Over-Indebtedness in Microfinance (Ghana)

Borrowers are more likely to be over-indebted when they lack the financial literacy to understand debt products.

That is from this paper by Jessica Schicks. A draft is here.  

Resource curse or resource disease? Oil in Ghana

From a paper by Dominik Kopiński, Andrzej Polus and Wojciech Tycholiz on the resource curse in Ghana

Ghana has recently joined the ranks of oil-producing states with a projected output of 120,000 barrels per day. This has greatly elevated hopes among the general public, but also sparked fears of a ‘Nigerian scenario’ in which oil becomes a problem rather than a solution. This article argues that Ghana, as a latecomer to the oil industry, may possess a structural immunity against the natural resource curse. The argument centres on three main factors: the country's stable political system, its relatively robust and diversified economy, and the strength of civil society. As a result, the usual symptoms linked to oil extraction across the developing world are unlikely to turn the country upside down. Instead, we suggest that the ‘curse’ should be perceived as a treatable ‘disease’. The article pursues this analogy by showing that, since the discovery of oil, Ghana has been strengthening its ‘immune system’ through a new legal framework, improvements in transparency and accountability, and modest attempts to strengthen non-resource sectors of the economy.

I did not find a full draft online, so I can just speculate about the results. The question is why Ghana has become relatively immune? After independence - Ghana was the first African country - Ghana went through a very turbulent period politically and economically. It was not until the early 1980s, after a period of liberalization of markets, when Ghana started a path of stability and sustained economic growth, it was modest but steady. Democracy started to gain traction and that set up the institutions of governance we see today. They are not great, but much better than other countries in the continent. See in the figure below the World Governance Indicator for countries in Africa.

But there are usually historical roots for good governance and in the case of Ghana that remains an enigma, at least for me. Probably the long term roots of governance were stablished during the consolidation of power of the Ashanti, that means going 300 years back in history.   

Stock market and economic growth (Ghana & Nigeria)

. . . [T]he nature of stock markets and the economies in Africa revealed the reasons for non-causal relationships between stock markets and economic growth in Ghana and Nigeria. The problem of African stock markets is the domination by a single sector, and the often monoproduct economy. Often, the stocks of this sector that account for the greater percent of the GDP are not listed in the domestic stock market, hence, a divorce between the actual performance of the stock market and economic growth. In Ghana, only AngloGold Ashanti, accounts for 70% of market capitalization (Osaze, 2007) while in Nigeria, over 60% of the total market capitalization is accounted for by the Banking sector. The oil and gas sector of the economy of Nigeria and the agricultural sector (cocoa) of that of Ghana are not in their stock markets.

From a paper by Osamwonyi & Kasimu, "Stock Market and Economic Growth in Ghana, Kenya and Nigeria" (International Journal of Financial Research, April 2013).

Insurance for the poor in Ghana

Interesting paper by Patrick O. Asuming on insurance for the poor in Ghana (January 2013). The results are encouraging regarding the effects of subsidies combined with education. 

Many developing countries have recently instituted social health insurance schemes (SHIs) to ease financial barriers to utilization of healthcare services and help mitigate the effects of adverse health shocks. Although these SHIs offer generous terms and benefits, enrollment remains low especially among the poorest households who are the intended primary beneficiaries. This paper implements randomized interventions to (i) understand the reasons for low enrollment; (ii) estimate the effects of insurance coverage on utilization of healthcare, financial protection and health; and (iii) provide insights into intra-household allocation of health resources. My results show that imperfect information, and insurance premium and fees affect enrollment. The demand for insurance is price elastic in the sense that small subsidies generate substantial enrollment effects. I find that insurance coverage leads to increased utilization of healthcare services, reduced out-of-pocket payments among individuals with prior positive expenses and improvement in health outcomes. My results suggest strong complementarities between providing information and providing subsidies in utilization and health outcomes, an indication of the importance of the combined interventions for achieving changes in health-seeking behavior and outcomes. Finally, I find evidence of son preference in the allocation of health resources within households.

The paper, "Getting the Poor to Enroll in Health Insurance, and Its Effects on Their Health: Evidence from a Field Experiment in Ghana," is mostly about the demand. I will keep my eyes open for a supply-side analysis, specially in developing countries where institutions are usually weak. Again, the results of the paper are promising. 

Do you know of successful market-based solutions for health-problems of the poor? 

Road Accidents in Ghana

The number of people killed by road accident in Ghana from 2001 t0 2010 for various age groupings.

Friday has the highest number of people who were killed by road accidents from 2001 to 2010 in Ghana (p. 52). 

Source: Oppong (2012).  

Death in Ghana - the property of the corpse

From a BBC article:

When a Ghanaian dies, the body belongs to the family - that is the legal position.

The definition of family, in this case, does not include a spouse or children.

What could be an efficient reason behind this social norm, at least historically? The extended family is very important, it is at the center of community in Ghana. If the family where one is born (which does not include spouse or children, to use the definition in the BBC article) makes the decision about the burial (when and where), the spouse and children will try to stay in good terms with the family during their lives, so that their opinion (spouse and children's) regarding the corpse is not rejected outright when death comes. If this interpretation is true, this social norm is a mechanism to keep families well connected. Well connected families can provide help in case that one of the members of the family is in need. In this regard, the social norm of the property of the corps might contribute to strengthening family links that perform as social insurance. [Of course this interpretation might be totally of target!]

Fastest growing economies in the world

Five African countries are among the top ten. Ghana is the first one -- it is not cocoa any more, it is oil. (HT Walter Menchú).

A photo-essay on economic development - Ghana.

10 months ago, I boarded a plane on a cold winter day in New York. When the doors opened on the other side of the Atlantic, Ghana greeted me with tropical heat. As the first stop on a multi-country project intended to study cultural differences and their impact on firm productivity, Ghana was a useful introduction to the challenges and joys of fieldwork. Life in Accra is difficult to predict, making the average day at once complicated and interesting. A power outage may derail plans for a day of data collection or a traffic jam in the city may prevent research participants or surveyors from arriving on time (or at all). Even finding drinking water and showering, mindless tasks one rarely considers in the US, require the newcomer and the Ghanaian alike to economize their cognitive resources. An impromptu dance party or an unexpected invitation to a funeral represent the flip side of this coin, one in which the unpredictable can be either serendipitous or disruptive. Keep reading . . .