African Journal of Economic Review <p>The <em>African Journal of Economic Review</em> (AJER) is a refereed, biannual Journal that publishes high quality and scholarly articles on economic issues relevant to Africa. &nbsp;The AJER is an applied journal with keen interest in the following areas: Public sector economics, monetary economics, international trade and finance, agricultural economics, industrial economics, development economics, labour economics, health economics, environmental economics and economic reforms.&nbsp;</p> <p>Other websites associated with this journal:&nbsp;<a title="" href="" target="_blank" rel="noopener"></a></p> <p>This journal has recently been accepted to be indexed&nbsp;in REPEC <a title="" href="" target="_blank" rel="noopener"></a></p> Centre for Economics and Community Economic Development en-US African Journal of Economic Review 1821-8148 The copyright belongs to: African Journal of Economic Review, Centre for Economics and Community Economic Development, The Open University of Tanzania, P.O.Box 23409, Dar es salaam, Tanzania The Impact of Agricultural Structural Transformation on Economic Growth in Africa <p>This study examines the influence of agricultural structural transformation on economic growth in 36 African countries over a period from 1990 to 2018. The Feasible Generalized Least Squares estimation technique is used to control for spatial dependence across African countries and error autocorrelation. The results revealed that the reallocation of agricultural labor positively contributes to economic growth in Africa. In contrast, agricultural value-added and agricultural employment negatively affect economic growth in Africa. As a policy implication, African countries must strengthen agricultural structural transformation for their economic development in line with the African Union vision.</p> Moukpè Gniniguè Bidé Félicité Awoki Abalo Tchilalo Paroubénim Méhèza Reine Heyou Copyright (c) 2022-03-15 2022-03-15 10 2 1 12 Effects of Monetary Policy on Bank’s Credit Dynamics in Tanzania <p>In a similar trend to other East African Community partner states, growth of credit to private sector in Tanzania has been declining in the recent past, despite massive effort by the monetary policy to boost bank’s credit extension. Using quarterly data spanning from 2002 to 2019, this paper estimates a structural vector autoregressive model to examine the intertwined relationships between monetary policy and growth of private sector credit, together with other key macroeconomic variables in Tanzania. Estimates from the model shows that the real effect of monetary policy on credit growth is quantitatively small — a 2.5% rise in cash rate leads to a decline in real growth of credit to the private sector by 0.1%. Though, in responding to the macroeconomic consequences of the shock in growth of private sector credit, monetary policy appears to stabilise the economy effectively. At short horizons, shocks to monetary policy found to be a significant driver of credit growth. Over longer horizons, shocks to real output, past shocks to credit growth and external shocks plays a greater role. The contemporaneous effects of external shocks to the growth of private sector credit takes slightly more than two years to disappears, but it would have taken much longer in the absence of a monetary policy response. These findings assert that, bank’s capacity to credit extension is vulnerable to both domestic and external shocks, and although it may be unfeasible for the monetary policy to fully caution the banking system from shocks, a quick and appropriate policy response may help banks to quickly recover from unexpected shocks.</p> Lusajo P. Mwankemwa Bonaventura Mlamka Copyright (c) 2022-03-19 2022-03-19 10 2 13 39 Effects of Anticipated and Unanticipated Monetary Policy on Output in Nigeria <p>Controversy abounds in both theoretical and empirical literature on the relative importance, and the real effects of anticipated and unanticipated monetary policy on output. Early authors argue that outputs are affected only by unanticipated monetary policy shocks while Keynesian theorists believe in the efficacy of the anticipated monetary policy shocks to orchestrate real effects on the economy. On this backdrop, this present study examines the effects of anticipated and unanticipated monetary policy on output in Nigeria using annual secondary data from 1986 to 2020. The study employs Autoregressive Distributed Lag (ARDL) model to estimate how anticipated and unanticipated monetary policy affects output in Nigeria. Our results show that there exists a long run level relationship among anticipated and unanticipated monetary policy and output in Nigeria. The results also show that the effect of anticipated monetary policy is neutral on output while unanticipated monetary policy has a significant positive effect on output. Therefore, the study aligns with the rational expectation theory that only the unanticipated monetary shocks affect the real economy.</p> Rufus A. Ajisafe Kehinde E. Adesina Solomon O. Okunade Copyright (c) 2022-03-19 2022-03-19 10 2 40 55 The Nexus between Military Spending, Tax Revenues and Economic Growth in the G5 Sahel Countries <p>This article aims to examine the nexus between military spending, tax revenues and economic growth in the G5 Sahel countries. To this end, a VAR model was estimated on a panel of five countries over the period 2000 - 2018. The analysis led to three main results. First, economic growth helps finance military spending, while military spending has a negative effect on economic growth. Second, military spending lagged by a period has a positive effect on tax revenues, while tax revenues have no effect on military spending. Third, tax revenues promote economic growth, and in return, economic growth contributes to increased tax revenues. The study therefore suggests the establishment of a good tax policy in the G5 Sahel countries to mobilize more resources to boost economic growth and to finance military spending.</p> Abdoulaye Dramane Copyright (c) 2022-03-19 2022-03-19 10 2 56 72 Sustainable Development Goals for Sub-Saharan Africans' by 2030: A Pathway to Longer Life Expectancy via Higher Health-Care Spending and Low Disease Burdens <p>This article analyzes the total health expenditures nexus life expectancy in 33 sub-Saharan African countries while controlling for HIV, under-five mortality, population growth and malnutrition. By analyzing the World Bank dataset from the year 2000 to 2016, as well as an additional dataset on disease burdens-health expenditure from the Institute of Health Metrics and Evaluation that covers up to year 2019, we are able to suggest four (4) conclusions to policy makers in the region. First, Africa's health budget is mainly reliant on external donors. Losing donors imply that the region will be pushed backwards in its efforts to meet the Sustainable Development Goals (SDGs) by 2030. Second, rapid population growth in sub-Saharan Africa (SSA) raises life expectancy, which is likely to be offset by an increase in non-communicable diseases. Thus, population growth needs to be controlled in the region in order to reduce the risks of disease burdens. Third, covid-19 pandemic has placed an extra burden on health-care systems; leading to higher levels of public debt and constraining the government’s ability to spend on citizen’s health. Fourth, governments in SSA need to increase their health spending by establishing new health financing mechanisms to reduce disease burdens and increase population life expectancy. Failure to do so could prevent sub-Saharan African countries ability to meet SDGs.</p> Mwoya Byaro Hozen Mayaya Riccardo Pelizzo Copyright (c) 2022-03-19 2022-03-19 10 2 73 87 Welfare Effects of Farming Household' Usage of Combination of Climate Smart Agriculture Practises in the Southern Highlands of Tanzania. <p>Climate change is a growing challenge to food security, especially for the developing countries which depend on agriculture for their livelihood. Climate Smart Agriculture (CSA) is the approach proposed by the Food and Agriculture Organization (FAO) to improve agricultural productivity and income, climate change adaptation capacity and mitigation of greenhouse gases hence improving food security. Despite the promotion of CSA-practices in Tanzania, its impact on household food security is not well documented. The study used a Multinomial Endogenous Switching Regression Model (MESR) to evaluate the impact of CSA-practises on food security in Mbeya and Songwe regions in Tanzania. Multistage sampling was conducted in which a total of 1443 farming households were interviewed. The study found that the usage of CSA-practises can increase or decrease Food Variety Score per adult equivalent unit when used either in isolation or in combination. Intercropping has the best payoff among the CSA-practices considered in this study. A combination of crop rotation and residue retention and a combination of crop rotation, intercropping and residue retention showed a positive impact on Food Variety Score per adult equivalent unit but lower magnitude compared with practises used in isolation. The study found that the usage of all three CSA-practices does not necessarily result in better returns compared to other practices. The study recommended that regardless of unobserved and observed effects, using crop rotation, residue retention and intercropping in isolation results into the highest food variety score per adult equivalent among all possible combinations.</p> Abiud J. Bongole Copyright (c) 2022-03-19 2022-03-19 10 2 88 100 Dynamic Relationship Between Financial Sector Development and Inclusive Growth in Sub-Sahara African Countries <p>This study examines the direction of causality between financial sector development and inclusive growth using panel data of 32 countries in sub-Saharan Africa (SSA) between 2000 and 2019. Findings from Dumitrescu - Hurlin panel causality test revealed that the panel of SSA’s countries and two other sub-regions (West and South African sub-regions) indicate unidirectional causality while the other two (East and Central African) show evidence of no causality. Likewise, this study observes some variations at the country-specific level where 24 out of the 32 countries selected displayed evidence of no causality, and 8 countries demonstrated evidence of unidirectional causality. Thus, the study concludes that both inclusive growth and financial sector development are too weak to cause each other in most SSA’s countries since bi-directional causality is nonexistent and recommends that policymakers in respective SSA sub-regions and countries should implement massive inclusive growth strategies and promotes relevant financial innovations, reforms, and efficiency in financial inclusion across the region.</p> Abiodun S. Olayiwola Copyright (c) 2022-03-24 2022-03-24 10 2 101 119 Private Intra-household Transfers as a Palliative for the Incompleteness of Social Protection: Evidence from Niger <p>This paper explores the distribution of private intra-household transfers in Niger. It aims to understand how these transfers could be a palliative to the inadequacy of social protection. Data provided from the Survey on Living Conditions of Households and Agriculture, conducted in 2014 were used. Multivariate statistics permitted to characterize private transfers received and quantile regressions to identify their determinants. Results of quantile regressions reveal that the household size, the donor's place of residence and the relationship with the donor positively explain the private transfers, which largely depend on various degrees of quantiles. The transfer from children to direct parents shows that an intergenerational solidarity allowing the elderly to be taken care. Results also show that the low level of education would lead to fewer transfers. Moreover, social events, often associated with immediate consumption and conspicuous spending, are sometimes favored to the detriment of private investments that could stimulate the country's economic growth. In terms of policy implications, two major challenges must be overcome. The first one is to formally mobilize private transfers to broaden the scope of social security. The second one is the ability to redirect these transfers to the needy populations and to productive investments. From this point of view, this study may be of interest to money transfer companies, particularly in their strategy for setting up agencies according to the national mapping of transfer flows. &nbsp;</p> Ahamadou MAICHANOU Agada DAN BAKY Copyright (c) 2022-03-24 2022-03-24 10 2 120 135 Determinants of Stock Market Volatility in Africa <p>The volatility of stock market dampens investors’ confidence because of the uncertain returns associated with it, and the effect this may have on trading activities and investment worries policymakers as it may spillover to the general economy. The aim of this study is to examine the volatility of African Stock Markets and the factors influencing it in Africa. The Generalised Autoregressive Conditional Heteroscedasticity (GARCH) was used to generate the volatility, and the Generalised Method of Moments was applied on dynamic panel model to examine the factors that account for volatility in Africa. Sixteen (16) African Stock Markets were covered for the period 2013 to 2019. Data was sourced from African Securities Exchanges Association, Bank for International Settlements and World bank development Indicators databases. The study found that macroeconomic instability and financial liquidity variables determine stock market volatility in Africa. Specifically, macroeconomic instability has positive and significant effect on volatility, while stock market liquidity, diaspora remittances, growth in money supply negatively influence stock market volatility. This study recommends that the monetary authorities, particularly Central Banks should inculcate stock market volatility as part of its financial stability goal and apply financial liquidity tools like diaspora remittances, money supply, and stock market liquidity to mitigate it, while ensuring stability in the macro-economy.</p> Monday UHUNMWANGHO Copyright (c) 2022-03-28 2022-03-28 10 2 136 151 Effect of Transport Infrastructure and Institutions on Inter-Regional Trade in Sub-Saharan Africa <p>The study investigates the role of transport infrastructure and quality of institutions on trade between the East African Community and three other regional blocs in Sub-Saharan Africa using panel data for the period between 2000 and 2018. By employing gravity model for trade and Poisson-Pseudo Maximum likelihood estimator, the study finds that transport infrastructure facilitates inter- East African Community trade. Additionally, improvements in regulatory quality of the East African Community Partner States and control of corruption of the importing regional blocs have positive effect on East African Community’s exports. The findings therefore suggest the need for additional investment in transport related infrastructure and improvement in quality of institutions of the East African Community Partner States for more trade.</p> James Ochieng Babu Daniel Abala Mary Mbithi Copyright (c) 2022-03-28 2022-03-28 10 2 152 165 Applying the National Income Identity Approach in Examining Determinants of Economic Growth in South Africa <p>From the mid-1990s to mid-2000s, the economic performance of the South African economy was relatively good but lower than growth of comparable economies. This is attributed to different factors such as low savings, low investment levels as well as the structure of the South African economy. The paper applies the macroeconomic identity to explore the impact of the key drivers of the South African economy, using the Autoregressive Distributed Lag (ARDL) econometric approach and data from 1980 to 2019. To test for the long-run relationship we used the co-integration test and the Vector Error Correction Model (VEC). The main results are that consumption, investment, and exports are key economic growth determinants in South Africa. This holds regardless of the time horizon. To confirm the long-run relationship we further performed the robust bound tests and the results indicate that there is a long-run relationship among the variables. From a policy perspective, it would be recommended that government ensures that there is higher investment in the economy and that exports are increased. In addition, based on the results, it is important to not only focus on the national income identity variables but also other factors that can negatively affect economic growth.</p> Vusi Gumede Santos Bila Copyright (c) 2022-04-01 2022-04-01 10 2 166 181 The Effect of Sanitary and Phytosanitary Measures on Uganda’s Fish Exports: A gravity model approach <p>This paper examined the effects of Sanitary and Phytosanitary measures on Uganda’s fish exports. The study used a gravity model variant that accounts for selection bias (decision to trade) and panel data from 28 countries covering the period between 2001 and 2018. The results revealed that microbiological and parasitic contamination have a negative effect on fish exports while certification about absence of Genetically Modified Organisms (GMOs) has an opposite effect. From a policymaker’s perspective, there is need to consider strict legislation concerning the GMO Bill to guarantee the safety of food items including fish. This is would increase overseas consumers’ confidence in Uganda’s fish products, hence increasing exports. Concerning microbiological and parasitic contamination, there is need to invest in safe production and processing measures given that the country is now expanding the fisheries production by involving smallholder farmers. This would present an opportunity for fish farmers to participate in lucrative fish export markets.</p> Justine Luwedde Medard Kakuru Nathan Sunday Copyright (c) 2022-04-04 2022-04-04 10 2 182 205