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This paper studies the effect of unconditional teacher salary increases on teacher and student outcomes. To study the issue, we evaluate the rural hardship for teachers in Zambia, which corresponds to a salary increase of 20%. This allowance is allocated to schools beyond a given distance from their district center, and this allows us to use a regression discontinuity design to identify its effects at the school level. We use administrative data from 2004 to 2015 on school and teacher characteristics and on Grade 7 student test scores. In addition, we perform a small telephone survey of schools close to the eligibility threshold for the allowance. We find that crossing the eligibility threshold increases the share of teachers obtaining the allowance by around 40pp. Because of the fairly high degree of non-compliance with the rule, our estimates are fairly imprecise. Focusing on the provinces where compliance is stronger we find some (albeit weak) evidence that the allowance increases the amount of teachers, their tenure, and reduces transfers away from schools. However, we find no effects on teacher characteristics or on student grades. All in all, it appears that the allowance succeeds in keeping teachers in rural areas, but with no implication for student performance.

Over the last decade an increasing number of the world’s fastest-growing countries have been in Africa. This recent progress created widespread optimism among many as economic development prospects across many parts of the continent improved. This optimism has, however, been accompanied by concerns regarding the inclusivity and longer-term sustainability of the current growth processes, which have been driven largely by extractive industries. Moreover, situating the observed growth in a broader historical context is important. Similar optimism accompanied the relatively short-lived growth boom in Africa following the Second World War (1950-1970), which provided limited longrun gains and should perhaps serve as a cautionary example in the current growth climate (Broadberry and Gardner, 2013). Going further back, Jerven (2010) suggests that periods of rapid growth, followed by reversals, have characterised economic performance in the region for several centuries, with commodity demand always the driving force behind these ‘booms and busts'.

Includes bibliographical references, This thesis examines some aspects of the economics of tobacco control in South Africa, Uganda and Zambia. The first part of the thesis examines whether tobacco expenditure displaces (or "crowds out") expenditure on other goods and services within Zambian households. In so doing, I make two contributions to the literature. Firstly, I use expenditure data from a low-income sub-Saharan African country where most households are poor. Secondly, I use the standard instrumental variable used in the literature, the adult sex ratio, to instrument for the tobacco smoking status of Zambian households. But unlike previous studies, I relax the strict exclusion restriction and allow for the adult sex ratio to be correlated with the error term. That is, I allow the instrumental variable to be imperfect. I consider the relaxation of the exclusion restriction to be reasonable given that the adult sex ratio is just as likely to influence tobacco expenditure as it is to influence expenditure on other goods and services. Even after relaxing the exclusion restriction, I, however, confirm many findings in the literature. For instance, I find that smoking households allocate less expenditure towards food, schooling, clothing, water, electricity, transportation, equipment maintenance and remittances. In addition, the crowding out patterns I uncover are in some ways related to the geographical location of households which in turn is related to socioeconomic status in Zambia. In sum, the results in this part of the thesis show that a broader accounting of tobacco's costs in Zambia should include other costs over and above mortality and morbidity considerations. We know from several studies that tax and price measures are the single most effective policy tool for reducing tobacco consumption. However, most of this evidence is based on studies conducted in developed countries with very few published studies on African countries. The second part of my thesis, therefore, contributes to the recent literature that uses expenditure data to estimate price and expenditure elasticities of demand for tobacco products in Low-and Middle-Income countries. I use expenditure data from Uganda and exploit the fact that prices of cigarettes vary across geographical space. I also adjust my demand elasticity estimates for measurement error and quality heterogeneity. I find price and expenditure elasticities that are in line with international evidence. For instance, I find that cigarette demand is expected to decline by between 3% and 4%, at the very least, for every 10% increase in cigarette prices. The authorities in Uganda ca n, therefore, reduce cigarette consumption by increasing excise taxes on cigarettes without reducing tax revenues. The third and final part of my thesis evaluates the impact on per capita cigarette consumption of South Africa's consistent excise tax increases that began in 1994. The tax rises have overtime translated into large increases in the inflation-adjusted price of cigarettes. For instance, the average real price per pack increased by 110% between 1994 and 2004. The main challenge in conducting pol icy evaluations is that of creating a credible counterfactual. That is, we want to know what would have happened to per capita cigarette consumption in South Africa if the excise tax increases had not occurred. This is particularly important in the case of South Africa because per capita cigarette consumption had already started declining by the time the tax rises started. I, therefore, use a transparent and data-driven technique, the Synthetic Control method, to create a credible counterfactual of South Africa's cigarette consumption after 1994. The counterfactual is constructed as a linear combination of the per capita cigarette consumption of countries that are similar to South Africa but did not engage in large-scale tobacco control efforts over the peri od 1994 to 2004. I find that per capita cigarette consumption would not have continued declining in the absence of the consistent tax rises that began in 1994. Specifically, I find that by 2004, per capita cigarette consumption was 36% lower than it would have been had the tax increases not occurred. This result is robust to several falsification (or placebo) exercises. Based on these results, I conclude that countries in Africa can achieve substantial reductions in cigarette consumption and prevent uptake from new smokers by consistently increasing excise taxes in the manner of South Africa.

Ambiguity aversion is defined as an aversion to any mean-preserving spread in the probability space. Using the Smooth Ambiguity Model proposed by Klibanoff, Marinacci and Mukerji (2005), we show that ambiguity aversion results in a reduction in the proportion of insurance coverage offered by an insurer. This is because an ambiguity averse insurer calculates expected utilities by using a 'distorted' probability that raises the marginal disutility of wealth in the loss state. We also show that, in general, an ambiguity averse insurer will not offer more coverage to wealthier agents. Wealthier agents enjoy more coverage when the subjective average probability of loss is significantly high. Our results go a long way in reconciling theoretical models of insurance under ambiguity with the empirical finding that insurers are sensitive to ambiguity.

This research paper applies the synthetic control method to measure the economic cost of sanctions imposed on South Africa between 1985 and 1994. The economic sanctions imposed on South Africa between 1985 and 1994 by the United Nations, the United States of America, and the European Community negatively affected the economy. This negative effect on the economy, measured by the gross domestic product per capita, continued until 1998 despite the sanctions having ended four years earlier. Using the synthetic control method, this research paper measures the economic cost by estimating the difference in the gross domestic product per capita between the treated country (South Africa) and the counterfactual (synthetic South Africa). Synthetic South Africa represents South Africa without undergoing treatment (sanctions). What would have happened if sanctions were not imposed? The results indicate that the economic cost is most pronounced after the sanctions ended, indicating a substantial lag effect. South Africa's gross domestic product per capita is 30% lower than synthetic South Africa by 1998. This potentially indicates that the sanctions had a long-lasting effect. The results are not sensitive to the composition of the donor pool. Furthermore, the placebo tests reveal that the results are statistically significant at the 10% threshold with only one country (Philippines) having a treatment effect that is larger than South Africa's and a better fit. For target nations, it means that policy makers should acknowledge that a policy that leads to sanctions may have a severe and long-lasting impact on the economy. Potential areas for future investigation include estimating the humanitarian effect of the sanctions imposed on South Africa and applying the synthetic control method approach to other sanctions episodes in the past.

The role played by Micro and Small Enterprises in many economies globally is huge and important. It is even more significant for economies in Africa such as South Africa where there are high levels of poverty and unemployment. In South Africa, Micro and Small Enterprises can contribute towards addressing the challenge of poverty and unemployment, given their proven history of job creation. However, their contribution is constrained by the lack of access to credit for growth, which is a result of a deficit of credit information among other contributing factors. This inhibits their growth. In South Africa, developmental credit was introduced through the National Credit Act 34 of 2005 to improve access to credit for low-income earners, including Micro and Small Enterprises. This type of credit is different from other types of credit because it bypasses the challenge of credit information, allowing the credit application of Micro and Small Enterprises to be assessed without the use of credit information (credit history). However, since the introduction of the Act, there has been little uptake and granting of developmental credit. This dissertation aimed to determine the reasons for this. This dissertation uses a qualitative research approach. Interviews were conducted with Micro and Small Enterprises and questionnaires administered with developmental Credit Providers, and the National Credit Regulator. Therefore, qualitative information from the above credit market stakeholders was analysed to get to the findings. The findings of this research are three-fold. In respect of credit providers, findings show that, despite the legislative provisions, there is still the use of credit information by large financial institutions, which adversely affects access to developmental credit. Findings for Micro and Small Enterprises reveal that there is a lack of knowledge of this type of credit. This is affected by the fact that Micro and Small Enterprises perceive credit as being difficult to access because of the use of credit information, which they lack, and therefore do not explore various types of credit available and suitable for their businesses. Furthermore, there are only a few credit providers, which provide developmental credit in the country; this affects their footprint in the country and different provinces. Lastly, the findings on legislation are that the requirements to register as a developmental credit provider limit the number of credit providers, which can register to provide developmental credit.

Growth and development of small and medium-sized enterprises (SMEs) are the key drivers of economic growth and development in Africa. While this has become a widely accepted idea, access to financing for growth remains a stumbling block for many enterprises in Zambia. Traditional lenders (i.e. banks) are risk averse because they may not understand the SME market and have been negatively impacted by information asymmetry that is often associated with these ventures. As a result, they tend to charge exorbitant interest rates that are unsustainable for long-term growth. The existing focus of many microfinance institutions in Zambia is typically directed towards salaried employees which crowds out lending to SMEs. Private equity financing, on the other hand, presents an alternative solution to the long-term financing dilemma faced by enterprises. The Zambian private equity market is itself in a nascent space but shows much potential. This dissertation seeks to determine what drives private equity financing in Zambia and what constrains it. The dissertation adopts a qualitative research approach relying on the interviews of various Fund Managers who are familiar with investing in Zambia. The paper finds that private equity investment in Zambia is determined and catalysed broadly by business attractiveness and the business environment. Business attractiveness is underpinned by management capacity, the business track record, exits and returns, impact potential and business scalability. The business environment is driven by political stability, GDP growth and population growth. The sector is however, constrained by a less developed private equity culture, limited opportunities to invest and currency risk.

The dissertation examined the effect of cryptocurrencies on the portfolio risk-adjusted returns of traditional and alternative investments using daily arithmetic returns from August 2015 to October 2018 of traditional assets (South African stocks, bonds, currencies), alternative assets (commodities, South African real estate) and cryptocurrencies (Cryptocurrency index (CRIX) and ten other individual cryptocurrencies). This is worth investigating as cryptocurrencies have been performing well while the listed equities in South Africa and most alternative investments have been underperforming (Srilakshmi & Karpagam, 2017). The mean-variance analysis, the Sharpe ratio, the conditional value-at-risk (CVaR) and the mean-variance spanning techniques were employed to analyse the data. The spanning test carried out was the multivariate ordinary least squares (OLS) regression Wald test. The research findings showed that the inclusion of cryptocurrencies in a portfolio of investments improves the efficient frontier of the portfolio of investments and the portfolio of investments risk-adjusted returns. Moreover, the findings suggested that cryptocurrencies are good portfolio diversification assets. However, investments in cryptocurrencies should be made with caution as the risks of investments are high in relation to traditional and alternative investments. The findings of this study advocate for individual and institutional investors to include cryptocurrencies within their South African portfolio of traditional and alternative investments.

Southern Africa has been exploring regional integration in the context of the Southern African Development Community (SADC). This dissertation seeks to examine the potential bilateral trade volume within SADC, that can be generated as a result of a hypothetical SADC currency union and to analyse its importance for policy. It can serve as a basis for the promotion of regional integration as a means of increasing intraregional trade in the region, on the continent and, ultimately, international trade. Regional monetary unions are envisaged by the African Union (AU) as building blocks towards an eventual continent-wide monetary union. In this respect a gravity model was estimated with panel data using pooled Ordinary Least Squares (OLS), random and fixed effect estimations covering the period 2000 to 2017. Because a SADC multilateral currency union does not exist yet, similar existing versions of monetary integration arrangements in the region were used in this study to draw inferences. The monetary integration arrangements in the region include the Common Monetary Area, a fixed exchange rate regime adopted by South Africa, Namibia, Lesotho and Eswatini, as well as Zimbabwe’s multicurrency regime that includes the South African Rand and the Botswana Pula. The results are largely in line with theoretical expectations except for the currency union dummy variable coefficient which was found to not be statistically significantly different from zero. This therefore means that in the case of SADC, a currency union might not have an effect on bilateral trade flows between member countries. One major limitation lies in the fact that my analysis relies on data based on currency union proxies since a SADC currency union does not already exist. Thus, any extrapolation from my results to infer the impact of an actual currency union on trade might lead to less than robust conclusions.

This thesis uses data from Kenya to contribute to the literature on tobacco and alcohol control policies in low and middle-income countries. The thesis uses the two most recent household and budget surveys (2005/6 and 2015/16), to examine some of the effects of the tobacco and alcohol control policies that were implemented in Kenya between 2005 and 2015. Chapter 2 considers the impact of consumption and taxation of tobacco and alcohol on household spending patterns. An instrumental variable approach is used in the estimation of the difference in spending patterns, between tobacco-consuming (alcohol-consuming) households and households that do not consume tobacco (alcohol). Following the precedent of some other studies, the adult sex ratio is used as an instrumental variable for the tobacco and alcohol consumption status of households. However, the adult sex ratio may not meet the exclusion restriction. In order to address this concern, I change the specification of the instrumental variable and relax the exclusion restriction. As a result, the upper and lower bounds of the difference in expenditure shares between households that consumed tobacco (alcohol) and the households that did not consume tobacco (alcohol) are estimated. A natural experiment involving tobacco and alcohol taxes occurred during the data collection period of one of the household surveys: the excise tax on tobacco and alcohol was increased during the data collection phase. A matched difference-in-differences (MDID) technique is used to estimate the implication of a tobacco (alcohol) tax increase on household spending patterns. The pseudo-panel generated from MDID also provided a new way of controlling for possible endogeneity arising from time-invariant unobservable variables. Therefore, MDID is used as a new approach, for comparing household spending patterns of tobacco-consuming (alcohol-consuming) households with those of households that do not consume tobacco (alcohol). The price and non-price tobacco-control policies that were implemented between 2005/6 and 2015/16 contributed to a decrease in household tobacco use prevalence. However, alcohol-control policies implemented over the same period did not successfully reduce the overall prevalence of alcohol consumption among Kenyan households. Tobacco- and alcohol-consuming households were found to spend less on education, energy, rent, healthcare, and food items. MDID results confirmed that tobacco and alcohol consuming households had lower expenditure shares on items necessary for human capital development. The increase in tobacco taxes did not have an impact on household spending patterns among tobacco-consuming households. However, an increase in taxes on alcohol led to further crowding out of expenditure on fruits. Chapter 3 uses the risk of child malnutrition in Kenya, to examine the effectiveness of tobacco and alcohol control policies, in reducing tobacco and alcohol consumption prevalence among vulnerable households. Past studies in this literature did not explicitly control for cluster/village level factors that may affect child nutrition. A multilevel/mixed effects logit and general equations estimation logit model are used to estimate the difference in the risk of child malnutrition, between households that consumed tobacco and alcohol and those that did not consume the two goods. The two models account for the possibility of correlation in nutritional outcomes for children living in the same cluster/village. The two methods also allowed for the inclusion of contextual effects that could inform public health policy in Kenya. In 2005/6 the odds of long-term child malnutrition were higher for children living in tobacco and alcohol consuming households in rural Kenya. The tobacco and alcohol control policies implemented between 2005/6 and 2015/16 were more effective in reducing tobacco and alcohol consumption prevalence among the poorest rural households. As a result, the decrease in child malnutrition prevalence was greater among households that consumed tobacco and alcohol. In 2015/16 the risk of child malnutrition in tobacco and alcohol consuming households was similar to that of non-consuming households. The results from chapter 3 indicate that tobacco and alcohol control policies that were implemented in Kenya over the ten-year period, contributed to the reduction in consumption of the two goods among the poorest rural households. Therefore, very poor households invested resources, which could have been used for tobacco/alcohol consumption, on human capital development. Chapter 2 and chapter 3 provide evidence on some of the opportunity costs associated with tobacco/alcohol consumption as well as potential benefits that may arise from controlling consumption of the two goods. Subsequently, Chapter 4 focuses on the price elasticity of demand for tobacco and alcohol products. Tax-induced price increases is one of the most effective policy tools for controlling the demand for the two goods. The effectiveness of price policy in controlling demand for tobacco and alcohol may be hindered by among other things, the consumption of informally produced alcohol and noncigarette tobacco products as well as other stimulants. Majority of the relatively few studies done on African countries were on South Africa and most of them estimated the price elasticity of demand for cigarettes and formally produced alcohol products. Further, I am not aware of any peer-reviewed study that has estimated the price elasticity of demand for alcohol and tobacco products in Kenya. Household survey data is used to estimate the own-price and expenditure elasticities (as proxies for income elasticities) of demand for tobacco and alcohol products in Kenya. The responsiveness of the demand for informally produced alcohol as well as non-cigarette tobacco products to changes in prices of cigarettes and formally produced beers is also estimated. This thesis also estimates the responsiveness of demand for khat to changes in the price of cigarettes and formally produced beers. Khat is a stimulant mostly consumed in Arabia and the Horn of Africa. One of the concerns about the use of taxes as a measure to control tobacco and alcohol consumption is the possible regressive nature of tobacco and alcohol taxes. Therefore, chapter 4 also examines the impact of price and non-price tobacco- and alcohol-control policies on the regressivity/progressivity of household tobacco and alcohol burdens (budget shares). Tobacco-control policies implemented between 2005/6 and 2015/16, contributed to a reduction in the regressivity of household tobacco budget shares. The changing profile of tobacco consuming households as well as economic growth over the period may have also contributed to the increase in the estimated price elasticity of demand for cigarettes. Over the ten-year period, the estimated price elasticity of demand for cigarettes increased from -0.63 to -0.42. Khat and snuff tobacco were found to be complements for cigarettes. Khat and informally produced spirits were found to be substitutes for formally produced beers. Further, the demand for formally produced beers was found to be price elastic. The alcohol-control policies that were implemented over the ten-year period, contributed to a reduction in the regressivity of overall alcohol budget shares. However, over the ten-year period, there was a rapid increase in demand for spirits in Kenya.