EXAMINING THE SOURCES OF SOVEREIGN RISK FOR SOUTH AFRICA: A TIME VARYING FLEXIBLE LEAST SQUARES APPROACH

This paper analyzes the determinants of the South African long-term sovereign bond yield spread using 10-year bond yield spread. We employ the Auto-Regressive Distributed Lag and Flexible Least Squares techniques to demonstrate the impact of macroeconomic and financial variables on the yield spread. Our results show that the short-term interest rate is positively related to the bond yield spread both in the short and long run. We also establish a long-run positive influence of government debt on the bond yield spread whilst on the other hand, economic growth, the nominal effective exchange rate, stock market returns and bank credit all have a negative impact on the bond yield spread in the long run. We examine the time varying coefficient of government debt and reveal that the long-run impact of government debt has varied over the period under analysis. Time varying coefficients capture some important periods in the history of the South African economy, indicatingthat underlying economic conditions and exogenous shocks influence the determination of sovereign risk. Our results imply the need for synchronization of fiscal and monetary policy. In addition, economic policy should address economic growth and macroeconomic instability to complement deleveraging efforts aimed at curbing sovereign credit risk.

AN ANALYSIS OF PERSONAL FINANCIAL LITERACY AMONG ADULTS IN VHEMBE DISTRICT, A RURAL MUNICIPALITY IN SOUTH AFRICA

Consumers in rural and low-income areas are the most financially vulnerable and are facing challenges with their finances and depend mostly on unsecured loans to finance their daily expenses. This has been exacerbated by global financial crises, which left many consumers in financial strains. The purpose of this paper is to measure the level of financial literacy focusing on the areas of day-to-day money management, financial planning, choosing appropriate financial services and products, and financial knowledge and understanding. The quantitative research approach was used to collect primary data among adults in Vhembe District Municipality (VDM), a rural and low-income municipality in South Africa. Primary data were analyzed through descriptive statistics. The results indicate that the level of financial literacy among adults in VDM is low at 38.73%. The low levels of financial literacy have serious consequences for an adult’s personal financial management skills and lead to their inability to make correct financial decisions. It is apparent that an individual’s level of financial literacy has become important in how individuals manage their finances in today’s complicated financial world. The paper concludes by suggesting interventions that could help adults to improve their level of financial literacy, manage and sustain their financial well-being.

THE CO-INTEGRATING RELATIONSHIP BETWEEN FINANCIAL INCLUSION AND ECONOMIC GROWTH IN THE SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

This study examines the relationship between financial inclusion and economic growth in SADC. It uses panel data covering the period between 1995 to 2015 and employs the Autoregressive Distributed Lag (ARDL) Bounds and the Toda and Yamamoto and Dolado and Lutkepohl (TYDL) models to examine the co-integrating relationship and the direction of causality respectively. The impact of financial inclusion on economic growth, when measured by the mobile penetration rate and the number of bank branches, diminishes in the long run to an extent of having a negative relationship with economic growth. This implies possible thresholds beyond which a negative impact on economic growth is realized. The long-run influence of financial inclusion on economic growth is hinged on financial technologies, measured by fixed broadband internet services, which have great potential to foster unique financial inclusion and shift the economic paradigm, leading to a digitalized economy. Only financial inclusion initiatives that result in increased bank deposit accounts promote economic growth. SADC is encouraged to liberalize its information and communications technology sector in order to fully benefit from financial inclusion initiatives. In addition, SADC should consider embracing international financial monitoring standards so that it does not fall behind the inevitable integration of the financial sectors.

SOCIOECONOMIC DETERMINANTS OF WOMEN’S EMPOWERMENT: A CASE OF FARM HOUSEHOLDS IN ABEOKUTA, OGUN STATE

This study examines the socioeconomic determinants of women’s empowerment or bargaining power among married couples living in farm households in Nigeria. A multistage random sampling technique is employed to collect cross-sectional data from 320 farm households aged between 15 to 50 years. Women’s empowerment or bargaining power is measured using 18 questions, and a Tobit regression model is used to analyze all the variables employed. According to the findings, husbands have five more years of formal education than wives and literacy rates are higher for men (62%) than for women (30%). This differenceleads to more decision-making power for men. The result shows that there is a visible gender disparity in the worth and value of assets brought into the marriage, with the men bringing around 34% while that of the women is around 3% making men the main decision-makers and women less empowered. As a policy recommendation, women’s status in society should be enhanced through investment in education and well-being. Additionally, policies and programs aimed at leveraging the bargaining power of the woman in her attempts to make decisions in the household and increasing her empowerment should be formulated and implemented by policymakers.

CAN REMITTANCES BOOST TAX REVENUES IN ZIMBABWE? A SECONDARY QUARTERLY TIME-SERIES ANALYSIS

The study applied the ordinary least squares (OLS) technique on quarterly time-series data to analyze if remittances can boost tax revenue in Zimbabwe. The main challenge faced in Zimbabwe is the insufficient tax revenues to finance growing public spending needs. Results indicate that the share of remittances both in the current and lagged period significantly influenced income tax revenue and the volume of manufacturing. Trade openness was found to be insignificant. Similar results were also observed for the variables when value-added tax to total revenue was the dependent variable. When lagged variables were taken into account, results showedthat only remittances were significant. Thus, increased remittance inflows have significant potential to generate more taxes for the government through income and consumption taxes. The study recommends the creation of platforms, which stimulate and attract more remittances, such as reducing costs of sending remittances through formal channels. Secondly, good governance and quality institutions provide appropriate economic environment and growth policies. Economic growth fosters increased and sustainable tax due to an increased tax base.

THE RELATIONSHIP BETWEEN MONETARY POLICY AND PRIVATE SECTOR CREDIT IN SADC COUNTRIES

This paper empirically examined the relationship between monetary policy and private sector credit in the Southern African Development Community (SADC) group of countries using a panel autoregressive distributed lag (ARDL) co-integration technique for the period from 2009 to 2018. The Hausman test result indicated that the null hypothesis of long-run homogeneity cannot be rejected and hence we accept the pooled mean group estimators (PMGE) as a consistent and efficient estimator. The PMGE results showed that credit to the private sector and gross domestic product have a positive and statistically significant long-run impact on money supply. The impact of credit to the private sector on money supply is shown by the results to be statistically significant and positive both in the short and long run. The impact of gross domestic product on money supply was found to be statistically significant positive in the long run while positive but insignificant in the short run. The study recommends policy attention that is directed towards the appetite for accelerated growth, investment, and employment in the SADC region but more importantly with more regard to the establishment of sustained macroeconomic stability as a precondition to sustainable growth and for the creation of monetary union in the region.

THE SHORT- AND LONG-TERM VALUE GAINS TO ACQUIRERS OF EMERGING MARKET TARGETS IN MERGERS AND ACQUISITION DEALS

This study investigates whether the acquisition of targets from the emerging markets impacts the short-term and long-term value gains of these targets' acquirers in terms of their profitability and growth opportunities. The study uses firm-level data of 93 listed acquirers of targets from the emerging markets sourced from the Bloomberg Terminal from 2003 to 2018. It employs the difference generalized method of moments (GMM) for analysis. This dynamic panel estimation method takes care of endogeneity problems, omitted variables, and error measurements. The study reveals that, broadly, the acquirers' profitability levels improve in the short-term after merger and acquisition (M&A) deals. This improvement in the acquirers' profitability levels occurs in the 1 st, 4th and 5th year periods within the short-term after their M&A transactions are completed. Regarding growth opportunities, acquirers of targets from the emerging markets experience both negative and positive returns on their short-term growth opportunities. However, they experience significant positive returns on their growth opportunities in the long-term. Our paper complements and contributes to the body of knowledge on international market entry and have implication for potential acquirers interested in investment opportunities in the emerging markets.

SOFTWARE, METHOD, AND ANALYSIS: REFLECTIONS ON THE USE OF ATLAS.TI IN A DOCTORAL RESEARCH STUDY

This paper presents evidence from a user of a computer-assisted qualitative data analysis software (CAQDAS) referred to as ATLAS.ti on its usefulness and challenges in the content analysis of corporate annual reports (CARs) of top South African companies. The paper illustrates how ATLAS.ti was employed to perform the content analysis of 60 corporate annual reports to determine the extent of human capital disclosures by the top South African companies. Useful reports generated from the “hermeneutic unit” known as “AdePhD” include the primary document list, the code list, the code families, the code summary, the code-primary document list, the codequotation list, and the network views. The reports from this qualitative analysis software facilitated the observations on the frequency of ninety-one human capital disclosure items analyzed from the corporate annual reports of companies in our sample. Findings indicate that the use of ATLAS.ti enabled a faster and robust analysis that would have taken a much longer time if done manually. It also facilitated more coherent results. Nevertheless, the major challenge is the lack of adequate institutional support for users when compared with the level of institutional support available for quantitative data analysis software such as the Statistical Package for the Social Sciences (SPSS).

THE USE OF SURROGATE CURRENCY TO ADDRESS LIQUIDITY CRISIS: THE ZIMBABWEAN EXPERIENCE

Zimbabwe has experienced an economic meltdown dating back to 2000, which created perennial economic woes such as a liquidity crisis that continued haunting the country to date. Various possible solutions were explored but did not yield the desired results. Amongst the explored solutions was an introduction of surrogate currency specifically to curb the liquidity crisis. This paper sought to explore the effects of using "surrogate currency" to address the liquidity crisis in Zimbabwe by employing a desk review. Currently, there is a dearth of literature on using surrogate currency in African countries. Hence this study contributes to the existing literature on the use of such currency. The review established that the surrogate currency led to the emergence of bad money as propounded by Gresham’s law of currency systems. Moreover, the surrogate currency rapidly lost its value, whereas the introduction of the surrogate currency failed to address the liquidity crisis, leading to other socio-economic challenges. Finally, financial reporting under the surrogate currency became a challenge as well. This study recommends the withdrawal of the surrogate currency and the use of multicurrency along with the promotion of products for export to attract more foreign currency into the economy.

TRADE AND INVESTMENT-LED GROWTH IN SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)

The growth in the gross domestic product (GDP) has been below zero within the Southern Africa Development Community (SADC) region in recent years. Some member states have consistently experienced negative growth rates for an extended period which has contributed to low growth for the region on average. The lack of consensus on the findings in literature requires further research work to be done to guide policymakers on the potential sources of growth. This study examines the contribution of trade and investment on growth in the context of SADC. It applies the autoregressive distributed lag (ARDL) model to test relationships in both short and long run using annual data for the period 1994 to 2019. Findings confirm the existence of the trade and investment-led growth hypothesis. There is a short run, long run, and joint causality from both explanatory variables to economic growth. Cointegration between growth, trade, and investment is confirmed. Specifically, an increase in investment spurs growth in both the short and long run. Investment expenditure seems to double the growth potential in the long run. Additionally, the study shows that an increase in trade openness retards growth which is consistent with the Prebisch-Singer hypothesis. Results suggest that policies that focus on the development and improvements in fixed investment, locally, help to drive the growth potential. The improvement of capitalization by manufacturing-oriented firms, as opposed to primary product-oriented firms, is ideal.