African J. of Economic and Sustainable Development (4 papers in press)

Regular Issues

• Private investment in Guinea-Bissau : main determinants and key reforms  
  by Cheikh Ahmed T. Sall 
  Abstract: There is a dearth of knowledge on the determinants of private investments in Guinea-Bissau. This paper aims to fill this gap, using the autoregressive distributed lag (ARDL) approach, in order to identify short-term and long-term determinants. Our results reveal an increasing importance of international drivers, in particular remittances and foreign direct investment. Demand, proxied by real GDP, is significant only in the short term and, socio-political instability negatively affects private investment. These results confirm the need to accelerate reforms aimed at improving the business environment and promoting the diversification of the financial sector. Indeed, domestic credit to the private sector generally stimulates private investment, but its impact does not appear to be significant in Guinea-Bissau according to our estimation results. Therefore, it may be useful to put in place more suitable financing structures, in particular a viable micro-credit infrastructure, and sectoral banks for agriculture, housing and investment.
  Keywords: private investment determinants; low income country; model ARDL; break tests; Guinea-Bissau.
  
  
• Household savings in informal social groups in Kenya: does accountability matter?  
  by Jacqueline Agesa, Richard U. Agesa 
  Abstract: Social groups play a vital role in providing informal financial services in sub-Saharan Africa. This study offers the first examination of the impact of social group accountability on savings contributions to informal market social groups (Chamas) in Kenya. Specifically, we utilise a national dataset to examine the impact of accountability on household contributions to Kenyan Chamas. We find evidence that low-cost accountability initiatives such as securing Chama funds in a money lock box, or a bank account, and the separation of the Chama chair and treasurer positions increase Chama contributions. These findings provide insight into how low-cost accountability initiatives enhance contributions in informal financial markets. By contrast, registering a Chama with the Kenya government significantly reduces Chama contributions. Moreover, Chama registration is accompanied by non-trivial costs and members of registered Chamas are required to pay the appropriate tax liability on their portion of Chama generated income. Such findings serve as a cautionary tale that cost inducing accountability initiatives may inadvertently suppress households’ willingness to contribute to informal social groups, possibly stifling households’ propensity to save.
  Keywords: Chamas; informal social groups; informal financial markets; rotating savings and credit organisations; ROSCAs; accumulated savings and credit associations; ASCAs; Kenya; Africa.
  
  
• Effect of taxation on the productivity of firms in Ivory Coast  
  by Nohoua Traore 
  Abstract: This paper analyses the effects of taxation on the firm productivity using a Probit model with instrumental variables based on data collected from 560 firms in Ivory Coast. Results indicate that the taxation and the performance of the firm are not antinomic objectives contrary to neo-liberal thinking. On the contrary, there is a positive correlation between these objectives. Informal enterprises which partially formalise themselves also improve their labour productivity of 40.2%, and this increase in productivity is greater (54%) when the enterprise is fully taxed. Moreover, analyses show a greater positive effect of taxation on the labour productivity by an average of 48.9% when the manager is a man rather than a woman (41.7%). Thus, the analysis is unequivocal about the idea that tax levies would reduce the productivity efforts of enterprises in the same way as any cost of legality.
  Keywords: effect; taxation; firm; productivity; Ivory Coast.
  
  
• Who is aware of circularity? Firm-level survey evidence from Uganda  
  by Klaus S. Friesenbichler, Ina Meyer 
  Abstract: This paper presents an analysis of the distribution of knowledge about the circular economy as a business concept. Knowledge is a prerequisite for the diffusion of innovation and, consequently, the incorporation of a higher degree of circularity into economic processes. The study examines the economic factors influencing the distribution of knowledge across firms. Using novel survey data from Ugandan enterprises, we present empirical evidence of circularity in a developing country context. In line with the resource-based view of the firm, the findings indicate that larger and more economically productive firms, as well as firms with proactive business strategies, are more likely to be informed about circularity. Exposure to environmental barriers, such as adverse climate change impacts or high energy intensity, does not affect awareness. Policy makers should improve environmental regulation, inform entrepreneurs about opportunities in circular business models, and facilitate the establishment of a waste sector.
  Keywords: circular economy; awareness; innovation; diffusion; Uganda; firm; survey; resource-based view.