Economics and Finance

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Open Access
A systematic literature review on migration and remittances in mountainous regions: key takeaways for Phuthaditjhaba, Free State, South Africa
(MDPI, 2023) Sunge, Regret; Mudzingiri, Calvin
Remittances are essential to the sustainability of economies in mountainous regions that face massive labour migration due to limited income generation and employment opportunities. In 2021, the share of remittances in GDP in the top 10 mountainous economies in the world was over 20%. Nonetheless, most are characterised by relatively lower GDP per capita and high poverty levels. Drawing a comparison with other mountainous areas, Phuthaditjhaba, an emerging mountainous city of South Africa on the border with Lesotho, faces similar out-migration and inferior socio-economic parameters. A global systematic literature review on the impact of remittances on livelihoods, specifically targeting mountainous areas, is missing. We, therefore, interrogate the role that remittances can play in Phuthaditjhaba. To inform our intended research, we seek to draw lessons from evidence on how migration and remittances affect mountainous communities globally. Accordingly, we carry out a systematic literature review (SLR) based on an updated Preferred Reporting Item for Systematic Reviews and Meta-Analysis (PRISMA) 2020 statement supported by bibliometric (co-word) analysis (BA) in VOSViewer. We collected data from the Scopus and Dimensions websites and drew 165 publications, of which only 88 were included after exclusion and inclusion assessments. The PRISMA results show that Mountain Research and Development, Russell King, and Nepal are the most productive and cited journal, the most productive and cited author, and the most researched country, respectively. The bibliometric analysis on keyword co-occurrences revealed that women, agriculture, labour migration, land management, forest, and poverty are the research hotspots. In light of these findings, we proffer important recommendations for future researchers and policymakers and identify thematic research areas for Phuthaditjhaba.
Open Access
COVID-19 shock and sectorial index response in South Africa: a cross-sector analysis
(EconJournals, 2022) Vengesai, Edson
The prime objective of this study was to examine the impact of COVID-19 shock on sector returns of the South African Stock market. The study employed the Autoregressive Distributed Lag (ARDL) model estimated with a Pooled Mean Group estimator on a sample of daily stock returns of 10 Johannesburg Stock Exchange (JSE) sectors. The results indicate a heterogeneous behaviour in sector stock return response to COVID-19 shock. The study shows that the Pandemic negatively impacted the majority of the sectors. However, some sectors were positively affected by the outbreak, while some were resilient to the shock. The pooled ARDL panel results show a negative relationship between COVID-19 and stock market returns in the short run. The study found an insignificant relationship between stock market returns and COVID-19 cases in the long run. The study also shows that sector and stock return response to different factors is time-varying. The results imply that COVID-19 shock is short-lived, the negative impact of the Pandemic is corrected in the long run. Stock market investors should thus focus on the long-run behaviour of stock returns. The results evidence the significance of diversification in different stock market sectors for investors
Open Access
Death, denial and dissidents: white commercial farmers’ discursive responses to mass violence in Zimbabwe, 1970-1980
(University of the Free State, 2015) Pilossof, Rory
This article investigates how white farmers in Zimbabwe reacted to two violent episodes in Zimbabwe’s recent history: the liberation war in the 1970s and the violence of Gukurahundi in the 1980s. The foregrounding of violence against white farmers by white farming representatives and mouthpieces in the 1980s was in direct contrast to the almost complete lack of acknowledgement of ‘terrorist’ casualties during the liberation war, and was a deliberate strategy on behalf of white farmers to recast themselves as an ‘endangered’ species that needed government protection. This article analyses how the discursive strategies of narrative violence changed for white farmers from the 1970s to the 1980s. The changing social and political contexts meant that white farmers had to adapt the tactics employed for narrating and discussing violence, with silencing and selective remembering as key components throughout this troubled period.
Open Access
The depth of financial integration and its effects on financial development and economic performance of the SACU countries
(University of the Free State, May-08) Aziakpono, Meschach Jesse; Burger, Philippe; Du Plessis, Stan
Afrikaans: Die studie ondersoek die verhouding tussen finansiële integrasie, finansiële ontwikkeling en ekonomiese groei in die SADU lande. Die empiriese analise begin met 'n ondersoek na die graad van finansiële integrasie in elk van die SADU lande, deur 'n battery van toetse te gebruik. Die resultaat verskaf in alle opsigte oorweldigende bewyse wat aantoon dat die finansiële sektore van die SADU lande individueel hoogs geïntegreer is en dat dit toeneem. Die aanwysers beklemtoon ook 'n duidelike asimmetrie in die kapitaalvloei tussen die banke en die SADU lande, met die kapitaalvloei betekenisvol ten gunste van Suid-Afrika en Namibië in vergelyking met die ander lande. Dit word toegeskryf aan die onderliggende eienskappe van hierdie lande, spesifiek hul swak institusionele ontwikkeling. Die resultate bevestig verder Suid-Afrika se dominante rol in die SADU. Die rentekoersanalises dui ook ondubbelsinnig op 'n hiërargie van die integrasie van die finansiële stelsels van elke lidstaat met die van Suid-Afrika. Namibië is bo-aan die lys, gevolg deur Swaziland, Lesotho en Botswana, in daardie volgorde. Die resultate dui verder ook aan dat die heersende integrasie tussen die finansiële stelsels voortspruit uit beide beleidkonvergensie en markkonvergensie. Die resultate toon egter ook dat, behalwe in Namibië, daar beperkte aktiwiteite tussen die lande bestaan, wat die gevolg kan wees van beide swak institusionele ontwikkeling en beperkte beleggingsgeleenthede, en die onvermoë van beleggers om sodanige geleenthede in die kleiner lande te verken. Die empiriese analise van die verhouding tussen finansiële ontwikkeling, finansiële integrasie en ekonomiese prestasie, wat gebaseer is op ko-integrasie en foutkorrigerende modelleringstegnieke deur die Johansen-benadering te gebruik, verskaf gemengde resultate tussen die SADU lande. By die verhouding tussen finansiële ontwikkeling en uitsetgroei varieer die resultate van land tot land en hang dit van die maatstaf van finansiële ontwikkeling wat gebruik is af. As ‘n geheel verleen die resultaat 'n mate van ondersteuning aan aanbod-leidende finansies oor die SADU lande heen, soos voorgestel deur Patrick (1966). Oor die effek van FO, dui die oorwig van die bewyse op 'n negatiewe jare-lange oorsaaklike effek van finansiële ontwikkeling op die uitsetvlak in die SADU lande, veral as die kredietaanwyser gebruik word. Die toetse vir die effek van die deposito-aanwyser op die uitsetvlak was grootliks onoortuigend, met die uitsondering van Swaziland, waar 'n robuuste positiewe effek gevind is. Die swak effek van finansiële ontwikkeling op ekonomiese groei word toegeskryf aan ondoeltreffendhede in die kredietallokasiemeganisme, weens swak regulasies, banktoesighouding en onderontwikkelde finansiële stelsels asook politieke, institusionele en strukturele probleme in party van die lande. Die resultate bevestig verder 'n langtermyn verhouding tussen finansiële ontwikkeling en finansiële integrasie oor die SADU lande heen. Die resultate bevestig ook 'n sterk terugvoer-verhouding tussen finansiële ontwikkeling en finansiële integrasie oor die lande heen. In alle opsigte is die effek van finansiële integrasie op finansiële ontwikkelinge en vice versa dubbelsinnig en dit varieer oor die SADU lande heen. Bykomend tot die variasie oor die lande heen, hang die bewyse af van die soort kapitaalvoorraad en die maatstaf wat vir finansiële ontwikkeling gebruik is. Dit is derhalwe moeilik om in die algemeen te beslis of finansiële integrasie 'n aanvulling of plaasvervanger vir finansiële ontwikkeling oor die SADU heen is. Laastens toon die resultate aan dat uitset oorheersend endogeen in die vier lande is, terwyl finansiële integrasie hoofsaaklik eksogeen is. Dit suggereer 'n beperkte terugvoerverhouding vanaf uitsette na finansiële integrasie. Wat die effek van finansiële integrasie op die uitsetvlak betref is die resultate gemeng; die effekte varieer van land tot land en hang van die soort kapitaal af. Die effek van Direkte Buitelandse Investering was negatief in Botswana, positief in Suid-Afrika, maar dubbelsinnig in Swaziland. Die verhouding van buitelandse bates van banke het 'n dubbelsinnige effek in Botswana, Lesotho en Suid-Afrika, terwyl geen effek in Swaziland bespeur is nie. Laastens het die verhouding van buitelandse laste 'n positiewe effek in Lesotho en Swaziland, en 'n negatiewe effek in Suid-Afrika, terwyl die effek in Botswana dubbelsinnig is.
Open Access
The development status of women in South Africa: patterns, progress and profiles
(University of the Free State, 2009/02/06) Booysen-Wolthers, Annelize; Fourie, F. C. v. N.; Botes, L. J. S.
Afrikaans: ‘n Soeke na redes vir die voortgesette onderskeiding van vroue as synde die armstes onder die armes, ongeag ontwikkelingspogings oor dekades, gee noodwendig aanleiding tot die behoefte om vroue se ontwikkelingstatus te evalueer. In die geval van Suid-Afrika met sy progressiewe geslagsgelykheidsbeleide, getuig sodanige evaluering ook van die sukses waarmee die integrasie van genderaangeleenthede in die samelewing neerslag gevind het in die welsyn van vroue. Die ontwikkelingstatus van vroue in Suid-Afrika, asook die veranderinge in hierdie verband tussen 1996/98 en 2001/3, staan sentraal in hierdie studie. ‘n Gender-gedisaggregeerde aanpassing van die Menslike Ontwikkelingsindeks (MOI) (Engels: Human Development Index – HDI) is ontwikkel en toegepas op Suid-Afrikaanse nasionale en provinsiale data ten einde verskille in die veranderingsvlakke en –koerse van vroue se ontwikkelingstatus vergeleke met dié van mans te bepaal. Die ontwikkelingsgebiede waarop die MOI gebaseer is, is ondersoek om areas wat besonder swak vaar ten opsigte van vroulike ontwikkelingstatus te identifiseer. Die meting van Suid-Afrikaanse vroue se welsyn is uitgebrei deur die MOI-gebaseerde meetinstrumente aan te vul met die Genderontwikkelingsindeks (Engels: Gender Development Index – GDI), die Genderbemagtigingsmaatstaf (Engels: Gender Empowerment Measure – GEM), asook met twee indikatore van ‘magstatus’ – die Besluitnemingsindeks (Engels: Decision-Making Index – DMI) en die Drempelmaatstaf van Vrouestatus (Engels: Threshold Measure of Women’s Status – TMWS). Elk van hierdie indekse bied slegs een perspektief op vroue se ontwikkelingstatus wat ‘n gefragmenteerde beeld verskaf. Ten einde ‘n breër-gebaseerde, holistiese beeld van vroue se welsyn te voorsien, word voorgestel dat ‘n stel indekse gekombineer word in ‘n metingsraamwerk, genaamd die Vroue-ontwikkelingstatusprofiel (Engels: Women’s Development Status Profile – WDSP). Hierdie evaluering van vroue se welsyn vanuit ‘n aantal perspektiewe dra by tot ‘n meer ewewigtige waardebepaling. Die bevindinge van die studie kan soos volg opgesom word: • Tussen 1996 en 2001 het die ontwikkelingstatus van Suid-Afrikaanse vroue op nasionale vlak afgeneem, in sowel absolute as (veral) relatiewe terme. • Hierdie nasionale tendens was teenwoordig dwarsoor die nege provinsies, ofskoon in wisselende mate. • Vroue woonagtig in provinsies met ‘n vooraf bestaande swak absolute ontwikkelingstatus blyk voorbestem te wees om ook ‘n swak ontwikkelingstatus relatief tot mans te hê. • Daar is ‘n kennelike verskil tussen die provinsies ten opsigte van hul absolute en relatiewe ontwikkelingsvlakke. Alhoewel provinsiale rangordepatrone nie noemenswaardig verander het tussen 1996 en 2001 nie, het inter-provinsiale prestasieleemtes ten opsigte van vroulike ontwikkelingstatus in sowel absolute as relatiewe terme gekrimp. • Onderwyl vroulike ekonomiese aktiwiteit in 1996 die vernaamste swak plek op ‘n absolute vlak was, het vroulike lewensverwagting te en 2001 te voorskyn getree as ‘n nuwe knelpunt. Werkloosheid en ongeletterdheid was die swakste punte in terme van relatiewe vroulike ontwikkeling. Die snelle afname in vroulike laerskool bruto inskrywingsratio’s tussen die twee jare verdien verdere ondersoek. • ‘n Vergelyking van die vyf gender-spesifieke indekse het die provinsiale rangordening van die Wes-Kaap en Gauteng bevestig as die beste presteerders in terme van die ontwikkelingstatus van vroue, met Limpopo as die swakste presteerder. In hierdie verband was daar by ander provinsies minder duidelike tendense te bespeur. • Die Vroue-ontwikkelingstatusprofiel (‘WDSP’) toon die relatiewe hoë ontwikkelingstatus van vroue in die Wes-Kaap en Gauteng vergeleke met ander provinsies, terwyl die vroue van Limpopo die swakste vroulike ontwikkelingstatus vir die jare 1996/98 en 2001/03 gehad het. • Die onderskeiding wat die Profiel (‘WDSP’) moontlik maak tussen ontwikkelingspotensiaal en werklike ontwikkeling onthul dat vroulike ontwikkelingspotensiaal betekenisvolle vordering gemaak het tussen 1996/8 en 2001/3, wat neerslag vind in ‘n meer ewewigtige Vroue-ontwikkelingstatusprofiel. Die beduidende afname in die werklike ontwikkelingstatus van vroue, grotendeels toe te skryf aan ‘n afname in lewensverwagting (en bes moontlik verbandhoudend met die impak van MIV/Vigs), is desnieteenstaande besonder onrusbarend. Hierdie proefskrif bied ‘n holistiese en omvattende metingsraamwerk vir die evaluering van die ontwikkelingstatus van vroue, wat hopelik sal lei tot toepaslike beleidstappe en sosiale veranderinge ten einde volhoubare ontwikkeling te verseker.
Open Access
Die invloed van spoorwegtariewe op die vestiging van nywerhede in Bloemfontein
(University of the Free State, 1957) Border, Thomas Going; Fourie, F. C. van N.
In dealing with the subject of the influence of railway tariffs on the localization of industry in Bloemfontein, it should firstly be pointed out that South Africa has undergone extensive industrial expansion especially during the years following world war II, but, as indicated in Chapter 1, this industrial development has unfortunately been limited to a relatively few concentrated areas namely, Southern Transvaal, Western Cape, Durban Pinetown and to a lesser extent Port Elizabeth. These four regions were jointly responsible for 83,3% of the country’s net industrial production during the year 1951/52. Of these four regions Southern Transvaal is by far the most developed area, having alone been responsible for 48,9% of the Union’s total net industrial production for the same period. Bloemfontein, on the other hand, although classified as the eight most important industrial centre in the Union and after Southern Transvaal the second most important inland industrial centre, is still as an industrial centre very much less developed than more concentrated regions mentioned. The Free State as a whole was during the year 1951/52 responsible for only 3,6% of the total net industrial production. Of the total number of workers employed in industrial concerns with more than 10 employees, Bloemfontein had only 1,7% of this total during the year 1948/19. It is clearly understood that it is difficult to determine with any exactness the actual influence which railway rates exort on industrial location in general. The importance thereof must however not be underestimated as railway rates are inherent in most localization factors such as markets, raw materials, power etc. In determining the influences of railway rates on industrial localization in Bloemfontein, due consideration has been given to the other localization factors such as the proximity of a suitable local and regional market, labour supply, the availability of a sufficient supply of water and power, climate and other general factors. These were found to be generally favourable for further industrial expansion in Bloemfontein. As regards Bloemfontein as market area, it is shown that it possesses a local and regional market which although relatively small in comparison with Southern Transvaal and other concentrated areas, contains the second most important inland market, and a regional market which covers a considerable area. Although this region consists of the more sparsely populated regions of the country, it is a region on the threshold of important developments in respect of mineral deposits in the Western Free State and goldfields. There is also the growing importance of the agricultural areas of the region. It is also shown in chapter 1 that in the absence of any discrimination in railway rates, Bloemfontein’s locality is second only to the Southern Transvaal as regards the cost of distribution within the national market. It is clear that there are definite reasons which go towards making a large market region more attractive for an industrial locality such as, the immediate proximity of a large market, prompt delivery, larger possibilities for expansion, quicker adaptation to changes in demand, the presence of a sufficient labour supply, etc. It is also clear that geographical conditions such as rich mineral deposits were largely responsible for the development and extreme concentration of industries in the Southern Transvaal region, but the fact must not be overlooked that the railway tariff system played an important part assisting industrial expansion in that area. The question is, in which way and to what extent did the railway tariff system encourage this large concentration of inland development in the Southern Transvaal, or in other words to what extent did the railway tariff system reward industrial development in other inland regions, resulting in practically all the industrial development having been restricted to one specific inland region? The most important bearing which railway tariffs have on the localization of industrial enterprises can clearly be conceived from the requirements stated in the South African Act of 1909, which emphasize that the South African Railways and Harbours must be administered on business principles with proper regard to the agricultural and industrial development of the inland regions of all the provinces of the Union. By comparing the requirements of the Act with the actual pattern of inland industrial development which exists at present, one finds rightly enough a considerable inland industrial development, but unfortunately this development is largely limited to on inland region of one province only, with little or no development having taken place in other inland regions. The Railway Administration by means of their tariff system adopted a positive policy towards encouraging the expansion of distribution and industrial concerns in the inland area of the country, but the results of this policy with it’s “maximum”, “distribution” and “nearest harbor” rates, helped towards attracting industry to the Southern Transvaal only, without providing any benefit to other less fortunate inland regions such as Bloemfontein. Irrespective of opinions as to the influence which the South African Railway tariffs have had on the siting of the country’s industries, the fact remains that the country’s extremely centralized industrial development occurred together with a railway rates policy which was extremely discriminatory in it’s application. For this reason also special attention has been given in this study to these discriminating aspects of the previous railway rates system, and their influences on the localization of the country’s industries. Attention is also given to the probably future influence as a result of the abandoning of these discriminating rates and complete revision of the previous rates policy in August 1954. It is found generally that as a result of the higher railway rates on manufactured articles than on the raw materials, the tendency exists to locate industries as near as possible to existing market areas. Considering this tendency together with the fact that the Southern Transvaal is by far the most important national market area, it would only be natural to expect that any railway rates policy which discriminates in favour of this region would only go towards attracting still further industrial expansion within this area. On careful examination of the South African Railway rates, especially those in operation before August 1954, one finds that industries in the Southern Transvaal were not only located within the country’s most important national market, but were also placed within reasonable distance from the other inland and coastal markets as a result of a discriminating rates policy. The distribution rates had the effect of halving the schedule rate, and thus of halving the transport distance in terms of railway rates, from declared distribution centres to other centres in the inland area. This policy also resulted in a considerable decrease in the rate on goods forwarded from distribution centres in the inland area to destination stations in the coastal area (in the instance the difference was taken between the schedule rate from the forwarding station to the harbor nearest to the destination station and the port rate from the destination station to that harbor.) The nearest harbor rate which applied to products of South African manufacture forwarded directly from the place of manufacture, had an even wider effect in that the actual distance between the forwarding and destination stations was not taken into account (except in applying a minimum rate which was considerably lower than the schedule rate), but the distance for rates purposes was that from the destination station to it’s nearest harbor, in cases where this mileage was less than the distance which the goods had to be transported. The reason for these rates was to enable the inland manufacturer to compete favourably with the imported article, but had the effect that a locally manufactured article forwarded for example, from Bloemfontein to Queenstown (distance of 248 miles) was charged the same rate as a similar article manufactured in and forwarded from Johannesburg to Queenstown, which is a distance of more than double that of Bloemfontein to Queenstown. The actual transport distance was also considerably reduced for rates purposes as a result of the application of maximum rates on certain products, such as coal. A further discriminatory aspect which still exists in the published harbour rates, is to be found in the harbour rates between stations in the Southern Transvaal and the ports of Buffalo Harbour and Algoa Bay. These harbour rates in respect of received and forwarded traffic place certain centres in this region approximately 170 miles nearer to Buffalo Harbour and approximately 210 miles nearer Algoa Bay. These different aspects of the Railway rates policy placed industries in the Southern Transvaal in an exceptionally favourable position for the distribution of their products to other market centres in the country, and acted as a strong incentive for industrial localization in that area, but unfortunately on the other hand it seriously handicapped the industrial development of other inland regions such as Bloemfontein. It is thus to be expected that since the major discriminatory aspects of the previous rates policy have been abandoned, conditions will be more favourable for the industrial expansion in Bloemfontein.
Open Access
Economic Inclusion: green finance and the SDGs
(MDPI, 2024) van Niekerk, Arno J.
Persistent economic exclusion and the high levels of natural resource depletion are alarming. The Sustainable Development Goals (SDGs) are among a few global initiatives aimed at bringing a turnaround in both of these areas of concern. Giving action to productive economic inclusion and transitioning towards a circular, regenerative economy is challenging for countries, particularly because of a lack of economic incentives. Green finance has emerged in the last few decades as a valuable mechanism that has the potential to meet this challenge. In answering the question of how to facilitate the necessary transition to a green, inclusive economy, the paper attempts to bring green finance and economic inclusion together as a possible means (like a bridge) to address economic exclusion and resource degeneration. That is the primary aim of the study, and it is investigated through an analysis of theoretical literature. The key findings include: a strong synergy exists between green finance and economic inclusion; different forms of green finance are able to facilitate economic inclusion; and green finance can be instrumental in attracting investors to fast-track SDG attainment. A key conclusion is that green finance can play a vital role in activating and prolonging broad-based benefit sharing in an eco-conscious way.
Open Access
Economic inclusion: green finance and the SDGs
(MDPI, 2024) van Niekerk, Arno J.
Persistent economic exclusion and the high levels of natural resource depletion are alarming. The Sustainable Development Goals (SDGs) are among a few global initiatives aimed at bringing a turnaround in both of these areas of concern. Giving action to productive economic inclusion and transitioning towards a circular, regenerative economy is challenging for countries, particularly because of a lack of economic incentives. Green finance has emerged in the last few decades as a valuable mechanism that has the potential to meet this challenge. In answering the question of how to facilitate the necessary transition to a green, inclusive economy, the paper attempts to bring green finance and economic inclusion together as a possible means (like a bridge) to address economic exclusion and resource degeneration. That is the primary aim of the study, and it is investigated through an analysis of theoretical literature. The key findings include: a strong synergy exists between green finance and economic inclusion; different forms of green finance are able to facilitate economic inclusion; and green finance can be instrumental in attracting investors to fast-track SDG attainment. A key conclusion is that green finance can play a vital role in activating and prolonging broad-based benefit sharing in an eco-conscious way.
Open Access
Economic sustainability of small mining communities: a case study of Kathu
(University of the Free State, 2021) Meggersee, Angelien; Guvuriro, S.
With the global fluctuations in commodity prices and increasing costs, most mines go through periods of downscale and eventually close down. The closures lead to various negative socio-economic impacts such as higher unemployment, declining growth and increased poverty levels encountered by affected mining communities. This study explores the roles that mining companies and other key stakeholders should play in the development of local economies in order to bring about economic sustainability. The South African legislative and policy framework are scrutinised for their effectiveness in promoting economic sustainability. In addition, key factors limiting the effective implementation of developmental strategies are also identified. Local economic development is often selected as the desired developmental strategy with the aim to create jobs, improve living standards and overall contribute to the economic sustainability of the mining locality. Kathu town, located in the Northern Cape province in South Africa, was used as a case study. Various outlooks, including legal, economic, and social perspectives on the challenges the town face were obtained through the use of interviews, document analysis and memos. Using constant comparative analysis to analyse the data obtained, themes such as a weak community involvement, lack in trust, poor collaboration, poor municipal capacity and possible legislation and policy flaws emerged. The study showed efforts towards sustainable local economic development. However, these efforts might not be sufficient for economic sustainability post mine-closure. Themes in support of this finding include: first, legislation and policy frameworks are promoting growth and not planning for decline to ensure an economically sustainable town. Second, the level of Kathu town’s dependency on the mining companies remain high and the local government is not fulfilling its roles and responsibilities optimally due to the lack of capacity and funding. Third, community members are not participating or contributing to development, however, the proposal of collaborative planning might address the issue. Last, fluctuations in commodity prices and incapacity will hamper the prospects of future development. Despite the challenges hindering the economic development of Kathu town, the mining company and local municipalities realise and acknowledge the shortcomings in their efforts towards promoting economic sustainability. The study makes recommendations about improving the legislative framework and planning arrangements, and hopes to contribute to the knowledge base from which all key stakeholders will learn.
Open Access
Economic sustainability of small mining towns: a case study in South Africa
(SAGE Publications, 2023) Meggersee, Angelien; Guvuriro, Sevias
Small mining towns are often single-industry towns that turn to ghost towns or face negative socio-economic impacts upon mine closure. This study qualitatively explores the roles that mining companies and other key stakeholders (should) play in the development of local economies of the small mining communities to bring about economic sustainability, employing a constant comparative analysis. A small mining town in South Africa is the case study. Legislative and policy frameworks were scrutinized for their effectiveness in promoting economic sustainability. In-depth interviews with key stakeholders were carried out. Key factors limiting the effective implementation of developmental strategies were also explored. The study finds that weak community involvement, lack of trust, poor collaboration, poor municipal capacity, and legislation and policy flaws impact economic sustainability. Sustainable local economic development efforts are reported though. However, such efforts are insufficient because of the legislation and policy frameworks that are promoting short-term growth. Also, the town’s overdependence on the mining company, local government not optimally fulfilling their roles and responsibilities, and minimal community members’ participation on local economic development are other hindrances. However, the fact that the mining company and local municipality do acknowledge the shortcomings in their efforts towards promoting economic sustainability is a promise in minimizing the socio-economic effects of mine closures.
Open Access
Eliciting risk preferences experimentally versus using a general risk question. Does financial literacy bridge the gap?
(MDPI, 2021) Mudzingiri, Calvin; Koumba, Ur
The study investigates the stability of financial risk preference choices elicited from subjects by way of two methods, namely: experimentally elicited incentivized revealed risk preferences (IRRP) and (self-reported) perceived willingness to take a financial risk (PWTFR). The research further examines whether financial literacy (a human capital aspect) helps in reducing the gap between IRRP and PWTFR choices made by subjects. A total of 193 university students (where 53% were female) participated in the study. The subjects completed IRRP choices from four multiple price list (MPL) risk preference tasks and a financial literacy questionnaire. There is a tendency to anchor at extremes of risk-seeking behavior when subjects self-report their PWTFR choices. A paired t-test analysis of the two methods shows that the average responses from the two methods are significantly different. A random effect (RE) panel regression shows that an increase in financial literacy narrows the gap between IRRP and PWTFR choices. The study’s findings show that responses by subjects from a PWTFR general risk question (GRQ) and IRRP experiment are unstable and inconsistent. What people say in a survey does not always translate into what they do when faced with a risk preference choice dilemma. Financial literacy helps individuals to predict their risk attitudes more precisely.
Open Access
Exploring association between self-reported financial status and economic preferences using experimental data
(MDPI, 2021) Mudzingiri, Calvin; Guvuriro, Sevias; Gomo, Charity
Research on economic behaviour of individuals in different financial statuses such as being in a good financial standing or in a threatening financial situation are inconclusive. Some evidence suggest that the culture of poverty may shape and dominate the economic preferences of those who are poor and even make them being prone to trembling and making mistakes thereby making decisions that do not maximize their utility. Other evidence suggest that the poor exercise extra caution and fail to maximize utility. This study investigates the association between selfreported financial status and economic preferences in a developing country setting using data from an incentivized experiment and a survey. Extended random effects panel probit regression models are employed as an analytical strategy. The study established a positive association between being financially broke or very broke and being risk averse. In addition, a positive association is found between being financially ‘very broke’ and impatient. Such findings illustrate the importance of psychology of poverty in economic preferences and in decision-making in general, even as poverty is temporary as represented by self-reported financial status.
Open Access
Exploring association between self-reported financial status and economic preferences using experimental data
(MDPI, 2021-05) Mudzingiri, Calvin; Guvuriro, Sevias; Gomo, Charity
Research on economic behaviour of individuals in different financial statuses such as being in a good financial standing or in a threatening financial situation are inconclusive. Some evidence suggest that the culture of poverty may shape and dominate the economic preferences of those who are poor and even make them being prone to trembling and making mistakes thereby making decisions that do not maximize their utility. Other evidence suggest that the poor exercise extra caution and fail to maximize utility. This study investigates the association between self-reported financial status and economic preferences in a developing country setting using data from an incentivized experiment and a survey. Extended random effects panel probit regression models are employed as an analytical strategy. The study established a positive association between being financially broke or very broke and being risk averse. In addition, a positive association is found between being financially ‘very broke’ and impatient. Such findings illustrate the importance of psychology of poverty in economic preferences and in decision-making in general, even as poverty is temporary as represented by self-reported financial status.
Open Access
Financial behavior, confidence, risk preferences and financial literacy of university students
(Cogent OA, 2018) Mudzingiri, Calvin; Mwamba, John W. Muteba; Keyser, Jacobus Nicolaas
This study investigates determinants of financial behavior (FB) of university students at a university in South Africa. It examines whether financial behavior, confidence, time preferences, risk preferences and financial literacy perceptions of university students differ by financial literacy level. Data were gathered via a questionnaire that included personal information, FB, financial perceptions and financial knowledge responses as well as a multiple price list (MPL) risk preferences and time preferences experiment tasks. A convenient total sample of 191 students (females = 53%) participated in the study. A t-test analysis showed that FB, risk preferences, confidence levels, time preferences and financial literacy perceptions of university students significantly differed by financial literacy level. Our results show that university students with low financial literacy levels are more overconfident, risk loving and impatient; such FB is synonymous with major causes of financial crises across the world. An OLS regression model analysis showed that the risk preferences index, financial literacy perception index and confidence significantly influenced the FB of categorized university students. The risk preference index significantly influenced debt FB of categorized university students. In order to understand the FB of university students, one should take cognizance of their preferences, financial knowledge, confidence and personal characteristics.
Open Access
Fiscal space, governance quality and inclusive growth: evidence from Africa
(Emerald, 2023) Katuka, Blessing; Mudzingiri, Calvin; Ozili, Peterson K.
𝗣𝘂𝗿𝗽𝗼𝘀𝗲 This study aims to examine the impact of fiscal space and governance quality on inclusive growth in African countries. 𝗗𝗲𝘀𝗶𝗴𝗻/𝗺𝗲𝘁𝗵𝗼𝗱𝗼𝗹𝗼𝗴𝘆/𝗮𝗽𝗽𝗿𝗼𝗮𝗰𝗵 In total, 28 African countries were analyzed from 2000 to 2020 using the generalized method of moment regression method. An inclusive growth index was developed using the principal component analysis (PCA) method. The PCA-derived index incorporates factors such as poverty, income inequality, economic participation and per capita income. 𝗙𝗶𝗻𝗱𝗶𝗻𝗴𝘀 The main findings suggest that fiscal space availability (de facto fiscal space and fiscal balance) promotes inclusive growth. The study also showed that lagged inclusive growth, digitalization and governance indicators positively influence inclusive growth. The study concludes that fiscal space availability fosters inclusive growth, but this effect is mediated by governance quality in Africa. 𝗢𝗿𝗶𝗴𝗶𝗻𝗮𝗹𝗶𝘁𝘆/𝘃𝗮𝗹𝘂𝗲 Several studies examined the role of fiscal policy on inclusive growth. However, it is crucial to assess the fiscal space, that is, the financial capacity of the government to implement its fiscal policy without harming its financial stability. This paper, therefore, contributes to the existing literature by using de facto fiscal space indicator to comprehend fiscal dynamics contributing to inclusive growth. In addition, the paper uniquely constructs an inclusive growth index by including poverty severity, which considers both the incidence and depth of poverty and inequality in society.
Open Access
Food insecurity and health outcomes during the coronavirus pandemic in South Africa: a longitudinal study
(BMC, 2022) Nwosu, Chijioke O.; Kollamparambil, Umakrishnan; Oyenubi, Adeola
Background Given that South Africa experienced significant food insecurity even before the COVID-19 pandemic, it is not surprising that the pandemic would result in even greater food insecurity in the country. This paper provides additional evidence on the relationship between food insecurity and health. Methods Data came from the National Income Dynamics Study-Coronavirus Rapid Mobile Survey, a longitudinal survey of adult South Africans. Health was a self-reported indicator of general health, while food insecurity was measured by household hunger, the frequency of household hunger, and households running out of money to buy food. We performed descriptive and econometric analyses. Results Food insecurity has remained high even in the face of greater re-opening of the economy. Moreover, among hunger-affected households, between a quarter and a third struggled with hunger almost daily or daily. Belonging to a hunger-affected household was associated with a 7-percentage point higher probability of worse health compared to not experiencing hunger. Compared to being unaffected by hunger, being hungry everyday was associated with a 15-percentage point higher probability of worse health in wave 1, an effect that became statistically insignificant by wave 4. Conclusions These results show the enormity of the hunger problem in South Africa and its adverse effects on health. In the face of economic uncertainty and the removal of COVID-19 palliatives like the grant top-ups, we enjoin policy makers to protect the vulnerable from food insecurity by continuing the implementation of anti-hunger policies and other measures that enhance food security in the country.
Open Access
Gender differences in intra‐household financial decision‐making: an application of coarsened exact matching
(MDPI, 2021-10) Booysen, Frederik; Guvuriro, Sevias
Most studies that explore collective models of intra‐household decision‐making use economic outcomes such as human capital, earnings, assets, and relative income shares as proxies of the relative distribution of bargaining power. These studies, however, fail to incorporate important measures of control over and management of the economic resources within households. In the current study, a direct measure of financial decision‐making power within the household is used to directly assess the distribution of bargaining power. Coarsened exact matching, an identification strategy not yet applied in studies of this nature, is applied to couple‐level observational data from South Africa’s longitudinal National Income Dynamics Study. The influence of gender differences in intra‐household decision‐making on resource allocations to per capita household expenditure is assessed. In the case of greater financial decision‐making power in couples being assigned to wives rather than husbands, per capita household expenditure on education increases significantly. The empowerment of women with financial decision‐making power therefore holds the promise of realizing the benefits of investments in human capital.
Open Access
The impact of a change in monetary policy by means of a monetary macro-econometric model
(University of the Free State, 2001) De Jager, Shaun; Wessels, G. M.; Pretorius, A. M.
Monetary policy essentially reflects monetary theory. As the financial system is complex and intricate in nature, it becomes virtually impossible to conceive without a theory to simplify its structure. This simplified structure should ideally be geared towards the generation of a transparent financial environment in order to enhance the effectiveness of monetary policy initiatives. To this end, a new monetary policy framework was adopted by the SARB in the year 2000, and is based on achieving a pre-determined inflation target over a specific period of time. The mission of the SARB to protect the value of the domestic currency hence remains the primary objective of the monetary authorities, and any assistance in increasing the transparency of the Bank's monetary policy initiatives will no doubt increase the overall effectiveness of monetary policy. Inflation basically remains a monetary phenomenon and the rates of growth in domestic money supply and bank credit extension are important factors in the new inflation targeting environment. Accordingly, the Bank's actions are aimed at adjusting the repo rate to influence economic expansion and the demand for credit. It is essentially for this purpose that the monetary macro-econometric model has been estimated in this study, and furthermore to elucidate the links between the financial and real sectors of the economy. The model has been structured to reflect money demand theory and how the various domestic economic agents interactively react to a monetary policy impulse. Various alternative monetary policy simulations were performed on the model to determine if the model was robust, and whether it suitably reflected the intricate links between the various key sectors of the economy. The results of the model suggested that it was stable and suitable for policy simulation purposes, and that the monetary transmission mechanism in South Africa is fairly long. In addition, it was found that there was a close relationship between real economic activity and inflation, while the lagged impact on real output growth from a hypothetical change in interest rates was approximately one year. The primary objective of the newly adopted inflation targeting framework is to achieve price and financial market stability over the long-term. As this framework is of a forward-looking nature, it becomes imperative to realise that monetary policy initiatives taken now, will result in (or influence) the possible outcome of the future. This process will even more importantly determine whether the SARB will achieve its inflation target or not. However, the sole purpose of this study was to develop a model that suitably illustrates the key links in the transmission mechanism, and not specifically to determine a model geared towards forecasting the future rate of inflation. The structure and theoretical foundation of the model is not a guarantee for successful monetary policy implementation, but its importance in illustrating the links between the key sectors of the economy cannot be denied. This characteristic makes the model a useful tool in the wide arsenal of operational instruments at the Bank's disposal, and in the process induces an environment in which the monetary policy implementation process becomes more transparent. Afterall, it is the credibility and transparency of the monetary authority that enhances the various stake holders ability to interpret the signalling intentions of the central bank, and it is this that ultimately determines the effectiveness of monetary policy.
Open Access
The impact of financial literacy on risk and time preferences and financial behavioural intentions
(University of the Free State, 2019) Mudzingiri, Calvin; Mwamba, John W. Muteba; Keyser, Jacobus Nicolaas
Financial literacy plays a pivotal role in influencing financial behaviour, risk preferences as well as time preferences which in turn impact on financial life outcomes of individuals such as saving and investment. There is documented evidence on variation in financial life outcomes of people with high financial literacy when compared to individuals with low levels of financial literacy. Financial literacy is also weakly associated with individual cognitive ability, which makes it important to examine its relationship with financial behaviour, risk preferences, time preferences and individual characteristics. This study explores the impact of financial literacy on risk preferences, time preferences and financial behaviour of university students. It seeks to examine whether there are differences in financial behaviour, confidence level, risk preferences and time preferences of university students with high financial literacy when compared to those students with low financial literacy. It also investigates the determinants of financial behaviour of university students. The data used in the study was gathered from university students enrolled in undergraduate bachelor of commerce degrees at University of the Free State in South Africa. Data was collected by way of a questionnaire, multiple price list time preferences and risk preferences experimental tasks, financial literacy test as well as a binary choice time preference task. All students that scored a financial literacy test mark above average were categorised as high financial literacy group while those who score a financial literacy test mark below average were classified as low financial literacy group. The study examined descriptive statistics, used t-test and regression models in the analysis of data. Our analysis was split along financial literacy and gender. First, the study found out that financial literacy is associated with risk preferences and time preference choices of university students with low levels of financial literacy. The research also concluded that indecisiveness or indifference shown by multiple switching on risk preferences and time preference choice options increases as financial literacy decreases. The paper also found low levels of financial literacy among university students. Second, the study found out that financial behaviour, confidence, risk preferences and time preferences significantly differ between university students with low financial literacy when compared to students with high financial literacy. Low financial literacy level university students were found to be more risk loving, overconfident and more impatient compared to university students with high financial literacy. The research also concluded that confidence, risk preferences and financial literacy perceptions are significantly related to financial behaviour of categorised university students. Third, the study findings show that financial literacy is associated with a patient behaviour, that is, a low discount rate in university students. Highest level of education in a household was also found to be significantly related to time preferences of university students, showing a positive externality of education. Finally, the research concluded a reverse causality between financial literacy and time preferences. The study results show that financial literacy education benefits more university students with low levels of financial literacy than university students with high financial literacy. Providing financial literacy reduces mistakes in making risk preference and time preference choices by university students. Availing financial literacy can provide the right dose of confidence, risk aversion and patience in university students.
Open Access
The impact of financial literacy on risk seeing and patient attitudes of university students
(Taylor & Francis, 2021) Mudzingiri, Calvin
The study investigates the impact of financial literacy on risk preference and time preference choices of university students. The study collected data using a questionnaire, implemented a multiple price lists experiment, and administered a financial literacy test. A maximum of 7680 risk preference and 7680 time preference choices were elicited from the subjects. The study used a maximum likelihood joint estimation on an expected utility exponential function on homogeneous and heterogeneous preferences of students. Research results show that financial literacy significantly influenced risk and time preferences of university students with low financial literacy. The study also found significant risk aversion and impatience on homogenous preference choices of students. Structural behavioural errors were significant for the risk preference and time preference tasks choices. An increase in financial literacy is associated with risk seeking and patient attitudes among university students. These traits are associated with better life outcomes of citizens.