Search

PurposeInfrastructure deficiency and supply disruption challenges are quite common among developing economies. While Sub-Saharan Africa is not unique to these challenges, it is the extent of levels of infrastructure deficiency and disruptions that affect the level of performance of small businesses. Literature on the performance of small businesses suggests both infrastructure availability and disruptions affect the performance of small businesses, but the effects on informal enterprises that operate from locations where the supply of infrastructure is weak are less documented. The paper, therefore, investigates the effects of four types of infrastructure supply in two dimensions of availability and disruption levels on the performance of informal enterprises in 12 Sub-Saharan African countries.Design/methodology/approachThe study uses data from World Bank informal enterprises surveys based on a sample of 3 735 informal enterprises. The study uses the multiple analysis of variance method based on the World Bank's Informal Enterprise Surveys (IFS) country-level cross-sectional data collected between 2009 and 2019.FindingsResults show infrastructure supply is quite low irrespective of the form of infrastructure. Infrastructure availability is associated with high supply disruptions. Infrastructure supply deficiency and disruption intensities are negatively associated with informal enterprises' performance. Finally, the effects of both infrastructure availability and supply disruptions are positively associated with informal enterprises' business activity levels.Research limitations/implicationsDue to data limitations, only four types of infrastructure are captured in the analysis. A wider variety of types of infrastructure could improve the analysis.Originality/valueGiven the deficiency level of infrastructure and its implications on informal enterprise development, therefore, policy interventions aiming at addressing informal enterprises' challenges should focus on improving infrastructure supply deficiencies and disruption challenges. This paper provides the link between infrastructure levels, infrastructure supply disruptions and performance of the informal enterprises which is an essential starting point for policy intervention in informal enterprise development.

PurposeThis study examines the role of institutions and governance on the digital financial inclusion and economic growth nexus in Sub-Saharan Africa (SSA) from 2014 to 2020.Design/methodology/approachThis study adopts the generalised method of moments technique which controls for endogeneity. The authors employed four main variables namely, index of digital financial inclusion, gross domestic product per capita growth, institutions and governance.FindingsThe results suggest a significant positive effect of institutional quality and governance on the digital financial inclusion-economic growth nexus in SSA. Furthermore, the authors find that effect of trade and population growth on economic growth was significantly positive while inflation reduces economic growth in the region.Research limitations/implicationsThis study also ignored the effect of digital financial inclusion on environmental quality. Future researches should focus on addressing these drawbacks and replicating the study in Africa as a whole and other developing countries across the world that are experiencing digital financial inclusion and economic growth challenges. The results from the study imply that a positive relationship between digital financial inclusion and economic growth. It is important to note that the study was carried out on the premise that institutions play a pivotal role in enhancing economic growth in SSA.Practical implicationsThe results confirm the significance of policies that enhances institutional quality and governance which are other avenues the authorities can pursue to enhance economic growth in SSA.Social implicationsThe paper documents the importance of institutions in boosting economic growth which impacts on social life rather than digital financial inclusion only.Originality/valueThe paper makes a contribution through analysing the role of institutions and governance on the digital financial inclusion-economic growth nexus rather than the traditional financial inclusion–economic growth nexus which is common to the majority of the available empirical studies.

Economic inequality is associated with preferences for smaller, immediate gains over larger, delayed ones. Such temporal discounting may feed into rising global inequality, yet it is unclear whether it is a function of choice preferences or norms, or rather the absence of sufficient resources for immediate needs. It is also not clear whether these reflect true differences in choice patterns between income groups. We tested temporal discounting and five intertemporal choice anomalies using local currencies and value standards in 61 countries (N = 13,629). Across a diverse sample, we found consistent, robust rates of choice anomalies. Lower-income groups were not significantly different, but economic inequality and broader financial circumstances were clearly correlated with population choice patterns. Ruggeri et al. find in a study of 61 countries that temporal discounting patterns are globally generalizable. Worse financial environments, greater inequality and high inflation are associated with extreme or inconsistent long-term decisions.

The study examines the relationship between savings and economic growth in South Africa for the period 1986–2018. The Johansen cointegration technique and the Vector Error Correction Model were emp...

This study sought to examine the effects of remittances on economic development on selected SADC states. Remittances are important for the survival of poor individuals, households and societies around the world. The funds sent by migrants are a crucial means of survival that can assist families in buying food, sending children to school and building basic shelter. Given the poor economic development in these SADC countries and the probable development outcomes of remittances, remittances income should be critical to the SADC countries. However, literature shows that relationship between remittances and development is not always clear. Remittances may bring positive or negative effects. It is against this background that this study sought to examine the effects of remittances on economic development on selected SADC states. The study used panel data and the sample included five SADC countries (Zimbabwe, Mozambique, Lesotho, Eswatini and DRC) for the years 2005-2015. The study used a Fixed effects model, random effects model and a GMM approach to estimate the effects of remittances and economic development. Results showed that remittances have a positive effect with economic development. This finding suggests that remittance inflows are able to stimulate economic development. The study recommended that the government put in place policies that enhance the remittances transformation to economic development.

Financial development is widely regarded as another conduit through which income inequality can be reduced. The study empirically examines the relationship between financial development and income inequality in selected Southern African Development Community (SADC) countries, employing the Generalised Method of Moments technique for the period 1980 to 2016. Based on the inequality-decreasing hypothesis, a model which links financial sector development and inequality was estimated. Empirical results revealed that financial sector development overall does have an impact on income inequality in the selected SADC countries. An interesting observation from the empirical results is that the actual dimension of financial development plays a significant role in determining the relationship between financial development and income inequality in the SADC region. The impact of financial depth on income inequality is not obvious in the study, depending on the variable used. On the relationship between financial system stability and income inequality, results reveal that a stable financial system is beneficial to the poor. Financial efficiency does not appear to have a significant role in reducing income inequality in the selected SADC countries. The findings imply that a specific approach to financial sector development rather than a blanket approach is desirable.

This paper investigates the indirect effects of lifestyle risk factors associated with non-communicable diseases on labour force participation in South Africa utilising data from the National Incom...

This study explores the impact of accumulated pension funds on the investment level and economic growth in South Africa using Bayesian Linear Regression (BLR) model. Time series data on Gross Domestic Product (GDP), total official pension funds and gross fixed capital formation (as a proxy for total investment level) from 1990(Q1) to 2019(Q3) were employed. The study makes use of MCMC (Markov Chain Monte Carlo) algorithm to obtain regression model parameters. The empirical findings from Bayesian Linear Regression estimation suggest that the mean effects of pension funds on economic growth and investment level in South Africa are approximately zero. The empirical conclusion is further corroborated by FMOLS results, which show that accumulated pension funds have no significant impact on the overall investment level and economic growth in South African economy. The study recommends that policy makers and the pension funds regulators have to come up with workable means by which pension funds can be invested to significantly benefit the economy; at the same time, ensuring the safety of the invested funds so as not to jeopardize the interest of pension funds owners.

This study investigated the relationship between sustainable development and crude oil revenue (COR) in selected oil-producing African countries from 1992&ndash, 2017 using the Pooled Mean Group (PMG) estimators on panel autoregressive distributed lag model (ARDL). Sustainable development was measured with the Human Development Index (HDI). This study was significant for Africa to break away from fiscal over-dependence on natural resource revenue, especially crude oil due to its high volatility and to correct porous institutional outlook. The a priori expectation is that crude oil revenue will tank so much that many countries will record negative positions and might not be to meet fiscal demands in the long run if the situation is protracted. Empirical results revealed that there was no long-term relationship between COR and sustainable development. In other words, the results suggest that any changes to COR have a potential negative effect on sustainable development in the selected countries. This implies over-reliance on COR will impact the economies negatively in the long run. This finding, therefore, requires an immediate fiscal intervention on spending on sustainable development drivers such as education, health, agriculture cum adoption diversification policy, and veritable supply-side policies that could avert the possibility of these negative effects and to correct traits of ineffective public institution. The absence of such policy interventions in these countries seems to be related to ineffective public institution and bad governance, culminating from poor, ineffective, and inefficient implementation.

The importance of foreign capital in the domestic economy cannot be underestimated as it bridges the gap between domestic capital demand and supply. Given this background the paper studies the rela...

PurposeThe purpose of this paper is to examine the relationship between financial sector development and inequality in South Africa for the period from 1990 to 2012. Unlike previous studies, the study examines the role of both the broad measure of financial sector development (Bank credit to the private sector) and a measure of financial inclusion (ATMs).Design/methodology/approachUtilising quarterly data, the autoregressive distributed lag bounds testing model approach to cointegration test was estimated. The approach was preferred due to its compatibility with data of different orders and flexibility.FindingsThe findings indicate that financial development, especially when it is inclusive reduces the level of inequality in South Africa both in the short- and long-run. The results also highlighted that economic growth, external trade activities and government activities have played a very important role in reducing inequality in South Africa. On the other hand the empirical results also highlight that increasing inflation is regressive on inequality in South Africa.Research limitations/implicationsThe results from the study imply that financial development on its own though important may not benefit the disadvantaged groups such as the poor and the rural community until it is inclusive. It is important to note that the study was carried out on the premise that inequality plays a very important role in exacerbating poverty levels in South Africa.Practical implicationsThe paper highlights another avenue which authorities can pursue to reduce the level of inequality in the country.Social implicationsThe paper documents the importance of financial inclusion in reducing the level of inequality in South Africa rather than advocating for financial sector development only.Originality/valueThe paper makes a contribution through analysing the effect of financial inclusion on income inequality rather than broad financial sector development which is common to the majority of the available empirical studies.

The majority of countries in the SADC region are experiencing low levels of domestic savings. This calls for the need to explore other sources of capital to bridge the gap between domestic capital demand and supply, and one such source is external financial flows. It is with this background that this study examined the causal relationship between external financial flows and economic growth in the SADC region for the period from 1980 to 2012 employing Panel granger causality test under the fixed effects approach. Panel granger causality tests are more efficient because of the larger number of observations which increases the degrees of freedom as well as reducing collinearity amongst the explanatory variables. In addition, the fixed effects approach does take into account potential heterogeneity of the individual cross sections. Unlike the previous studies, the study disaggregates the different forms of external financial flows. Based on the data from the World Bank, the empirical results reveal that at aggregate regional level there exists a bidirectional causal relationship between economic growth and external financial flows in the region. However when foreign capital flows are disaggregated, the effect is not the same. FDI exhibits bidirectional causality with growth in the majority of the countries in the SADC region. On the other hand cross border bank flows was found to have an insignificant causal relationship with economic growth. ODA and remittances reveal a unidirectional causality from the two types of capital to economic growth. The empirical results also revealed that those countries which are “better off” and sound in the region rely less on aid and remittances and are able to attract private foreign capital such as FDI. At the same time countries which are “worse off” rely more on ODA and remittances. The results imply that the state of the country acts as an important determinant factor attracting foreign capital flows to the SADC region. The other implication which is inferred from the results is that countries in the SADC region should integrate to benefit from cross border bank flows.

This paper identifies the factors influencing women participation in politics in the SADC region. The paper drew from the fact that the 30% average woman participation rate is still only half way to the target of 50% women representation required by the Protocol on Gender and Development of 2008. The paper argues that full and equal participation of both women and men in political decision-making provides a balance that more accurately reflects the composition of society, and may as such enhance the legitimacy of political processes by making them more democratic and responsive to the concerns and perspectives of all segments of society. Based on the pooled OLS and GMM dynamic panel of Blundell and Blond (1998) on 14 SADC countries over the period 2010–2017, the findings show that labor participation, functioning of government, political culture, the overall political participation have a positive relationship with women political participation. Results showed that civil liberties, human development index, electoral process and pluralism have a negative relationship with women political participation. The study recommended that governments, the SADC region, engage political players, especially political parties, to ensure that they actively involve and appoint more women in their political structures.

This article examines the link between financial sector development and savings mobilisation in South Africa for the period 1980–2012. Taking the life-cycle hypothesis as our theoretical background and using Johansen co-integration that allows for hypothesis testing, the empirical results revealed a long-run relationship between savings, interest rates and financial sector development. We find an inverse relationship between the interest rate and savings, implying that South Africans are net borrowers because the income effect overwhelms the substitution effect. This in part explains the low level of savings in recent time. Important policy lessons for boosting the national savings rate are discussed.

The importance of the bond market to the financial system and broader economy of a country cannot be underestimated. Thus this study seeks to establish the determinants of liquidity in the South African bond market using monthly data covering the period 1995 to 2009, employing the Johansen cointegration test and the Vector Error Correction Model. Empirical results reveal that there is a longterm relationship between the selected macroeconomic variables and bond market liquidity in South Africa. Based on the empirical results, it is recommended that authorities should keep inflation at low and stables levels as well as a stable currency. Of great importance in the study is the role played by foreign investors in the bond market. The positive impact of the foreign investor participation on the bond market liquidity in South Africa suggests that authorities should remove restrictions on foreign investor activities to enhance liquidity in this important market.

The paper empirically examines the dynamic relationship between financial development and economic growth in South Africa in terms of financial intermediaries and financial markets based structure. A time series analysis using the VAR Model provided evidence for the dynamic relationship. The paper provides empirical evidence on the causal impact of the financial market on economic growth in South African. The results suggest that financial intermediaries and financial markets have different impacts on economic growth given their different roles in the economy. In particular, there is bidirectional causality between stock market and economic growth. Also, a unidirectional causality from the bond market to economic growth was established. However, as for financial intermediaries, causality runs from economic growth to financial intermediaries. This suggests the importance of the financial market in economic development in South Africa. Key words: Financial markets, financial intermediaries, economic growth, vector auto-regression, Granger causality.

The study examines the determinants of three forms of foreign capital, cross-border bank flows (CBF), foreign direct investment (FDI) and oversees development assistance (ODA) in the SADC region over a period from 1980 to 2012 utilising the 3SLS model and the GMM. The empirical results reveal that both domestic and foreign factors are important determinants of private external financial flows (FDI and CBF) to the SADC region. In all the regressions estimated in the study, foreign variables emerged to be significant in influencing the flow of finance to the region. This suggests that events in developed countries can reduce the amount of external financial flows to the developing countries. Thus, relying on foreign capital flows may humper growth prospects in the SADC countries. This therefore suggests that mobilisation of domestic resources can be an avenue worth exploring to enable sustainable long-term growth in the region.

This paper discusses the nature of livelihood strategies within the Eastern Cape province of South Africa. The analysis is based on a survey conducted among 2000 households throughout the province. Content and statistical analysis is used to summarise the results. The role played by government structures in the process of livelihood implementation is discussed. Links are drawn between local community resources and the diverse livelihood strategies that households engage in. The results show that there is a very weak link between resources in communities and associated livelihood strategies. Moreover, institutional structures tend to inhibit successful exploitation of such resources in some cases. Regulatory compliance and attendant costs also constrain participation in sustainable resource use.

The increased interest in capital flows has made it imperative to understand how it impacts on economic growth. The Global drive for an interlinked world economy has increased the need for monetary authorities and Governments to able to effectively deal with any negative spins off from capital flows and also be able to take advantage of positive effects capital flows may have on an economy. The study explores the impact of the easing of restrictions on capital flows within the South African economy on Economic growth. The study analysed the relationship that exist between capital flows, measured with foreign direct investment (FDI) and portfolio investment (P_I) and economic growth. Empirical results revealed that there is a long-run relationship between the variables of interest. Therefore the results implies that to maximise capital account liberalization, the economy should maintain sound macroeconomic policies. This will help shield the economy from the external shocks and this maintain economic growth. DOI: 10.5901/mjss.2014.v5n20p2753

The paper empirically examines the causal relationship between bond market development and economic growth in Africa with South Africa as a case study over a period from 1995 to 2012. Quarterly data applying the Engle Granger cointegration method and the pairwise granger causality test was used. Empirical results reveal that there is a relationship between economic activity and bond market capitalization. Our results imply that African governments should put in place policies which will promote the development of the bond market as one of the ways to mobilise domestic resources and promote economic growth. DOI: 10.5901/mjss.2014.v5n3p126

The paper empirically investigates the extent to which the South African stock market is integrated to other African stock market as well as the developed markets as represented by the US, Japan and German. The study employs the Autoregressive Distributed Lag (ARDL) approach to cointegration because it is a more reliable method than other conventional cointegration approaches and is also applicable even if the series are integrated of different orders, as long as none is of order 2 or more. It is also more robust and performs well for small sample sizes unlike the conventional approaches which are valid for large sample sizes. The results of empirical tests suggest that the South African stock market is fully integrated to the developed markets. However, the South African stock market is not fully integrated to other African stock markets. This suggests that investors can diversify their portfolios by investing in other African stock markets. DOI: 10.5901/mjss.2014.v5n2p619

The study examines the determinants of savings in the SADC region, mainly focusing on the roles played by external financial flows and financial development in mobilising domestic savings utilising panel cointegration method and the Dynamic ordinary Least Squares (DOLS) approach from 1980 to 2009. Following the review of literature, the empirical model adopted established that there is a long-run relationship between the variables of interest. The results indicate that income, proxied with GDP, financial sector development and foreign capital have a positive relationship with savings. The results also suggest that financial sector development has played a very important role in influencing savings in the region. However on the other hand the results indicate that interest rate and dependency ratio have influenced savings negatively. The empirical results support the hypothesis that foreign savings bridges the gap between domestic demand and supply of finance in the SADC countries. There is need to attract more foreign capital given that it compliments domestic savings. At the same time policies aimed at financial deepening should still be pursued to further deepen the financial system in the SADC countries to further enhance savings.

South Africa has been experiencing unprecedented budget deficits since the 1960s, in light of this, the study investigates whether budget deficits crowd out or crowd in private investment in South Africa, using quarterly data covering the period 1994 to 2009. An empirical model linking private investment to its theoretical variables is specified and used to assess the quantitative effects of budget deficits on private investment. The study augments the cointegration and vector auto–regression (VAR) analysis with impulse response and variance decomposition analyses to provide robust long run and short run dynamic effects on private investment. The empirical results revealed that there is a long–term relationship between private investment and its determinants specified in the model. This implies that budget deficits significantly crowds out private investment in the long–run. These results corroborate the theoretical predictions and are also supported by previous studies.

The external debt issue has recently been a subject of topical concern in South Africa. In the 2014 budget review, the Treasury proposed to increase external debt as a percentage of GDP from the 2013 figure of 39.9% to about 43.9% by 2016. This proposal was contrary to the IMF recommendation that South Africa should cut its external debt to figures below 40% of its GDP. In this paper, the vector auto-regression model was used to analyse the determinants of the South African external debt utilising annual data from 1980-2013. Empirical results reveal that external debt in South Africa is mainly due to sluggish levels of economic growth and high levels of government spending on infrastructure.

The study examines the stability of the money demand function from 1994 to 2012 using quarterly data. The study utilises the Johansen co-integration to analyse the long-term relationship between the money demand function and its determinants. The CUSUM and CUSUMSQ were also used to examine the stability of the South African money demand function. The co-integration test proved that there exists a long-term relationship between the money demand function and its determinants. However, the CUSUM and CUSUMSQ proved that the South African money demand was unstable from 2003 to 2007. This therefore justifies the use of the repo rate as a monetary policy tool as compared to the monetary aggregates.

Globalisation has resulted in financialisation, which is the free flow of funds across borders. Because of the global financial crisis and the European debt crisis, there has been a decrease in the volume of external funds to developing countries. This has left remittances as one of the major sources of finance for growth in developing countries. The study investigated the macroeconomic effects of remittances in developing countries. Utilising panel study techniques, the study analysed yearly data of 22 countries covering the period, 1960–2010. Empirical evidence suggests that remittances diminish macroeconomic volatility mainly in receiving developing countries, presumably through smoothening aggregate consumption. The analysis further revealed that remittances do not have uniform macroeconomic effects from country to country or across time.