FDI in Africa: potential implications of Brexit on South Africa’s financial sector

2019 ◽  
Vol 28 (1) ◽  
pp. 114-129
Author(s):  
Silindile Nomfihlakalo Buthelezi
Keyword(s):  
South Africa ◽  
Negative Impact ◽  
Financial Sector ◽  
Additional Contribution ◽  
African Countries ◽  
Content Type ◽  
Current Trends ◽  
Economic Climate ◽  
Economic Developments ◽  
European Investment

Purpose This paper aims to investigate whether any potential weakening of the UK’s financial sector, as a result of Brexit, will have a negative impact on South Africa’s financial sector given the close ties between the countries’ financial systems. This paper seeks to also argue that Brexit may provide an opportunity for South Africa to pursue new trade linkages with other countries in Africa and Asia. Design/methodology/approach This paper is a review of relevant sources from foreign direct investment (FDI) and international economic literature. It analyses comparative and cross-disciplinary research and examines the current trends in the legal and economic climate in South Africa – within the context of economic growth and FDI inflows patterns. Findings This paper finds that Brexit does not pose a systemic risk to South Africa’s financial system. This paper also finds that South Africa’s recent policy changes may serve as obstacles to South Africa attracting new FDI. Research limitations/implications The implications of Brexit on the investment in the economy of African countries are under-researched, and this paper provides an additional contribution to the euro-centric discussion of the ramifications of Brexit on the economic developments in the financial sector after Britain’s exit. Originality/value This paper argues for an enhanced FDI system for South Africa and its policy proposals can be used to further the independence of African countries from European investment streams.

An overview of the current state of interlibrary loans in South Africa

2015 ◽  
Vol 43 (2) ◽  
pp. 76-83
Author(s):  
Jenny Raubenheimer ◽  
John Stephen van Niekerk
Keyword(s):  
South Africa ◽  
South African ◽  
Information Provision ◽  
Literature Study ◽  
Content Type ◽  
Current Trends ◽  
Current State ◽  
Computer Library ◽  
Practical Implications ◽  
Essential Service

Purpose – The purpose of this paper is to review interlending development in South Africa and current trends in interlending. Design/methodology/approach – Literature study and survey. Findings – Interlending is still an essential service in South Africa. Interlending systems must be used effectively to ensure rapid delivery of requested interlibrary loans. There is a significant use of WorldShare ILL, but there is a scope for substantial development. Research limitations/implications – This is not a comprehensive study but focusses on current interlending activities at some of the larger South African academic and special libraries and the use of Online Computer Library Centre systems. Practical implications – The paper provides some historical information and the extent of current interlending and systems used. Social implications – The paper gives an indication of the value of interlending in South Africa and its contribution to information provision. Originality/value – The paper provides a snapshot of interlending in South Africa and areas for development.

Mixed-gender ownership and financial performance of SMEs in South Africa

2016 ◽  
Vol 8 (2) ◽  
pp. 117-136 ◽  
Author(s):  
Beatrice Desiree Simo Kengne
Keyword(s):  
South Africa ◽  
Financial Performance ◽  
Negative Impact ◽  
Firm Survival ◽  
Industrial Sector ◽  
Individual Characteristics ◽  
Small Sample ◽  
Gender Composition ◽  
Content Type ◽  
Mixed Gender

Purpose The purpose of this paper is to investigate whether the presence of women among owner-stakeholders affects firms’ financial performance. Particularly, it extends the corporate governance literature by linking stakeholder theory and gender differences to explain why gender composition of ownership matters for firms’ performance. As the management of small and medium-scale enterprises (SMEs) revolves around owner-managers and their individual characteristics that are likely to affect their achievements, the study further investigates the relationship between the gender composition of ownership and the firm survival. Design/methodology/approach Using survey data on SMEs for 2007 and 2010, this study uses a panel-level heteroskedasticity technique and a probit methodology to assess the effect women’s presence among owners may exert on SMEs performance and survival, respectively. Findings Results indicate that firms jointly owned by men and women appear to perform better than those owned by men although the presence of women among owners does not correlate with firm survival. Research limitations/implications While the findings of this study shed some light on the performance impact of gender composition of firm ownership, reports based on the presence of women among owners may not present the full picture. Whether the ownership is shared equally between different genders might provide further insides on the magnitude and/or robustness of such effect. Moreover, a small sample period (T = 2) was used to analyse a single industrial sector (manufacturing), and even though the Hausman test confirmed the use of random-effects specification, caution should be taken when generalizing the findings to other cases. Practical implications The findings suggest that the leadership in mixed-gender context propels a perspective of women as a valuable resource within SMEs, but relying on it to sustain the survival would be unwise. Social implications South Africa scores particularly high on positive actions towards women entrepreneurship, and this is compounded in the SMEs sector by managerial attitudes that could offer positive developments for women. Originality/value The positive and significant relationship between women’s presence among owners and SMEs financial performance in South Africa complements the almost exclusively reported negative impact of gender diversity on firm performance. Consequently, mixed-gender owners’ team can be used as a fulcrum to promote SMEs growth in South Africa.

Reconsidering criminal law-based liability for corporations and directors in South Africa

2019 ◽  
Vol 26 (4) ◽  
pp. 1085-1094
Author(s):  
Herbert Kawadza
Keyword(s):  
South Africa ◽  
South African ◽  
Criminal Law ◽  
Negative Impact ◽  
Criminal Liability ◽  
Annual Reports ◽  
Content Type ◽  
Criminal Sanctions ◽  
Fresh Perspective ◽  
African Context

Purpose It is recognised that the mere proscription of corporate offences is not adequate to deter misconduct or engender compliance. There is a need for the enforcement of the rules through robust culture-changing sanctions. The purpose of this paper is to demonstrate the inadequacies of criminal law liability in ensuring compliance with ethical corporate conduct in South Africa. Design/methodology/approach This paper is purely qualitative. For expository purposes, it draws from the Criminal Procedure Act, 51 of 1977 as well the corporate criminality enforcement trends and data from the National Prosecutions Agency’s annual reports to demonstrate that much as criminal liability is enshrined in a statute it has, however, not yielded the expected results. It situates the debate within the broader economic criminological scholarship. Findings This paper argues that even though the option of prosecuting corporations and directors is part of South African law, many corporate offences are not brought into the criminal justice system. Judging by its erratic imposition, criminal liability has failed to express the indignation and condemnation that are normally attached to criminal sanctions. Several reasons account for this. These include evidentiary, legal, technical and definitional complexities of some corporate offences, which lead to them being regarded as “unprosecutable crimes”. This has a negative impact on enforcement. Originality/value This paper is novel because it approaches the debate from a fresh perspective, economics and criminology. Not much scholarly attention has been devoted to analysing the efficacy of criminal sanctions in the South African context. This paper attempts to fill that gap.

Social enterprises and organizational learning in South Africa

2018 ◽  
Vol 10 (1) ◽  
pp. 117-133 ◽  
Author(s):  
Boris Urban ◽  
Elena Gaffurini
Keyword(s):  
South Africa ◽  
Organizational Learning ◽  
Social Innovation ◽  
Emerging Market ◽  
Cross Sectional Study ◽  
Social Enterprises ◽  
African Countries ◽  
Cross Sectional ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to determine the relationship between different dimensions of organizational learning capabilities (OLC) and levels of social innovation in social enterprises. Design/methodology/approach The empirical strategy adopted is a cross-sectional study based on primary survey data. Following a survey of social enterprises in South Africa, statistically analysis is conducted using regression analyses to test the study hypotheses. Findings The findings show that the OLC dimensions of knowledge conversion, risk management, organizational dialogue and participative decision-making all have a significant and positive relationship with social innovation. Research limitations/implications In many emerging economies, the notion of organizational learning appears to have considerable potential relevance, particularly as African countries are moving toward knowledge-based economies. By focusing on OLC, it is anticipated that social enterprises can configure and leverage the different factors in ways that enable them to overcome the constraints of the complex and unpredictable environments and increase their levels of social innovation. Originality/value The paper provides a pioneering empirical investigation into the impact that OLC has on levels of social innovation, in an under-researched emerging market context.

Capital flight and extent of corruption control in the least corrupt African countries

2019 ◽  
Vol 13 (3) ◽  
pp. 469-483 ◽  
Author(s):  
Thales Pacific Yapatake Kossele ◽  
Magalie Gabriella Ngaba Mbai-Akem
Keyword(s):  
Sustainable Development ◽  
Fixed Effects ◽  
Negative Impact ◽  
Economic Environment ◽  
Capital Flight ◽  
African Countries ◽  
Content Type ◽  
The Sustainable Development ◽  
The Government ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the effect of corruption control on capital flight in the least corrupt African countries. Design/methodology/approach Using panel data covering the period of 1996-2010. Findings The results show that the extent of corruption, the total natural resources rent are statistically significant and affect positively the capital across the pooled, random and fixed effects. Inflation and economic growth are also found to have a negative impact on capital flight. Moreover, the exchange rate has a negative and significant effect on capital flight. Practical implications The findings of this study suggest that the extent of corruption control by responsible institutions can be considered as one of the most effective weapons in the fight against capital flight in the least corrupt African countries. Social implications The paper recommends to the government of the least corrupt countries in Africa to create an enabling political and economic environment for investor’s attractiveness. This, in turn, will reduce the occurrence of capital flight and lead to the sustainable development. Originality/value The findings of this study suggest that the extent of corruption control by responsible institutions can be considered as one of the most effective weapons in the fight against capital flight in the least corrupt African countries. The paper recommends to the government of the least corrupt countries in Africa to create an enabling political and economic environment for investor’s attractiveness. This, in turn, will reduce the occurrence of capital flight and lead to the sustainable development.

Economic impact of data localization in five selected African countries

2018 ◽  
Vol 20 (4) ◽  
pp. 337-357
Author(s):  
Mona Farid Badran
Keyword(s):  
South Africa ◽  
General Equilibrium ◽  
Computable General Equilibrium ◽  
Research Paper ◽  
Policy Recommendations ◽  
African Countries ◽  
Content Type ◽  
Cross Border ◽  
The Impact ◽  
The Eu

Purpose The purpose of this study is to quantify the impact of laws and regulations that govern the cross-border flow of data on the economies of five selected African countries, namely, Egypt, Morocco, South Africa, Kenya and Mauritius. Moreover, this study addresses the state of cloud computing in Africa. Finally, policy recommendations are provided in this respect. Design/methodology/approach To reach accurate finding the Global Trade Analysis Project (GTAP) data was used, and then the computable general equilibrium (CGE) was computed to estimate the total cost on the economy. Using the three data regulations linkages indexes (DRLs), the increased administrative cost effect was analyzed on five to six major economic sectors in the target countries. This was followed by estimating the loss in sector-wide total factor productivity (TFP) (for the five to six shortlisted sectors). Using this data, the computable general equilibrium model (CGE) was computed, in order to estimate the economy-wide impact. Based on these findings, a set of recommendations were offered to the policy maker, reflecting the obtained results and conclusions and their implications on drafting data-related policies. Findings The obtained data indexes reveal that Mauritius is the country with the most laws and regulations governing the cross border flow of data, followed by South Africa Egypt to a lesser extent and finally Morocco and Kenya both showing an obvious lack of data regulations. The small value of the estimated elasticity of the selected countries compared to the value of the estimated elasticity in the EU-0.347 shows that the impact of data localization is less in the selected African countries than in the other set of EU countries examined in the research paper. This is because the former has smaller economies with fewer linkages to the global economy and are less reliant on sectors that are heavy users of data. Thus, the overall impact of data localization was not as profound on TFP as is the case in advanced economies. This research paper arrives at the conclusion that fighting the trend of data localization is crucial. In fact, data localization hinders the necessary and essential role of global trade in realizing economic development. Specifically, this is evident in the increase in production costs as reflected in the increase of the prices of goods, which would lead to a decline in incomes. Originality/value Global studies looked at the impact of data localization on the EU, as well as China, India, Korea and Vietnam, providing some data on Asia Pacific. However, no study has ever been conducted on the Middle East and Africa. This study aims to fill this gap. The approach of this study is to capture the extent of data localization mandates encoded in the laws of each of the selected five African countries showing how these mandates govern their cross-border data flow and, in turn, affect their economies. Furthermore, the policy recommendations section of this research paper makes a contribution to the existing literature.

The economic and pricing impact of authorized generic medicines in South Africa

2015 ◽  
Vol 9 (1) ◽  
pp. 20-35 ◽  
Author(s):  
Shelley-Ann Marion McGee
Keyword(s):  
South Africa ◽  
Market Share ◽  
Negative Impact ◽  
Generic Competition ◽  
Content Type ◽  
Significance Level ◽  
Generic Entry ◽  
Market Shares ◽  
Two Samples ◽  
Significant Difference

Purpose – This paper aims to examine whether authorized generics (AGs) have influenced prices and market shares in markets for molecules facing generic competition in South Africa. AGs (clones), which are identical to the originator brands, offer a solution for originator companies to protect their markets from independent generic (IG) competition. IG competitors have claimed that AGs have a negative impact on pricing and competition. Design/methodology/approach – In a retrospective analysis, pricing and quantity data for 24 months post generic entry were extracted for oral solid dosage form products which experienced generic entry into their markets between 2005 and 2011, divided into “Authorized generic affected” and “no authorized generic” markets. A series of indices was calculated, as well as market shares of competing originator and generic products, and the number of generic competitors determined. Indices and market share data for clone affected and unaffected groups were tested at 6, 12, 18 and 24 months using unmatched t-tests, at a 95 per cent significance level. Findings – None of the evaluated pricing indices showed a consistently significant difference existing between AG-affected and no-AG samples. The only variable for which the two samples consistently differed was market shares, with originator brands experiencing significantly more market share erosion in AG-affected markets. Pricing levels of generics and originator products as well as growth of numbers of generic competitors were similar in both AG-affected and no-AG groups. Originality/value – A study of this nature on the impacts of AGs in the South African generics has not been previously published and reflects the situation particular to the country.

Access to finance and firm innovation

2018 ◽  
Vol 10 (1) ◽  
pp. 73-94 ◽  
Author(s):  
MccPowell Sali Fombang ◽  
Charles Komla Adjasi
Keyword(s):  
South Africa ◽  
Trade Credit ◽  
Microfinance Institutions ◽  
African Countries ◽  
Access To Finance ◽  
Firm Level ◽  
Firm Innovation ◽  
Content Type ◽  
Level Data ◽  
Firm Level Data

Purpose The study aims to examine the importance of access to finance in firm innovation by using firm-level data from the World Bank enterprise survey (WBES) on selected African countries. Design/methodology/approach This study utilises firm-level data from the WBES database and computes aggregate innovation index by using multiple correspondent analysis. The authors then apply instrumental variable models (to control for possible endogeneity between innovation and finance) to assess the link between finance and innovation. Findings The research finds that finance in the form of overdraft overwhelmingly drives innovation in all selected countries – Cameroon, Kenya, Morocco, Nigeria and South Africa. Trade credit enhances innovation among firms in Nigeria, South Africa and Cameroon, while asset finance drives innovation amongst firms in Cameroon, Nigeria and South Africa. Practical implications Policy incentives such as tax breaks could be put in place for financial intermediaries that have shown proof of extending loans to financially constraint firms to enable them to innovate. Furthermore, different financial institutions such as microfinance institutions can be supported to increase credit to enterprises. Partnerships with organisations willing to fund firms and support start-ups should be encouraged. One of such support mechanisms could be specialised schemes such as a credit guarantee scheme to encourage and secure lending to enterprises to promote innovation. Originality/value This paper provides empirical insights into how finance enhances innovation in African enterprises. It also shows how different finance structures (overdraft, asset finance and trade credit) affect firm innovation in different African countries.

Financial sector development and income inequality in South Africa

2017 ◽  
Vol 8 (4) ◽  
pp. 420-432 ◽  
Author(s):  
Forget Mingiri Kapingura
Keyword(s):  
South Africa ◽  
Income Inequality ◽  
Financial Development ◽  
Empirical Studies ◽  
Financial Sector ◽  
Financial Inclusion ◽  
External Trade ◽  
Bounds Testing ◽  
Content Type ◽  
Financial Sector Development

Purpose The purpose of this paper is to examine the relationship between financial sector development and inequality in South Africa for the period from 1990 to 2012. Unlike previous studies, the study examines the role of both the broad measure of financial sector development (Bank credit to the private sector) and a measure of financial inclusion (ATMs). Design/methodology/approach Utilising quarterly data, the autoregressive distributed lag bounds testing model approach to cointegration test was estimated. The approach was preferred due to its compatibility with data of different orders and flexibility. Findings The findings indicate that financial development, especially when it is inclusive reduces the level of inequality in South Africa both in the short- and long-run. The results also highlighted that economic growth, external trade activities and government activities have played a very important role in reducing inequality in South Africa. On the other hand the empirical results also highlight that increasing inflation is regressive on inequality in South Africa. Research limitations/implications The results from the study imply that financial development on its own though important may not benefit the disadvantaged groups such as the poor and the rural community until it is inclusive. It is important to note that the study was carried out on the premise that inequality plays a very important role in exacerbating poverty levels in South Africa. Practical implications The paper highlights another avenue which authorities can pursue to reduce the level of inequality in the country. Social implications The paper documents the importance of financial inclusion in reducing the level of inequality in South Africa rather than advocating for financial sector development only. Originality/value The paper makes a contribution through analysing the effect of financial inclusion on income inequality rather than broad financial sector development which is common to the majority of the available empirical studies.

scholarly journals Information asymmetry and conditional financial sector development

2017 ◽  
Vol 9 (4) ◽  
pp. 372-392
Author(s):  
Simplice Asongu ◽  
Jacinta Nwachukwu
Keyword(s):  
Information Asymmetry ◽  
Financial Development ◽  
Financial Sector ◽  
Policy Implications ◽  
African Countries ◽  
Content Type ◽  
Mean Values ◽  
Financial Sector Development ◽  
Negative Effect ◽  
The Impact

Purpose The purpose of this study is to examine the role of reducing information asymmetry (IA) on conditional financial sector development in 53 African countries for the period 2004-2011. Design/methodology/approach The empirical evidence is based on contemporary and non-contemporary quantile regressions. Instruments for reducing IA include public credit registries (PCRs) and private credit bureaus (PCBs). Hitherto unexplored dimensions of financial sector development are used, namely, financial sector dynamics of formalization, informalization, semi-formalization and non-formalization. Findings The following findings are established. First, the positive (negative) effect of information sharing offices (ISO) on formal (informal) financial development is consistent with theory. Second, ISOs consistently increase formal financial development, with the incidence of PCRs higher in terms of magnitude, and financial sector formalization, with the impact of PCBs higher for the most part. Third, only PCBs significantly decrease informal financial development and both ISOs decrease financial sector informalization. Policy implications are discussed. Originality/value The study assesses the effect of reducing IA on financial development when existing levels of it matter because current studies based on mean values of financial development provide blanket policy implications which are unlikely to be effective unless they are contingent on prevailing levels of financial development and tailored differently across countries with high, intermediate and low initial levels of financial development.

Sign in / Sign up

Export Citation Format

Share Document