Financing Sustainable Development in Africa (eBook)

Efobi Uchenna is Faculty at the College of Business and Social Sciences, Covenant University, Nigeria. He is also a Hewlett Scholar and an Alumnus of the Brown International Advanced Research Institutes. His research interests include household decision making dynamics and development outcomes; rural institution and agricultural productivity; and governance, with a special focus on the African region. Asongu Simplice is the Lead Economist and Director of the African Governance and Development Institute, and a Visiting Professor at the University of Cape Town, South Africa. He is also a Research Associate at Oxford Brookes University, UK; Covenant University, Nigeria; and the University of Buea, Cameroon. 

Acknowledgements 5
Contents 6
List of Figures 9
List of Tables 13
Introduction 17
1 Introduction 17
References 24
Part I Financing in Africa for Sustainable Development 26
Financing Mechanisms African Governments Should Pursue in Financing Sustainable Development in the Next 20 Years 27
1 Introduction 27
2 Traditional Sources of Financing Sustainable Development in Africa 29
3 A Changing Global Context and Challenges Faced by Traditional Sources of Financing Development 33
4 Solutions for Financing Sustainable Development in Africa 36
4.1 Sovereign Wealth Funds 37
4.2 Private Financing 39
4.3 Blended Finance 41
5 The Role of Local Government 43
5.1 The Relationship Between Business and Local Government 46
6 Conclusion 48
References 49
Financial Inclusion and Foreign Market Participation of Firms: A Quasi-experiment from Nigeria 52
1 Introduction 52
2 Theoretical Framework and Empirical Validations 56
3 Research Method 59
3.1 Data 59
3.2 Methods 62
4 Result and Discussions 64
5 Concluding Implications, Caveats and Future Research Directions 70
References 72
Business Regulations and Foreign Direct Investment in Sub-Saharan Africa: Implications for Regulatory Reform 75
1 Introduction 75
2 FDI and Doing Business in SSA 77
2.1 Recent Trends of FDI Inflows in SSA 77
2.2 World Bank’s Doing Business in SSA 80
3 Theoretical and Empirical Literature on the Determinants of FDI 82
3.1 FDI and Its Traditional Determinants 84
3.2 Recent Empirical Studies 85
4 Variables, Hypotheses, and Model Specification 88
4.1 Variables 88
4.2 Foreign Direct Investment 88
4.3 The World Bank’s Doing Business Indicators 88
4.4 Other Variables 89
4.5 Hypotheses 90
4.6 Model Specification 92
5 Estimation Results and Policy Implications 94
6 Conclusion 98
References 101
Broadening Financial Intermediation in Sub-Saharan Africa 104
1 Introduction 104
2 The Current Financial Configuration in Sub-Saharan Africa 106
3 The Need for an Improved Financial System for Sustainable Development in Africa 108
4 Instruments, Actors, Financial System Characteristics for Sustainable Development in Africa 116
4.1 Addressing Developmental Challenges Through a Broader Financial System 117
4.2 Key Pillars for Broadening the Financial Systems in Africa 119
5 Conclusions 126
References 127
Institutions, Fiscal Performance, and Development Trajectories in ECOWAS: Implications for Sustainability 131
1 Introduction 131
2 Some Insights from Extant Literature 134
3 Empirical Model and Data 137
4 Results and Discussions 140
4.1 Descriptive Analysis 140
4.2 Implications of Result for Sustainable Development 146
5 Conclusions and Recommendations 147
References 148
Part II Domestic or Foreign Investment for African Development 152
Capital Flows and Economic Growth: Does the Role of State Fragility Really Matter for Sustainability? 153
1 Introduction 153
2 Theoretical Framework 156
3 Empirical Models and Data Description 161
4 Data Analysis 163
4.1 Time-Series Properties of Data, Lag Selection and Co-integration Estimates 163
4.2 Long-Run Relationships 168
4.3 Short-Run Dynamics 169
4.4 Model Diagnostic Test 170
4.5 Further Discussions 170
5 Conclusion 173
Appendices 175
References 179
Changing Patterns of the Official Development Assistance to Sub-Saharan Africa 182
1 Introduction 182
2 Foreign Aid to SSA Compared to ODA to Other Developing Regions 185
3 Foreign Aid from Non-DAC Countries to SSA Region vs. Aid from DAC 188
4 Foreign Aid Flow from “Emerging” DAC Donors vs. The Largest DAC Donors 189
5 Declining Importance of Foreign Aid to the National Budgets of Recipient Countries 191
6 Growing Allocation of Foreign Aid Towards Economic and Production Sectors 194
7 Conclusion and Policy Recommendations 197
References 199
Financing Sustainable Energy Access with Oil Revenues in Sub-Saharan Africa: Trends and Strategies 203
1 Introduction 203
2 Energy Access—The African Situation 206
3 Energy Production and Consumption in Africa 209
4 Sustainable Development Goal 7 and Africa’s Energy Policy 213
5 Financing Electricity Access and Managing Petroleum Revenue for Renewable Energy in Africa 216
6 Managing Petroleum Revenues Sustainably to Finance Energy Access 219
6.1 Petroleum Revenue Management Experience in Africa 223
6.2 Strategies for Improved Revenue Management for Energy Access 226
7 Conclusions and Recommendations 228
References 230
Maximizing the Gains from Natural Resources 236
1 Introduction 236
2 Natural Resources and Sustainable Development: Theory and Evidence 238
2.1 Theory 238
2.2 Empirical Evidence 241
3 Natural Resources and Economic Development in Africa: Trends and Patterns 243
4 Challenges of Maximizing Gains from Natural Resources to Finance Sustainable Development 250
5 Strategies to Optimize the Benefits of Natural Resources 252
6 Country Case Studies and Imminent Lessons 257
6.1 Country Case Studies 257
6.2 Lessons from Success Stories for Africa’s Development 262
7 Conclusion 264
Appendix 1 266
References 268
Part III Human Development in Africa for Sustainability 272
Does the Implementation of Social Safety Net Intervention Affect Indigenous Social Capital Systems for Coping with Livelihood Shocks? Ethnographic Evidence of Agro-pastoral Communities in Eastern Ethiopia 273
1 Introduction 273
2 Overview of the Productive Safety Net Program (PSNP) in Ethiopia 276
3 Theoretical Framework 278
3.1 Formal and Informal Risk Coping Strategies 279
3.2 Social Capital and Social Safety Net Theory 280
3.2.1 Social Capital 280
3.2.2 Social Safety Nets 282
3.3 Actor-Oriented Theory 283
3.4 The Interlock Between Formal Safety Net and Social Capital 284
4 Research Methodology 288
4.1 Description of the Study Sites 288
4.2 Research Design 289
4.3 Sampling, Data, and Methods 289
4.4 Data Analysis 292
4.5 Analysis Variables 293
5 Result and Discussions 293
5.1 Prevalence of Shocks in the Case Study Community 293
5.2 Household Coping Mechanisms 296
5.3 Networks, Groups, and Collective Action in the Case Study Community 298
5.4 Indigenous Mutual Support Practices in the Case Study Community 299
6 Interactions of Safety Net with Indigenous Practices 302
6.1 Influence of Quantity Transfer on Household Social Networks 302
6.2 Influence of Payment Predictability on Household Social Networks 304
6.3 Influence of Targeting on Household Social Networks 307
6.4 Do Social Safety Net Transfers Crowd Out Informal Arrangements? 311
7 Conclusions 313
References 315
Issues in Sustainable Development: The Environment–Income Relationship 321
1 Introduction 321
2 Literature Review 323
3 Methodology 328
3.1 Model Specification 329
3.2 Estimation Technique 330
4 Empirical Results 331
4.1 Verification of the EKC Hypothesis in Nigeria 333
5 Conclusions 339
References 340
Microcredit, Child Education, and Health Outcomes: A Case Study from Ghana 343
1 Introduction 343
2 Previous Related Studies 346
3 Methodology 351
3.1 Study Areas and the Microcredit Institution 351
3.2 Data and Sampling Procedure 352
3.3 The Model 353
3.4 Description and Measurement of Variables 355
4 Results and Discussion 357
4.1 Participation in Microcredit Programme 357
4.2 Microcredit and Child School Attendance 358
4.3 Mean Differences in School Attendance 361
4.4 Microcredit and Child Health 361
4.5 Regression Results for Child Health Outcome 362
4.6 Differences in Mean Health Outcome 365
5 Conclusions and Limitations 365
References 366
Part IV Industrial Development in Africa for Sustainability 370
Financial Inclusion and Growth of Non-farm Enterprises in Ghana 371
1 Introduction 371
2 Measurements and Data 377
2.1 Measuring Firm Growth 377
2.2 Measuring Financial Inclusion 378
2.3 Data 380
3 Estimation Technique 380
4 Analysis and Discussion 382
4.1 Regression Analysis 383
5 Conclusion and Recommendation 391
Appendix 392
References 394
The Role of Cooperative Organizations in Tanzania’s Industrialization 399
1 Introduction 399
2 Industrialization and the Context of Cooperative Development in Tanzania 402
2.1 Saving Mobilization for Capital Accumulation 406
2.2 Providing Extension Services 408
2.3 Agro-processing Industries for Value Addition 408
3 Industrialization and the Future of Cooperatives in Tanzania 412
3.1 Invest in Science and Technology 412
3.2 Investment in R& D
3.3 Strengthening Institutions 414
3.4 Invest in Human Capital and Innovation 415
3.5 Learn from Past Mistakes Which Undermined the Cooperative Sector 416
4 Conclusion and Recommendations 419
References 420
Textile and Clothing Sector, and the Industrialization of Sub-Saharan Africa 423
1 Introduction 423
2 An Account of Industrialization in Sub-Saharan Africa 427
3 Industrialization, Economic Growth, and Development: A Brief Discussion 429
3.1 Stages of Industrialization 432
3.2 Why Did Industrialization Fail in Africa? 433
4 Textile and Clothing Sector as a Trigger of Industrialization 436
4.1 The Experience of the Textile and Clothing Industry in Selected Countries 439
5 Can Textile and Clothing Sector in SSA Become a Trigger of Industrialization? 441
5.1 Textile and Clothing Sector in Selected African Countries 443
5.1.1 Mauritius 443
5.1.2 South Africa 444
5.1.3 Nigeria 445
6 Conclusion 447
References 448
Index 453