Lessons from the NBER Project on African Economic
Transcript
Lessons from the NBER Project on African Economic
Lessons from the NBER Project on African Economic Successes David N. Weil Brown University and NBER NBER Africa Project • 5 year project, funded by Gates Foundation, administered by NBER • Directors: Sebastian Edward, Simon Johnson, me • 40 sub projects, 85PIs • 2 pre-conferences, 3 “research conferences” (Cambridge 12/09, Accra 7/10, Zanzibar 8/11) • Finished papers available as NBER WPs • Will be 3 or 4 books www.NBER.org/AfricanSuccesses Goals • Inform policy making in Africa and elsewhere. • Strengthen research base on Africa. Build links between African researchers and those outside • Make serious study of Africa a more mainstream endeavor for applied economics. • Bring new researchers to the study of African development. www.NBER.org/AfricanSuccesses “Successes” • We are interested in what is going well – new technologies – new industries – successful health interventions – increases in market integration – better functioning institutions – successful post-conflict transitions. • This is not a requirement www.NBER.org/AfricanSuccesses Agriculture / Food • Agriculture, Roads, and Economic Development in Uganda Douglas Gollin and Richard Rogerson • The Determinants of Food Aid Provisions to Africa and the Developing World Nathan Nunn and Nancy Qian • The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa Since 1961 (Ghana) Steve Block • The Sahel's Silent Maize Revolution: A Case Study of Maize Productivity in Mali Using Farm-level Panel Data Jeremy Foltz • From subsistence to cash crop agriculture: The role of contract farming in sugar cane production in Kenya Sendhil Mullainathan www.NBER.org/AfricanSuccesses Mobile Phones • New Cellular Networks in Malawi: Correlates of Service Rollout and Network Performance Taryn Dinkelman, Emily Oster, Rebecca Thornton, Deric Zanera • Mobile-Banking: The Impact of M-Pesa in Kenya Isaac Mbiti and David N. Weil www.NBER.org/AfricanSuccesses Health, Fertility, and Education • Evaluating the Effects of Large Scale Health Interventions in Developing Countries: The Zambian Malaria Initiative Nava Ashraf, Günther Fink, and David N. Weil • Fertility Responses to Prevention of Mother-to-Child Transmission (PMTCT) Scale-Up in Zambia Nicholas Wilson • Demographic Pressure and Institutional Change: Village-Level Response to Rural Population Growth in Burkina Faso Harounan Kazianga, William Masters, and Margaret McMillan • Impact of Nigerian Conditional Grant Initiative on the Health-related Millennium Development Goals Elizabeth Brainerd, Jens Hainmueller, and Michael Hiscox • Stimulating Demand for AIDS Prevention William Dow • What drives success in children's educational outcomes in poor villages in rural West Africa, the case of Guinea-Bissau? Peter Boone and Simon Johnson www.NBER.org/AfricanSuccesses Political Economy / Conflict • Healing the Wounds: Learning from Sierra Leone's Post-war Institutional Reforms Katherine Casey, Rachel Glennerster, and Edward Miguel • Decentralization and Its Consequences in Africa: Fiscal Competition and Redistributive Politics in Benin Martial Foucault, Grégoire Rota-Graziosi, and Leonard Wantchekon • The Political Economy of Government Revenues in Postwar ResourceRich Africa (Liberia and Sierra Leone) Victor Davies and Sylvain Dessy • Intra-Elite Dynamics in African Countries Ilia Rainer and Francesco Trebbi • Politics and Institutions in Sierra Leone Daron Acemoglu and James Robinson www.NBER.org/AfricanSuccesses Finance / Capital Allocation • The Return to Capital for Small Retailers in Kenya: Evidence from Inventories Michael Kremer, Jonathan Robinson, Olga Rostapshova • The Financial System in Burundi: An Investigation of its Efficiency in Resource Mobilization and Allocation Léonce Ndikumana, Janvier Nkurunziza, and Prime Nyamoya • Is capital allocated efficiently within the African countries? Sebnem Kalemli-Ozcan and Bent Sorensen • Were the Nigerian Banking Reforms of 2005 A Success ... And for the Poor? Lisa Cook • Resolving the African Financial Development Gap (Kenya) Franklin Allen, Elena Carletti, Robert Cull, Jun "QJ" Qian, Lemma Senbet • Enabling Microenterprise Development in Sub-Saharan Africa through the Provision of Financial Services Pascaline Dupas and Jonathan Robinson www.NBER.org/AfricanSuccesses Government Regulation and Transfers • Deals versus Rules: Policy Implementation Uncertainty and Why Firms Hate It Mary Hallward-Driemeier and Lant Pritchett • State versus Consumer Regulation: The Case of Road Safety in Kenya James Habyarimana and William Jack • Fifteen Years On: Household Incomes in South Africa Murray Leibbrandt and James Levinsohn www.NBER.org/AfricanSuccesses Market Integration / Efficiency • International and Intra-national Market Segmentation and Integration in West Africa (Niger, Nigeria) Jenny Aker, Michael Klein, and Stephen O’Connell • The Unofficial Economy in Africa (Kenya, Madagascar, Mauritius) Rafael La Porta and Andrei Shleifer www.NBER.org/AfricanSuccesses Gender Issues • Gender and Social Protection Programs in Developing Countries: A Randomized Evaluation of Conditional and Unconditional Cash Transfers in Rural Burkina Faso Richard Akresh, Damien de Walque, and Harounan Kazianga • Family Ties, Inheritance Rights and Successful Poverty Alleviation (Ghana) Edward Kutsoati and Randall Morck • Discussion Sessions Coupled with Microfinancing May Enhance the Role of Women in Household Decision-Making in Burundi Radha Iyengar • Girl Power: Conditional Cash Transfers and Female Empowerment (Malawi) Sarah Baird, Ephraim Chirwa Jacobus de Hoop, and Berk Özler www.NBER.org/AfricanSuccesses Country Studies • Cape Verde and Mozambique as Development Successes in West and Southern Africa Jorge Braga de Macedo and Luís Brites Pereira • Mauritius: African Success Story Jeffrey Frankel • Tanzania: Finally, a Success Story Sebastian Edwards www.NBER.org/AfricanSuccesses International Trade • AGOA Rules: The intended and unintended development consequences of Special Fabric Provisions(Lesotho) Lawrence Edwards and Robert Lawrence • African Export Successes: Surprises, Stylized Facts and Explanations William Easterly and Ariell Reshef • The Returns to the Brain Drain and Brain Circulation in SubSaharan Africa: Some computations using data from Ghana Yaw Nyarko • Can African countries move from agriculture directly to services (such as tourism)?: A cross-regional study including successes in Tanzania and the Seychelles Diego Comin www.NBER.org/AfricanSuccesses Mobile Banking : The Impact of M-Pesa in Kenya Isaac Mbiti, Southern Methodist University David Weil, Brown University and NBER Introduction • Mobile phone adoption in sub-Saharan Africa has increased dramatically over the past decade. • Followed by proliferation of unique and innovative mobile phone based services and development projects • M-pesa is a service of Safaricom –Kenya’s leading mobile phone operator • Introduced in 2007 • Provides very simple services to mobile customers on Safaricom network. – Deposit Money, Withdraw Money – Transfer Money to anyone with a phone • Charged on a per transaction basis. • Now 18,000 agents (vs 1,000 banks and 352 ATMs) Transaction Costs Transaction Range (Kshs) Charge (Kshs) Min Max Deposit 100 35,000 0 Send money 100 35,000 30 Withdraw money 100 2,500 25 by M-Pesa 2,501 5,000 45 registered user 5,001 10,000 75 10,001 20,000 145 20,001 35,000 170 No min balance. Max account balance is 50,000 Kshs. Maximum daily transaction value is 75,000Kshs Current exchange rates 1USD = 80 Kshs Finacess survey 2006 & 2009 Why has the adoption been phenomenal? • Predominant use of M-Pesa has been in person to person transfers. (domestic remittances) • Ethnographic work by (Morawcynzski 2008) respondents reported the following advantages of M-Pesa – – – – Cheaper Safer / more reliable Quicker More coverage- (lots of M-pesa agents) Who is Adopting M-Pesa? • Probability of adoption is higher for: – Males – Urban residents – More educated – Wealthier individuals – Banked Individuals – Employed in non-farm sector – Mobile phone owners Survey Data: Frequency of Use Frequency of Use Percentage users Percentage transactions Daily 1.6 32 Weekly 14.4 41 Monthly 32.7 21 Irregular 51.3 6 M-Pesa:Potential Economic Impacts • Could change pattern and amount of remittances • Increased competition in money transfers sector and perhaps banking sector – Impact on Western union etc – How will banks respond to (perceived) “threat” of M-Pesa • Could M-Pesa provide “basic financial services” for the poor? – Is M-Pesa complement or substitute for formal banks? – Could serve as a rudimentary saving vehicle – Impact on Financial access • Macroeconomic effects? – Implications for measuring money supply? M-Pesa and Remittances • Increased competition in money transfers sector and perhaps banking sector – Examine the impact on M-Pesa on prices of Western Union and MoneyGram – Describe banks response to (perceived) “threat” of M-Pesa Costs of Other Money Transfer Services • To send $100 it costs about: – $15 via western union – $6 via postal money order – $12 via Moneygram – $2-3 via Akamba bus (0-10kg parcel) – $20 wire transfer Compared with: – $2.50 via M-pesa (non-registered user price) Sources: Kabbucho et al 2003, individual company websitesi Effect of M-Pesa on Prices of Competition Macroeconomic Aspects of M-Pesa • Some simply monetary economics (ala Sherlock Holmes) E-money loop velocity • Data on Withdrawals • Implicit Interest Rates The E-Money Loop (Irving Fisher: Cash Loop) Agent cash Agent e-float cash User #1 User #2 e-float deposit-transfer-withdraw Loop = 1 deposit-withdraw (e-wallet) Loop = 0 “money” (repeated circulation) Loop>1 e-float User #3 e-float Estimating the E-Money Loop Steady State: Loop Length = transfers / deposits = 2 (transfers / [deposits + withdrawals]) • Safaricom tells us monthly P-P transfers • (deposits + withdrawals) available in one paper Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Length of the E-Money Loop 1.2 1.15 1.1 1.05 1 0.95 0.9 0.85 0.8 Length of E-money loop ≈ 1 Consistent with: • Almost all transactions are deposit-transfer-withdraw or • Roughly equal numbers of deposit-withdraw (e-wallet) deposit-transfer-transfer-withdraw Transactions Velocity • Average number of person-to-person transfers per unit time for a unit of currency. • Different than income velocity, which is commonly measured. Agent Mr. A Agent Mr.B 3 days Mr. C Agent Agent Mr. D 1 day • M-Pesa = data sleuthing 203 (ksh./user) × 3.73 million users (August 2008) 757 Million ksh. outstanding e-float 3,761 outlets (Safaricom data) 50,000 ksh. /outlet in till (assumed) = 188 million ksh in till cash 569 million ksh. on customer phones 8.32 billion ksh. person-to-person transfers Velocity = 14.6 P-P transfers / month Velocity = 14.6 / month • Implies average unit of e-float transferred every 2 days • Presumably a mix of many units that exist for less than one day, and a few that stay on phones for a while • Implications for measuring money supply Distribution of Withdrawals Distributions of Withdrawals Implied Discount Rates • Vast majority of withdrawals are by frequent withdrawers • Many withdrawals are small (1,000 ksh. or less) • Little if any bunching at price notches We think that this implies many users could economize on transaction costs by “bunching” withdrawals. They don’t do so because of discounting • Assume that user receives W every month. • Cost for withdrawing either W or 2W is C • W=1,000 C= 25 r = 2.6% per month (36% per year) Distribution of Deposits by Last 2 Digits 00 05 _10 _15 _20 _25 _30 _35 _40 _45 58.6% 0.3% 0.4% 0.1% 1.1% 9.5% 4.0% 0.1% 0.3% 0.1% _55 _60 _65 _70 6.8% 2.6% 0.1% 2.2% _75 _80 _85 _90 _95 1.2% 0.4% 0.1% 0.1% 0.0% Other _50 0.02% 11.7% Note: Based on 6188 deposits of less than 2600 shillings Some Open/Interesting Issues • How do we interpret high discount rates? Cash tax? • Cash management problems of agents – implied discount rates.