Uncertainty Shocks in Africa

Table of Contents

1. Frontmatter

2. Shocked Economies: New Urban Thinking and Sustainable Advancement

   1. Frontmatter

   2. Urbanization Motif, COVID-19, and Economic Revival: Exploratory Research from Addis Ababa, Ethiopia

      Bedane S. Gemeda, Giuseppe T. Cirella, Fekede T. Gemeda, Michael J. Rosciszewski-Dodgson, Birhanu G. Abebe

      Abstract

      The COVID-19 pandemic had a significant shock to Ethiopia’s economy and society, particularly by paralyzing its urban centers and the mobility of its people. This chapter uses primary and secondary data to undertake an empirical examination of the cityscape urbanization process Addis Ababa, Ethiopia, faced in the first year of the outbreak. From an economic viewpoint, sub-city district differences are analyzed using the generalized method of moments estimator, the limited information maximum likelihood estimator, and an ordinary least squares regression model. These approaches show how elevated levels of urbanization during 2020 created a stagnation period throughout the city. This slump has worsened differently throughout the city over the past 2 years, resulting in significant problems in health services and tourism. These sectors have suffered greater losses when compared to the information and technology, entertainment, and internet-based industries. The findings indicate that Addis Abada’s city center recovered at a slower rate when compared to its outer sub-city districts. Besides the analysis from the control variables demonstrates that as actual cases increases by one unit, GDP per capital has a downbeat shock by 40.91% and communal spending has upbeat shock by 14.38%. The fundamental cause is that in places with higher urbanization rates, COVID-19 had a greater effect on personal resources and savings as well as communal services. On the other hand, in the sub-city districts many essential services and businesses remained open, i.e., for a longer period, during the first year of the pandemic. In the long term, these outer districts show signs of faster economic growth and appear to be more resilient in the post-pandemic period. From a policy perspective, this chapter examines how to improve Ethiopia’s urban economic resilience to reduce economic shocks, like COVID-19, with preparedness and proper mitigation strategies.

   3. Lessons for Sub-Saharan Africa: Using the Development Model from East Asia in Nigeria, 1965–2015

      Olajumoke I. Omodara, Giuseppe T. Cirella, Andrzej Paczoski

      Abstract

      East Asia has received much attention due to the extraordinary economic transition which led much of the region to a more balanced growth despite the 1997 Asian financial crisis. In search of a common development model for sub-Saharan Africa, an extensive examination of the economic growth from East Asia is compared from 1965 to 2015. Focusing mainly on economic growth features and differences in selected East Asian and sub-Saharan African countries, a comparative analysis investigates the patterns of development and identifies major economic indicators. A review of East Asia’s transition looks at the historical and socioeconomic evolution of key sectors that contribute to different development model strategies in the region. This chapter centers on questions that try to identify positive indicators as well as reasons to how East Asia developed, the rapidity of the development, and if there is a unified development model. Post-Second World War research catalogs how East Asian countries mobilized towards industrialization by engaging their populations using effective public policies. Comparatively, sub-Saharan African countries, dating back to the same period, were considered among those with growth potential. Since then, they face underutilization of economic growth, inappropriate fiscal reform, and low human capital investment—attributing to the poor economic performance and growth seen over the review period. A secondary examination explores the case of South Korea and Nigeria as representative countries of the two subregions. These countries help to identify critical economic growth deviation and suggest possible growth enhancement policies for sub-Saharan Africa. By examining economic growth divergence, lessons are drawn out and development strategies highlighted. Key facets of South Korea’s development model are described including the increase in labor force, investment in capital, export led growth, technological advancement, and top-down reform policies. Nigeria’s economic performance factors point to a lack of development of the financial markets with limited size and stability, poor productivity of human resources in every sector of the economy, and ineffective institutional order correlating with high corruption and a shadow economy of 50% of gross domestic product. Recommendations center on developing other sectors of the economy and increasing domestic demand to serve as a security measure. This can aid in protecting the economy from potential global market shocks, e.g., the COVID-19 crisis, strengthen budgetary control to improve fiscal solvency, and maintain a low external debt profile to reduce government expenditure on debt servicing. To this end, the restructuring and optimization of trade through the reduction of imports, and exports expansion for more efficient trade balance could aid economic diversification and stabilize financial and healthy fiscal policies—reinforcing sub-Saharan Africa’s economic future and stressing country-specific development as a way forward.

   4. Economic Shocks from COVID-19 and the Assessment of Micro-, Small-, and Medium-Sized Enterprises Emergence of Insurance Coverage in Urban South-West, Nigeria

      Adeyemi E. Ayinde-Olawale, Idowu T. Ogunyemi, Giuseppe T. Cirella

      Abstract

      The COVID-19 pandemic created financial uncertainties which affected economic growth and investments throughout different sectors of the world economy. It created ample setbacks and negatively affected priority sectors such as agriculture, healthcare, defense, finance, and construction. The COVID-19 risk is perceived differently and viewed as a global economic shock. Micro, small, and medium-sized enterprises (MSMEs) have been proven to be the powerhouse of sustainable development of most economies, even though most of them do not have any risk management tool set in place. Insurance coverage is one of the risk management tools that help protect businesses from shocks and enables them to remain in business. This chapter examines the impact of the COVID-19 pandemic on MSMEs’ level of production income and the uptake of insurance coverage in South-West, Nigeria. A quantitative approach is adopted with a representative sample of 192 MSME operators selected by snowballing sampling. Data were analyzed using descriptive and inferential statistics, including the treatment effects model, logistic regression, Pearson correlation coefficient, and Cramer’s V. The average age of the respondents was 37 ± 7.2 years—implying MSME operators in the study area are young and vibrant and, therefore, considered to be in their economically active years. Most MSME operators had at least secondary education in which 68.2% were providing services of some kind and can be classified as micro in nature as they employed less than ten employees. The findings revealed that the uptake of insurance coverage by MSMEs stood at 31%, while 69% were willing to take insurance coverage to mitigate future risks. MSMEs affected by the global pandemic showed more interest in taking up insurance coverage to mitigate future risks than those that were not seriously affected. Over 45% of MSME operators showed interest towards the uptake of fire and special peril insurance products, while about 29% were interested in the uptake of business interruption insurance products—reflecting on the proactive nature of doing business and new normal in the region. It is recommended that insurance companies should develop tailor-made products for MSMEs so as to make insurance more attractive. Given that the high cost of premiums significantly influenced MSMEs’ likelihood of getting insurance, flexible payments methods should be allowed for increased uptake. This will, in turn, boost productivity and confidence that in the event of any adverse market condition and undesirable future occurrences, they will not be worse off.

   5. Shocks from the COVID-19 Crisis in Ethiopia

      Solomon T. Abebe, Giuseppe T. Cirella

      Abstract

      It is estimated that due to the COVID-19 pandemic over 140 million people will fall into extreme poverty and suffer from food insecurity and hunger, with many of these individuals coming from sub-Saharan Africa. Given the importance of agricultural prices for the income of farmers and food prices in these countries, this chapter case researches the shock of the pandemic in Ethiopia from before the COVID-19 outbreak to the end of 2021. The economic shock of the pandemic is explored by examining the macroeconomy, poverty and food insecurity, and social conditions of the country with recommendations on how to best recovery. Before the impact of COVID-19, the Ethiopian macroeconomy had massive imbalances in economic outputs, unemployment, and inflation. Currently, the economic recovery process has exhibited some positive signs of bouncing back. The macroeconomic big picture of Ethiopia indicates the need for investors and policymakers to mitigate the consequences of the pandemic by jumpstarting gross domestic product, employment, and inflation via constructive, safe, and secure fiscal policy. A two-pronged approach is discussed: economic and socio-ecological. Economic imbalances in the country need to be reevaluated to better understand how the poor and most vulnerable can be best helped. Linkages between economic and social measures are considered, including how to best deal with the pandemic’s aftereffects and how to mitigate future economic shocks. Socio-ecological development and environmental degradation must also play an important part of the recovery process and should not be discounted. Finally, to accelerate structural change, in terms of agriculture transformation, industrialization, and digitalization, these sectors should be given a long-term ecologically-friendly priority as they impact poverty reduction and improve communal well-being.

   6. Green Buildings and Green City Strategies for the COVID-19 Pandemic Affected Tourism Industry in Rwanda

      Ilija Gubić, Dheeraj Arrabothu, Richard Ndicunguye, Giuseppe T. Cirella

      Abstract

      The tourism industry and its associated infrastructure is propelling Rwanda’s rapid urbanization and economic growth. Recently adopted green buildings and green city policies, including newly developed city master plans and green building code, reflect on the tourism industry, regulating its influence on urban development and communities. Before the COVID-19 pandemic, tourism in Rwanda was one of the key sectors of economic development, and the largest foreign exchange earner, contributing to almost 15% of gross domestic product, generating 13% of the total employment. Rapid growth of the tourism sector is potentially linked to consumption of high carbon-intensive building materials, energy-intensive transportation choices, high dependency on fossil fuels for lighting, cooking, heating and cooling, and cleaning. In 2020, the COVID-19 pandemic led to the loss of USD 1.2 trillion in international tourism globally. In Rwanda, closure of borders for passenger flights and businesses other than essential services, and postponing of events, influenced the loss of about USD 7.6 million in income and 4000 jobs in the tourism sector. In addition to the Rwandan government’s support of affected tourism businesses and linked livelihoods, there is a need for more innovative and sustainable solutions to building back better. After surveying hotel suppliers and hotel managers in Rwanda’s Musanze District and analyzing the results, this chapter provides recommendations for actions on how Rwanda’s secondary cities, that highly depend on tourism, can respond to the pandemic and set a path of sustainable and inclusive growth by boosting resilience, clean energy transition, and a circular economy.

   7. The African Union’s Agenda 2063 and Africa’s Tourism Industry

      Gakwaya P. Isingizwe, Giuseppe T. Cirella

      Abstract

      This chapter pieces together aspects of the African Union’s Agenda 2063 framework that focuses on long-run sustainable tourism and economic development in Africa. It examines tourism-led growth in different African countries and assesses how the tourism industry contributes to economic development. Agenda 2063 is broken down in terms of how a common tourism industry can exist in Africa and what factors highlight a Pan-African approach. Background knowledge on the topic is thoroughly explored and presented in a chronological order pre-COVID-19 with important measures underscored. This includes an examination of the African Continental Free Trade Area, business tourism changes dating back to the 1990s, and highlights from the travel and aviation industry in Africa. Post-pandemic recommendations look at how several African countries are set to boost tourist trust on the continent and how the tourism industry represents a frontline sector that was the worst hit at the onset of the pandemic. Since the COVID-19 crisis, many tourists chose to pause on travel due to various uncertainties, including the cancelations of flights and travel, closing of borders, imposed lockdowns, COVID-19 tests, quarantine, and fear of novel infections—affecting the mobility and sociability of people. In Africa, recent efforts have been made to develop the tourism industry post-COVID-19 using attractions, accommodation, and accessibility as key starting points. Some African countries entering the market are now providing a wide range of destination options for tourists. In due course, standards of services and value for money will determine which countries and destinations will be most successful. There are many African countries which, for a number of reasons, have limited tourism development but have considerable potential. Local communities need to be featured through participatory partnerships and tourism projects, and government institutions need to effectively reinvest tourism revenue to better cater for conservation and local community-based initiatives. For tourism in Africa to be successful, it will be necessary to engage as many stakeholders as possible in African countries. Realizing these challenges will require a much-needed effort. In terms of the Africa Union’s Agenda 2063 tourism industry standards, prioritizing destination readiness and tourism-led growth and development—continent-wide—should be integrated into a tourism action plan blueprint for a post-COVID-19 future.

3. Shocked Social Development: Mechanisms to Improve Community Robustness

   1. Frontmatter

   2. Societal Shocks and Gender-Based Violence Among Vulnerable People in Kibra and Other Informal Settlements Around Nairobi, Kenya

      Wyclife Ong’eta Mose, Giuseppe T. Cirella

      Abstract

      The impact of the COVID-19 pandemic on peace is unfolding. While some forms of violence declined in the short-term, growing unease with lockdowns and rising economic uncertainty resulted in civil unrest and violence increasing in 2020. According to the 2021 Institute for Economic and Peace, over 5000 pandemic-related violent events were recorded between January 2020 and April 2021. They outline that the pandemic has had a devastating impact on socioeconomic development in many countries. In 2020, the economic impact of violence to the global economy was USD 14.96 trillion in purchasing power parity terms. This is equivalent to 11.6% of the world’s economic activity or USD 1942.00 per person. In Kenya, the 2020 National Crime Research Centre revealed that socioeconomic shocks caused by COVID-19 increased violence—especially gender-based violence (GBV)—among people living in Kibra, Nairobi’s largest informal settlement, as well as other slums located in the city. Between January and June of 2020, 71% of the 2416 cases of GBV reported were female victims. The main perpetrators of GBV are youthful males aged 18–33 years who are in the context of a family or intimate partner relationship. This chapter will look at the social structures that increase the vulnerability of people living in Nairobi’s slums in comparison to the other parts of the country. Specifically, it utilizes Galtung’s classification of direct, structural, and cultural violence framework to analyze structures to increase resilience of people in informal settlements in the context of COVID-19, so as to suggest policy directions that can foster institutions and structures that create and sustain peaceful societies.

   3. Contraceptive Utilization Among Married Couples in Nigeria: Socio-cultural Factors

      Dominic E. Azuh, Paul O. Adekola, Adebanke Olawole-Isaac, Gideon A. Adeyemi, Giuseppe T. Cirella, Chelsea R. Spring

      Abstract

      Effective spacing of births enhances the health and well-being of reproductive-age women. The literature on socio-cultural factors affecting contraceptive utilization is not well documented in Nigeria. This chapter aims to fill this gap. The research is based on cross-sectional data gathered from the 2018 Nigeria Demographic and Health Survey consisting of 8061 married couples. Data analyses were done via three levels of statistical analysis: univariate, bivariate, and multivariate. For univariate analysis, descriptive statistics were adopted to explore the socio-demographic characteristics of married couples in Nigeria. Chi-square analyses assessed differences in the utilization of contraceptives among married couples by way of socio-demographic characteristics. Auto-fitted binary logistic regression model was adopted to identify the socio-cultural determinants of contraceptive utilization among married couples. Results show a clear regional difference in contraceptive implementation among married couples with the least acceptance from North-West (i.e., 7.2%) and highest in South-West (i.e., 36.8%). The bivariate analysis shows that 36.8% of women with higher education use contraceptives, while only 5.8% of women without an education use them. Results from the binary logistic regression show that contraceptive utilization among married couples in Nigeria was significantly correlated with key socio-cultural factors: education, wealth index, religion, age, and an ideal family size. This chapter explores the large unmet need for contraceptive acceptance in rural Nigeria and indicates the need for improving women’s health and well-being as enshrined by the United Nations Sustainable Development Goals 3, 5, and 10—as we gradually approach 2030.

   4. COVID-19 and the Built Environment: Informal Sector, Housing, and Shock Challenges in Nigeria

      Adewale O. Yoade, Solomon A. Olatunji, Giuseppe T. Cirella

      Abstract

      Housing is a basic need and a key unit of a human being’s survival. It often represents the largest investment and biggest achievement in an individual’s life. The continuous challenge in housing requirements vis-à-vis the recent outbreak of COVID-19 has subjected many to staying at and working from home. This has demanded the need to reevaluate housing quality and housing environments. This assessment cannot be underestimated in Nigeria, as scholarly works have reported the low standard of housing across the country. Inadequate housing and low-income levels have subjected countless people to living in unhabitable apartments at the detriment to personal health. This chapter evaluates housing planning and design in residential areas, with a specific focus on informal settlements, throughout Nigeria. Problems such as lack of space, lack of adequate security, and light and noise pollution are reported to affect one’s residence. Other factors identified include the inadequate level of understanding of the COVID-19 pandemic, its prevention, and the relevance of physical distancing. Based on observation, the lack of work and low level of literacy have affected peoples’ adherence to public laws—nationwide. It is recommended that the government continue to stimulate more public information on the preventive measures of COVID-19, create job opportunities, and ensure better housing quality and standards for its citizenry, especially the less fortunate. It is expected that this will promote the well-being of the population and mitigate against future shocks as well as the spread of disease outbreaks.

   5. Influence of the Big Brother Naija Lockdown 2020 Edition Reality TV Show on Nigerians’ Value Orientation During the COVID-19 Lockdown Measures

      Blessed F. Ngonso, Peter E. Egielewa, Giuseppe T. Cirella, Felix O. Iyalomhe, Christian Orobello

      Abstract

      This chapter investigates how Nigerians consumed the Big Brother Naija Lockdown 2020 edition reality TV show featured on Nigerian television during the period of the COVID-19 lockdown. Understanding whether the reality TV show affected their value orientation was examined using a semi-structured online questionnaire through Google Forms and distributed via WhatsApp and Facebook. Data was obtained from 400 respondents between 7 October and 26 November 2020. Results indicate that more females watched reality TV show than their male counterparts. It was found that Nigerians increased their viewership of the 2020 edition in comparison to previous years, attributing this to the lockdown measures that restricted them to stay at home. The majority of respondents found the show morally offensive. A chi-square test was used to confirm no significant difference in how the moral content of the show was perceived by either gender. Recommendations are offered to better understand why males did not watch the show as much as females as well as why they found the show more acceptable even though they watched it less. This chapter probes into prolonged social isolation and television exposure in light of better understanding of psychological impacts and associated influences during public health crises. The research was anchored on the minimal effects theory.

   6. COVID-19 Television Audience Program Choices: Analysis of How Nigerians Consume Television During the Pandemic

      Peter E. Egielewa, Blessed F. Ngonso, Andrew A. Ate, Giuseppe T. Cirella, Felix O. Iyalomhe, Christian Orobello

      Abstract

      This chapter is anchored on the uses and gratification theory and starts off with a background review on television viewers’ choices of media programs and the decision of audiences to select what they see or hear from available content. Key factors that influence viewers’ selection and consumption of TV programs are considered. Experimentation into how Nigerians consumed TV programs before and during Nigeria’s first phase of the COVID-19 lockdown measures is assessed. Using a semi-structured online questionnaire, data was obtained from 457 respondents, from 27 out of the 36 states of Nigeria and the Federal Capital Territory, between April 27, 2020, and May 21, 2020. The results showed that most respondents doubled their consumption of TV programs to combat boredom, get information on COVID-19, and get spiritual inspiration. They also indicated there is no significant relationship between gender and the amount of time spent viewing TV during the lockdown period. Possible reasons for this included (1) both male and female viewers were confined to their home and had equal time to spend viewing television, and (2) couples living together usually watch TV alongside each other. This second reason correlated with program choices, noting that movies, news, and religious programs were preferred over food networks, sports, and documentaries. Additional findings indicated a preference for local TV channels versus foreign ones and the need for the Federal government to improve the recurring problem of inconsistent power supply as many Nigerians reported this as a reason they did not watch TV. Moreover, traditional versus digital media consumption is considered as well as the Federal and state governments handling of COVID-19.

   7. Underlying Factors That Worsened the Vulnerability of Small-Holder Farmers During the COVID-19 Pandemic: Evidence from North-Central, Nigeria

      Olalekan Ibitoye, Adedoyin L. Ibitoye, Giuseppe T. Cirella

      Abstract

      This chapter determines the underlying factors that worsened the vulnerability of small-holder farmers during the COVID-19 pandemic in North-Central, Nigeria. Proffering lasting solutions to the problems of low productivity, arising from the vulnerability to cope with shock events, is an important starting point to understanding how, why, and what occurred over the last 2 years. To better understand this, the socioeconomic characteristics of small-holder farmers were identified and interlinked with the factors that impaired their vulnerability during the pandemic. Primary data were collected with the aid of a structured questionnaire in combination with face-to-face interviews. A multi-stage sampling technique was used for data collection and a total of 360 farmers were sampled across three states in North-Central. The analytical techniques employed in the study include descriptive statistics and multiple regression analysis. The findings of the research reveal that the majority of the respondents are male, fairly advanced in age, with relatively low levels of formal education. The major factors that significantly worsened the vulnerability of the farmers is educational level, farming experience, access to finance, adoption of improved technologies, and access to extension services. It is recommended that efforts should be made towards encouraging farmers to acquire some level of formal education, while adult education should be encouraged among those that are fairly old. Government should also increase access to finance and credit facilities, i.e., finance that goes directly to the actual small-holder farmer. More access to various improved farming technologies should provide farmers with better crop output and financial turnover. Moreover, increased access to quality extension services should be made available. In brief, the COVID-19 pandemic created financial uncertainties which affected economic growth and investments throughout different sectors of the world economy. It created agricultural setbacks that should not be overlooked but rather documented to mitigate future shocks with preparedness as a new standard.

4. Backmatter