gaps. Any attempt to define poverty involves a value judgement as to what constitutes a good quality of life or a bad one. We argue that an approach which examines the individual’s own perception of well-being is less imperfect, or more quantifiable, or both, as a guide to forming that value judgement than are the other potential approaches. We develop a methodology for using subjective well-being as the criterion for poverty, and illustrate its use by reference to a South African data set containing much socio-economic information on the individual, the household and the community, as well as information on reported well-being. We conclude that it is possible to view subjective well-being as an encompassing concept, which permits us to quantify the relevance and importance of the other approaches and of their component variables. The estimated well-being functions for South Africa contain some variables corresponding to the income approach, some to the basic needs (or physical functioning) approach, some to the relative (or social functioning) approach, and some to the security approach. Thus, our methodology effectively provides weights of the relative importance of these various components of well-being poverty.

  • Trade liberalisation and factor returns in South Africa, 1988-2002
    October 2004
    Lawrence Edwards

    This paper estimates the impact of trade liberalisation on factor returns in South Africa between 1988 and 2002. A particular contribution of the paper is that tariff data are explicitly used in the analysis. In addition, the paper models trade-induced technological change. The paper finds that tariff liberalisation from 1988 to 2002 negatively affected wages of South African labour relative to the return to capital. However, the decline in demand for labour is concentrated amongst skilled labour. Tariff liberalisation mandated a decline in the wages of skilled labour relative to both capital and less-skilled labour. The paper also finds some evidence of trade-induced technological change. The results suggest that trade-induced technological change positively benefited skilled labour relative to capital and less-skilled labourand thus partly ameliorated the negative direct effect on skilled labour arising from a reduction in tariffs. The net effect for skilled labour, however, remains negativerelative to less-skilled labour and capital.The results of the paper, therefore, suggest that factors other than trade liberalisation account for the decline in employment experienced during the 1990s.

  • Foreign aid and population growth: evidence from Africa
    October 2004
    Leonid Azarnert

    This paper investigates the relationship between foreign aid and population growth in Sub-Saharan Africa. Using a panel of African countries over the last four decades, it demonstrates the positive effect of foreign aid on fertility and population growth in this region.

  • Community, comparisons and subjective well-being in a divided society
    April 2004
    Geeta Gandhi Kingdon and John Knight

    The paper poses six questions about the determinants of subjective well-being in South Africa. Much of the paper is concerned with the role of relative concepts. We find that comparator income – measured as average income of others in the local residential cluster – enters the household’s utility function positively but that income of more distant others (others in the district or province) enters negatively. The probit equations indicate that, as well as comparator groups based on spatial proximity, race-based comparator groups are important in the racially divided South African society. It is also found that relative income is more important to happiness at higher levels of absolute income. Potential explanations of these results, and their implications, are considered.

  • The economy-wide impacts of the labour intensification of infrastructure expenditure
    October 2004
    Anna McCord and Dirk van Seventer

    This paper examines the performance of public works in addressing both micro and macroeconomic policy objectives relating to growth, employment and poverty reduction in South Africa. Survey data on the micro-economic impact of public works programme participation is used alongside a social accounting matrix (SAM) for the South African economy which models the impact of a demand stimulus to the South African economy reflecting a hypothetical annual public works programme of R3 billion, using data from a labour based road rehabilitation programme. Drawing on recent survey data from two public works programmes in South Africa, the microeconomic impacts of public works programme participation in terms of income poverty, non income poverty and labour market performance are reviewed. These microeconomic findings are then linked to recent research examining the macro-economic impacts of public works programmes and the two are considered together in order to assess the micro-macro linkage of public works programmes and theircontribution to development and poverty reduction. This analysis is particularly relevant given the popularity of public works as an instrument for labour market and social protection intervention throughout the continent. The microeconomic analysis suggests that while participation in a public works programme may contribute to a reduction in the depth of poverty, with improvements in participation in education and nutrition, and have positive psychosocial benefits, the impact of a short term programme may not be significant in terms of a reduction in headcount poverty or improvements in asset ownership (material or financial). In this case the public works programme income may function essentially as a temporary wage shock, since the insurance function of the transfer is limited by the short duration of the employment period. If targeted to poorer groups, with lower levels of school participation and poorer nutrition, impact may be greater per unit of wage transferred, interms of contributing to human capital, but is still not likely to move participants out of poverty, but rather reduce the depth of their poverty.

  • Credit demand and credit rationing in the informal financial sector in Uganda
    October 2004
    Nathan Okurut, Andrie Schoombee and Servaas van der Berg

    This paper focuses on identifying the factors that influence credit demand and also those that result in the poor being credit rationed by lenders. An understanding of both these sets of determinants could assist policy formulation to enhance the welfare of the poor through improved credit access. In this respect we were fortunate in having a dataset that contains questions not only on actual credit given, but also on loans applied for. This allows us to investigate both credit demand and credit supply, and to model these using observed household and individual characteristics.

  • Capital Flight from South Africa, 1980 to 2000
    October 2004
    Seeraj Mohamed and Kade Finnoff

    Capital flight is a serious problem for South Africa, which if not addressed will continue to impede its ability to deal with structural issues such as high unemployment and concentration of wealth. This paper presents an estimate of the wealth that left South Africa in the form of capital flight during the period 1980 to 2000. We find that from 1980 to 2000 average capital flight as a percentage of GDP was 6.6 percent a year. In this paper, we deviate from the existing literature on capital flight from South Africa by suggesting that the motivation of people involved in capital flight before and after the fall of apartheid may have changed. We find that capital flight as a percentage of GDP was higher after the democratic elections in 1994, even though, there was much more political and economic instability during the period investigated before the democratic elections. The increase in capital flight as a percentage of GDP may reflect the discomfort of those involved in capital flight in the post-apartheid democratic process. We also consider how international capital flows and structural weaknesses in the economy have influenced capital flight.

  • Have labour market outcomes affected household structure in South Africa? A preliminary descriptive analysis of households
    October 2004
    Farah Pirouz

    In this paper we comprehensively examine household size and structures in the October Household Survey 1995, 1997, 1999 and the Labour Force Survey September 2001 and 2002. Over the 1995-2002 period, the average household size has decreased significantly, by 0.4 household members. A rising share of single households from 12.6% to 21% of all households mostly drives this result. We investigate the question of how such changes in the patterns of household composition could be correlated to changes in labour force participation rates, unemployment rates, and employment rates. We further trace the distribution of unemployment andemployment over South African households over time. The shares of workless households where no member is employed, and full employment households, where all working age adult members earn income from work, tell about employment polarisation. Not surprisingly, the share of households with unemployed members has doubled to 27% in 2002. Findings may also provide explanations for why rising household inequality and household poverty are observed. Given the absence of a comprehensive social security net, a rising number of workless households in which no member earns work income may explain an increase in inequality measures over the same period. The paper aims to be a starting point for further econometric investigation on how households’ demography is influenced by individual labour market outcomes and vice versa. Therefore the explorations are general and the argumentation follows several avenues. To further explore household dynamics in conjunction with labour forcedynamics, panel data is required. In South Africa, panel data is limited to a two-wave survey of African households in KwaZulu-Natal (KIDS). The Labour Force Survey is designed as a rotating panel, and Statistics SA is still in the process of matching household and individual observations.

  • Trade liberalisation and regional integration in SADC: policy synergies assessed in an industrial organisation framework
    October 2004
    Martine Visser and Trudi Hartzenberg

    Trade liberalisation has a significant impact on firm-market dynamics in a regional context. The purpose of this paper is to use an industrial organisation framework, focusing on the analytical units, the firm and the market, to assess the impact of trade liberalisation within the Southern African region, SADC. It is specifically the firm-level responses to various policies that will provide insight into changes in national industrial configurations, regional patterns of industrialisation and the potential for sustainable supplychain development in Southern Africa. The purpose of intra-regional trade liberalisation is to facilitate trade within a regional economic space, and through enhanced trade opportunities to elicit firm-level decisions to expand productive capacity. Such expansion of productive capacity, through various modalities of investment, can have important implications for the development of markets and market processes, resulting in robust, sustainable regional development.

  • Financial Intermediation and Access to Finance in African Countries South of the Sahara
    October 2004
    Neren Rau

    This paper describes the status of financial systems for a number of African countries south of the Sahara, identifying various problems that hinder access to finance, especially for the poor, and subsequently those issues that deter economic performance and development. The countries surveyed were selected on the basis of a range of criteria including: geographical spread, economic size and development, level of financial market development and availability of information. Although Angola, Botswana, Gabon, Ethiopia, Kenya, Mauritius, Mozambique, Nigeria, Senegal and South Africa are the focus countries of this survey, many of the scenarios presented in this paper are applicable to other African countries south of the Sahara. Broad policy measures to tackle the bottlenecks that currently undermine financial systems' responsiveness to the needs of the real economic sector are recommended.

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July 18-20, 2004, Accra, Ghana

  • Banking Competition and Efficiency in Ghana
    October 2004
    Thierry Buchs and Johan Mathisen

    This paper assesses the degree of bank competition and discusses efficiency with regard to banks’ financial intermediation in Ghana. By applying panel data to variables derived from a theoretical model, we find evidence for a noncompetitive market structure in the Ghanaian banking system, which may be hampering financial intermediation. We argue that the structure, as well as the other market characteristics, constitutes an indirect barrier to entry shielding the large profits in the Ghanaian banking system. In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • The Evolution of Welfare in Ghana: A Rural-Urban Perspective
    July 2004
    Louis Boakye-Yiadom

    Welfare patterns in Ghana are characterised by widespread rural-urban disparities, with the welfare of rural residents lagging behind that of their urban counterparts. This paper argues that Ghana’s rural-urban welfare gap is influenced by the concentration – in urban areas – of business and industrial activity, and is sustained by the resultant inequalities in education, access to healthcare, and basic amenities. Given the pervasiveness and self-perpetuating nature of the disparities, the paper calls for a major policy initiative to address the imbalance.

  • Export Performance and Investment Behaviour of Firms in Ghana
    July 2004
    Susanna Wolf and Daniel Bruce Sarpong

    A strong relationship between export performance and investment behaviour at the firm level is expected to complement market access in diversifying Ghana’s exports. A 2003 survey of 100 enterprises in Ghana is used to analyse the factors that influence the investment and exporting behaviour of firms using a simultaneous equation model to allow for the endogeneity of investment and exporting. In addition the different factors that influence the investment and export decisions in different sectors are investigated. However, no significant positive relationship between exporting and investment could be found. There seems rather to be a negative association which might be explained by constraints in the access to capital. On the other hand there are several factors that work in the same direction, for example, younger firms, larger firms and more efficient firms are more likely to invest and more likely to export. In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Maternal Literacy and Numeracy Skills and Child Health in Ghana
    May 2005
    Niels-Hugo Blunch

    This paper examines the impact of maternal literacy and numeracy skills and schooling on the production of children’s health in Ghana. The analysis considers child health inputs, including pre- and post-natal care and vaccinations, and child health outputs, including illnesses and mortality. Previous studies of the determinants of child health have mostly been limited to investigating the impact of maternal schooling only and, as a consequence, largely have not considered skills, including literacy and numeracy skills and health knowledge, and also have ignored alternative routes to acquiring skills, such as adult literacy programs. Analyzing a recent household survey for Ghana, this paper addresses both of these issues. Preliminary results for a specification where all regressors are treated as predetermined indicate that skills are largely not important once education is controlled for but at the same time also indicate a positive association between adult literacy course participation and child health. The latter points towards the potentially important role of adult literacy programs in promoting child health by the acquisition of health knowledge by participants in these programs, which is something that has previously received little to no attention in the economics literature.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Poverty Reduction Strategies in a Budget-Constrained Economy: The Case of Ghana
    February 2003
    Maurizio Bussolo and Jeffery I. Round

    Analyses of responses to reforms in Ghana seem to indicate that current policies may be benefiting different segments of society disproportionately. Also, experience in the 1990s suggests that recurring budget deficits may adversely affect reform and poverty alleviation programmes. The aim of this paper is to carry out some experiments using variants of a stylised CGE model, to ascertain the possible effects on poverty of a range of budget-neutral redistributive income transfers. The analysis is based on a social accounting matrix (SAM) for Ghana for the year 1993, which has been substantially modified for the present application. The CGE model is a real-side, static model and therefore excludes the monetary and financial sectors and is designed in the tradition of other OECD Development Centre models. The experimental design follows one employed by Adelman and Robinson (1978) for Korea and Chia, Wahba and Whalley (1992) for the Côte d’Ivoire. However the experiments are designed with a view to examining the sensitivity of the results to alternative specifications, within otherwise broadly similar, SAM-based model structures. The main outcome is to show that the results are very sensitive to (long and short run) closure rules, to the financing rules in a budget-neutral setting, and to the method of computing poverty ratios (parametric and non-parametric approaches). A new decomposition method is introduced to assist in interpreting the results. A wide range of simulations demonstrates that poverty is not eradicated via redistributive income transfers, and may even increase, especially in the short run, after taking into account the secondary effects.

  • Effects of Exchange Rate Volatility and Changes in Macroeconomic Fundamentals on Economic Growth in Ghana
    July 2004
    Stephen Kyereme

    This paper examines the determinants of per person real output growth (a measure of economic growth), exchange rate volatility, and price inflation—and their interactions and implications for economic development—using vector autoregression models. The roles of money and interest rates in price and output determination in Ghana are also explored. Using the Johansen cointegration procedure, tests are done to find out if long run relationships exist between pairs of the above variables. Results suggest: money as the key determinant of inflation; the exchange rate as the main determinant of output; and the exchange rate itself and price as the main determinants of the exchange rate. Interest rate shocks explain interest rates and money. Cointegration tests suggest: (a) a significant long run relationship between real output growth and the exchange rate; (b) a significant long run relationship between price inflation and the exchange rate; and (c) an insignificant long run relationship between the real interest rate and the exchange rate. These results reinforce the vector autoregression results discussed above. Policy makers, researchers, and future research may find insights from this study useful.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • A General Equilibrium Analysis of the Impact of Inward FDI on Ghana: The Role of Complementary Policies
    July 2004
    Lawrence Arbenser

    The need for external capital (FDI) inflow to finance the current account deficit of developing countries cannot be over-emphasized. Foreign direct investment takes predominance over other types of capital inflow into developing countries. How would an increase in FDI and a reduction in import tariff levels in isolation affect household welfare and other macroeconomic indicators? How would the concurrent application of the two enhance expected impact? This paper explores the above questions by using a Computable General Equilbrium (CGE) model for Ghana, implemented in the General Algebraic Modeling System (GAMS) to carry out specific counterfactual simulations. This paper concludes that the primary benefit of an increase in FDI inflow for a developing economy is the increase in current consumption. It also establishes that policies which ensure increase in FDI flow and reduce tariff levels are complementary policies that enhance household welfare. It also emphasizes that the two policies will have different impact on macroeconomic indicators, inter alia exchange rate, export, import and trade deficit.

  • Financial Sector Liberalization on the Labour Market in Ghana
    April 2003
    Augustine Fritz Gockel and Nora Amu

    One of the expected outcomes of the financial sector liberalization programme was that labour and capital resources would be priced efficiently in a competitive market. In a labour abundant country, labour intensive production techniques will emerge, as real wages fall sufficiently to contain employment and output. The study finds that firms are inclined to increase capital intensity than labour intensity given access to credit facilities. Furthermore, the high-cost-low-wage labour phenomenon plays a role in the low labour absorption in Ghana, especially where labour needs may be seasonal or dependent on the level of output. A more pragmatic labor law that allows flexibility for employers but also adequately compensate seasonal labour is needed.

  • Production Changes in Ghana Cocoa Farming Households Under Market Reforms
    October 2003
    Francis Teal and Marcella Vigneri

    The Ghana cocoa market has been extensively liberalised over the period since the mid 1980s. Three issues have been prominent in research on agricultural supply response to liberalisation. The first has been the size of the supply elasticity, the second the response to reduced subsidies on inputs, the third whether innovation will occur. In this paper we investigate these three issues by estimating a production function for cocoa in Ghana drawing on two household surveys covering the period from 1991 to 1998. The estimated production function allows identifying the factors underlying the change in output. It is shown that for most regions the whole rise in cocoa production occurring over the period, of about 6 per cent per household, was accounted for by a rise in land and non-labour inputs. The data is consistent with a constant returns to scale technology in which total factor productivity was unchanged in almost all regions. There were offsetting changes in factor use: the labour to land ratio fell while the non-labour to land ratio rose. Thus the analysis of the micro data shows that, contrary to much of the discussion of the effects of trade reform, the contribution of non-labour inputs to cocoa production has increased both relative to land and, very substantially, relative to labour. The reform period has seen a rise in the ratio of both land to labour and of non-labour input to labour which have increased labour productivity. Reform has not led to innovation in techniques which raise total factor productivity.

  • Household Asset Choice Among the Rural Poor in Ghana
    January 2004
    Ernest Aryeetey

    It is generally well known that Ghanaian households have been generally low savers in the last four decades (Aryeetey 1997). But the fact that saving is low does not mean households have no assets (de Janvry 1991). This raises considerable interest in the issue of what determines how households allocate their portfolio of assets. It is certainly important to examine the diversity in asset choices rural households make. A diverse portfolio of assets is not only critical for households to cope with unexpected shocks, but can free access to a range of consumption smoothing options that are vital for them to maximize utility over time. Diversity in asset choice is also important in order to allow households to manage risk in any one period. These attributes are especially important in developing countries where the lack of sufficient access to consumption smoothing mechanisms can perpetuate and worsen poverty. A household that is constrained in its access to credit or other assets may not be able to survive a negative shock. In practice, many households do survive, but at the cost of adopting an extremely risk averse production strategy. In many rural areas, for example, this strategy might be reflected in the sacrifice of expected return as farmers choose safer, lower yield crops. This perpetuates the cycle of poverty and hampers economic growth as the credit and/or other constraints push farmers to a sub-optimal path1.

  • Adult Literacy Programmes in Ghana: An Evaluation
    June 2004
    Niels-Hugo Blunch and Claus C. Pörtner

    This paper examines the effect of adult literacy program participation on household consumption in Ghana. We find that in most cases there is no significant effect on consumption from participation after allowing for self-selection into the program. For households where no adults have completed any formal education there is, however, a substantial positive and statistically significant effect on household consumption, pointing towards the potential importance of adult literacy programs for the parts of the population which have not participated in the formal education system. Possible explanations for why adult literacy program participation does not seem to significantly affect households where some formal education has been attained are explored, as well.

  • Terms and Access to Credit: Perceptions of SME/Entrepreneurs in Ghana
    July 2004
    Kwadwo Ansah Ofei

    This research reports on the impact of financial sector liberalization program on the access to funding by Small and Medium Enterprises (SME’s) in seven regions in Ghana. Especially, it examines the extent to which differences in the development of the seven regions can cause access to funding. Small and Medium Enterprises (SME’s) in Ghana. in constitute a greater percentage of the economy of Ghana. There are, however, several constraints to the development of SME’s. Especially, the lack of access to resources and financial markets (Aryeetey et al 1994). Other constraints to SME development include difficulty in finding skilled labour to employ. There is also a problem of having access to modern technology. Many firms use old machinery, and have problems with finding replacements parts to purchase (Andrea 1981)

  • Coping with Performance Below Expectations
    July 2004
    Blair Rourke

    The weak economic performance of Ghana since independence has been a source of much disappointment. A similar situation applies as well to most other African countries, and for many, the performance has been even worse. Much attention has been given both to failed government policies and to the failure of international assistance. It will be argued that one factor that is frequently not given sufficient attention in the discussion of the growth in the economy of Ghana is the extent to which the 1950s, the period during which Ghana obtained its independence, was an abnormally favorable period for Ghana and for most other primary commodity producing countries. The focus of the argument here is somewhat different from that usually advanced in studies showing the critical importance of the terms of trade to Ghana. It is that the favorable external environment for Ghana in the 1950s was the result of rather unique events, and the degree to which they were unique was not fully appreciated at the time and for many years thereafter. This experience of Ghana in the early postindependence period raises more general questions as to how to differentiate between permanent and transitory events, and further, when major errors occur, questions as to how the situation can be rectified.

  • Financial Development, Political Institutions and Economic Growth in the ECOWAS Sub-Region: An Empirical Analysis
    July 2004
    George A. Dampare and Jennifer Piesse

    The enormous cross-country differences in economic development and growth in recent years, have led to a resurgence of research interest in the determinants of economic growth, a subject which has been extensively debated. The resultant literature contains competing explanations of economic development and growth and the notable ones are the roles of institutions (Easterly and Levine, 2003; and Rodrik et al 2002), importance of geography, culture and history (Acemoglu et al. 2001) and quality of macroeconomic policies (Frankel and Romer, 1999; Aryeetey and Fosu, 2002; and Berg and Krueger, 2003). A common characteristic of the series of research papers that have examined this issue is that they relate to a combination of developed and developing countries. Interestingly, the results have been very persuasive, but not conclusive and this characterizes the issue as one of continuous research importance.

  • Real Exchange Rate Response to Capital Inflows: A Dynamic Analysis for Growth
    July 2004
    Oliver Morrissey, Tim Lloyd and Maxwell Opoku-Afari

    One of the most challenging problems in developing countries such as Ghana is exchange rate management, that is, ‘getting the exchange rate right’ especially in the context of exchange rate misalignment. The major research and policy question is what constitutes the equilibrium real exchange rate (ERER) and how can it be measured? Acknowledging the importance of fundamentals in determining the equilibrium real exchange rate, the paper concentrates on the effects of capital inflows (by decomposing capital inflows into official inflows, “permanent” inflows and “non-permanent” inflows). Vector Autoregressive (VAR) techniques are used to model the long-run equilibrium real exchange rate in Ghana, and based on a multivariate orthogonal decomposition technique, the equilibrium steady state path is identified which is used in estimating misalignments. As predicted by the Dutch Disease theory, results indicate that capital inflows tend to appreciate the real exchange rate in the long-run. Capital inflows is the only variable generating real appreciation in the long-run; technology change, trade (exports) and terms of trade all tend to depreciate the real exchange rate. The only variable that has a significant (depreciating) effect on the real exchange rate in the short-run is trade, implying that changes in exports are the major driver of exchange rate misalignment. It is also shown that the real exchange rate is slow to adjust back to equilibrium, implying policy ineffectiveness or inflexibility.

  • Survival and Success Among African Manufacturing Firms
    February 2004
    Alan Harding, Måns Söderbom and Francis Teal

    Recent reforms in most African economies of their trading and exchange rate regimes have eliminated much of the protection which previously limited competition. Despite these reforms, African manufacturing firms remain unsuccessful, particularly in international export markets. In this paper we consider the roles of learning, competition and market imperfections in determining three aspects of firm performance, namely firm exit, firm growth and productivity growth. We use a pooled panel data set of firms in Ghana, Kenya and Tanzania that spans a period of five years. We find that the main determinant of exit is firm size, with small firms having much higher exit rates than large ones. Productivity impacts on firm survival among large firms, but not among small firms. Reasons for this result are discussed. We find evidence that, among surviving firms, old firms grow slower than young firms, which is interpreted as evidence consistent with market constraints limiting growth of firms in Africa. We find no evidence that larger firms have faster rates of productivity or input growth, or are more efficient in the sense of benefiting from scale economies. We also find that competitive pressure enhances productivity growth. Given that one of the objectives of the reform programmes implemented in all three countries was to stimulate higher efficiency levels, this finding shows that one aspect of the reform programme has been successful.

  • The North-South Divide and the Disappearing Middle Class: An Analysis of Spacial Inequality and Polarization in Ghana
    May 2004
    Jacqueline Vanderpuye-Orgle

    This paper assesses trends in spatial inequality and polarization in Ghana over the period of economic reform. It contributes to the existing literature in three ways. First, it focuses on the spatial dynamics of inequality in Ghana. Secondly, it introduces the concept of polarization to the income distribution-welfare dialogue in Ghana. Finally, it proposes an index for measuring the share of spatial variation in changes in total inequality, as well as determining which spatial dimension primarily affects the variation in total inequality. The results establish that the Ghanaian population is clustered and that polarization is increasing in Ghana. The differences within-group specific means are considerably larger than the between-group components in explaining static levels of interpersonal inequality. However, changes in the levels of inequality are principally driven by changes in the between-group, i.e. the spatial, component of inequality. This suggests that inequality in Ghana may be assuaged by formulating regional policies directed at reducing down-side fluctuations in spatial inequality.
    In Poverty Reduction Strategies in Action, edited by Joe Amoako-Tuffour and Bartholomew K. Armah, Rowman & Littlefield Publishers, Inc., 2007 (ISBN 9780739110102)

  • Persistent Public Sector Deficits and Macroeconomic Instability in Ghana
    September 2004
    Curtis E. Youngblood and David L. Franklin

    Over the decade of the 1990s Ghana was considered an example among African countries regarding the pace and extent of its economic reforms affecting its trade regime, its financial sector, and the conduct of its fiscal and monetary policy (Kapur et al., 1991). This reputation was earned in the latter half of the 1980s when Ghana’s government instituted a series of policy measures to rescue its economy from the depths of its most severe crisis in the post-colonial period. This program, the Economic Recovery Program (ERP), placed Ghana on a path of modest economic growth: from a per capita GDP of $309 in 1983, per capita income grew at an average rate of 1.8% per year to $371 in 1993. In spite of this early promise and the good reputation it achieved with the international financial institutions, international donors and its own private enterprise sector, Ghana’s economic growth has continued to be moderate. Per capita GDP in 2000 was $411, so that per capita incomes grew at only 1.5% per year from 1993 through 2000. At this rate, incomes will double in 50 years. This is a far cry from the ambitious growth rates envisioned in official growth plans such as Vision 2020, which was predicated on per capita growth rates of 5%-7% per annum. Yet, it is perplexing to most observers that in March 2001 the recently elected government of the New Patriotic Party (NPP) sought relief under the Highly Indebted Poor Countries (HIPC) initiative, as it dealt with the aftermath of a massive currency crisis.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Economic Growth in Ghana: 1960-2000
    July 2004
    Ernest Aryeetey and Augustin K. Fosu

    It was fairly common in the 1980s and early 90s to read commendations of Ghana’s economic growth achievements. Leechor (1994) described Ghana as a frontrunner in the economic reform process, and the Bretton Woods institutions regularly put Ghana forward as a showcase of economic success in Africa. But this occurred at a time when many Ghanaians showed little appreciation of that growth achievement (Aryeetey and Tarp 2000). The continuing fragility of the economy and the significant social costs of adjustment made it difficult to appreciate economic growth in a period of reforms. While there is no doubt about the fact that the economic growth record of the last two decades, following reforms, differed from that of the first two decades in terms of consistency, it is also clear that the factors behind the growth experiences of shorter periods in-between show remarkable similarity. Whenever there has been considerable capital injection into the economy, this has been followed by significant growth. It is the difficulty in making those injections consistently in the absence of structural change that has left the economy still fragile after four decades of independence.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Selective Poverty Reduction in a Slow Growth Environment: Ghana in the 1990s
    September 2003
    Harold Coulombe and Andy McKay

    Ghana is regarded as having achieved a relatively good record of poverty reduction in the first years of its Economic Recovery Programme initiated in 1983. This paper addresses the record of poverty reduction over the 1990s, when Ghana’s macroeconomic performance was somewhat weaker. The analysis is based on comparable household surveys conducted at the beginning and end of the decade. At the national level the incidence of monetary poverty fell overall, and the evidence for this seems to be quite robust, consistent with other survey based evidence and with macroeconomic trends over the period. Most non-monetary indicators of poverty that are available from the survey also show improvements over the period, except for use of health care facilities which has deteriorated substantially over this period. However, a more detailed analysis presented in this paper, shows that there are strong patterns to this reduction in monetary poverty. Poverty reduction has been concentrated in specific localities (Accra and the rural forest region) and within particular activities (notably export oriented sectors and commerce). Households in other localities and working in other activities have experienced little poverty reduction, with some evidence of increasing depth or severity of poverty in some locations (especially in the northern savannah). Again these patterns of change are consistent with the sectoral pattern of growth over this period. The reduced use of health care facilities is consistent with reduced government spending in this area combined with the introduction of user charges. The survey data used in this paper also help provide a clear explanation for these observed trends, which typically differs from one region to another. Poverty reduction in Accra is strongly associated with a large increase in the numbers engaged in self-employment, primarily trading activities, combined with increased incomes from these activities. In the rural forest increased prices and production of cocoa play an important point in driving poverty reduction there, but food farmers also experience quite large poverty reductions (in contrast to other regions of Ghana). Poverty reduction among the food farmers there is primarily due to a substantially increased inflow of remittances much from outside the region (raising questions about its sustainability). This experience of remittances leading to poverty reduction among food farmers, the poorest group, is much less evident elsewhere in Ghana. Despite the reduction in the overall poverty figures, this paper highlights the limited benefits accruing to many of the poorest groups in Ghana over the 1990s and the increased differential between localities that emerged over this period. This is clearly not only a consequence of poor macroeconomic performance over the period, but also raises questions about the overall policy stance over this period and the extent to which it focused on poor, more remote regions and on non-export agriculture.

  • Poverty Reduction Efforts in Ghana: The Skill Development Option
    July 2004
    George Botchie and William Ahadzie

    Ghana, like many developing countries needs to improve economy-wide labour productivity in order to achieve a competitive edge in the rapidly changing economic and technology-driven world. But an equally significant driver of improved labour productivity is the effort to reduce endemic poverty in a country that has a low technological base. Flexibility and productivity of the labour force are dependent on the competent skilled workers. Generally, skilled workers and technicians enhance the quality and efficiency of product development, production, and maintenance, and they supervise and train workers with lesser skills (World Bank 1998 13). For the poor, labour in its crudest form, is a key asset and adding value to that asset could offer a route out of poverty. But the stock of skills required by the poor goes beyond technical and entrepreneurial abilities (ILO InFocus Programme 2004). They need skills that make them confident and capable of exploring and trying new income-earning opportunities within the labour market. Among the critical competencies are skills such as numeracy and literacy, social and communication skills, problem-solving and decision-making, negotiation skills, learning and training to promote social inclusion including understanding of social rights, “citizenship skills”, self organisation.

  • Ghana’s Exchange Rate Reform and its impact on Balance of Trade
    July 2004
    Frank W. Agbola

    Since the breakdown of Bretton Wood Accord in 1973, and the advent of floating exchange rates, there has been renewed interest about the effect of devaluation on the trade balance of both developed and developing countries. This paper examines the impact of devaluation on trade balance of Ghana. Annual data spanning the period 1970 and 2002 were employed in the analyses. The Johansen MLE multivariate co-integration procedure reveals that Ghana’s trade balance and key determinants are co-integrated, and thus share a long-run equilibrium relationship. The Stock-Watson dynamic OLS model (DOLS), which is superior to a number of alternative estimators, finds empirical evidence of significant long run relationship between Ghana’s trade balance and real domestic and foreign income, domestic and foreign interest rates and exchange rates. The empirical result suggests that devaluation does not improve the trade balance of Ghana in the long run. The response in trade balance to movements in the exchange rate appears to be characterised by an M-curve phenomenon. The policy implications of the results are discussed.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Decentralization and Poverty Reduction
    July 2004
    Felix A. Asante and Joseph R. A. Ayee

    This paper concentrates on one of the most important reasons behind the implementation of decentralization programmes in sub-Saharan Africa, that is, the capacity of decentralized governments because of their closeness both institutionally and spatially to citizens in the rural areas who are more responsive to the needs of the poor than the central government and thus are more likely to formulate and implement pro-poor policies and programmes. Using the Ghanaian experience of decentralization, which started with the creation of 110 decentralized governments called District Assemblies in 1988/89, the paper examines the impact of decentralization on poverty reduction.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Rural and Micro Finance Regulation in Ghana: Implications for Development of the Industry
    September 2004
    William F. Steel and David O. Andah

    This paper assesses how the policy, legal and regulatory framework has affected — and been influenced by — the development of rural and micro finance institutions (RMFIs) in Ghana, especially in terms of the range of institutions and products available, their financial performance and outreach. The potential of microfinance to reach large numbers of the poor is well understood (Robinson 2001). Questions for regulation are the extent to which a flexible regulatory environment can encourage innovation and a diversity of RMFIs and products serving different market niches not reached by commercial banks, and at what point special legislation may be needed, whether to facilitate commercialization and sustainability of the rural and micro finance (RMF) industry or to protect deposits and ensure the stability of the financial system. Ghana is particularly interesting because its tiered system of different laws and regulations for different types of institutions has evolved largely in response to local conditions and because so many of its institutions are savings-based. The resulting system resembles the tiered approach recommended by the World Bank’s 1999 study of microfinance regulation (Van Greuning et al.) and more recently adopted by Uganda.2 While Ghana’s approach has fostered a wide range of both formal and informal RMFIs, it has not as yet been so successful in achieving strong financial performance, significant scale, and true commercialization of microfinance.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Understanding Poverty in Ghana: Risk and Vulnerability
    July 2004
    Appiah-Kubi, Kojo, Abena D. Oduro, and Bernardin Senadza

    Poverty, as a reflection of material, social or rights deprivation, is of concern in its own right, hence its reduction has been the focus of economic policy in both developed and developing countries. However, as pointed out by Gibson (2001), people may, in a given time period, be poor either because their mean quantitative proxy indicator for poverty such as income, consumption expenditure or calories falls below the national average (or poverty line) or because they have suffered a temporary shortfall in consumption or income. In other words households or persons may be poor at a point in time either due to intertemporal variability in consumption or income, which is considered as “transient”, or because of the persistence of income or consumption expenditure below the poverty line, i.e. “chronic poverty” (Jalan and Ravallion, 1998). Therefore, for effective poverty reduction programmes, it is important to know not only those who are currently poor but also those who are vulnerable to poverty.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • A Small Macroeconometric Model of Trade and Inflation in Ghana
    July 2004
    Samuel Donyina Ameyaw and Philip Abradu-Otoo

    This paper uses a conventional macroeconometric model to empirically investigate the effects of credit tightening and currency depreciation on trade and inflation in Ghana. Our main findings are as follows. First, the results corroborate the view of the International Monetary Fund that both depreciation and credit restraint are effective in addressing the balance of payments issues facing developing economies, such as Ghana. Second, depreciation of the domestic currency is unfavourable to the cause of curbing inflation in Ghana. It rather leads to price increases and could lead to spiraling inflation through the agitation of higher wages by employees. Third, depreciation of the domestic official exchange rate leads to a decline in the parallel market exchange rate premium, while increases in money supply causes the parallel market exchange rate premium to increase.

  • Technical Efficiency in Ghanaian Secondary Education
    April 2005
    Kwabena Gyimah-Brempong and Elizabeth N. Appiah

    This paper uses district-level panel data and a stochastic frontier production function to investigate the existence of, and the correlates of inefficiency in the production of secondary education in Ghana. Using the proportion of students passing the West African Examination Council’s Certificate examination, we find relatively large indices of technical inefficiency in the production of education in Ghana. These technical inefficiencies vary by subject matter and are higher at the Junior Secondary School level than at the Secondary School level. Furthermore, we find large regional differences in technical inefficiencies we estimate in this paper. Technical inefficiency, we find, also varies by subject; there tends to be large inefficiencies in the sciences and mathematics than in English. We find that average per student household expenditure on education, parent’s education, and the number of siblings are highly correlated with technical inefficiencies in the production of secondary education in Ghana. The correlation between these family inputs and technical ineffi- ciency is much stronger at the Senior Secondary School level than at the Junior Secondary School level. We also find that the education production function is neither of the Cobb-Douglas functional form nor constant returns to scale technology. Our results point to the importance of both school and family inputs in the production of cognitive abilities in Ghanaian secondary schools.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • From Independence to Economic Reform: Rural Poverty in Ghana from 1967-1997
    July 2004
    Markus Goldstein and Rikhil Bhavnani

    Estimates of poverty and inequality are constructed more accurately from household survey rather than national accounts data, since growth in the latter per force demonstrates that any growth leads to poverty reduction. Household surveys, however, were only systematically conducted from the 1980s onwards, at the prompting of the academic community and the World Bank. Most examinations of poverty reduction and inequality therefore limit themselves to trends since the 1980s, failing to take a sufficiently long duree of their evolution. Similarly, assessments of structural adjustment programs are usually conducted at the macro-level, with before-after or plan-outcome analysis, leaving aside examinations of microeconomic changes, partly due to the absence of such data. The ensuing discussions on poverty, inequality and the efficacy of structural adjustment programs (and macroeconomic policy more generally) thus often form a flimsy basis for national and international policy making, leading many to call for radical changes in data gathering and dissemination practices.

  • Healthcare Provision and Self Medication in Ghana
    October 2004
    G. J. M. van den Boom, N. N. N. Nsowah-Nuamah and G. B. Overbosch

    Self-medication is predominant in Ghana, where one out of four lives outside a 15 km radius of a doctor. The cost of visiting a doctor is almost $10, one third of monthly per capita expense, as compared to $1.5 for self-medication. Simulated utilization patterns indicate that higher densities (doctors within 15 km) and more insurance (flat rate tax covering half of the health expense) could raise demand for doctors by 15-20%. The poor though continue to rely on self-medication. Medicines that are affordable and of certified quality could thus play a key supplementary role in health sector development.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Does Inflation in Ghana Hit the Poor Harder?
    April 2005
    Andy McKay and Nii K. Sowa

    One of the defining characteristics of the Ghanaian macroeconomy over the past 40 years has been its high, and often variable, rates of inflation. Inflation was particularly high and variable in the politically turbulent 1970s and early 1980s, but has persisted throughout the gradual economic recovery since 1983. Though inflation has been lower and less variable in the latter period, it still remains high in absolute terms and by comparison with many other countries...This paper focuses on the question of whether the inflation rate for the basket of purchases of the poor is higher than for the population as a whole.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Household Savings in Ghana: Does Policy Matter?
    July 2004
    Peter Quartey and Theresa Blankson

    The level of financial savings in recent years has been low by African standard and although various monetary policies have been pursued in Ghana to liberalize the financial sector, the level of savings has not increased substantially to accelerate the economy towards the growth path. Ironically, the few studies that have examined savings behaviour in Ghana have focused on aggregate savings (national or private savings) which does not sometimes reveal enough on household savings. Secondly, these studies have not examined the macro-micro inter-relationship between household savings and macro-financial policy. This study mainly aims to examine this relationship using the Ghana Living Standards Survey (GLSS) Waves III and IV. The paper found that macrofinancial sector policies pursued between 1991/92 and 1998/99 did not have appreciable effect on household savings. Secondly, children and the aged on average had higher savings balances than the working population, contrary to the life cycle hypothesis.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Policy Dynamics, Trends in Domestic Fish Production & Implications for Food Security in Ghana
    July 2004
    A. Wayo Seini, V. K. Nyanteng and A. Asantewah Ahene

    The fishing industry in Ghana started as an artisanal fishery with very simple and low efficient gears and methods operating in very near coastal waters, lagoons, estuaries and rivers. Through government and private efforts to promote production, the fishing industry continued to improve over the years with the development of new gears and methods that had been more efficient than the previous ones. Through government schemes, the use of outboard motors on canoes, introduced in 1959, was very successful and went a long way to create a modern sub-sector of the canoe fisheries. These schemes, particularly the charter party scheme (a hire purchase scheme), also encouraged fishermen to purchase larger fishing boats and gear which they paid for over a period of four years at very low interest rates (Lawson and Kwei, 1974). This paper examines major policy regimes since Ghana’s independence and relates them to trends in domestic fish production. Domestic production is then linked to the implications for food security. There is no doubt that fish is an important commodity in the country’s food security, particularly when the latter is defined beyond availability and accessibility to encompass the nutritional content of a meal that is required to provide a balanced diet and to ensure a minimum daily intake of 2,300 calories. Where food consumption is not balanced from the standpoint of nutrition, some diseases and improper physical developments emerge, such as stunting, underweight and wasting in children, particularly, under-5 years of age. Fish is consumed by many households and among all income groups everywhere in Ghana, largely to supply protein requirements in the diet.

  • Budget Implementation and Poverty Reduction in Ghana
    July 2004
    Anthony Tsekpo and Charles D. Jebuni

    In a poor country, the government plays a key role in poverty reduction. A critical instrument available to government in the pursuit of the poverty reduction objective is fiscal policy – budgetary allocation and disbursement of budgetary resources. In recent times, the Government of Ghana adopted the Ghana Poverty Reduction Strategy (GPRS), which serves as the overall framework document for medium to long-term development policy in Ghana. Budget and macroeconomic policies are therefore, to be derived from the GPRS. The fact that the GPRS has poverty reduction as its focus suggests that resource allocation within the context of the budget will recognise expenditures that are more likely to have significant impact on the poor or sectors and activities where the poor are expected to benefit most.
    In Ernest Aryeetey and Ravi Kanbur (editors), The Economy of Ghana: Analytical Perspectives on Stability, Growth and Poverty, James Currey, 2008.

  • Mitigating the Impact of HIV II
    July 2004
    John K. Anarfi and Ernest N. Appiah

    Since the first clinical evidence of HIV/AIDS was reported in 1981, the epidemic continues to escalate at an alarming rate and has now become a full-blown developmental crisis in the world. Africa is the most affected continent and at the end of the year 2002 she had 28.1 million of the world’s estimated 42 million people living with HIV. Since the beginning of the epidemic and by the end of 2001 a cumulative 19 million Africans had already died of AIDS. Although just 10% of the world’s youth live in Sub-Saharan Africa, the region contained almost three-quarters of all youth living with HIV/AIDS in 2001 – a total of 8.6 million. That is certainly a threat to the future generation of Africa and calls for refocusing of efforts on strategies that have the potential of registering a strong impact in efforts at reducing further spread of the disease. This paper identifies education as a strategy that can be used to mitigate the impact of HIV/AIDS in Ghana. It focuses on both formal school education and general education on HIV/AIDS.

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From the KIPPRA-CORNELL SAGA Workshop on
March 11, 2004, Nairobi, Kenya

Edited by Walter Odhiambo, John M. Omiti, and David I. Muthaka
©KIPPRA 2005
  • Quantitative Poverty Analysis
    March 2004
    Germano Mwabu

    Poverty is a complex human phenomenon associated with unacceptably low standard of living. It has multiple dimensions, manifestations and causes (World Bank, 2000). Poverty analysts from a variety of disciplines have been constantly asking questions about this phenomenon, sometimes out of curiosity, but often with the aim of providing information that can be used to overcome it. Quantitative methods help provide answers to particular questions about poverty and, can only provide partial information about it. Needless to say, no single approach to poverty appraisal can capture all the essential aspects of poverty. Choice of methods of poverty analysis is dictated by issues of interest to a researcher and his research skills. Because of the complexity of the poverty phenomenon, researchers have come to appreciate the need to specialize in acquiring skills that are necessary for understanding only certain aspects of poverty, and consequently the need to concentrate their work on areas of poverty appraisal in which they have comparative advantage in skill endowments. As Barrett (2001) has correctly observed, the type of poverty appraisal that has been undertaken over the past decades has been subject-driven, and researcher-directed. This is of course no accident. The economic concept of comparative advantage suggests that there is much efficiency (in advancing knowledge about poverty) to be gained from specializing in certain approaches to poverty appraisal. Quantitative poverty analysis is a particular area of poverty research in which investigators with quantitative skills specialize.

  • Bridging the Qualitative-Quantitative Methods of Poverty Analysis
    March 2004
    Enos H.N. Njeru

    Poverty is primarily a social problem. As such it requires meticulous definition, identification of constituent parameters and verifiable and measurable indicators. The constituent parameters should essentially single out the major causal factors. Knowledge of the latter, in effect, serves as good basis for identification of perceived solutions and methodologies to guide implementation of the proposed remedial strategies.

  • Mixing Qualitative and Quantitative Methods of Analyzing Poverty Dynamics
    March 2004
    Christopher B. Barrett

    Persistent poverty has plagued rural Africa for generations and, by some accounts, is becoming more widespread and entrenched. As a consequence, governments and donors have renewed and intensified their commitment to poverty reduction. This is reflected around the continent in poverty reduction strategy papers (PRSPs), efforts at decentralizing public goods and services delivery and the rise of participatory poverty appraisals intended to empower the poor, and a range of other policy changes. In some cases, one can legitimately wonder about the extent to which these reforms are heartfelt, rather than merely rhetorical and political, and the extent to which national and international elites are prepared to make sacrifices so as to advance an authentic poverty reduction agenda. But as one who has worked on problems of African poverty for two decades now, I feel quite comfortable asserting that there has been a palpable increase in recent years in the attention paid and sincerity surrounding questions of poverty reduction on the part of policymakers and donors.

  • Poverty Mapping: The Case of Kenya
    March 2004
    Anthony K.M. Kilele and Godfrey K. Ndeng’e

    Kenya like many other developing countries is currently refocusing its development policies towards poverty reduction. The emphasis on poverty reduction is primarily a response to the fact that, despite many efforts to improve the well being of the poor in the past, the majority of the people still live in poverty. Hence, finding ways to reduce poverty and inequality in Kenya is a huge challenge facing both local and national policy decision makers. Poverty is a multi-faceted problem and its levels tend to vary considerably over space. Thus, providing information on the spatial heterogeneity of poverty can greatly assist anyone trying to tackle the challenge of identifying who the poor are? Where they live? And what causes their poverty?

  • Social Aspects of Dynamic Poverty Traps: Cases from, Vihiga, Baringo and Marsabit Districts, Kenya
    March 2004
    Nelson Mango, Josephat Cheng’ole, Gatarwa Kariuki and Wesley Ongadi

    This paper draws on qualitative research on Social Aspects of Dynamic Poverty Traps conducted in Vihiga, Baringo and Marsabit districts, Kenya. Using qualitative research techniques such as case study approach and community workshops, the paper explores the strategies that have been used by certain households to move out of poverty in the past ten to twenty years and reasons for descent into poverty by some households in the same period. Findings from this study indicate that poverty is not only an outcome of economic processes, but also an outcome of political, environmental and social processes that interact with each other and frequently reinforce each other in ways that exacerbates the deprivation of the environmental situation in which people live. The case studies presented in this report give people’s description of what living in poverty means and bears eloquent testimony to their pain. While it is tempting to think that for those who live in poverty escaping from it may seem impossible, findings from this study show that it is not. The case study materials presented in this paper indicate that poor people are not passive to their predicament but have time testesd coping and survival strategies and institutions that can even enable some of them to escape from poverty. Such strategies and institutions can be integrated into innovative poverty reduction programs because they present enormous potential for bottom-up approaches to poverty alleviation.

  • Indices and Manifestations of Poverty: Informing Anti-Poverty Policy Choices
    March 2004
    Willis Oluoch-Kosura, Paswel P. Marenya, Frank Place and Christopher B. Barrett

    Kenya has entered the 21st century with over 50% of its population classified as absolutely poor in that they live on less than a dollar a day. Per capita income is lower than at the end of the 1960’s. Income, assets, and access to essential services are unequally distributed. The country has made important economic reforms, improving macroeconomic management, liberalizing markets and trade, and widening the scope for private sector activity in the hope of improving economic growth and welfare for Kenyans. Yet, despite these reforms the country has experienced little growth and poverty continues to afflict an ever-larger segment of its citizenry, especially in rural areas.
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