Five Big Mistakes in the Fight Against Energy Poverty in Africa
September 26 2019
Presented by: Todd Moss, Founder and Executive Director of the Energy for Growth Hub; Visiting fellow at the Center for Global Development
Energy poverty is finally high on the global development agenda. Sustainable Development Goal 7 provides an ambitious and laudable vision for “access to affordable, reliable, sustainable, and modern energy for all.” Yet, as we pursue this goal, there is a lot of confusion, even by policymakers who are making critical decisions, over what is meant by access, affordable & reliable, modern, and (especially) sustainable. These big mistakes are muddying progress in the fight against energy poverty and risk selling Africa short.
Financial Sector Development, Innovation and Financial Inclusion: How far has Africa come?
March 14, 2019
Presented by: Prof. Njuguna Ndung’u, Executive Director of the African Economic Research Consortium
Africa’s banking systems have realized substantial progress over the past two decades in terms of innovation, inclusion, and regulation. Understanding the regulatory challenges that come with financial innovations is critical, especially in the era of fintech. There is a danger that, in the face of weak state capacity and regulatory capacity, innovations can negatively disrupt economies. On the other hand, excessive regulation can stifle innovation. As Africa ventures into the digital economy, particularly in the financial sphere characterized by high dynamism, what are the appropriate regulatory standards to adopt, including consumer protection? How should regulators regulate fintech and other innovations in the financial sector without unnecessarily stifling innovation? This discussion covers the evolution of Africa’s financial sector over the last 10 years or so; the extent of, and the factors affecting financial inclusion in Africa; and the impacts of financial innovation on access as well as monetary policy.
Growth, Debt, and Money from Asia: Findings of a Policy Research Program on Middle-Income Africa
January 24, 2019
Presented by: Dr. Indermit Gill, Professor Of Practice of Public Policy in the Sanford School of Public Policy, Duke University
Last year, per capita incomes in Sub Saharan Africa grew half as fast as in the rest of the developing world. Public debt in the subcontinent has been growing. Africa’s economies have been looking more and more towards Asia for markets and money. These developments are raising questions. Is the decline in Africa’s growth cyclical or secular? Is Africa headed for another debt crisis? Is Africa’s growing economic relationship with Asia increasing debt faster than economic output? Four recent working papers by researchers at Duke University try to answer these questions. Taken together, the papers paint a picture of a region that has been quietly transformed from a low-income region dependent on advanced economies into a group of mainly middle-income economies increasingly interdependent with other middle-income economies. The developed world has not updated how it sees the subcontinent. Until it does so, it will underestimate the ability of Africans to take care of their own interests and overestimate the influence of Asia in the region.
Fertility, Political Institutions, and Economic Development
December 6, 2018
Presented by: Dr. Roland Pongou, Associate Professor of Economics, University of Ottawa.
This presentation draws on two papers to illuminate the topic. The first paper uses individual-level data from over 30 sub-Saharan African countries to examine the long-term effect of British (vs. French) colonization on reproductive outcomes. Exploiting the arbitrary division of ethnic homelands across colonial borders for identification purposes, we establish that colonial origins have a causal effect on marriage timing and fertility. These effects operate primarily through female education and economic empowerment. Moreover, these effects disappear in areas closer to the sea coast, which suggests that economic opportunities exogenously induced by proximity to industrialized centers mitigate the long-term effects of differential colonial legacies.
The second paper uses longitudinal data from Madagascar to study the effect of drought-induced income shocks on the timing and level of fertility. We find that drought exposure significantly affects the number of new births for women residing in rural areas, but it has no effect in urban areas. Our results support the view that in contexts where rainfed agriculture is the primary source of income, droughts lower the opportunity cost of having children by reducing the returns to participation in agricultural work, which raises fertility. Together, the two papers imply that one way to reduce fertility in Africa is by creating viable economic opportunities for women.
Improving the Productivity of Subsistence Farmers: Lessons from Cash Transfers and Credit in Mali
October 25, 2018
Presented by: Lori Beaman, Associate Professor, Department of Economics, Northwestern University
We seek to understand whether lack of access to capital and funds is one of the explanations for low agricultural productivity in Africa. In a series of experiments, we provide fertilizer, cash loans or the opportunity to take out an agricultural loan by partnering with a local microfinance organization that provides agricultural loans to women farmers in southern Mali. Farmers who receive cash grants on average convert the grants into larger agricultural output and revenues. In-kind grants of fertilizer are less effective at raising agricultural revenues. The loans and grants are integrated into the research design, allowing us to examine whether returns to capital are higher for farmers who borrow than for those who do not. We find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs. The project is joint work with Dean Karlan, Bram Thuysbaert and Chris Udry.
Cultural differences in social and emotional competencies matter: Implications for effective pedagogy in Tanzania
October 11, 2018
Presented by: Matthew Jukes, Fellow - Education and Evaluation, RTI International
Social and emotional competencies are increasingly seen as important for children’s academic success and social adjustment. However, social and emotional learning has not been studied extensively in Tanzania or the rest of Africa. This seminar will cover three studies on this topic. In qualitative interviews (Study 1), we find that social responsibility – e.g., respect and obedience – is valued highly in Tanzania but is underrepresented in current social and emotional learning frameworks. Parents believe that respect, obedience and discipline are most important for success in education, whereas teachers prioritize curiosity, being self-directed and having self-belief.
Application of an assessment scale based on these insights (Study 2) shows that curiosity is more common in urban schools and among children of educated parents. In Study 3 we assess the implications of these findings for effective pedagogy. The aim was to understand whether teaching in rural Africa is ineffective in part because it is designed with the children of educated urban parents in mind and how to improve effectiveness of pedagogy.
Getting it Right: A New Economy for South Africa
October 4, 2018
Presented by: Philippe Burger, Professor of Economics and Head of Department, University of the Free State
The seminar discusses key problems inhibiting economic growth, job creation and the reduction of inequality and poverty in South Africa. The government’s policy agenda to address these issues should include much higher levels of investment; reform of land tenure to secure better livelihoods for the 32 percent of South Africa’s population living on communal land; and much better education to increase the employability of its youth. The success of this agenda also requires rolling back corruption and patronage. Only with this agenda can South Africa create a new inclusive high growth, high-employment economy.
No Good Deed Goes Unpunished: Political Incentives for Reform in Tanzania
September 13, 2018
Presented by: Ken Opalo, Assistant Professor, School of Foreign Service, Georgetown University
Do programmatic policies yield electoral rewards for politicians? A growing body of research attributes political motives for the provision of public goods and services in Africa. Yet these works seldom examine the specifics of policy implementation, including how programmatic policies are financed. In this paper, we analyze the electoral effects of a programmatic policy in Tanzania designed to increase access and improve learning outcomes in secondary schools over a 15-year period. Contrary to standard political economy models, we find a significant electoral penalty of between 1.5-4 percentage points associated with the expansion of access to secondary schools. Further analysis suggests that this is due to the fact that increased access came with an effective tax increase on Tanzanian communities and a precipitous decline in the quality of secondary education. Our findings suggest that the specifics of implementation condition the realized electoral effects of programmatic policies. This work is co-authored with James Habyarimana and Youdi Schipper.
Addressing Constraints to Agricultural Transformation in Northern Ghana
May 17, 2018
Presented by: Christopher Udry, Professor of Economics, Northwestern University
We report preliminary results from a four-year project examining three major agricultural barriers inhibiting increased farm profitability amongst smallholder farmers: (1) excessive risk deriving from weather uncertainty, (2) unavailability and unaffordability of high yielding inputs, and (3) lack of improved agricultural knowledge. Using a cross-cutting randomized design, we test all three. To test the role of risk, farmers were able to purchase a commercial rainfall index insurance project. To test the role of unsure, untimely, and costly access to appropriate inputs, the program made fertilizer and improved seeds available just prior to land preparation. To test the role of imperfect farmer knowledge, certain communities were provided with more intensive extension. In addition, two text messaging interventions provided farmers with information about either weather forecasts or market prices. Preliminary results suggest that large insurance grants – but not small grants – induce sizeable investments. Extension agents induce significant but small impacts on farmer knowledge and practice. Input provision had little impact. Text messages with weather forecasts changed the timing of farmer activities and increased profits.
Can Digital Loans Deliver? Take Up and Impacts of Digital Loans in Kenya
May 10, 2018
Presented by: Tavneet Suri, MIT, Sloan School of Management
Developing world lenders are taking advantage of fintech tools to create fully digital loans on mobile phones. We investigate the take up and impacts of one of the most popular digital loan products, M-Shwari in Kenya, using a regression discontinuity design. While 34% of those eligible for the loan take it, this does not substitute for other formal or informal credit. The loans improve household resilience against shocks and increase their propensity to spend on education. These digital loans could therefore be an important way to improve financial access, but they are not a panacea for greater credit market failures. This work is co-authored with Prashant Bharadwaj and William Jack.
Consumer Perceptions and Saving Behavior: Evidence from Nigeria
April 12, 2018
Presented by: Kehinde Ajayi, Assistant Professor of Economics, Boston University
A government audit in 2009 revealed a third of commercial banks in Nigeria were critically insolvent. The Central Bank bailed them out and sanctioned their CEOs. Using survey data on individual perceptions and financial behavior, I exploit variation in baseline market shares and consumer attitudes to estimate the effects of this regulatory shock on saving behavior. Exposure to insolvent banks increased bank use for people reportedly interested in financial matters. Bank use declined in places with high initial concern about bank stability, particularly among people uninterested in financial matters. These results suggest financial regulation crucially affects consumer perceptions and saving behavior following a banking crisis.
Self-employment, Capital and Job Search: Evidence from Ghana
February 28, 2018
Presented by: Simon Quinn, Associate Professor, Department of Economics, University of Oxford
We build a structural life-cycle model of sectoral choice and entrepreneurship. Our model allows endogenous career choices, capital accumulation and permanent heterogeneity (in both wage productivity and self-employment productivity). We estimate our model using a long panel from urban Ghana and show that our model fits the data well. Our model serves three related purposes. First, we provide a unified and formal framework to rationalize a number of disparate stylized facts from recent empirical work. Second, in doing so, we are able to quantify the relative importance of key barriers to opportunity: search frictions, capital constraints, and heterogeneous ability. Third, we combine our model with methods from information theory, to provide a novel comparison of the informativeness of several potential field experiments. Our results imply important roles for sectoral frictions and capital constraints in limiting career opportunities.
Mobile-Phone Based Agricultural Advice for Smallholder Farmers
January 25, 2018
Presented by: Michael Kremer, Department of Economics, Harvard University and
Shawn Cole, Professor in the Finance Unit, Harvard Business School
Sending SMS messages with agricultural advice to smallholder farmers increased yields by 11.5% relative to a control group with no messages. These effects are concentrated among farmers who had no agronomy training and had little interaction with sugar cane company staff at baseline. A follow-up trial of the same intervention has, however, no significant impact on yields. Enabling farmers to report input provision delays to the company reduces the proportion of delays in fertilizer delivery by 22%. There is evidence that reporting a complaint has positive geographic spillovers, since it induces the company to deliver inputs to several neighboring plots.
Prices, Productivity and Enterprise Clustering: Firm-level Evidence from Ethiopia
December 14, 2017
Presented by: Måns Söderbom, Professor of Economics, Department of Economics, School of Business, Economics and Law, University of Gothenburg
We investigate how enterprise clustering in local markets affects firm-level output prices and physical productivity. Using census panel data on Ethiopian manufacturing firms, we find a negative and statistically significant relationship between the density of firms that produce a given product in a given location and the local price of that product. We further find a positive and statistically significant relationship between the density of firms that produce a given product in a location and the physical productivity of same-product firms in the location. These results are consistent with the notion that increased clustering of firms generates higher competitive pressure and positive externalities. The net effect on firm-level revenues is close to zero, suggesting that firms have weak incentives to agglomerate endogenously. Across firms that produce different products, we find no statistically significant relationship between enterprise clustering and firm-level output prices and productivity. We also find no clustering effects across towns. Our results thus suggest that while clustering can impact firm performance, the advantages are narrow in scope.
Does Social Pressure Hinder Entrepreneurship in Africa? The Force Mutual Help Hypothesis
November 30, 2017
Presented by: Dr. Pierre Nguimkeu, Associate Professor, Department of Economics, Georgia State University
In Africa, obstacles hindering entrepreneurship are not limited to availability of credit. Additional barriers to entrepreneurship may exist for local people. In the absence of a public safety net, a culture of mutual help has developed within kinship networks where the wealthy has the social obligation to share their resources with their needy relatives and extended family. Since becoming an entrepreneur marks economic success, it inevitably involves substantial family taxation in the form of cash transfers and/or inefficient family hiring. Consequently, local firms are less productive than firms owned by nonlocals, which discourages local entrepreneurship. Using data from African manufacturing firms, we develop and estimate a structural model of entrepreneurial choice that accounts for these social redistributive constraints. We derive and test predictions regarding employment choices and productivity of African versus non-African entrepreneurs. The proportion of missing African entrepreneurs is estimated to be between 6.5% and 13% of the formal sector workforce. Implications for the role of social protection are discussed.
Income Inequality Trends in sub-Saharan Africa: Divergence, Determinants, and Consequences
November 14, 2017
Presented by: Haroon Bhorat, Professor of Economics, School of Economics, University of Cape Town
This seminar will cover 4 topics in inequality within Sub-Saharan Africa: First, we present the stylized facts around the interaction between growth, poverty and inequality in Africa. In particular, we reveal the presence of seven ‘outlier’ economies that exhibit extremely high levels of inequality within the region. Second, the presentation investigates the constraints facing the manufacturing sector in Sub-Saharan Africa, within the context of the decline of the share of manufacturing in value added in the region. Third, we consider the notion that natural resource wealth is associated with high levels of in-country inequality. We explore the manner in which countries that depend heavily on natural resource extraction can face risks of rising inequality. The data suggest that on aggregate there is no clear link between resource dependence and inequality, using the standard, broad proxies. However, there are specific features of resource-dependent growth, which we argue, present obvious inequality risks. Finally, the presentation will empirically assess the nature and character of social protection programs in SSA and the extent to which this expenditure is inequality-reducing in the African context.
The Hopes and Impediments of Sustainable Improvements in School WASH: Evidence from A Field Experiment in Kenya
October 26, 2017
Presented by: James Habyarimana, McCourt School of Public Policy, Georgetown University
Investments in school water, sanitation, and hygiene (WASH) improve health and school attendance but are typically under provided. In a randomized field experiment in primary schools across 3 counties in Kenya, we test alternative strategies to sustainably provide WASH services. In practice this means ensuring that sanitation facilities are structurally sound, are cleaned on a regular basis, are supplied with bath tissue, clean water, and soap, and are used appropriately by students. Taking the current envelope of resources as fixed, we design a set of low cost interventions to address three broad explanations for the under provision of school WASH services — low prioritization by stakeholders, a lack of administrative capacity and weak incentives of school managers. Our results suggest that interventions to prioritize school WASH produce modest improvements. Explicit and implicit low-stakes incentives have no effect unless performance is locally generated through parents reports of school WASH quality. We also find considerable heterogeneity in treatment effects across counties. We do not find any impact on student attendance.
Improving Student Learning by Changing Teaching Practice: Evidence from South Africa
September 28, 2017
Presented by: Jacobus Cilliers, Georgetown University
We present results of a randomized evaluation of two teacher professional development programs aimed at strengthening the enactment of government curriculum in South African primary schools. In 50 schools (Training), teachers receive two two-day training sessions over the course of the year; in another 50 schools (Coaching), teachers receive monthly visits from specialized reading coaches who monitor teaching activity and provide feedback. In both programs teachers receive the same structured lesson plans and supporting reading materials. We track a cohort of pupils over two years and find that over this period Coaching improved learning proficiency by 0.24 standard deviations compared to the control. Training had a smaller and statistically insignificant impact of 0.12 standard deviations. Coaching is more cost-effective, under a variety of different assumptions. Moreover, data from detailed lesson observations reveal that program teachers are better able implement difficult classroom management practices required by the curriculum, and this improvement is significantly larger in the Coaching arm. As a result, pupils are more likely practice writing and reading out loud, and receive individual feedback from teachers. Results of this paper yield insights into the appropriate combination of support required to shift teaching practice, and which teaching practices plausibly have a greater impact on learning.
Land Markets, Resource Allocation, and Agricultural Productivity
September 14, 2017
Presented by: Diego Restuccia, University of Toronto
We study the role of land markets on factor misallocation in agriculture using detailed farm-level micro data from Ethiopia. Land is owned by the state and local authorities distribute land-use rights uniformly among rural residents. While a recent land certification reform is aimed at providing tenure security to farmers, land sales are prohibited and land rentals remain restricted, deriving in large variations in rental activity across individuals and space. We exploit the differences in operational scales generated by land rentals across households, locations, and time. Despite restrictions to land transactions, land rentals are associated with a significant reduction in misallocation and an increase in productivity. We also find that rentals increase the proportion of farms utilizing more capital intensive technologies, further contributing to increased productivity. Despite these positive effects of reallocation, aggregate rental activity remains tenuous and as a result, there is substantial misallocation in agriculture, an elimination of which can increase aggregate agricultural productivity by 136 percent.
Strategies for Raising Labor Productivity in Sub-Saharan Africa
May 18, 2017
Presented by: Margaret McMillan, Tufts University and IFPRI
Many countries in Africa have experienced rapid labor productivity growth over the past couple of decades. This productivity growth is largely a result of structural change; labor has moved out of agriculture and into other relatively more productive sectors. However, labor productivity growth within manufacturing and services has been stagnant and sometimes negative. If this trend continues, economy wide labor productivity growth will stall. This research examines two avenues for raising labor productivity in Africa’s non-agricultural private sector activities. Foreign direct investment in Ethiopia’s manufacturing sector has been a key pillar of the Ethiopian government’s industrial policy. Using a novel identification strategy based on winning and runner-up locations, this research assesses the extent to which knowledge spillovers have spurred the employment and productivity growth of domestic manufacturing firms. The second strand of research examines the productive heterogeneity of Tanzania’s relatively small and largely informal firms. Although the average productivity of these firms is quite low some are very productive. A strategy for raising labor productivity by targeting the most productive of these small firms is considered.
Resources, Conflict, and Economic Development in Africa
April 6, 2017
Presented by: James Fenske, University of Warwick
Natural resources have driven both growth and conflict in modern Africa. We model the interaction of parties engaged in potential conflict over such resources. The likelihood of conflict depends on both the absolute and relative resource endowments of the parties. Resources fuel conflict by raising the gains from appropriation and by increasing fighting strength. Economic prosperity, as a result, is a function of resources and equilibrium conflict prevalence. Using high-resolution spatial data on resources, conflicts, and nighttime lights in sub-Saharan Africa, we find evidence confirming each of the model's predictions. Model fit is substantially better where institutions are weak.
Why is the Adoption of Productivity Enhancing Agricultural Technologies Low in Africa? Evidence on the NERICA Variety in Nigeria and Conservation Agriculture in Zambia
March 16, 2017
Presented by: Awudu Abdulai, Professor and Chair, , Kiel University,
The significance of promoting new agricultural technologies to increase productivity and output as well as overall welfare in under-developed countries was documented in the 2008 World Development Report. In particular, productivity-enhancing agricultural technologies can help reduce food insecurity by reducing food prices and stimulating economic growth in the rural nonfarm sectors. Likewise, it facilitates the transition from low productivity subsistence agriculture to a more productive agro-industrial economy. Several policy interventions have therefore taken place to introduce new agricultural technologies in sub-Saharan Africa. However, the adoption and diffusion of these technologies in this region remains quite low. Recent examples include the New Rice for Africa (NERICA) technology, which was developed by the Africa Rice Center to help increase rice productivity in the region, as well as conservation agriculture. The question that arises is why farmers do not use these modern inputs and farm practices even though demonstration plots suggest that it should be a more profitable choice. The presentation will focus on the role of private and public learning on the diffusion of agricultural technologies, and presents empirical evidence to show the driving forces of diffusion of the NERICA variety in Nigeria and conservation agriculture in Zambia.
Share the Love: Parental Bias, Women Empowerment and Intergenerational Mobility
March 2, 2017
Presented by: Théophile T. Azomahou, Professor of Economics, University of Clermont Auvergne and CERDI Maastricht University
This paper introduces a collective household decision-making process into a gender-based overlapping generation model with heterogeneous agents. Gender bias is modeled as part of parents' psychic cost -- a reflection of their pessimism, which leads to different mobility thresholds for daughters and sons. In this setting, the degree of women's bargaining power is found to be crucial in defining the psychic cost and hence their children's mobility. The framework is applied to the Nigerian General Household Survey panel data. We estimate a multinomial logit model with unobserved heterogeneity, using simulated maximum likelihood, to determine intergenerational mobility across primary, secondary and tertiary sectors. We find that children whose parents work in the secondary and tertiary sectors are more likely to work in the same sector. Greater intra-household female bargaining power leads to greater upward mobility for boys more than girls. Parental gender bias could thus be a driving force behind gender-based intergenerational persistence.
Environmental externalities and intra-household inefficiencies: Evidence from water use in Zambia
February 9, 2017
Presented by: Seema Jayachandran, Associate Professor Northwestern University, Department of Economics
When consumption generates negative externalities, raising the price to reflect the social cost of consumption is the preferred policy solution. In some cases – for example, household water and electricity use – consumption is susceptible to a second externality problem: each individual enjoys the private benefits of consumption but shares the costs with other household members, leading to overconsumption even from the household's viewpoint. We test the prediction that intra-household inefficiency dampens price sensitivity in the context of water use in Zambia, combining billing records, randomized price variation, and lab-experimental measures of intra-household efficiency. We find that households with above-median efficiency have a short-run price elasticity of -0.49, while those with below-median efficiency have an elasticity of -0.17. These results suggest that the required Pigouvian price when own and others' consumption is difficult to observe, yet usage is billed at the household level, will need to be set to correct both the environmental and the intra-household externalities. Alternative policies such as price incentives targeted toward the primary water-using household members or access to real-time data on household water consumption (which would improve the enforceability of intra-household agreements) could also be useful.
There's No Place Like Home: Theory and Evidence on Decentralization and Politician Preferences
January 26, 2017
Presented by: Michael Kremer, Harvard University
We construct a simple model in which politicians can choose to spend resources on themselves, on their home area, or on other geographic areas. The model implies that if politicians are sufficiently home biased, centralization will reduce social welfare relative to decentralization. Moreover, other approaches to controlling the effects of home bias, such as constitutional equal treatment spending clauses that constrain politicians from focusing resources on their home areas, will increase corruption relative to decentralization. An incentive-compatible choice experiment in which 179 elected county councilors in rural Kenya chose among alternative water infrastructure projects reveals substantial home bias. We estimate that politicians value each person served in their home village more than twice as much as each person served outside their home village. Consistent with the model, politicians are more likely to value controlling the discretionary funding associated with the project when they do not control the location of the project.