Assessing alternative monetary policy frameworks and instruments in selected African economies

A thesis submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in fulfilment of the requirements for the Degree of Doctor of Philosophy in Economics, October, 2017This thesis contains three core chapters that assess the performance of alternative monetary policy frameworks and instruments in stabilizing 10 selected African economies. Literature and practice show that Advanced Economies (AEs) and Emerging Market Economies (EMEs) are mostly adopting the ination targeting (IT) framework. This framework relies on active use of the interest rate as a policy instrument for macroeconomic stabilisation. Di⁄erent from AEs and EMEs, the majority of African countries are characterized by low nancial market development, frequent supply shocks and volatile terms of trade. These features impede the e¢ ciency of the IT framework and the interest rate instrument. Supply shocks imply that ination is not only demand driven. Volatile terms of trade translate into excessive exchange rate uctuations. Due to these factors, policy practice in Africa remains largely divergent from the global trend. Authorities still rely on monetary aggregate targeting (MAT) with de facto managed exchange rates. However, the MAT framework is also failing to stabilize economies. This follows instability of the key factors, such as the money demand, upon which the framework is anchored. Furthermore, controlling exchange rate movements is a challenge due to weak balance of payments positions. It is not surprising, therefore, that the majority of African economies still remain in the grip of macroeconomic instability. Ination and GDP targets are rarely met and they also remain volatile. The perverse macroeconomic features and the perceived failure of the MAT regime have necessitated the search for alternative monetary frameworks and instruments. In this study, we join the search by specically focussing on three questions. First, given the macroeconomic landscape in Africa, what is the relative performance of the interest rate vis--vis the monetary aggregate as instru iv ments for macroeconomic stabilization? Secondly, how do these instruments perform when apart from ination and output stabilization, monetary policy also engages in smoothing exchange rate uctuations? Thirdly, what is the relative performance of ination targeting vis--vis nominal GDP targeting as alternative monetary policy regimes for macroeconomic stabilization in African economies? Although the success of monetary policy largely relies on appropriate conguration of monetary policy frameworks and instruments, answers to these questions remain controversial and scanty for African economies. In order to address these questions, we formulate a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. In this model, money is non-separable from consumption in the utility function. We estimate the model using the Maximum Likelihood method with quarterly data mostly from 1990 to 2014. The data is obtained from the International Financial Statistics (IFS). The thesis has ve chapters. Chapter 1 is the general background to the research problem. Chapters 2, 3 and 4 are distinct but related core chapters addressing three specic research questions. Chapter 5 is the conclusion. In Chapter 2, we compare the performance of the monetary aggregate and the interest rate as alternative instruments for stabilizing ination and output in 10 selected countries. Results show that the monetary aggregate is superior in stabilizing 5 economies. In the other 5 countries, it is the interest rate instrument which performs better. In the former group of countries, the monetary aggregate plays a relatively large role in macroeconomic dynamics while in the latter the interest rate is more signicant. These results partly reect di⁄erences in nancial market development between the two groups of countries. Overall, we nd a weak role of the interest rate compared to the monetary aggregate in driving aggregate demand dynamics. The exchange rate is also found to be a key driver of macroeconomic dynamics. Our re v sults suggest three things: First, authorities in Africa need to be cautious of a blanket adoption of the interest rate as a sole monetary policy instrument. Second, authorities will nd it di¢ cult to stabilize economies using the interest rate based frameworks. Third, exchange rate stability is key to macroeconomic stability in Africa. In Chapter 3, we extend the authoritiesobjective function. In addition to minimizing ination and output volatility, authorities also use the interest rate or money supply rules to smooth exchange rate uctuations. The results show that macroeconomic performance is enhanced when authorities smooth exchange rate uctuations in 4 of the 10 countries. The gains from exchange rate smoothing mostly arise from a reduction in ination and exchange rate volatility but not fromoutput. In the other 6 countries, exchange rate smoothing worsens macroeconomic performance. These results reect the fact that the exchange rate exerts a relatively large inuence in macroeconomic dynamics in the rst group of countries compared to the latter. Exchange rate smoothing therefore minimizes the pass-through of the exchange uctuations to ination and output leading to better performance. Overall, the ndings suggest that exchange rate smoothing is harmful in Africa. Where exchange rate smoothing delivers gains, appropriate thresholdsofsmoothingneedtobeobservedtoavoidpolicyinducedmacroeconomic instability. Authorities should also smooth temporal rather that structural shifts in the exchange rate level. In Chapter 4, we compare the performance of ination targeting (IT) vis-vis nominal GDP targeting (NGDPT) as alternative monetary policy frameworks for macroeconomic stabilization. We examine the strict and exible versions of these policy regimes. We also include a hybrid regime which combines elements of IT and NGDPT. Results show that the hybrid regime performs better in 5 countries. In the other 4 countries, it is the strict ination targeting that performs better. In 1 country, exible ination tar vi geting is optimal. The results also reveal that demand shocks dominate but are closely trailed by supply and exchange rate shocks in explaining macroeconomic uctuations. The multiplicity of signicant shocks is key in explaining the dominance of the hybrid regime. The hybrid regime successfully handles shocks that can neither be optimally handled by the IT regime nor the NGDPT regime alone. These results have several implications. First, demand management alone is insu¢ cient to stabilize African economies. Second, identifying dominant shocks is critical for choosing robust monetary policy regimes. Third, the multiplicity of signicant shocks implies that choosing monetary policy frameworks and hence macroeconomic management process is more complex for African policy makers. Overall, the results have several policy implications which are outlined in Chapter 5. First, they suggest a cautious approach towards generalized adoption of the interest rate over the monetary aggregate as a monetary policy instrument in African economies. This contradicts the current wave of monetary policy changes sweeping across African countries. Secondly, the signicanceoftheexchangeraterenderscredencetoexchangeratesmoothing in Africa. The ndings, however, suggest that exchange rate smoothing can either enhance or worsen macroeconomic performance. Where it enhances macroeconomic performance, authorities must carefully consider the thresholds of smoothing to avoid creating macroeconomic instability. Authorities need not ght structural shifts in exchange rates levels through smoothing. This would help to preserve the shock absorbing role of the exchange rate. Finally, the prevalence of demand, supply as well as exchange rate shocks makes the hybrid monetary policy regime which combines elements of IT regime as well as NGDPT regime to perform relatively better in stabilizing the majority of the economies. Given the multiplicity of shocks, authorities inAfricaneedtocomplementdemandmanagementwithpoliciesthataddress supply side and exchange rate bottlenecks to ensure sustainable macroeco vii nomic stability. Overall, the ndings suggest that there is scope to improve monetary policy performance in Africa by adopting suitable frameworks and instruments. The results also highlight the problem of tackling monetary policy issues with a "one size ts all" approach.GR201

Bus trip to Joni: the story of undocumented Malawian migrants’ journeys to Johannesburg

Submitted in fulfilment of the requirements for the degree of Master of Art in Journalism and Media Studies, University of the Witwatersrand, Johannesburg, 2016This is a story of undocumented migrants’ journeys between Malawi and Johannesburg, exposing the challenges they face and the corruption that takes place along the borders. Modern migration between the two countries has taken place for close to two hundred years. In the past, migrants, most of whom worked in the mines, were protected by law and that eased their movements. These days, low skilled migrants do not qualify for work permits so they stay in the country illegally. The South African law qualifies such migrants as undesirable visitors and bans them from returning to the country for some time. This research project documents how such migrants return home and come back to South Africa even before their bans expire. The research exposes how the migrants are aided by corrupt officers at the borders. The story shows how some of the migrants utilised a weakness in the old Malawi identification and passport system to obtain new travel documents under false names and return to South Africa undetected. This research project adopted an ethnographic approach. The findings are presented in a longform narrative story, which forms the first part of this document. The story is accompanied by a method document, which provides the theoretical framework and explains the methodology.GR201

Vulnerability in Holstein-Friesian dairy cows : risk factors for culling and effect of temperament on oestrus

The general aims of the work were to determine the factors associated with vulnerability in Holstein- Friesian dairy cows in two scenarios: A) culling and B) the effect of temperament on days to first recorded oestrus in dairy cows. Vulnerability was defined as either an increased risk of being culled or having long interval from calving to first recorded oestrus in cows. The work was carried out in two distinct studies. The objective of the first study was to identify the predisposing factors for an increased risk of culling in adult Holstein-Friesian dairy cows. This study was conducted using data sourced from Scottish Agricultural College Langhill database. Between September 2003 and August 2010, 519 cows calved for the first time and 175 of these were culled. The major reasons for culling were fertility (9.2%), udder problems (9.1%) and accident (6.2%) on which further analysis was performed. The culled cows were matched with their cohorts that survived to a later lactation. Cows assessed for the risk of being culled due to major reasons had a mean age at first calving of 26.2 months (Standard Deviation (SD) =2.4). Cows with high body condition score (BCS) at service and low 60-day (60d) milk protein had a significantly (P<0.05) increased likelihood of being culled due to infertility. The regression estimate (RE) was 1.67 for Service BCS and -2.43 for 60d milk protein with predicted probability (PP) of 0.91. However in first lactation heifers, only BCS at service was significant (P<0.05, RE=2.65 and PP=0.86). Cows with a reduced interval to reach peak milk yield had a significant (P<0.01) likelihood of being culled due to udder problems (RE=-0.05 and PP= 0.89). Locomotion score and parity were not significant on increasing the risk of culling cows due to accident. Hence higher BCS at service, low 60d milk protein and short duration to peak lactation are factors that place dairy cows at an increased risk of being culled. The second study aimed at determining the association between temperament and days to first recorded oestrus in adult dairy cows. Temperament traits that were studied were flight response score, nervous, interest, shy, bold, fear and docile. Number of days to first recorded oestrus after calving was the dependent variable in the analysis. Seventy Holstein-Friesian dairy cows, mean age at first calving 25 months (SD=1.9) were used in the study. Temperament traits for individual cows were recorded on day 30 before calving, and on days 30 and 60 after calving. Temperament traits were quantified using an Approach Passageway test. On average the first oestrus occurred 55.5 days (SD=17.9) after calving. The study showed that temperament traits did not significantly affect the number of days to first recorded oestrus. Within the temperament traits, nervousness, shyness, boldness, fearfulness and docility were significantly (P<0.001) related to flight response score while interest was not. In conclusion, higher than average BCS at service, low milk protein content at day 60 in lactation and short duration to peak lactation exposes cows to an increased risk of being culled while temperament did not influence number of days to first recorded oestrus after calving

Perceived challenges in business development of smallholder dairy farmers in three Malawian regions

Dairy farmers face various challenges in developing their businesses. The current literature identifies several constraints towards a more efficient dairy sector that relate mostly to on-farm management practices. The available studies analyze constraints mostly from the objective viewpoint of the researcher, whereas very little is known about what farmers themselves perceive to be challenging. To better understand the farmers’ perspective and what they perceive to be challenging, and how these challenges differ across regions, this paper builds on a survey of 529 dairy farmers in Malawi. In the survey, respondents were asked in an open question to name their three main challenges. Based on the responses, a three-level coding scheme was elaborated. Data were then coded by two researchers to ensure reliability of coding. Codes were then used to calculate relative frequencies for the different challenges and to perform chi-square tests to check for regional differences in frequencies. Results suggest that farmers perceive low milk price and milk yield, animal health, availability of feedstock, and the costs for drugs as the main challenges. The analysis also revealed that the challenges vary strongly between the three main regions in the country – Blantyre (south), Lilongwe (central), and Mzuzu (north). The perceived challenges reflect the different production systems in the regions. In Blantyre, dairy farming is low in intensity, and farmers thus perceive inputs, in particular the availability of fodder, as well as outputs, in particular milk yields more frequently as a challenge than farmers in Lilongwe and Mzuzu. In contrast, dairy farming in Lilongwe is the most intense. Accordingly, farmers in Lilongwe perceive costs, in particular for inputs such as mash and concentrates as major constraints. Farmers in Mzuzu, which is a rather remote region, consider a lack of assistance, in particular concerning extension services significantly more challenging than the farmers in the other two regions do. Considering these insights, development work and extensions services may be able to increase outcomes in the dairy sector by targeting the regional challenges.Keywords: Challenges, dairy production, smallholders, Malawi, qualitative study, region

Historical amnesia: a study into the causes of the disconnection between communities and their rock art sites at Chongoni Rock Art World Heritage Site

This study examines the history by which the local communities became separated from their ancestral heritage at Chongoni World Heritage Site in Malawi and then uses this knowledge to improve the management and conservation of rock art sites in the area. It demonstrates how various forces of the distant and immediate past came into play and systematically disconnected the Chewa communities around Chongoni area from their ancestral rock shelters once used by scores of generations for many important functions such as rock painting, rainmaking ceremonies and boys and girls initiation rituals. It shows that the separation of these communities from their heritage happened gradually in various episodes spread over the past 150 years. The key factors that directly or indirectly led to the separation included the early conquest of the Chewa communities by the Ngoni and other groups; conflicts with early Christian missionaries; heavy handed policies of the British colonial government; social and political failures of the post-independent state; the rise of multiparty politics, governance and human freedoms and others. Using local evidence, I build a case for each of the mentioned factors and shows how this community is still in danger of not only being completely separated from their ancestral heritage but also losing the remaining strands of their unique traditions. The study concludes by making recommendations for instituting participatory approaches in the management and conservation of Chongoni World Heritage Site

Implementation of a human papillomavirus vaccination demonstration project in Malawi : successes and challenges

Background:  Cervical cancer is a major public health problem in Malawi. The age-standardized incidence and mortality rates are estimated to be 75.9 and 49.8 per 100,000 population, respectively. The availability of the human papillomavirus (HPV) vaccine presents an opportunity to reduce the morbidity and mortality associated with cervical cancer. In 2013, the country introduced a school-class-based HPV vaccination pilot project in two districts. The aim of this study was to evaluate HPV vaccine coverage, lessons learnt and challenges identified during the first three years of implementation. Methods:  This was an evaluation of the HPV vaccination project targeting adolescent girls aged 9–13 years conducted in Malawi from 2013 to 2016. We analysed programme data, supportive supervision reports and minutes of National HPV Task Force meetings to determine HPV vaccine coverage, reasons for partial or no vaccination and challenges. Administrative coverage was validated using a community-based coverage survey. Results:  A total of 26,766 in-school adolescent girls were fully vaccinated in the two pilot districts during the first three years of the programme. Of these; 2051 (7.7%) were under the age of 9 years, 884 (3.3%) were over the age of 13 years, and 23,831 (89.0%) were aged 9–13 years (the recommended age group). Of the 765 out-of-school adolescent girls aged 9–13 who were identified during the period, only 403 (52.7%) were fully vaccinated. In Zomba district, the coverage rates of fully vaccinated were 84.7%, 87.6% and 83.3% in year 1, year 2 and year 3 of the project, respectively. The overall coverage for the first three years was 82.7%, and the dropout rate was 7.7%. In Rumphi district, the rates of fully vaccinated coverage were 90.2% and 96.2% in year 1 and year 2, respectively, while the overall coverage was 91.3%, and the dropout rate was 4.9%. Administrative (facility-based) coverage for the first year was validated using a community-based cluster coverage survey. The majority of the coverage results were statistically similar, except for in Rumphi district, where community-based 3-dose coverage was higher than the corresponding administrative-coverage (94.2% vs 90.2%, p 80%) coverage. However, this strategy may be associated with the vaccination of under- and over-aged adolescent girls who are outside of the vaccine manufacturer’s stipulated age group (9–13 years). The health facility-based coverage for out-of-school adolescent girls produced low coverage, with only half of the target population being fully vaccinated. These findings highlight the need to assess the immunogenicity associated with the administration of a two-dose schedule to adolescent girls younger or older than 9–13 years and effectiveness of health facility-based strategy before rolling out the programme.Publisher PDFPeer reviewe

Exploring a framework for demandable services from antenatal to postnatal care: a deep-dive dialogue with mothers, health workers and psychologists.

BackgroundOne of the factors affecting quality of care is that clients do not demand care practises during antenatal, intrapartum and postnatal care. This study aimed to identify care practices that can be demanded by the mother in the continuum of care from antenatal to postnatal.MethodsThe study respondents included 122 mothers, 31 health workers and 4 psychologists. The researchers conducted 9 Key Informant Interviews with service providers and psychologists, 8 Focus Group Discussions with 8 mothers per group, and 26 vignettes with mothers and service providers. Data was analysed using Interpretative Phenomenological Analysis (IPA) where themes were identified and categorised.ResultsDuring antenatal and postnatal care, mothers demanded all recommended services presented to them. Some services seen as demandable during labour and delivery included 4-hourly assessments of vital signs and blood pressure, emptying of the bladder, swabbing, delivery counselling, administration of oxytocin, post-delivery palpation, and vaginal examination. For the child mothers demanded head to toe assessment, assessment of vital signs, weighing, cord stamp and eye antiseptics, and vaccines. Women observed that they could demand birth registration even though it was not among the recommended services. Respondents proposed empowerment of mothers with cognitive, behavioural and interpersonal skills to demand services e.g., knowledge of service standards and health benefits in addition to improved self-confidence and assertiveness. In addition, efforts have to be made to address perceived or real health worker attitudes, mental health for the client and the service provider, service provider workload, and availability of supplies.ConclusionThe study found that if a mother is informed in simple language about services that she is supposed to receive, she can demand numerous services in the continuum of care from antenatal to postnatal. However, demand cannot be a standalone solution for improving quality of care. What the mother can ask for is a step in the guidelines, but she cannot probe deeper to influence quality of the procedure. In addition, empowerment of mothers needs to be coupled with services and systems strengthening in support of health workers

Non-communicable respiratory disease in Malawi: a systematic review and meta-analysis

Background Non-communicable respiratory diseases are important contributors to morbidity and mortality in sub-Saharan African countries such as Malawi. Aim To conduct a systematic review of the available literature relating to chronic respiratory disease in Malawi. Methods We conducted a systematic protocol-driven literature search of key scientific databases including Scopus and Medline. Papers were independently assessed for eligibility by two authors and included if they reported objective measures (including self-reported standard symptoms) of chronic respiratory disease and were conducted in Malawi. A meta-analysis of available estimates was then conducted. We re-analysed data from three of these studies in a secondary data analysis to allow for between-study comparisons. Results Our search identified 393 papers of which 17 (5 involving children and 12 involving adults) met the inclusion criteria. Wheeze was the symptom most frequently reported in children in the community (12.1%), hospital (11.2%) and HIV clinic (8.1%) settings. Cough was the symptom most frequently reported by adults in the community (3–18%). Spirometric abnormalities varied substantially between studies. For example, in adults, airflow obstruction varied between 2.3% and 20% and low forced vital capacity (varied between 2.7% and 52.8%. Conclusion We identified a high burden of chronic respiratory symptoms and abnormal spirometry (particularly low FVC) within paediatric and adult populations in Malawi. The estimates for country-wide burden related to this disease were limited by the heterogeneity of the methods used to assess symptoms and spirometry. There is an urgent need to develop a better understanding of the determinants and natural history of non-communicable respiratory disease across the life-course in Malawi

Aqua­{2-morpholino-N-[1-(2-pyrid­yl)ethyl­idene]ethanamine-κ3 N,N′,N′′}bis­(thio­cyanato-κN)nickel(II)

In the title compound, [Ni(NCS)2(C13H19N3O)(H2O)], the NiII ion is six-coordinated by the N,N′,N′′-tridentate Schiff base, the N atoms of two thio­cyanate ligands and one water O atom in a distorted octa­hedral geometry. Intra­molecular C—H⋯N and C—H⋯O hydrogen bonds occur. In the crystal, O—H⋯S, O—H⋯O and C—H⋯S hydrogen bonds link adjacent mol­ecules into layers parallel to the ac plane