South Africa, NEPAD and the African Renaissance

ASC – Publicaties niet-programma gebonde

The role of multinational corporations in local dairy value chain development: a case of Friesland Campina WAMCO (FCW) in Nigeria

Nigeria is arguably the largest importer of dairy products in Africa. Available statistics shows that up to 98% of the total dairy products consumed in the country are imported; and that about 75% of the entire dairy market is controlled by FrieslandCampina WAMCO (FCW). The purpose of this study is to examine the basis for the prevailing import orientation in the dairy industry since 1973. Is the orientation traceable to operations of multinational companies or the institutional and governance challenges in the country? Using triangulated data collected from FCW official reports and other relevant sources, and a content analytical technique, the study finds that the problem in the industry is multifaceted. Central to the challenges are persistent institutional and infrastructural defects, as well as faulty integration designs adopted by FCW. Based on this, the paper recommends that reversing the current trend requires government’s policies that dis-incentivizes importation. However, such policies canwork only when the right atmosphere for cattle farming and local dairy production is put in place.ASC – Publicaties niet-programma gebonde

Exchange rate volatility and capital inflows: role of financial development

There is vast literature examining the impact of exchange rate volatility on various macroeconomic aggregates such as economic growth, trade flows, domestic investment, and more recently capital flows. However, these studies have ignored the role of financial development while examining the impact of exchange rate volatility on capital flows. This study aims to analyze the impact of exchange rate volatility on capital inflows towards developing countries by incorporating the role of financial development over the time period 1980–2013. In this regard, the behavior of two types of capital flows is examined: physical capital inflows measured as foreign direct investment, and financial inflows quantified through remittance inflows. The empirical investigation comprises the direct as well as indirect effect of exchange rate volatility on capital inflows. The study employs dynamic system GMM estimation technique to empirically estimate the effect of exchange rate volatility on capital inflows. The empirical results of the study identify that exchange rate volatility dampens both physical and financial inflows towards developing countries. The indirect impact of exchange rate volatility through financial development, however, turns out positive and statistically significant. This finding reflects that financial development helps in reduc- ing the harmful impact of exchange rate volatility on capital inflows. Hence, the study concludes that a developed financial system is an important channel through which developing countries may improve capital inflows in the long run.info:eu-repo/semantics/publishedVersio

Crossing the borderline in strategic corporate philanthropy: Dangote and the construction of cement roads in Nigeria

Using the case of Nigeria's Dangote Group and an exploratory research technique, we critique CSR practices in a developing country context based on a three‐pillar model—traditional CSR, strategic CSR and strategic business engagements. Our paper makes a unique contribution by revealing how a company can transform its strategic CSR into strategic business engagements that permit it to circumvent public procurement laws and secure public contracts at non‐competitive terms. We show how, in weak institutional and regulatory contexts, strategic CSR could be turned to a tool for rent extraction and profit maximization. We advocate for regulatory measures that impose ex ante and ex post limits on the extent to which firms can go in integrating CSR into their normal business operations. Based on the outcomes from this important African case study, we illustrate and propose the strategic business engagement model as a new framework for analysing the social benefits of strategic CSR practices in developing countries.ASC – Publicaties niet-programma gebonde

The fiscal effects of armed conflicts in Africa

This study examines the impact of armed conflicts on the fiscal capacity of African governments. It made use of a data set covering 1997–2021 for 50 countries, as well as the system dynamic generalised method of moment estimation technique. The results show that, in the short run, conflicts undermine tax revenue, mount pressure on military expenditure, and force governments to rely more on mineral resource rents for their fiscal needs. As conflicts persist, this fiscal feature changes to a pattern that reflects a decline in mineral resource earnings and an increase in tax revenue. The impact on public health expenditure also changes from an increasing to a decreasing pattern, whereas the positive impact on military expenditure and external borrowing persists over time. The findings suggest that African countries in conflict can address their fiscal challenges by observing these patterns and putting in place policies that protect public resources (e.g., the adoption of digital financial technology protocols to facilitate remote revenue collection and strategic protection of mineral resource-endowed zones from insurgents' control). Overall, enhancing government effectiveness and strengthening the institutions of governance is important to facilitate a quick return to normalcy in the event of conflict and to prevent future conflicts.ASC – Publicaties niet-programma gebonde

Relevance lost?: the Petroleum Equalization Fund in Nigeria

This paper traces the origins of the Petroleum Equalization Fund (PEF) in Nigeria and describes the environment in which it has operated. The paper argues that the PEF has failed to live up to its mandate of equalizing the prices of petroleum products across the country. This is in part because such equalization schemes create arbitrage opportunities which are always prone to exploitation. The rentier nature of the Nigerian state and the prevalence of corruption in the country have added fodder to such exploitations. The consequence of the above is that PEF has simply become one of the inefficient channels of subsidizing the price of petroleum products in Nigeria. This paper therefore recommends that the starting point in the efforts by the Nigerian government to undertake petrol subsidy reform in the country should be to abolish the PEF.ASC – Publicaties niet-programma gebonde

Second-hand vehicle markets in West Africa: a source of regional disintegration, trade informality and welfare losses

This article critiques the second-hand vehicle markets in the West African region, focusing on the triad trading arrangements among Nigeria, Benin, Togo, and Niger. These countries are connected by a number of underlying conflicting interests in the second-hand vehicles trade. Benin and Togo are incentivised by the revenues derived from re-export trade and port operations. Niger provides a proxy market for the illegal re-export of these vehicles to Nigeria, with the latter suffering huge welfare losses as a major consuming nation. We conclude that by offering conflicting benefits to the West African countries, the second-hand vehicle market provides disincentives against true regional integration.ASC – Publicaties niet-programma gebonde

Multinationals, capital export, and the inclusive development debate in developing countries: the Nigerian insight

 In this paper, we employed a blend of multiple and historical case study design, and a mix of institutional, behavioral, resource-based, and multinational theories, to examine the nature of multinational companies’ (MNC) engagements in local economic development and capital export practices in an African context. Evidence from our Nigerian case analysis (FrieslandCampina, Nigerian Breweries Plc. and Dangote Cement) confrms the proposition that, faced with a similar degree of uncertainty and constrained institutional environment and laying claims to difering sources of competitive advantage, both local and foreign MNCs would repatriate profts and limit exposures to local value chains (LVCs) mainly as a strategy for mitigating country risks and preserving corporate value. Such limited exposures detach MNCs, especially the foreign ones, from the LVCs, and by doing so push them to deeper reliance on the global value chains (GVCs). Linking local businesses to the GVCs is central in the inclusive development (ID) debate essentially because it allows for the redistribution of economic benefts, helps in building a complementary (rather than competitive) relationship between MNCs and local businesses, and facilitates local businesses’ access to international markets. We, therefore, recommend that in pursuit of the inclusive and sustainable development projects in Africa, industrial policies need to be tailored toward stabilizing the policy environment, protecting investments from risk of expropriation, and incentivizing MNCs’ participation in the LVCs.ASC – Publicaties niet-programma gebonde