AFRICAN JOURNAL OF ECONOMIC REVIEW

Is Value-added Tax a Moneymaking-Machine for Developing Economies? Evidence from Ghana

Francis Kwaw Andoh

Value-added tax (VAT) became a tax of choice recommended by the Breton Wood Institutions to boost tax revenue shares in developing countries. However, after several decades of VAT implementation globally, empirical evidence on its revenue effects is still inconclusive. The key question in this paper is: has the adoption of value-added tax (VAT) really made Ghanaâ€™s tax revenue mobilisation better off? This paper employs both the Fully Modified OLS and Autoregressive Distributed Lag (ARDL) approaches to test the moneymaking hypothesis for Ghanaâ€™s VAT.Â On the whole, the study fails to uphold the view that the VAT is a moneymachine for Ghana. This implies that its adoption has not really brought about any dramatic improvement in aggregate tax shares. The study therefore recommends a reduction in the over concentration on VAT.Â An appropriate balance of tax-mix is therefore recommended.

Is it Factor Accumulation or Total Factor Productivity Explaining the Economic Growth in ECOWAS? An Empirical Assessment

Yaya Sissoko

The purpose of this paper is to examine the sources of economic growth for the ECOWAS countries and to disentangle the relative contribution of each source. Malmquist Productivity Index decomposition is used to distinguish between technical efficiency versus technological change. In addition, an OLS and panel regression is used to estimate the contribution of various sources of growth to increases in GDP per capita. The paper concludes that 1) there was a modest increase in Productivity Index in ECOWAS countries (11.1% between 1981 and 2015) and 2) both factor accumulation and total factor productivity drive the economic growth with technological change and efficiency change being significantly greater contributors.Â

The Dynamic Synergies between Agricultural Financing and Economic Growth of Tanzania

Fintan Paul

We apply the recently developed asymmetric ARDL cointegration methodology of Shin et al. (2011) to analyse the relationship between agricultural financing and economic growth of Tanzania. In this approach, short run and long run asymmetries are introduced via positive and negative partial sum decompositions of exogenous variables, and the model is estimable by standard OLS. Our findings reveal supporting evidence of asymmetric interactions among the examined variables in the short run and long run. The findings further reveal that endogenous variables react differently to positive and negative shocks of exogenous variables. Positive shocks of agricultural financing have considerably larger positive impacts on economic growth compared to negative shocks, while any unfavourable economic conditions would clobber agricultural financing. In light of our findings, we conclude that the existing asymmetric relationship between agricultural financing and economic growth should be taken into account and the government should increase its financing of the agriculture sector.Â Â Â

Does Development Assistance For Health Buy Better Results In Maternal Health in Tanzania? Evidence from Autoregressive Distributed Lag (ARDL) Model.

Mwoya Byaro

This paper establishes whether development assistance for health buy better results in maternal health in Tanzania using annual time series data for the period between 1995 and 2014 based on Autoregressive Distributed Lags (ARDL) and Error Correction Model. A long run cointegration relationship exists between GDP per capita, maternal mortality, unemployment and development assistance for health over examined period of time. The results show that in the long run Development Assistance for Health (DAH) and Economic growth (measured by real GDP per capita) was significant in reducing maternal mortality in Tanzania. In the short run, unemployment was statistically significant on increasing maternal mortality in Tanzania between 1995 and 2014. Furthermore, the short run results show that both DAH and real GDP per capita reduces maternal mortality between 1995 and 2014. The results imply that Development Assistance for Health (DAH) channeled to the health sector is an important component in improvements of maternal health in Tanzania. The findings are robust to sensitivity analyses and estimation methods.Â

Oil price shock and agricultural commodity prices in Nigeria: A Non-Linear Autoregressive Distributed Lag (NARDL) Approach

Oseni Isiaq Olasunkanmi, Ph.D

This study analyzed the impact of oil price shocks on agricultural commodity prices in Nigeria using monthly data on oil prices, maize, wheat and soybean and exchange rate from 1997 to 2016. Data on oil price and exchange rate were obtained from the central bank statistical bulletin while those of agricultural commodities were obtained from Food Agricultural Organization (FAO) website. Dummy variables were used to capture periods of structural breaks in the selected agricultural commodity prices. Linear ARDL and Non-linear ARDL with and without breaks were estimated.Â Asymmetric test using Wald Statistics revealed evidence of asymmetries in all the cases implying that positive and negative shocks of the same magnitude did not have equal impact on agricultural commodity prices. The study found significant positive oil price changes in all cases with the expected positive sign, implying that increases in oil price lead to increases in agricultural commodities. Similarly, exchange rate (a control variable) showed positive significant relationship with agricultural commodities. It is concluded that oil price has overall positive relationship and significant effect on agricultural commodity prices. The study recommended that since oil price was important in agricultural commodities prices, efforts should be geared towards local development of the oil sector as this will bring about positive spillover effect on the agricultural sector and ensure food availability at affordable prices thereby improving standard of living and welfare.

Dynamics of Economic Growth, Energy Consumption and Health Outcomes in Selected Sub-Sahara African Countries

Omosola Arawomo

The study investigates the relationship between energy consumption, economic growth and health outcomes in a representative of sub-Saharan Africa (SSA) countries. Annual data over 1990-2014 were sourced from World Bank's World Development Indicators (2016) and fitted in a panel vector autoregression model.Â The study reveals that neither economic growth nor energy consumption was found to affect health outcomes significantly. The study however shows that medical factor such as health care expenditure remains an important determinant of health outcomes in SSA. However, all the variables employed in the study have joint significance to Granger-cause health outcomes, but individually only CO₂causes a marked change in health outcomes. Neutrality hypothesis in causal relation is found to hold. No evidence of causality running from proxy of health outcome to energy consumption or economic growth.Â Likewise,Â no evidence of causal pattern running from either energy consumption or economic growth to health outcome is found

An Emprical Analysis of Weak-Form Efficiency of Dar es Salaam Stock Exchange

Maximillian Michael Katabi

This study examines the empirical evidence for efficient market hypothesis in the Dar es Salaam

Stock Exchange (DSE). The daily closing stock prices of the market index (All share IndexDSEI) were used, covering the sample period from January 2009 to March 2015. All data were extracted from Dar Es Salaam Stock Exchange (DSE), excluding public holidays and nontrading days. To examine the weak-form efficiency hypothesis, the study used four different statistical tests: serial correlation test-The Ljung-Box test, Unit root tests, non-parametric runs test and the variance ratio test. The results of all four statistical tests employed showed that the daily returns series did not behave randomly for the sample period investigated and hence it was concluded that DSE is not a weak form efficient market. Inefficiency of the market (DSE) general implies that trading strategy such as the technical analysis can be valuable in the market taking into consideration of the other factors. The study recommended that other studies to be conducted using individual shares. This will help in understanding the efficiency of individual stocks as well as the possibility of applying some of trading strategy on individual shares

Food Poverty Dynamics and the Determinants across Households in Rural South South Nigeria

John Chiwuzulum Odozi

This article takes a dynamic approach to the study of poverty by investigating how households exist and stay in poverty over time in rural South South, Nigeria while focusing on the food dimension of poverty. South South region is at the center of multiple risk factors: natural, ecological, social and economic that result in highly volatile income and consumption pattern for households. Balancing potential welfare loss of rural households depends in part on the effectiveness of existing programmes. This article uses the panel data set for farm households collected by the National Bureau for Statistics between 2010 and 2012 to evaluate the effectiveness of these programmes. The article used the Multinomial Logit Model (MLM) to determine the conditional probability of poverty transition. The descriptive analysis and the econometric model both lead to results that illustrate the significance of food poverty determinants in a dynamic perspective.

An Empirical Analysis of Tax Ratios and Tax Efforts for Kenya and Malawi

Raphael Rasiel Macha

The study intended to analyse the trends in tax ratio and tax effort differentials between Kenya and Malawi using secondary annual data for the period 1980 to 2015.Â The data were obtained from both the International Monetary Fund and World Bank data bases. The study was carried out to analyse tax ratios for Kenya and Malawi, estimate the tax effort for each, and identify the factors that accounted for the differences in the tax ratios and tax effort indices in the two countries. The regression models for the two countries were estimated using the ordinary least squares (OLS) method. The results reveal that GDP per capita was explaining changes in tax revenue in Kenya both in the long run and the short run, share of agriculture to GDP, and the share of industry were influencing the tax revenue in Kenya,Â in the long run.Â However, the coefficient for the dummy variable for political reform in Kenya has been insignificant. In Malawi, GDP per capita, share of agriculture in GDP, share of industry in GDP, and the dummy variable for political reform were all explaining changes in tax revenue in the long run but not in the short run. In regards to the tax efforts, the study reviels that Malawi was undertaxing while Kenya was overtaxing given the structure of their respective economies. The study recommends the two countries have to work towards optimal level of taxation.

Comparing the Illicit Financial Flows in Some African Countries: Implications for Policy

Onanuga Abayomi

Due to the deleterious effect of the illicit transfer of funds on Africa economies the paper determines and compares the volume of illicit funds which should have been used for development but otherwise channeled into private benefits in seven African countries during 2005-2015. Using the World Bank Residual Model, we found that illicit financial flows are being experienced in all the sample countries otherwise unabated. In quantum terms, illicit transfers of funds are more in upper-middle-income countries while and it was highest in low- income countries as a proportion of the countryâ€™s GDP. The study concluded that relative to aggregate income low-income countries engage more in illicit financial transfers that the other income groups whereas in quantum terms it was substantial in upper-middleincome group. We recommend that all income groups should improve on regulatory controls in order cub illicit transfers in Africa, more importantly, the low-income group.Â Â

Trade Union Revitalization in Kenya: Acquisition and Utilization of Power Resources

Jacob Omolo

A consensus has emerged in trade union research that trade unions are not solely at the mercy of major societal trends, but always have the option of making strategic choice(s) to revitalize and ensure improvement in the socio-economic welfare of their members. The key question is, which power resources and means of exerting such power are available to trade unions in the different context they face to reposition and revitalize themselves?Â This paper uses the power resources approach to identify the power resources that were acquired, developed and utilized by the Kenya National Private Security Workers Union to revitalize. The revitalization process, which started in 2011 saw the union transform from an outfit characterized by leadership wrangles, coup dâ€™Ã©tats, demarcation conflicts and low membership density to one with relatively high membership, stronger cohesion and solidarity, and unity amongst the leadership and the rank and file members. Based on the analysis, the revitalization of the Kenya National Private Security Workers Union reinforced the fact that associational power is best sustained through institutional power. The revitalization process also saw a double framing function by allowing the union to gain more sympathy and relevance from members of the public, while internally presenting it with articulation capabilities to bring together national officials, shop stewards and rank-and-file members. These changes made the union to increase its density by almost tenfold between 2011 and 2017. It also enabled the union to emerge as a strong, cohesive and vibrant union capable of turning challenges into opportunities.

Inequalities in infant malnutrition between rural and urban areas in Cameroon: a Blinder- Oaxaca decomposition

Nguenda Anya Saturnin Bertrand

Child malnutrition is an obstacle to human capital and a deprivation of capabilities. In Cameroon, malnutrition is a public health problem and rural areas suffer more from child malnutrition than the urban areas. The objective of this study is to identify the factors that explain inequality in the distribution of child malnutrition between urban and rural areas in Cameroon. The methodology used is based on the Oaxaca-Blinder decomposition. The data used is from the Demographic and Health Survey organized in 2011 by the National Institute of Statistics. Differences in endowments of children and mothers explain 75% of the weight difference of children under 5 years between urban and rural areas. We specifically find that a paid job for the mother reduces by approximately 2.56 % the differences in the weights of children of less than 5 years between urban and rural areas. Also, the education of the mother reduces the difference in weight between the rural and urban children by 2.44% for primary education, 5.48% for secondary education and 3.54% for higher education. Lastly, the difference in weight between the children of rural and urban areas increases when the households are poor. The reduction inequalities of child malnutrition between urban and rural areas in Cameroon thus passes through the improvementÂ of the education of the mother, the strengthening of the economic capacities of women in rural areas and the improvement of the living conditions of rural households.

The Burden of Produce Cess and other Market Charges in Kenyaâ€™s Agriculture

Maurice J Ogada

The study was conducted to quantify the impact of produce cess and market charges on the cost structure of major agricultural commodities in Kenya under a newly devolved system of government. The study used a blend of qualitative and quantitative methods. Analysis of quantitative data involved computation of total costs, revenues, cess as a proportion of total cost, the impact of cess on costs and cost structure. To assess the impact of cess on costs, regression analysis was used. Results showed that produce cess significantly increased production and distribution costs. A one percent increase in cess raised the average distribution cost by 0.8% and average production cost by 0.2%. Therefore, county governments should review levying of cess to avoid charging it at multiple points. This is important for enhancing food and nutritional security, and improving incomes of households which are dependent on either production or trade in agricultural produce.