The effects of opportunity motivation and environmental contingencies on market growth strategies of African early-stage entrepreneurs

PurposeThe purpose of this paper is to examine how early-stage entrepreneurs' opportunity motivation impacts their choice of market growth strategies as well as the contingent roles of institutional environments and product market conditions in Africa.Design/methodology/approachThe study employs hierarchical linear modeling to test multilevel models with nested data empirically.FindingsThe findings show that African early-stage entrepreneurs who are opportunity-driven and from countries with strong institutional environments have a higher tendency to adopt market exploration strategies. African early-stage entrepreneurs from countries with strong product market conditions have a higher tendency to adopt market penetration strategies. Further interaction tests show that both contingency conditions, namely institutional environments and product market conditions, moderate the effects of opportunity motivation on market growth strategies of African early-stage entrepreneurs.Practical implicationsThe study shows that policymakers in Africa need to develop flexible, supportive market-related policies based on entrepreneurs' growth paths, institutional environments and product market conditions.Originality/valueThe study is the first to explore multilevel influences on early-stage entrepreneurs' market growth strategies in Africa. It sheds new insights on the entrepreneurial marketing process of early-stage entrepreneurs in Africa.

Return and volatility spillovers between South African and Nigerian equity markets

PurposeThe paper evaluates the cross-transmission of returns and volatility shocks between Nigeria and South Africa stock markets to infer the extent of interdependence between the two markets. The paper also makes inference to optimal portfolio weights of holding assets in the two markets.Design/methodology/approachThe paper uses an asymmetric vector autoregressive-exogenous generalised autoregressive conditional heteroscedasticity (VAR-X GARCH) model to assess the extent of returns and volatility spillovers between Nigeria and South Africa.FindingsThe results of the empirical analysis show evidence of shock spillovers from the South African stock market to the Nigerian stock market. Moreover, based on the dynamic Sharpe ratio and portfolio weight optimisation, the results indicate the possibility of portfolio diversification when holding simultaneous positions in the two stock markets.Practical implicationsThe results imply the possibility of economic profit for investors who take positions in the two stock markets. The lack of synchronisation of stock markets in the two largest economies in Africa is in contrast with the situations in other regions where stock markets returns of large economies often co-move.Originality/valueThe paper is the first to use the asymmetric VAR-X GARCH model to assess the cross-transmission of shocks between stock markets.

Barriers of growth within an informal sector business: narratives of women subsistence entrepreneurs in South Africa

PurposeThe study explores growth barriers experienced by a sample of women subsistence entrepreneurs operating within the informal sector in South Africa.Design/methodology/approachThe paper utilizes a descriptive-exploratory research approach and design relying on semi-structured interviews. A purposive sample of 45 women subsistence entrepreneurs formed the participant pool.FindingsThree main narratives emerged. First, a sense of personal contentment existed as a potential barrier for women subsistence entrepreneurs. Second, the women subsistence entrepreneurs had no expansion strategy due to their circumstances. This served as a barrier to growth. Finally, challenges emanating from the home-front served as a limit to the growth of the informal sector business.Research limitations/implicationsBased on the findings, strategies are offered to assist the women subsistence entrepreneurs in tackling the identified barriers to the growth of the informal sector business. A limitation of the research concerns issues that accompany qualitative research. Notably, these include sampling issues.Practical implicationsBased on the findings, strategies are offered to assist women subsistence entrepreneurs in tackling the barriers that affect their businesses.Originality/valueGiven the popularity of the informal sector in emerging nations such as South Africa, the study proffers suggestions that assist the advancement of subsistence entrepreneurship, especially within the informal sector. The role of women in all this is heightened.

Government domestic debt arrears and private investment in Sub-Saharan Africa

PurposeThis study investigates the effect of government domestic payment arrears on private investment. The authors argue that an increase in government domestic arrears can reduce private sector investment owing to the competition for credit.Design/methodology/approachThe prediction is empirically tested using data for 33 Sub-Saharan Africa (SSA) countries for the period 2007–2018 using a panel general methods of moment estimation technique. This is also complemented with impulse responses derived from the standard vector autoregressive model.FindingsThe results show that an increase in government domestic arrears adversely affects private investment in SSA and most subregional communities within SSA. It also revealed that private investment negatively responds to shocks in government domestic arrears.Originality/valueThis is the first study that attempts to investigate the effect of government domestic borrowing arrears on private investment. It seeks to serve as a guide to governments in their domestic borrowing decisions to ensure timely servicing.

Quality financial inclusion and its determinants in South Africa: evidence from survey data

PurposeThe study measured quality financial inclusion, a more comprehensive measure of financial inclusion, and examined its determinants at a consumer level in South Africa.Design/methodology/approachThis study leveraged on FinScope 2015 survey data to compute a quality financial inclusion index using polychoric principal component analysis. Subsequently, a heteroscedasticity consistent ordinary least squares regression model was employed to assess determinants of quality financial inclusion.FindingsThe empirical findings indicated that gender, education, financial literacy, income, location and geographical proximity determine quality financial inclusion. These findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups.Research limitations/implicationsDue to data limitations, the study was confined to South Africa and did not capture digital financial inclusion. Hence, future studies could replicate the study in Sub-Saharan Africa's context and compute an index that captures digital financial inclusion.Practical implicationsThese findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups.Originality/valueThis study proposed a more comprehensive measure of quality financial inclusion from a demand-side perspective by accounting for important dimensions that include diversity, affordability, appropriateness and flexibility of financial products and services.

Asymmetric and threshold effects of public debt on economic growth in SADC: a panel smooth transition regression analysis

PurposeThis study aims to interrogate dynamic asymmetric relationships between public debt and economic growth in Southern African Developing Communities (SADC), over the period 2000–2018.Design/methodology/approachThe study employed a panel smooth transition regression (PSTR) technique to analyse dynamic asymmetric relationships between public debt and economic growth, and the threshold effect at which public debt hampers economic growth.FindingsThe findings indicate that there is a significant nonlinear effect of debt on economic growth in SADC. The study discovered a debt threshold of 60% to GDP at which debt beyond this threshold deteriorates long-term growth. The low-debt regime was found to be positive and statistically significant, while the high-debt regime is detrimental for long-term growth. Fiscal policymakers ought to consider the adoption of well-coordinated debt policies that aims to strike a balance between sustainable public debt and economic growth, within a reasonable threshold target.Originality/valueThe study focusses on asymmetric and threshold analysis of public debt on economic growth in SADC using sophisticated panel smooth transition regression (STAR). This study provides rigorous empirical evidence within the SADC perspective in which previous studies have predominantly been confined in advanced economies.

Overconfidence bias and stock market volatility in Ghana: testing the rationality of investors in the Covid-19 era

PurposeThe paper tests the overconfidence bias and volatility on the Ghana Stock Exchange (GSE) during the pre-Covid-19 pandemic and Covid-19 pandemic period.Design/methodology/approachThe study employs pairwise Granger causality to test the presence of overconfidence bias on the Ghana stock market as well as GARCH (1,1) and GJR-GARCH (1, 1) models to understand whether overconfidence bias contributed to volatility during pre-Covid-19 pandemic and Covid-19 pandemic period. The pre-Covid-19 pandemic period spans from January, 2019 to December, 2019, and Covid-19 pandemic period spans from January, 2020 to December, 2020.FindingsThe paper finds a unidirectional Granger causality running from weekly market returns to weekly trading volume during the Covid-19 pandemic period. These results indicate the presence of overconfidence bias on the Ghana stock market during the Covid-19 pandemic period. Finally, the conditional variance estimation results showed that excessive trading of overconfident market players significantly contributes to the weekly volatility observed during the Covid-19 pandemic period.Research limitations/implicationsThe empirical findings demonstrate that market participants on the GSE exhibit conditional irrationality in their investment decisions during the Covid-19 pandemic period. This implies investors overreact to private information and underreact to available public information and as a result become overconfident in their investment decisions.Practical implicationsFindings from this paper show that there is evidence of overconfidence bias among market players on the GSE. Therefore, investors, financial advisors and other market players should be educated on overconfidence bias and its negative effect on their investment decisions so as to minimize it, especially during the pandemic period.Originality/valueThis study is a maiden one that underscores investors’ overconfidence bias in the wake of a pandemic in the Ghanaian stock market. It is a precursor to the overconfidence bias discourse and encourages the testing of other behavioral biases aside what is understudied during the Covid-19 pandemic period in Ghana.

The impact of COVID-19 on stock returns of listed firms on the stock market: Ghana's experience

PurposeIn Ghana, even though scholars and experts in the field of economics and finance have expressed their opinions and perceptions on the effect of the pandemic on the Ghana Stock Exchange, there has been no study conducted to that effect. This study, therefore, aimed at examining the impact of COVID-19 on the stock returns on the Ghana stock exchange. This would help policy makers and investors in making efficient decisions.Design/methodology/approachThe outbreak of the novel COVID-19 has been a thorn in the flesh of the world in its entirety, affecting many aspects of life including the stock market. This study, therefore, examined the impact of the outbreak on the stock returns of the Ghana Stock Exchange. The study utilized data from the All Share Prices of the Ghana stock exchange, commonly known as the Ghana stoke exchange composite index (GSECI) for analysis. The data covered the period before the outbreak of COVID-19 and during the outbreak. It was revealed that the Ghana stock exchange experienced better returns on the market before the outbreak of the virus. The outbreak of COVID-19 has led to wide variations in the market increasing the risk of investments. The exponential General Autoregressive Conditional Heteroscedasticity (EGARCH) (1, 1) model also reveals that the outbreak of COVID-19 has a significant negative effect on the returns in the market. The market in these periods of COVID-19 is highly volatile. It is recommended that investors should carefully consider risk mitigation strategies to enable them diversify their investments effectively and efficiently against the high risk associated with the market in this COVID-19 era.FindingsIt was revealed that the Ghana stock exchange experienced better returns on the market before the outbreak of the virus. The outbreak of COVID-19 has led to wide variations in the market increasing the risk of investments. The EGARCH (1, 1) model also revealed that the outbreak of COVID-19 had a significant negative effect on stock returns in the market. The market during these periods of COVID-19 was viewed as highly volatile.Research limitations/implicationsThe outbreak of COVID-19 is hence deduced to have a negative impact on the Ghana stock exchange. However, the knowledge of how the market has been affected by the disease, it is important that financial risk mitigation studies be undertaken. This goes beyond what this study has done. The study can further be expanded to include other important economic variables such as GDP, inflation, exchange rates and the likes in to the model.Practical implicationsInvestors should carefully consider risk mitigation strategies to enable them diversify their investments effectively and efficiently against the high risk associated with the market in this COVID-19 era.Social implicationsIt is also important that investors consider diversification of their investments in order to reduce the risk in their investments. It will be more appropriate for most investors to invest with companies such as banks and the telecommunications companies listed on the on the market. This is because most of the telecommunication companies in these times have taken advantage and are making good profit on their businesses. Likewise, some of the financial institutions are considered essential institution in these times. Investing in industries such as manufacturing and the oil and gas sector may be more risky.Originality/valueThe decline in economic and financial market indicators could be credited to the failure of most business entities, organizations and firms which are struggling to sustain their operations in these times of COVID-19. These also include firms listed on the Ghana stock exchange with whom investors transact their daily businesses. However, about 70% of the Ghanaian economy heavily depends on these business and firms found in the private and informal sector. According to the Ghana Statistics Service COVID-19 Business Tracker Survey, about 131,000 businesses expressed their uncertainties with the business environment and also faced the challenge of financial accessibility. The study is appropriate to unearth the true effect and offer policy interventions.

Financial inclusion and small enterprise growth in Africa: emerging perspectives and research agenda

PurposeThe purposes of the paper are to review the stream of studies that link financial inclusion to small enterprise growth in Sub-Sahara Africa (SSA) to identify the research gaps they provide and to prepare an agenda for future research in the field.Design/methodology/approachThe study employs systematic literature search method to identify relevant literature from journals. The study then adopts a narrative approach for the review, highlighting the findings from the prior studies and gaps requiring research attention.FindingsThe discussions reveal that there is a need for future studies that can unpack small enterprise growth determinants, identify growth-enabling entrepreneurial characteristics and examine the contextual variabilities that shape their effectiveness.Originality/valueThere is currently no comprehensive/integrated review exploring the link between financial inclusion and small enterprise growth in SSA. The review, therefore, provides insights that contribute to the development of this stream of research.

Pro-poor and inclusive growth in West Africa

PurposeThis paper focuses on three key metrics of poverty, income distribution and employment to ascertain the pro-poor and inclusive-growth position of the western African region. The roles of governance structures and their interactive effects are also accommodated to capture the peculiarity of the region.Design/methodology/approachThe paper employs fixed and dynamic models.FindingsEvidence suggests that growth is pro-poor, although virtually all governance indicators are sterile in stimulating poverty reduction. The authors observe that health and education spending coupled with trade-openness stimulate pro-poor growth potentials, whereas conflicts culminate the pervasiveness of poverty in the region. By empirically answering the question of how inclusive is economic growth through the lens of income-distribution and employment, the authors show that growth has been exclusive as per-capita-GDP growth rather dampens income shared by the poorest 20%. Also, it is observed that growth has not been inclusive as the jobless-growth argument remains valid while high inequality further exacerbates unemployment in the region. It is further shown that governance has been generally weak in propelling inclusive growth except where the institutional-component of governance stimulates inclusive growth through improvement in equality and labor employability.Originality/valueThe study jointly examines the metrics of poverty, income distribution and employment to ascertain growth pro-poorness and inclusivity which are key for the achievement of African-union (AU) agenda 2063. The study captures cross-sectional dependence among selected countries which previous studies ignored.