Revisiting the Exchange Rate Pass‐Through to Inflation in Africa’s Two Largest Economies: Nigeria and South Africa

This paper revisits the exchange rate pass‐through (ERPT) to inflation in Nigeria and South Africa by incorporating structural breaks and using time series variables, namely the consumer price index, nominal effective exchange rate, gross domestic product, and crude oil price. Based on the Maki cointegration test and a flexible estimation approach of the Autoregressive Distributed Lag (ARDL) model, our empirical evidence suggests that the long‐ and short‐run ERPT to inflation is complete for Nigeria, while for South Africa it is incomplete both in the long run and short run. This result indicates that prices are stickier in South Africa compared to Nigeria. The comparison between Nigeria and South Africa confirms the role of inflation targeting and central bank credibility on the ERPT. The results divulge further that output growth in Nigeria increases inflation in the long run while it is anti‐inflationary in the short run. For South Africa, the effect of output growth is negatively insignificant. In addition, the long‐run effect of oil price is negative and significant for Nigeria, while for South Africa the short‐run effect of oil price is positive and significant. Therefore, the findings of this paper will assist the monetary authorities to achieve monetary policy objectives.     

Measuring wealth inequality in South Africa: An agenda

ABSTRACT

Understanding wealth inequality has unique significance in South Africa. The co-existence of extreme poverty and extreme wealth is starkly visible. Apartheid-era inequality has persisted despite more than 20 years of democracy. Much of the recent research focus on inequality has been on inequality of income and of opportunities, especially quantitatively. With the recent project to release South African tax administrative data for research, this paper hopes to show how use of the tax administrative data can contribute to developing a refreshed quantitative analysis of wealth inequality, especially in estimating the top shares of the wealth distribution, and so contribute to the existing literature on wealth inequality in South Africa. The first section will explore why studying wealth inequality is of fundamental importance. The second section will review international data and methods used to research wealth inequality, before laying out suggested approach to doing such studies in South Africa.     

An evaluation of age–sex distributions of South Africa's population within the context of HIV/AIDS

Knowledge about the age–sex distribution of a population is valuable for planning and decision making as it is a determinant of the future development of the population. Various aspects of the age–sex distributions of the population of South Africa estimated by Statistics South Africa remain controversial. For example, at face value the 1996 census implies that the overall sex ratio dropped from 97 in 1970 to 92 in 1996 and 91 in 2001. The 1996 census results also imply that the proportion of peoples aged 0–4 dropped from 15 per cent in 1970 to 11 per cent in 1996 and 10 per cent in 2001. In an attempt to shed more light on these controversies this study evaluates the age–sex distributions from the 1996 census, using a novel approach, and also develops model age–sex distributions for South Africa as a means of evaluating age–sex distributions from the 2001 census, and future censuses and surveys in the country.     

Risk amplification: HIV in migrant communities

The demography of both urban and rural South Africa is shaped by migration, with three unique patterns: labour-sending, labour-receiving and rural areas. This article explores the relationship between HIV risk and migration in South Africa. It identifies the urban informal settlements common in labour-receiving areas as key magnifiers of HIV risk, increasing the vulnerability of migrant workers in these townships. It examines the urban informal settlement, a unique social environment with distinctly high-risk behaviour dynamics, as a focal determinant of HIV. It proposes this framework as an extension of the migration–HIV dialectic beyond the traditionally unidimensional approach, to encompass a more contextualised discussion. This methodology, which uses the environment as an entry point to understanding behaviour and emphasises the importance of addressing the HIV–migration issue within a broader development perspective, has important implications for HIV programming in South Africa.     

Problem‐solving strategies for small‐scale emerging commercial mango farmers in Venda

This article describes the prevailing farming system of emerging small‐scale commercial mango farmers in the Venda region of the Northern Province of South Africa. Analyses based on intensive group discussions with farmers and prioritisation of their problems using a ‘problem tree/objective tree'framework, as well as comparisons with adjacent commercial mango farmers, enabled the development of operational support strategies. This study followed a new (for South Africa) participative approach. The first step of the Objective Oriented Intervention Planning (OOIP) approach to Logical Framework Analysis (LFA) is a problem tree; the next is to convert the problem tree into an objective tree in order to identify alternative strategies for alleviating constraints and problems. These are then summarised in the LFA matrix. This methodology is described here.     

Poverty in South Africa – a statistical analysis

Poverty is one of the major challenges facing democratic South Africa. This article focuses on poverty in South Africa, using the Income and Expenditure Survey conducted in 1995 by Statistics South Africa (formerly the Central Statistical Service). In the first part, different approaches that can be followed in the measurement of poverty are discussed. In the second part, Sen's approach to the measurement of poverty and the Chi-square Automatic Interaction Detection (CHAID) technique have been used to analyse the above data. CHAID is used to explore the relationship between the poverty status of the household (ie poor or non-poor) and other household characteristics. These variables can then be used as predictors of poverty status.     

The role for competition policy in economic development: the South African experience

Competition policy is part of the new international orthodoxy in economic policy and, at the same time, was viewed in South Africa as a crucial element of economic transformation. This article reviews the role of competition policy in economic development and the experiences of developing countries such as Brazil and South Korea. It then assesses the effects of competition policy in South Africa after 1994, with the main focus being on the performance of the new competition institutions established in 1999. The case of the steel industry is used to assess the approach and impact of the institutions in a concentrated sector that has simultaneously undergone processes of liberalisation and domestic consolidation.     

THE SOUTH AFRICAN PHILLIPS CURVE: HOW APPLICABLE IS THE GORDON MODEL?

Is there a Phillips curve relationship present in South Africa and if so, what form does it take? Traditionally the method to establish whether or not there is a relationship between the output gap and the change in inflation is merely to regress the latter on the former. This yields the well‐known augmented Phillips curve. However, Gordon has argued that this specification of the Phillips curve produces biased results. Instead, he puts forward and estimates successfully for several industrialised countries his so‐called triangular model that tests for hysteresis and inertia in the behaviour of inflation, as well as the impact on inflation of changes in the output level. This paper considers whether or not Gordon's triangle model is applicable to South Africa, i.e. are hysteresis and inertia present in South Africa? In addition, in an attempt to find a better estimation of the output gap, the paper also experiments with alternative ways to estimate the long‐run output level, including the standard HP‐filter, as well as a production function approach.     

Improved cookstoves in Africa: Explaining adoption patterns

This article uses the case of 18 projects in 14 African countries to explore the adoption patterns of improved cookstoves and the factors that influence these patterns. Our results show that there is variation in the rate of adoption between countries and amongst rural and urban households. The combined effect of moderately good gross domestic product per capita, history of improved cookstove project implementation and adequate institutional support suggests that consumers in South Africa, Senegal and Lesotho tend to be more aware of the benefits of improved cookstoves and better able to afford them than consumers in countries such as Mali, Malawi and Mozambique. Within the countries, rural households seem to be less aware and capable of affording the stoves compared to urban consumers. These differences are a result of varying levels of income and literacy. The low literacy levels mean rural and mostly elderly individuals are less knowledgeable and appreciative of the benefits offered by improved cookstoves.     

South Africa's titanium industrial policy: A product space perspective

South Africa is a globally significant player in the titanium raw mineral production industry but does not play a large role in its downstream mineral processing. Since downstream activities generate much higher value added, the government has sought to support the end-to-end titanium value chain to capture more value from raw titanium before export through ‘beneficiation’-related policies. This paper applies the input–output product space methodology to generate an overview of those sub-sectors within the titanium value chain that are likely to support long-term economic growth in South Africa. We then evaluate whether the selected global value chain activities are supported by the current industrial policy and/or whether a focus on currently excluded global value chain activities is recommended. Our results confirm that although beneficiation appears to make sense in the titanium industry in South Africa, it should (from a product space perspective) be applied neither automatically nor sequentially moving down the value chain. The paper concludes with the shortcomings of the approach and various avenues for future research.     

Estimating the future health care cost of population aging in South Africa

ABSTRACT

This paper analyses the relationship between health care expenditure and population aging in South Africa using yearly data from 1983 to 2015. Empirical evidence from an Autoregressive Distributed Lag approach to cointegration indicates that old dependency and life expectancy are major drivers of public health expenditure in South Africa besides the income. Particularly, when structural breaks are controlled for, income exhibits a long-term elasticity with respect to health spending greater than unity; suggesting that South African public health care has become a luxury good over time. Interestingly, South African public health spending is found to be responsive to demographic development only in the long run. This is consistent with the micro evidence that health expenditure increases with individual age with significant impacts in the long term. Finally, using economic and demographic projections statistics, we find that public health expenditure could roughly double in the next fifteen years ceteris paribus.     

THE DEMAND FOR FOOD IN SOUTH AFRICA1

Food consumption is an important issue in South Africa, given its relation to poverty and deprivation. With the pressing need to increase food security, understanding the determinants of the demand for food and having some estimates of the likely impact of price and income changes has become a vital task. There is, however, surprisingly little economic research on this topic and almost none in recent times. This paper provides a comprehensive empirical analysis of the demand for food in South Africa for the years 1970‐2002. It moves beyond the usual static modelling approach in using a general dynamic log‐linear demand equation and a dynamic version of the almost ideal demand system, to provide estimates of the short‐ and long‐run price and expenditure demand elasticities.     

Analysing legal mobilisation’s potential to secure equal access to socioeconomic justice in South Africa

ABSTRACT

From the moment South Africa became a liberal democracy, the Government promised to deliver on social security for the poor. However, South African NGOs have reported that several barriers prevent poor South Africans, and black women in particular, from accessing the country’s social assistance system. Government inaction has compelled NGOs to approach the Courts. As reflected in a series of court judgements, many problems faced by the system relate to the administration of payments by South African and multinational corporations. But is this the complete story?

Applying a critical, analytical lens of legal mobilisation to explain the potential of legal mobilisation to secure progressive structural change, this article will assess the extent to which civic-based, legal advocacy aimed at securing access to social grants, and challenging the manner in which these grants have been administered, has the potential to more strategically advance socioeconomic justice and inequality for South Africa’s poor.     

South Africa's ten years of democracy: development and media discourse

Newspapers play an important role in selecting, defining and communicating pertinent social issues, especially during changing times. Yet, in the case of the transition to a new dispensation in South Africa, it seems that there has been very little sustained analysis of the news media in terms of its approach to social change before 1994. Hence the apparent lack of vigorous public engagement about the interplay between contending relations of power and the way that conflictive relations are being dealt with in terms of either maintaining or changing the status quo. For example, even in instances where popular discourses were in favour of changing the apartheid order to a more humane society, it would appear that social change was discussed in a way that meant that any alternative understanding was based on an a priori set of assumptions about what would be a suitable socio-economic order for South Africa. Hence the contradiction between election promises of a ‘better life for all’ and the current increasing levels of poverty in South Africa.     

Sustainable livelihood principles and urban greening in informal settlements in practice: A case of Zandspruit informal settlement,South Africa

This article looks to investigate the practice of using the ‘sustainable livelihood approach’ in a multifaceted urban greening project, Trees for Homes. The urban greening project was implemented to improve the quality of life and help marginalised citizens of an informal settlement in South Africa to adapt to climate variability through tree planting. We explored the actual execution of the independent techniques being utilised in the implementation of the Trees for Homes project and how it can promote sustainable livelihood objectives in the Zandspruit informal settlement in South Africa. Using a qualitative approach, the study was able to effectively apply sustainable livelihood principles. It was also found, however, that the multi-level principle was limited by the lack of political muscle which is endemic to many disempowered poor citizens of developing economies. Although the project was successful in many ways, political vulnerability within the development cycle threatens the longer term sustainability of the project outcomes.     

Export processing zones as an element of export‐oriented and regional industrial development

Establishing export processing zones (EPZs) is a popular method of creating isolated islands of free trade which provide the export manufacturer with freedom from the cost‐increasing measures implemented to protect the domestic market. In South Africa the interest in using this concept has remained alive, especially because the EPZ has the additional advantage of being used as an instrument of regional development. After account has been taken in the paper of the economic rationale of the EPZ and of the apparent conditions for the successful operation of an EPZ, as deduced from the experience of countries that have made use of this development instrument, it is concluded that the economic feasibility of establishing conventional EPZs in South Africa is doubtful. A flexible approach, making use of the EPZ approach and of the system of duty drawbacks and rebates, could form the nucleus of a cost‐efficient way of providing export manufacturers with the advantages of a free trade situation.     

Evaluating South Africa's Open Economy

The competing theories of the macroeconomic trilemma and dilemma are empirically tested for South Africa. The empirical findings show evidence of the trilemma theory being applicable to South Africa, supporting the country's ability to maintain monetary independence (MI). An empirical puzzle, however, emerged as South Africa's MI index decreased during the country's 2000–2014 inflation‐targeting period. A possible explanation, and subject for further research, is that the increasing opening of South Africa to international flows since 1995 may have caused South Africa to be more exposed to international business cycles and shocks, resulting in a reduction in measured MI.     

Russian Projects and Energy Cooperation in South Africa

The article discusses the problems and prospects for the development of a Russian nuclear power plants in South Africa, as well as other innovative energy projects in this country. Acute energy shortages in South Africa give Russia a unique chance to enter the African market and create a technological link between African countries and Russian innovations. An analysis of the political and economic situation in South Africa, as well as an assessment of the prospects for Russian business participation in the development of the South African energy sector were carried out using research conducted by the authors in South Africa in 2016, and interviews with Russian and South African civil servants and businesmen.     

Criticism of neo-colonialism: clarification of Sino-African cooperation and its implication to the west

ABSTRACT

This paper examines whether the claims regarding the nature of the Sino-African relations can be qualified or categorised as a neo-colonialism approach. Additionally, the paper analyses the Western perception and implication towards the Sino-African geopolitical cooperation and clarifies whether China is taking advantage of the weak African states in the name of South–South cooperation or playing the role of a contemporary proxy of the old colonial system and re-partitioning Africa. The relation between China and Africa simultaneously presents both challenges and opportunities for either of them. This study argues that the criticism that China is invading the continent and practicing neo-colonialism is just a speculation or Sino-phobia. In fact, the Chinese have no gene in their blood to invade Africa and it is crystal clear that unlike China, the Western world has had an influential history in the African continent. The African government and their societies have the ability to address the issues of Sino-African relations. This paper additionally provides a theoretical analysis of China’s enthusiastic involvement and contribution to the international aid operations and its presence and contribution in Africa.