Income, Labor, and Trade in Africa
Sunday, Jan. 8, 2023 8:00 AM - 10:00 AM (CST)
Juliet Elu, Morehouse College
- Gbadebo Odularu, Virginia Military Institute
Critical Exogenous and Endogenous Constructs for Stimulating SMMEs Efficacy in Rural South Africa: Evidence from Limpopo
AbstractThe persistent business failure rates in South Africa despite concerted government efforts to stimulate Small, Micro and Medium Scale Enterprises (SMMEs)in the country leaves concerns and has been a subject of serious debate. One on hand is the challenge that South Africa and Africa lack area-specific models for directing needed entrepreneurial support, consistent with realities on the ground, and on the other hand, is a knowledge gap about peculiar issues confronting grassroots entrepreneurs. In this paper, we investigate key constructs that if supported can enhance enterprise efficacy using Limpopo Province as case analysis. This was derived through two objectives: 1) exogenous factors affecting enterprises, and 2) the complimentary endogenous factors. About 724 entrepreneurs operating SMMEs in selected rural areas of Limpopo were sampled following purposive and cluster sampling techniques. Data collection was performed one-on-one using a structured questionnaire whose constructs derived from an entrepreneurship existing prototype in Vhembe District. The analysis modelled on Multilayer Perceptron through IBM SPSS v27 suggests up-scaling support in endogenous entrepreneurial key constructs such as bridging networks, resilience, risk awareness, self-efficacy and being nonconformist. These were perceived as being lacking amongst the entrepreneurs and critical to enterprise efficacy in the area. Although exogenous construct tends to be less critical compared to endogenous, it poses a challenge to the local enterprises. The factors include access to market, enterprise financing, stiff competition, operational cost, lack of physical capacity and sociocultural issues. Local infrastructure concerns and entrepreneurial capacity building need solutions at a local level to facilitate targeted support on the two identified constructs affecting SMMEs’ efficacy in rural areas.
COVID-19 versus GFC: A Firm-Level Trade Margins Analysis Using Kenyan Data
AbstractThis study describes trade margins (intensive and extensive) and establishes determinants of the mid-point export and import growth during the global financial crisis (GFC) and COVID-19 pandemic by relying on Kenya’s monthly customs transaction data (at 6-digit level of Harmonized System) for the period January 2006–June 2020. Exports fell during the two crises, of which the intensive margin was responsible for the drop during GFC while the extensive margin dominated the COVID-19 era. Imports are mainly driven by the extensive margin which grew during GFC but declined during the pandemic. However, the fall in the intensive and extensive margins was near symmetrical during the pandemic. Estimates from the fixed-effects regression model reveal that the decrease in export and import mid-point growth was larger during the COVID-19 pandemic than GFC and it was determined by several factors: firm-, product- and partner-country characteristics. Overall, addressing both supply- and demand-side shocks can help countries adjust better to future crises.
Redressing Senegambian MSMEs Exports to Europe within the ECOWAS-EU Agri-Food Trade Relations
AbstractThe Economic Community of West African States (ECOWAS) signed an Economic Partnership Agreement with the EU to strengthen trade relations and improve market access. However, using the EU Non-Tariff Measures such as Sanitary and Phytosanitary (SPS) measures on agri-food exports from ECOWAS defeats these objectives. This study analyzed the impact of the EU SPS measures on ECOWAS agri-food exports. The study uses a mixed method. Part 1 utilizes the modified gravity model and Poisson Pseudo Maximum Likelihood (PPML) using two measures of coverage ratio and frequency index to determine the effects of EU SPS measures. Part 2 utilizes empirical data collected from MSMEs in the Senegambia region to provide further insights into the EU SPS measure’s types, challenges, and coping strategies of local MSMEs. The empirical results indicated the distance between seaports, log GDP of ECOWAS, log GDP of EU, and colonization status of the ECOWAS counties are positive and significant. At the same time, the frequency index of EU SPS measures had some negative impact but was not significant. The EU SPS coverage ratio was positive but not statistically significant. Landlocked and exchange rate of local currency with EU, was found to affect export negatively. Part 2 suggested that the cost of meeting the stringent EU SPS measures has negatively impacted Senegambia MSMEs as 65 percent of them divert their trade to Asia, most significantly China. The study concludes that the effects of EU SPS measures may not be statistically significant but harm agri-food exports. As a result, ECOWAS Governments and MSMEs must be supported to comply with the huge initial investment cost necessary to comply with the stringent EU SPS measures.
- O1 - Economic Development
- J0 - General