Empirical analysis of asymmetry phenomenon in the public debt structure of Sub-Saharan Africa's five biggest economies: A Markov-Switching model

Olaoye, Olumide Olusegun; Olomola, Philip Akanni

doi:10.1016/j.jeca.2022.e00242

Cited by 13 publications

(12 citation statements)

References 53 publications

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“…Consequently, a plethora of studies have analyzed the prevalence of poverty in developing economies (see Bolarinwa et al, 2021;Olaoye et al, 2022;Alvarez-Gamboa et al, 2021;Olaniyi et al, 2022;Olaoye, 2022;Aracil et al, 2022;Essel-Gaisey and Chiang, 2022;Asongu and Odhiambo, 2020) and argued that the widespread poverty may not be unconnected to the poor financial system and the low level of financial inclusion in developing countries. They note that poverty is an inevitable outcome of unequal opportunities and poor redistribution of resources.…”

Section: Introductionmentioning

confidence: 99%

Financial inclusion and poverty reduction in Nigeria: the role of information and communication technology (ICT)

Olaoye,

Zerihun

2023

AJEMS

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PurposeThe study analyzed the moderating role of information and communication technology (ICT) in the financial inclusion–poverty nexus in Nigeria.Design/methodology/approachThe study adopts a battery of econometric techniques such as the generalized method of moments and the fully modified OLS to control for heterogeneity and endogeneity issues in the poverty literature.FindingsThe results show that ICT (regardless of the measure of ICT adopted) moderates the impact of financial inclusion on poverty in Nigeria. Specifically, the result shows that ICT strengthens the effectiveness of financial inclusion to reduce poverty. In particular, the results show that in the presence of unanticipated macroeconomic shock, ICT can help to deepen financial inclusion, reduce the negative effects of an unanticipated shock and ameliorate poverty in Nigeria. That is, the vulnerability of the poor in Nigeria to unanticipated economic shocks can be reduced by expanding the use of ICT in the financial sector. The research and policy implications are discussed.Originality/valueThe study accounts for the impact of COVID-19.

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Section: Introductionmentioning

confidence: 99%

Financial inclusion and poverty reduction in Nigeria: the role of information and communication technology (ICT)

Olaoye,

Zerihun

2023

AJEMS

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“…The empirical literature on this current wave of indebtedness in Africa (see, for instance, Azolibe, 2022; Ndulu and O'Connell, 2021; Olaoye and Olomola, 2022) has provided important macro‐financial insights on the continent's economic situation. However, the historical political‐economic origins of the financial distress remain largely unaddressed.…”

Section: Introductionmentioning

confidence: 99%

Ghana's Debt Crisis and the Political Economy of Financial Dependence in Africa: History Repeating Itself?

Abotebuno Akolgo

2023

Development and Change

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Recent accounts of the re‐emergence of debt distress in Africa, while offering significant insights, fail to provide the historical political‐economic context within which African indebtedness is set. On the surface, spending induced by the COVID‐19 pandemic, economic fallout from the Russia–Ukraine war, and repeated examples of fiscal indiscipline by African governments appear to be the causes of the current wave of debt crises. Beyond these factors, however, this article argues that the present indebtedness, like previous episodes, is rooted in the economic and financial subordination of African economies. Specifically, the article places Ghana's extensive debt within the country's post‐independence political‐economic context, and thus traces the structural factors and external constraints that underlie its economic vulnerability and financial dependence. These include the collapse of developmentalism in the 1970s, the Structural Adjustment Programmes of the 1980s, and an exploitative transnational lending system dominated by Western commercial creditors. Internally, recent fiscal mistakes by the government, within its limited policy space, have exacerbated Ghana's indebtedness. The Ghanaian experience shows that unconditional debt cancellation, widely called for, is a necessary but insufficient measure to address the recurring cycles of indebtedness. Debt cancellation should be followed by broader economic and financial reforms, globally and domestically.

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“…However, some scholars (Avramovic, 1991; Olaoye, 2022a,b; The African Capacity Building Foundation, 2017; Whajah et al, 2019) have suggested that Africa's growth may not be unconnected with the recent and rapid increase in public borrowing across sub‐Saharan African countries (hereafter, SSA). Many African countries, following the COVID‐19 pandemic, have embarked on a new wave of borrowing to scale up public investment and spur economic growth (Olaoye & Olomola, 2022; Sennoga & Balma, 2022). To put it in context, the total public debt for SSA increased from an average of 27% of gross domestic product (GDP) in 2010 to over 56% in 2018.…”

Section: Introductionmentioning

confidence: 99%

Sub‐Saharan Africa's debt‐financed growth: How sustainable and inclusive?

Olaoye¹

2022

African Development Review

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Sub-Saharan African (SSA) countries recorded impressive economic growth in the last two decades. The question however is, how inclusive and sustainable is this growth? With this in mind, this study examined the sustainability and inclusiveness of economic growth in a panel of 44 SSA countries, over a period of 38 years, while taking into account the diversity of the continent's institutional quality, income growth and resource endowment. The study adopts the innovative nonlinear fiscal reaction function and the dynamic panel threshold model to account for potential asymmetric phenomena in public debt series. The study also adopts Driscoll and Kraay's estimator to account for cross-section dependency and cross-country heterogeneity. The result shows that the recent increase in the economic growth rate in SSA is not sustainable and inclusive. This is tenable since if economic growth is debt induced, more money will be spent on servicing public debt, thus depriving governments of funds for critical intervention programs. Lastly, the study found a public debt/ gross domestic product ratio threshold of 34% beyond which public debt impairs growth inclusiveness across SSA. The research and policy implications are discussed.

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Empirical analysis of asymmetry phenomenon in the public debt structure of Sub-Saharan Africa's five biggest economies: A Markov-Switching model

Cited by 13 publications

References 53 publications

Financial inclusion and poverty reduction in Nigeria: the role of information and communication technology (ICT)

Financial inclusion and poverty reduction in Nigeria: the role of information and communication technology (ICT)

Ghana's Debt Crisis and the Political Economy of Financial Dependence in Africa: History Repeating Itself?

Sub‐Saharan Africa's debt‐financed growth: How sustainable and inclusive?

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