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  5. Disease, Uncertainty and African Economies
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Disease, Uncertainty and African Economies

Paper Session

Sunday, Jan. 3, 2021 3:45 PM - 5:45 PM (EST)

Hosted By: National Economic Association & African Finance and Economics Association
  • Chair: Leonce Ndikumana, University of Massachusetts-Amherst

Building Resilience to Extreme Weather Shocks in Africa: The Role of Climate-Proofing Infrastructure

Hanan Morsy
,
African Development Bank
Eman Moustafa
,
African Development Bank
Lacina Balma
,
African Development Bank

Abstract

Natural disasters such as storms, floods and drought are common and increasing
shocks in Africa. In addition to deaths toll they inflict, natural disasters destroy public and
private infrastructure needed for the economy to function, disrupting economic and social
activities with long-lasting effects. They also put considerable strains on government finances,
frequently demanding a swift reconstruction of damaged infrastructure. However, there may be
a limited room for fiscal adjustment such as raising additional revenues or cutting expenditures
on the one hand and accessing external financing on the other. We study the macroeconomic
impacts and fiscal costs of extreme weather events in Africa and examine ex ante how African
countries can building resilience strategies, such as climate-proofing infrastructure and
accumulation of contingency fiscal buffers. Ex post, we study the debt sustainability concerns
of financing the reconstruction of public infrastructure over the medium term. The results reveal
the following. First, investing in resilient infrastructure is useful in attenuating the impact of
the natural disaster. Second, building contingency fiscal buffers can smooth out the fiscal
adjustment needed to finance post-disaster reconstruction. Finally, governments cannot face
damages alone: grant-financing is key for debt sustainability and reducing the social cost of
abrupt adjustment. Thought there are principal-agent issues linked with such a strategy, the
donor community would need to significantly scale up its financial contributions following the
disaster shock

How Income Uncertainty Affects Child Labour: Evidence from the Cocoa Households’ Financial Diaries

Samuel Amponsah
,
Tokyo International University
Nathan Munier
,
Tokyo International University
Savannroeun Samreth
,
Saitama University

Abstract

We use data from the Cocoa Households’ Financial Diaries to study how income uncertainty affects child labour. The Cocoa Households’ Financial Diaries is an on-going research in Ghana aimed at tracking a continuous year-long worth of month-to-month income and other indicators for 360 cocoa producing households’ from twenty cocoa districts (twenty-four political districts) in five administrative regions of the country. Some preliminary findings from five months of data collection provide us with clearer understanding of a rarely observed nature of income volatility among cocoa producing households. Our descriptive analysis indicates that where child labour takes place, incomes are consistently lower and also more stable. However, where no child labour occurs, there is probably less economic uncertainty as income from cocoa harvesting during the main crop season could last far longer around the year.

Germs, Globalization, and Trade Spillovers: How Could COVID-19 Affect African Economies and AFCFTA

Gouranga Das
,
Hanyang University
Jean-Claude Maswana
,
Ritsumeikan University
Yumeka Hirano
,
World Bank

Abstract

The present investigation evaluates the growth-effects for African countries and the disruptive potentials resulting from the COVID-19 pandemic, as African countries are involved intra-regional integration processes. Particularly, the effects of preferential agreements and imports of parts and components out of the continent, mainly from China, on intra-regional trade are examined. The study simulates scenarios of technology-imports contents in the CGE model. In particular, the ricochet effect of the trade in intermediates in the presence of COVID-19-induced trade disruptions will be studied. The paper proposes some fresh evidences on the risks posed by trade plus non-trade external shocks to African intra-regional integration, given the region’s weaker production basis. Findings also indicate that technological benefits due to trade liberalization under FTA may be hindered by non-trade factors like epidemic or pandemic resulting in skill deficiencies, and translating into productivity slowdown.

Do Better Institutions Broaden Access to Sanitation in Sub-Saharan Africa?

John Nana Francois
,
West Texas A&M University
Johnson Kakeu
,
University of Prince Edward Island
Cristelle Kouame
,
World Bank

Abstract

Inadequate access to sanitation remains a persistent issue in sub-Saharan countries, affecting the lives of millions of children, women, workers, and families. This paper examines whether expansion in institutional quality broadens access to improved sanitation in the region. We employ a dynamic panel-data model and data from 44 sub-Sahara African countries over the period 2002-2015 to estimate the direct effect of institutional quality on access to sanitation. We find that institutional quality promotes access to improved sanitation with control of corruption, regulatory quality, and voice and accountability playing the most significant roles. We also find a dichotomy between rural and urban areas in which aspects of institutions increase access to sanitation. Specifically, in urban areas, the populace's ability to participate in selecting government and expressing freedom through associations and free media drives access to sanitation. In contrast, efficient curbing of corruption, increasing rule of law, and enhancing the capacity of governments to formulate and implement sound policies facilitate access to sanitation in rural areas.
Discussant(s)
Kwabena Gyimah-Brempong
,
National Science Foundation
Belinda Archibong
,
Columbia University-Barnard College
Julius A. Agbor
,
Vanguard University of Southern California
Mina Baliamoune-Lutz
,
University of North Florida
John Nana Francois
,
West Texas A&M University
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty
  • F0 - General