Browsing by Author "Sadekla, S.S."

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    Aid to Africa’s agriculture towards building physical capital: Empirical evidence and implications for post-COVID-19 food insecurity
    (World Development Perspectives, 2020) Asiedu, E.; Sadekla, S.S.; Bokpin, G.A.
    The formation of physical capital in Sub-Saharan Africa (SSA) in agriculture is imperative to help the continent (1) overcome the effect of the COVID-19 pandemic on food insecurity and (2) still be on track towards achieving the Sustainable Development Goals (SDGs) of “No poverty” and “Zero hunger” in the midst of the COVID-19 pandemic. Using country-level data on 40 SSA countries from 1996 to 2014 and rainfall deviations as an in strument for agricultural official development assistance (ODA) in fixed-effect estimation settings, this paper examines the ‘instantaneous’ impact of agricultural ODA on agricultural fixed capital formation in SSA. The question here is whether aid to agriculture does translate instantaneously to building fixed capital urgently needed to address the effect of any potential crisis on food insecurity. Measuring agricultural fixed capital as fixed investments in farm machinery, dams, industrial buildings for agricultural and agro-processing, fences, ditches, drains, etc., we find that capital formation in SSA agriculture improves instantaneously with agricultural ODA inflows. Second, we find that even though rainfall deviations are associated with agricultural ODA inflows to SSA, institutions particularly those designed to control corruption and strengthen rule of law, do matter for agricultural aid inflows to SSA. These results suggest that agricultural ODA is necessary to accelerate agricultural investments and achieve food security. Our results are robust to sensitivity analysis on the specification of the instantaneous model.
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    Official Development Assistance And Agricultural Fixed Capital Formation In Africa: Evidence From A Panel Of Countries
    (University of Ghana, 2017-07) Sadekla, S.S.
    Sub-Saharan Africa (SSA) has attracted substantial amounts of Official Development Assistance (ODA) over the years. General ODA flows to the continent currently stands at around $80 billion per annum and the figure is projected to be well above $125 billion due to the Sustainable Development Goals. Over the last five decades, SSA has received about $1 trillion in foreign aid for sector-specific (agriculture, health, etc.) development. Even though the impact of aid on economic growth is inconclusive, the question is whether sector-specific aid has led to sector-specific growth. Little is known about the relationship between ODA and agricultural fixed capital formation. In this study we examine how agricultural ODA impacts agricultural fixed capital formation in the short and long-terms in Africa. ODA has the potential of augmenting scarce domestic resources to form fixed capital in developing countries. Nonetheless, ODA can also be a disincentive to wealth building by depressing governments’ motivation for revenue generation; thereby impeding capital formation for economic growth and poverty reduction. For these reasons, this study tests the hypotheses that total ODA and its decomposed forms: bilateral and multilateral, enhances the formation of agricultural fixed capital needed for agricultural growth and employment. Using data on 40 SSA countries over the period 1996 to 2014 and exploiting the instrumental variable two stage least squares (IV-2SLS) in a fixed-effects setting and the generalized method of moment (GMM) estimators, the study finds that in the short-term, total and bilateral ODA have a strong positive and statistically significant impact on fixed capital formation. However, we do not find short-term impacts of multilateral ODA on fixed capital formation. In terms of the growth impacts of total ODA on fixed capital formation, the study finds marginal impact of bilateral ODA on growth in fixed capital formation in Sub-Saharan Africa at the 10% level of significance. Total and multilateral aid do not have longer-term impact on agricultural fixed capital formation. For this reason, bilateral ODA seem to be more suitable for sustainable rural and agricultural development. The insignificant impact of multilateral ODA at level (short-term) and growth (long-term) could be as a result of free-riding in monitoring. With many donors providing aid in a multilateral arrangement, monitoring could be seem as a public good where individual donors expect others to monitor, and that can result in non-monitoring or under-provision of monitoring. Thus, for policy directions, it is recommended that in the design of multilateral ODA, monitoring by donors should be invigorated to enhance aid effectiveness. Generally, the study finds limited impact of overall aid on agricultural fixed capital. Therefore, governments of African countries should reconsider their over-reliance on official development assistance and strengthen private sector channels that encourage internally generated revenue.