The African Integration and Development Review is an international multidisciplinary journal for the discussion of a wide range of integration issues in Africa.

This volume of the Review is particularly interested in the theory of integration and to its application to problems. Areas of interest include: aid and trade, regional disparities and agrarian reform, development administration, education planning and human resource development, industrialization and transfer of technology, environmental issues, human rights and democratization issues, urbanization and women in development.

The Need for Public Policy Space: Examining the Problems of Wholesale Public Policies Implementation and the Criticisms of Conditionality in Eradicating Poverty in Africa

Many African countries face the challenge of policy space in economic and noneconomic development. The term ‘policy space’ appeared in an UNCTAD document in 2002 and acquired its first official status in Sao Paulo consensus of 2004. Policy space can be defined as, the scope for domestic policies implemented in economic and non-economic development which might be framed by international and global market consideration (Oversees Development Institute, 2007). The UNCTAD document argued that developing countries, especially the small or poor countries should be free from International Financial Institutions (IFIs) because the effects of their actions are likely to cause more damage than good. This lack of policy space has triggered debates about the availability of national governments inputs on economic and non-economic policies. Therefore, this paper argues for the need for public policy space in terms of both economic and non-economic policies in Africa.

One of the issues that emerges from this, is that public policies implementation proves problematic in developing and African countries. Public policies are important to global economic development. The World Bank (WB) and International Monetary Fund (IMF) are some, but major pioneers of public policies. Both IFIs have also been deeply involved economic and noneconomic affairs and many governments have turned to them for solutions. In western democracies it is believed that WB & IMF policies will improve efficiency in the economic and public sector systems. However, Kong (2007) explained that most of the times these policies are unsuccessful because of complexities that accompanies them.

Critics have recommended that WB and IMF modify their economic policies in order to reap better results from their advocacies. Some observers have drawn our attention to the issue of ‘Financial Tightening’ condition for fund provision as a problem for African development. In advanced countries, financial tightening is the opposite of what their economies need, yet, this same condition is exported to Africa. Given the extensive gap, globally Africa is the worst affected by this lack of economic policy space (Global Financial Stability Report, 2012). This paper approaches this issue by examining why public policies conditionality proves problematic in Africa.

Author: Dr. Waziri Sulu-Gambari, University of Manchester, United Kingdom

Effects of Remittances on Economic Growth in Cameroon: An ARDL-bounds testing Approach

Theoretical and empirical investigations into remittances’ economic impact have produced highly mixed results. On the positive side, remittances contribute to the alleviation of poverty and, in some instances, provide capital to fund households’ investments and savings. For a number of countries, international remittances have driven macroeconomic growth, mostly by increasing national disposable income. For many low income countries, net emigration countries, remittances are the most important source of external financing, leading FDI and official development assistance.

The debate on remittances and its potential effects on economic growth has produced mixed results.

In the first strand of the debate, some studies have found that remittances can have a deleterious impact on national economic growth in the medium and longer term. Remittances can fuel inflation, disadvantage the tradable sector by appreciating the real exchange rate, and reduce labor market participation rates as receiving households opt to live off of migrants’ transfers rather than by working. Moreover, remittances’ contribution to growth and poverty might reduce the incentives for implementing sound macroeconomic policy or to institute any needed structural reforms.

In the other strand of the debate, however, there is empirical evidence that remittances lead to positive economic growth, be it through their positive impact on consumption, savings or investment. Lucas (2005) cites several case studies that show signs that remittances may indeed have served to accelerate investment in Morocco, Pakistan, and India. Glytsos (2002) models the direct and indirect effects of remittances on incomes and hence on investment in seven Mediterranean countries, and finds that investment rises with remittances in six out of the seven countries. Additionally, the results of the analysis conducted by Leon-Ledesma and Piracha (2004) for eleven transition economies of Eastern Europe during 1990-1999 show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through their effect on investment. Finally, a recent study by Roberts and Banaian (2004) on remittances in Armenia conclude that overall, empirical evidence suggests that the propensity to save out of remittance income is high (almost 40%) and remarkably consistent across studies.

There are, however, at least two points of reservation regarding the effects of remittances. One is the possibility that countries can face a situation similar to the Dutch disease in which the inflow of remittances causes a real appreciation, or postpones depreciation, of the exchange rate. This has the effect of restricting export performance and hence possibly limiting output and employment. The second reservation relates to the argument put forward by Chami et al (2003) that income from remittances may be plagued by a moral hazard problem, permitting the migrant’s family members to reduce their work effort. Their panel regressions support this view as they find remittances to be negatively correlated with growth among a sample of developing and developed economies from the early 1970s.

Against this backdrop, we examine the impact of remittances on economic growth in Cameroon by bringing out the pronounced positive effect of remittances on economic growth as compared to other external sources of capital. To this end, we employed an econometric procedure as the recently ARDL bounds testing approach which heavily relies on Multivariate Cointegration within an error correction model (ECM) to establish both the short- and long- run relationships between inflows of remittances, and other external inflows in the form of foreign aid, foreign direct investment and openness to trade on economic growth for the period 1960 to 2014.

Author: Prof. Do ango Simplicio, Université Omar Bongo Faculté de Droit et des Sciences Économiques, Libreville, Gabon