AfDB

Salami, Adeleke Oluwole

English

Research Papers in Economics

AFRICAN DEVELOPMENT REVIEW / REVUE AFRICAINE 
DE DEVELOPPEMENT 
 
VOL. 18 No. 1 April / Avril 2006 
 
 
Libéralisation du commerce et intégration spatiale des marchés: 
Le cas du maïs au Togo   
Koffi Yovo, Etsri Homevoh 
African Development Review 2006 18:1 1 
 
Measuring Producer Benefits of Price Stabilization in the Nigerian 
Primary Sector: History Revisted   
Richard Ilorah 
African Development Review 2006 18:1 30 
 
Promoting of Investment in Africa   
John C. Anyanwu 
African Development Review 2006 18:1 42 
 
Does  the  Group  Leader  Matter?  The  Impact  of  Monitoring 
Activities  and  Social  Ties  of  Group  Leaders  on  the  Repayment 
Performance of Group-based Lending in Eritrea   
Niels Hermes, Robert Lensink, Habteab T. Mehrteab 
African Development Review 2006 18:1 72 
 
The  Structure  of  Production,  the  Balance  of  Payments  and 
Growth  in  Developing  Countries:  An  Essay  in  Memory  of 
Mohammed Nureldin Hussain 1954–2005   
A. P. Thirlwall 
African Development Review 2006 18:1 98 
 
Stock Market Development and Economic Growth: Evidence from 
Côte D'Ivoire   
Félix Fofana N'Zué 
African Development Review 2006 18:1 123 
 
Stock Market Development and Economic Growth: The Case of 
Selected African Countries   
Charles K.D. Adjasi, Nicholas B. Biekpe 
African Development Review 2006 18:1 144 Libéralisation du commerce et intégration spatiale des marchés: Le 
cas du maïs au Togo 
 
Koffi Yovo et Etsri Homevoh  
Abstract: The cereal market of Togo was liberalized in 1987. This policy aims to 
improve  markets'  spatial  integration  through  the  development  of  arbitrage.  The 
paper  assesses  the  extent  of  maize  market  spatial  integration  in  order  to 
understand  how  it  has  been  affected  by  price  liberalization.  The  monthly  retail 
maize  prices  collected  on  13  markets  for  the  period  from  1980  to  2001  are 
considered. The results show that the impact of price liberalization on markets 
integration is moderate. The liberalization has not significantly improved the extent 
of  long run  and  short run  integration  of  maize  markets.  The  speed  of  price 
adjustment is relatively weak for most of the markets. In order to improve market 
efficiency, it is suggested that the government should create a market information 
service (SIM) which will be entrusted in collecting and disseminating weekly cereal 
prices all over the country. 
Résumé: En 1987, la commercialisation des céréales a été libéralisée au Togo. 
Le but visé par cette politique est d'améliorer l'intégration spatiale des marchés à 
travers un développement de l'arbitrage. Le papier évalue le niveau de l'intégration 
spatiale des marchés du maïs afin de comprendre comment celle ci a été affectée 
par la libéralisation des prix. Les prix de détail mensuels de maïs collectés sur 13 
marchés  pour  la  période  1980–2001  sont  considérés.  Il  ressort  des  résultats 
obtenus, que l'impact de la libéralisation des prix sur l'intégration des marchés de 
maïs  est  mitigé.  La  libéralisation  n'a  pas  amélioré  de  manière  significative  le 
niveau de l'intégration de long terme et de court terme des marchés. La vitesse 
d'ajustement des prix est relativement lente pour la majorité des marchés. En vue 
d'améliorer l'efficacité du fonctionnement des marchés, il est suggéré que l'Etat 
mette en place un Système d'Information sur les Marchés (SIM).  
 
 
Measuring Producer Benefits of Price Stabilization in the Nigerian 
Primary Sector: History Revisted 
 
Richard Ilorah  
 
Abstract: The Nigerian commodity marketing boards may have been dissolved far 
back in 1986, but as long as the export sector of the country's agriculture remains 
dysfunctional and unproductive, with the authorities unwilling to give it the priority, 
in practical terms, that it deserves for revival, there is bound to remain lots of hard 
feeling in the collective psyche of Nigerians, farmers in particular, directed at the 
Boards for their market intervention activities during the period 1942–86. We argue 
that  the  legacy  of  the  Boards'  heavy  taxes  on  the  export  sector  of  Nigerian 
agriculture  lives  on  in  the  form  of  damaged  producer-incentives  reflected  by  a 
generally  dysfunctional  sector.  Developing  a  simple  formula  that  derives  from Newbery  and  Stiglitz  (1981),  for  the  measure  of  producer  benefits  of  price 
stabilization,  we  argue  that  the  Boards'  stabilization  scheme  remains  partly  to 
blame for the present poor state of the country's export agriculture. 
 
 
Promoting of Investment in Africa 
 
John C. Anyanwu  
 
Abstract: This paper examines the trend, constraints, promotion, and prospects of 
investment – domestic investment, foreign direct investment, and private portfolio 
investment – in Africa. After identifying the importance of investment in Africa's 
economic development, it was shown that all forms of investment are low in Africa 
and hence inadequate for the attainment of the MDGs and poverty reduction in the 
continent.  The  constraining  factors  include:  low  resources  mobilization;  high 
degree  of  uncertainty;  poor  governance,  corruption,  and  low  human  capital 
development; unfavorable regulatory environment and poor infrastructure, small 
individual country sizes; high dependence on primary commodities exports and 
increased competition; poor image abroad; shortage of foreign exchange and the 
burden  of  huge  domestic  and  external  debt;  and  undeveloped  capital  markets, 
their high volatility, and home bias by foreign investors. The paper recommends 
that successful promotion of both domestic, foreign direct and portfolio investment 
in  Africa  will  require  actions  and  measures  at  the  national,  regional,  and 
international levels. It concludes that the prospects are bright. New and attractive 
investment  opportunities  are  emerging  in  infrastructure,  particularly  as  most 
African countries now encourage public/private partnerships for investments in this 
sector. In addition to privatization, renewed interest within Africa in undertaking 
regionally  based  projects  and  joint  exploitation  of  natural  resources  is  creating 
other investment opportunities. Apart from the fact that investment in Africa yields 
the highest returns, investment risk in the continent is declining. In addition, much 
progress  has  been  made  in  recent  years  to  improve  the  investment  climate  in 
Africa. All this is of course is not to deny that obstacles do remain hence economic 
reforms  to  enhance  domestic  investment  would  need  to  be  complemented  by 
measures to attract increased foreign capital. Critical in such endeavors must be 
efforts to improve governance in some countries as well as to eliminate socio-
political  violence  in  others  and  development  of  domestic  capital  markets,  while 
government institutions must be modernized and upgraded. 
 
 
Does the Group Leader Matter? The Impact of Monitoring Activities 
and Social Ties of Group Leaders on the Repayment Performance of 
Group-based Lending in Eritrea 
 
Niels Hermes, Robert Lensink and Habteab T. Mehrteab  
Abstract: This paper analyses whether the effects of monitoring and social ties of 
the group leader and other group members on repayment performance of groups 
differ,  using  data  from  an  extensive  questionnaire  held  in  Eritrea  among participants  of  102  groups.  We  hypothesize  that  the  monitoring  activities  and 
social ties of the group leader have a stronger positive impact on the repayment 
performance of groups. The results show that social ties of the group leader do 
have a positive effect on repayment performance of groups, whereas this is not 
true  for  social  ties  of  other  group  members.  We  do  not  find  evidence  for  the 
hypothesis that monitoring activities of the group leader have a stronger positive 
impact  on  group  repayment  performance.  All  variables  measuring  monitoring 
activities, either of the group leader or the other group members, are found to be 
statistically insignificant. 
 
 
The Structure of Production, the Balance of Payments and Growth in 
Developing Countries: An Essay in Memory of Mohammed Nureldin 
Hussain 1954–2005 
 
A. P. Thirlwall 
 
Abstract: This essay commemorates the work of Mohammed Nureldin Hussain 
who was Chief Research Economist in the African Development Bank, and Editor 
of the African Development Review from 2003 to his untimely death in 2005. It 
focuses on five aspects of his work: his emphasis on the role of the structure of 
production  and  trade  for  an  understanding  of  growth  rate  differences  between 
countries; his development of the balance of payments constrained growth model 
with capital flows; the application of this model to compare the performance of 
African and Asian countries; his use of this model as an alternative to the Harrod–
Domar growth model for estimating the financing requirements in Africa to meet 
the Millennium Poverty Reduction targets by 2015 — and also for estimating the 
impact  of  the  Highly  Indebted  Poor  Country  initiative  on  growth  and  poverty 
reduction in Africa, and finally, his critical appraisal in the 1980s of the supply-side 
approach to devaluation in his own country, the Sudan. 
 
 
Stock Market Development and Economic Growth: Evidence from Côte 
D'Ivoire 
 
Félix Fofana N'Zué  
 
Abstract: The  present  paper  investigates  the  relationship  between  the 
development of the Ivorian stock market and the country's economic performance. 
Stock  market  development  indicators  were  identified  and  used  to  calculate  the 
Ivorian  stock  market  development  index.  A  set  of  control  variables  were  also 
identified. The empirical results suggest that gross domestic product and stock 
market development are cointegrated when the control variables are included in 
the  analysis.  That  is,  there  is  a  long-run  relationship  between  these  variables 
taken together. Moreover, there is a unidirectional causality running from stock 
market development to economic growth.  
Résumé: Le  présent  papier  analyse  la  relation  entre  le  développement  de  la 
Bourse des Valeurs d'Abidjan, BVA (Côte d'Ivoire) et la performance économique 
du  pays.  Des  indicateurs  du  développement  des  marchés  boursiers  ont  été 
identifiés et utilisés pour développer un indice de développement de la BVA. Un 
ensemble de variables de contrôle a été aussi identifié. Les résultats empiriques 
suggèrent  que  le  PIB  (mesure  de  la  performance  économique)  et  l'indice  de 
développement de la BVA sont cointégrés. Ainsi, il y a une dynamique de long 
terme entre le développement du marché boursier, la croissance économique et 
les  variables  de  contrôle  pris  ensemble.  En  outre,  il  y  a  une  causalité  uni-
directionnelle  allant  du  développement  du  marché  boursier  vers  la  croissance 
économique. 
 
 
Stock  Market  Development  and  Economic  Growth:  The  Case  of 
Selected African Countries 
 
Charles K.D. Adjasi and Nicholas B. Biekpe 
 
Abstract: This paper studies the effect of stock market development on economic 
growth in 14 African countries in a dynamic panel data modelling setting. Results 
largely  show  a  positive  relationship  between  stock  market  development  and 
economic growth. Further analyses, based on the level of economic development 
and stock market capitalization, are also conducted. The results reveal that the 
positive influence of stock market development on economic growth is significant 
for countries classified as upper middle income economies. On the basis of market 
capitalization  groupings,  stock  market  developments  play  a  significant  role  in 
growth only for moderately capitalized markets. The general trend in results shows 
that low income African countries and less developed stock markets need to grow 
more and develop their markets to elicit economic gains from stock markets. 
 

African Development Review Vol 18 NÂ°1

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African Development Review Vol 18 NÂ°1

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Research Papers in Economics