Back to top

Policy Briefs

Publication

To what extent does socio-economic status still affect household access to water and sanitation services in South Africa?

Bruce Rhodes and Tamlyn McKenzie
Despite the significant progress of water and sanitation services since the fall of Apartheid, many parts of South Africa still do not enjoy much of these facilities that many take for granted. Since 1997 South Africa declared basic water and sanitation a human right under the auspices of the Water Services Act (1997), yet still by 2005 it was estimated that about 6 million South Africans still lacked access to basic level of service.
Oct 2018
Read more
Publication

Real Exchange Rate Volatility and Employment Growth in South Africa: The Case of Manufacturing

Trust R. Mpofu and Eftychia Nikolaidou
South Africa has one of the highest unemployment rates in the world. This remains one of the key concerns to the policymakers in South Africa. Although there is a vast literature that examines the cause of high unemployment rates from a microeconomic perspective, there is limited work on this issue from a macroeconomic perspective. Exchange rate movements are expected to impact employment (and, indirectly, unemployment) through the profitability of the sector in export-oriented activities. This is so because exchange rate volatility changes the production costs of firms, and thus, causes uncertainty of future earnings. This affects investment decisions as well as employment because hiring workers represents an investment in the sense that there are costs incurred to reversing this decision.
Oct 2018
Read more
Publication

Measuring the Financial Cycle in South Africa

Greg Farrell and Esti Kemp
This paper sets out to measure the financial cycle in South Africa. Financial cycles provide a broad perspective on the evolution of risks to financial stability, and therefore provide a useful monitoring tool for policymakers who are required to set macroprudential policies. A robust measure of the financial cycle is currently particularly important for South African policymakers, given the renewed emphasis on the financial stability regulatory and supervisory framework provided by the Financial Sector Regulation Act, which was signed into law in September 2017. Understanding financial cycles is viewed as critical for informing the use of countercyclical macroprudential policy, but there is no consensus regarding the definition of financial cycles nor on the methodology that should be employed to measure them. Despite a large and growing international literature, we are also not aware of published research that assesses the options available for measuring the South African financial cycle.
Oct 2018
Read more
Publication

Family-type Public Goods and Intra-Household Decision-Making by Co-Resident South African Couples

Sevias Guvuriro & Frederik Booysen
The household is a critical decision-making and consumption unit and various crucial decisions are indeed made within households. These include decisions on day-to-day expenditures, decisions about where to live, who to live with, who should work and how to raise income, as well as where children should attend school, and how to spend the available income. However, perceiving the household as a single ‘glued-together’ unit, whose interests are as that of an individual, suggests that investigations into intra-familial issues are unnecessary, thus neglecting what actually happens within households. Employing resource theory and the theory of assortative mating in the application of the cooperative intra-household bargaining model, the current study examines the sources of bargaining power that informs financial decision-making processes by females within co-resident couples. The study also determines how bargaining power and financial decision-making of female partners in co-resident couples impact on family-type public goods expenditure.
Oct 2018
Read more
Publication

Financial Structure and Economic Growth: Evidence from Sub-Saharan Africa

Naomi M. Mathenge and Dr. Eftychia Nikolaidou
Financial structure, the extent to which a country’s financial system is either bank-based or market-based has been shown to have an effect on some countries economic growth, while in other countries, it has been shown to be of no economic significance. Many of the studies have focused on developed and emerging economies that have well developed financial systems relative to the financial systems of developing countries.
Sep 2018
Read more
Publication

Electricity crisis and the effect of CO2 emissions on infrastructure-growth nexus in Sub Saharan Africa

Chengete Chakamera and Paul Alagidede
Sub Saharan Africa (SSA) is a region of over 950 million people but also with greatest proportion of population without access to electricity. The World Development Indicators reveal that electricity-related CO2 emissions (CO2EM), and the ratio of electricity transmission and distribution losses (RETDL) have been rising in SSA over the past decades, implying deterioration in efficiency of the power sector. Given the recent rising focus on the Sustainable Development Goals (SDGs), studies on the impact of electricity consumption and CO2 emissions on economic growth remain vital to inspire energy policy and academic research. Several studies have examined environmental Kuznets curve (EKC) that hypothesizes environmental quality and economic growth nexus. Closely related to this study, plenty of literature is done on the cointegration between electricity, CO2 emissions and growth. Despite the fact, firstly, accounting for electricity quality is still lacking and remains a serious gap. Secondly, measuring both the nature and size of the influence of electricity-related CO2 emissions on the growth contribution of electricity stock (quantity) and quality is another angle that has not been properly interrogated in the literature. Therefore, we investigate the economic growth effects of both electricity stock and quality before and after accounting for electricity-related CO2 emissions.
Sep 2018
Read more
Publication

Regulatory ambiguity and policy uncertainty in South Africa’s telecommunications sector

Helanya Fourie, Lara Granville & Nicola Theron
Competition policy aims to encourage efficiency and promote choice by protecting consumers from anti-competitive behaviour by firms. The rationale is that by creating competitive markets, economic welfare will be maximised. Network industries, like telecommunications or electricity, however, are characterised by scale economies and sunk costs, which create barriers to entrants and prevent effective competition from being realised. In such industries, sector specific regulation plays an important role in preventing incumbents from abusing their market power, by imposing conditions to encourage entry and competition.
Aug 2018
Read more
Publication

Nonlinearities in Financial Development–Economic Growth Nexus: Evidence from sub–Saharan Africa (SSA)

Muazu Ibrahim and Paul Alagidede
The impact of financial development on economic growth has received much attention in the recent literature. The general conclusion is that development of the financial sector is positively related to the level of growth. However, theoretical studies have espoused discontinuities in the relationship. More importantly, the relationship between finance and economic activity is well mediated by the level of initial per capita income, human capital and existing financial development. While this is well documented at the theoretical front, empirical literature is silent on the nonlinearities in finance–growth nexus caused by the threshold variables. Beyond examining the impact of financial development on economic growth for 29 SSA countries over the period 1980–2014, in this study, we further investigate whether the impact of finance on growth is conditioned on the initial levels of countries’ income, human capital and financial sector development. Our overall finding is that, financial development is positively and significantly associated with economic growth. However, the growth–enhancing effect of finance is higher when measured with private relative to domestic credit. We re–examine the threshold effect of finance in the face of the threshold variables. Our evidence suggests that, in almost all cases, financial sector development is positively related to growth albeit insignificantly below the estimated thresholds. The only exception is the impact of private credit on growth below the income threshold where the impact is slightly significant. Similar trend is also noticed when domestic credit mediates the finance–growth nexus.
Aug 2018
Read more
Publication

Pricing electricity blackouts among South African households

Nomsa Phindile Nkosi and Johane Dikgang
Lack of information about households’ welfare losses could lead to incorrect policy choices. Given the ever-increasing reliance on electricity, extreme weather conditions and current energy diversification strategies, it is vital that policymakers obtain information about households’ welfare losses due to power outages. According to Schmidthaler (2012), the costs associated with power outages may be direct, indirect or ongoing.
Aug 2018
Read more
Publication

South African attitudes about nuclear power: The case of the nuclear energy expansion process

Nomsa Phindile Nkosi and Johane Dikgang
Excessive use of fossil fuels is widely acknowledged as one of the main causes of climate change. The energy sector is one of the sectors that make use of fossil fuels. Greenhouse gasses are released during the combustion of fossil fuels, such as coal, oil, and natural gas, to produce electricity. Generating electricity from nuclear reduces pollution externalities hence it is argued by some to be part of a sustainable solution to achieving low-carbon energy options. This option According to Ertor-Akyazi et al. (2012) since energy security is a critical element in an economy, nuclear energy can play a role in ensuring smooth supply of electricity; it is reliable, and can provide electricity on a larger scale, similar to fossil fuels.
Aug 2018
Read more

Pages