Department of Economics

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A panel data analysis on the formal-informal sector linkages in South Africa
(University of the Western Cape, 2017) Nackerdien, Moegammad Faeez; Yu, Derek
There are few studies on linkages between the formal and informal sectors in South Africa. This study explores the types of linkages between the informal and formal sectors with empirical research concentrating on labour churning (movements between the informal and formal sectors). Using National Income Dynamics Study (NIDS 2008-2014) data from four waves, individuals are classified into labour market statuses based on the Heintz & Posel (2008) methodology. This study conducts labour market transitional matrices and finds formal employment to provide the most stability in terms of employment. The main focus is on the following three groups of employed: working in the formal sector in all four waves; working in the informal sector in all four waves; moving between the formal and informal sectors across all four waves. For those always working in the formal sector, they are predominantly females and Africans. Those who always work in the formal sector are most educated, while those always working in the informal sector are associated with low educational attainment. The descriptive statistics are followed by econometric analysis: in terms of attaining employment, being male and a higher educational attainment significantly increase the probability of finding employment. In terms of sustaining work, the same two covariates significantly increase the probability of sustaining work. Being the head of household is also a key covariate in significantly increasing the probability in maintaining and sustaining employment. In terms of transitioning to formal employment, being male, an increase in education and living with a partner (married or unmarried) significantly increase the probability of moving to formal sector employment. In addition, multinomial logistic regressions are conducted, and the results indicate that being a male significantly increases the probability of working in the formal sector for all four waves. Africans are also significantly more likely to be employed informally for all four waves and an increase in the years of education significantly increases the probability of being formally employed for all four waves. The household-level variables reveal that being the head household significantly increases the probability of being employed (especially formally employed for all four waves) while having children has a negative impact on being employed for all four waves.
Access in the South African public health system: factors that influenced access to health care in the South African public sector during the last decade
(University of the Western Cape, 2014) Christian, Carmen Sue; Burger, Ronelle; Yu, Derek
The aim of this mini-thesis is to investigate the factors linked to access in the South African public health sector - using General Household Survey Data - in order to contribute to a better understanding of the role of access in achieving the National Department of Health’s primary goal of universal coverage. Even though the multi-dimensional interpretation of health system performance has gained acceptance and traction in recent years, much of the research linked to it remains supply-focused. The implicit truth is that demand-side health issues are largely ignored, under-researched and ominously absent from health policies. This is particularly true with regard to the access dimension of health performance, where research and policy focus almost exclusively on availability and affordability perspectives of access while neglecting demand-side aspects of health-seeking behaviour, such as acceptability. The study, therefore, pursues an in-depth exploration of access across its three dimensions - availability, affordability and acceptability - in the South African public health sector and aims to empirically investigate access to public health care from 2002 to 2012. It also identifies the underlying reasons for the observed trends, supplementing and reorienting the current understanding of access to public health care. The empirical findings reveal mixed results: it supports current literature by suggesting that equity has been achieved in terms of making public health care services more affordable, especially for the most vulnerable groups of South African society. However, acceptability and availability issues persist. It is safe to say that the availability of public health care – mainly a supply-side issue – is being addressed in the South African context with Government taking steps to address it. Unfortunately the same attention has not been given to issues of acceptability on the demand-side. Failure to fully understand the demand-side dimension of access and the role health-seeking behaviour plays in public health issues threatens to weaken health policies aimed at improving access. It is imperative that demand-side aspects of health-seeking behaviour and institutional responsiveness to health-demand occupy a more prominent role in South African public health debates, research and policy.
Access to health care in post-apartheid South Africa: availability, affordability, acceptability
(Cambridge University Press, 2018) Burger, Ronelle; Christian, Carmen
We use a reliable, intuitive and simple set of indicators to capture three dimensions of access – availability, affordability and acceptability. Data are from South Africa’s 2009 and 2010 General Household Surveys (n=190,164). Affordability constraints were faced by 23% and are more concentrated amongst the poorest. However, 73% of affordability constraints are due to travel costs which are aligned with findings of the availability constraints dimension. Availability constraints, involving distances and transport costs, particularly in underdeveloped rural areas, and inconvenient opening times, were faced by 27%. Acceptability constraints were noted by only 10%. We approximate acceptability with an indicator measuring the share of community members bypassing the closest health care facility, as we argue that reported health care provider choice is more reliable than stated preferences. However, the indicator assumes a choice of available and affordable providers, which may often not be an accurate assumption in rural areas. We recommend further work on the measurement of acceptability in household surveys, especially considering this dimension’s importance for health reform.
Adverse welfare effects of regulations on small tobacco exporters: the case of Zimbabwe
(University of the Western Cape, 2005) Matemba, Edward; Jacobs, Peter; Dept. of Economics; Faculty of Economics and Management Sciences
Regulations to reduce the consumption of tobacco products have dual effects on economies. Economies that are net consumers of tobacco products experience welfare enhancing effects as a result of these regulations. However, these regulations can have adverse welfare effects among net producing economies. Many studies have explored these welfare effects on net consuming economies, whereas the impacts among net producing economies have been neglected. This research paper examined the adverse welfare effects of smoking regulations on small tobacco exporting economies with, a comparative advantage in tobacco production.
Affirmative action in education and Black Economic Empowerment in the workplace in South Africa since 1994: policies, strengths and limitations
(BCES Conference Books, 2017) Herman, Harold D.
This paper explains the concepts of Affirmative Action (AA) and Black Economic Empowerment (BEE) and the policies developed in post-Apartheid South Africa. It compares it to similar policies adopted in different contexts in Malaysia, India and the U.S.A. It explains and critiques the South African policies on AA and BEE, its history since 1994 and how class has replaced race as the determinant of who succeeds in education and the workplace. It analyses why these policies were essential to address the massive racial divide in education and the workplace at the arrival of democracy in 1994, but also why it has been controversial and racially divisive. The strengths and limitations of these policies are juxtaposed, the way it has benefitted the black and white elites, bolstered the black middle-class but has had little success in addressing the education and job futures of poor, working class black citizens in South Africa. The views of a number of key social analysts in the field are stated to explain the moral, racial, divisive aspects of AA in relation to the international experience and how South Africa is grappling with limited success to bridge the divide between the rich and poor.
Allocation and use of water for domestic and productive purposes: an exploratory study from the Letaba river catchment
(2009) Masangu, T.G.; Lahiff, Edward; Derman, Bill
In this thesis, I explore the allocation and use of water for productive and domestic purposes in the village of Siyandhani in the Klein Letaba sub-area, and how the allocation and use is being affected by new water resource management and water services provision legislation and policies in the context of water reform. This problem is worth studying because access to water for domestic and productive purposes is a critical dimension of poverty alleviation.The study focuses in particular on the extent to which policy objectives of greater equity in resource allocation and poverty alleviation are being achieved at local level with the following specific objectives: to establish water resources availability in Letaba/Shingwedzi sub-region, specifically surface and groundwater and examine water uses by different sectors (e.g. agriculture, industry, domestic, forestry etc.,); to explore the dynamics of existing formal and informal institutions for water resources management and water services provision and the relationship between and among them; to investigate the practice of allocation and use of domestic water; to investigate the practice of allocation and use of irrigation water.The study concludes that there is a problem of water scarcity in the study area and that the water scarcity is caused by the growth in the population, specifically in the Giyani area; these problems are exacerbated by financial and institutional obstacles within local institutions of governance. The water scarcity is not, therefore, natural but anthropogenic in nature.The water scarcity is not felt by all sectors, however: some farmers have access to water for irrigation, while many others face great challenges in their farming activities.Overall, people in Siyandhani and surrounding villages surrounding villages in the Letaba Catchment do not have access to water because of human action, hence the use of the concept of manufactured scarcity. The lack of access to water, it is argued,leads to the violation of the human right to water. This study concludes that water reform, which is widely seen as a priority for South Africa, has not yet reached the villages of the Klein Letaba.
Alternative definitions of informal sector employment in South Africa
(Stellenbosch University, 2008) Yu, Derek; Essop, Hassan
Before the introduction of the Quarterly Labour Force Survey (QLFS) in 2008, Statistics South Africa (Stats SA) has been using the same methodology to derive the informal sector employment throughout the years, focusing on the enterprise registration status to classify workers (which include both self-employed and employees) as either formal or informal sector workers. Although there are difficulties with attempting to provide any consistent trend data (Yu, 2007 & Essop & Yu, 2008), it is generally accepted that informal sector employment grew relatively more rapidly in the late 1990s, and then stabilized at about 2 million in the early 2000s before it increased (albeit more slowly) again since 2005. Nonetheless, recent papers by Devey, Skinner & Valodia (2006) as well as Heintz & Posel (2008) argue that the current classifications used by Stats SA hide a significant degree of informality in the formal economy, as some formal jobs are characterized by conditions that are typical of informal work. Therefore, they propose alternative definitions of informal sector employment, focusing on worker characteristics instead of enterprise characteristics. This paper aims to address the reliability or otherwise of these recent approaches, as well as to suggest better ways to define informal sector employment.
Analysing the effects of public expenditure on economic growth in South Africa
(University of the Western Cape, 2022) Woodhouse, Carla; Sheefeni, Johannes P S
Since the commencement of South Africa’s democracy in 1994, South Africa has made tremendous progress with a focus on sustainable economic growth. Due to data limitations because of the Covid-19 pandemic, the study drew on quarterly data for the period 1997 to 2018 to examine the effect of public investment on economic growth in South Africa. The study drew data from World Bank and The International Monetary Fund, making use of real gross domestic production, general government capital stock, private capital stock, research and development and total employment were used. The analysis was conducted with the use of EViews 12.
Analysing the relationship between economic growth and the insurance sector: Evidence from South Africa
(University of Western Cape, 2021) Makeleni, Mphumzi; Sheefeni, Johannes P. S.
The connection between the real economy and the financial sector continues to be a subject of debate amongst scholars. There is a plethora of studies dedicated to unravelling the relationship between economic activity and financial progress. However, a large share of those studies has concentrated on banking and the capital market industries; the studies that have undertaken to decipher the connection between the insurance industry and prosperity in the economy are insufficient. An understanding of the connection between the insurance industry and advancement in the economy is immensely important to effect judicious policy making, which will enhance and boost the economy. The primary goal of this study is to establish if there is a connection between the insurance industry and economic advancement in the South African context.
An analysis of management's approach to occupational health and safety in the Western Cape chemical sector
(University of the Western Cape, 2002) Le Roux, P.J; Hirschsohn, P
Employers in South Africa are keen to be referred to as being responsible when dealing with workplace health and safety. However, the poor health and safety record of South African companies generally and especially in the mining and fishing sectors is internationally known. Many observers comment that the picture at plant level does not reflect a commitment and willingness by management to even implement the minimum standards stipulated by legislation without pressure from external sources such as government enforcement agencies or export market pressure. It is well known that the lives of black labourers were worth little during the apartheid era as workers were simply replaced when injured, killed or unable to perform duties due to illness. This legacy still exists today under high unemployment rate in the country does not allow workers the freedom to turn down jobs in high-risk environments or to refuse unsafe tasks. The steady increase of work-related injuries and diseases reported under the Compensation for Occupational Injuries and Diseases Act it came into effect in 1993, is sufficient proof of this sad state of affairs with 289 952 accidents and 3615 occupational diseases reported during the 199711998 financial year. The fatality rate reported in 1996 was 2 220 inclusive of all sectors in the economy. These figures illustrate the need for a new mental model that will value human life irrespective of colour or status in the economy.
An analysis of the effectiveness of inflation targeting monetary policy framework in South Africa
(Journal of Economics, Management and Trade, 2019) Sheefeni, J. P. S.; Makuvaza, Leonard; Nyambe, Jacob M.
This study is premised on investigating the effectiveness of inflation targeting in South Africa. The methods of analysis include the Vector Autoregressive model (VAR), the unit root test and cointegration test. The analysis was conducted with the use of EViews version 9. The findings from the study revealed that the response of inflation is not consistent with the Taylor rule hence increases in the repo rate meant to reduce inflation actually increase the inflationary pressures in the economy. This is due to the composition of the Consumer Price Index. Housing constitutes the largest weight on the CPI hence this has an impact on how the Repo rate affects inflation. The autoregression model of inflation showed that the sum of the coefficients is less than one (0.965) showing that inflation targeting has effectively reduced the persistence of inflation in South Africa. Thus monetary framework in South Africa seems to be effective and should thus be advanced for wider economic benefit.
An analysis of the effectiveness of microfinance: A case study in the Western Cape
(University of the Western Cape, 2004) Sheraton, Marcia; Adams, Ismail; Dept. of Economics; Faculty of Economics and Management Sciences
The aim of this study is to determine the extent to which the UN/OSCAL (United Nations Office of the Special Coordinator for Africa and the Least Development Countries) model of microfinance is being applied in the South African context, its scope for application and recommendations for implementation. The hypothesis is that, the better South African microfinance initiatives conform to the model, the more successful it will be in fulfilling the ultimate mission of microfinance which is to supply financial services to the poor by cutting the cost of outreach with beneficial effects on poverty..
An analysis of the impact of crude oil price shocks on the exchange rate in South Africa
(University of the Western Cape, 2016) Sedick, Afiefa; Van Lill, Dawie
Numerous studies have investigated the impact of oil price shocks on the exchange rates in developed economies. However, fewer studies have examined the effect of oil price shocks in developing economies. One study by Turhan, Hacihasanoglu and Soytas in 2012 examines the dynamic effect of oil price movements in thirteen developing markets, including South Africa. Another study by Kin and Courage (2014) investigate the effect of crude oil prices on the South African exchange rate, but their modelling, time period and variables differs. The intention of the current mini-thesis, however, is investigate the effect of crude oil prices on the exchange rate of South Africa from January 1980 to December 2014. The aim of this mini-thesis is to explore the impact of crude oil price movements on the volatility of the exchange rate on the South African market. Currently emerging economies are consuming an increasing share of the world’s oil and they have therefore become larger players in the global financial markets. Basher and Sadorsky (2006:224-227) state that as countries modernise and urbanise, their demand for crude oil and its related products tends to increase. The rising economic importance of the BRICS (Brazil, Russia, India, China and South Africa) economies implies that the possibility of the consumption of oil in the developing economies could surpass the global oil consumption of developed economies. It is important to note that future oil demand cannot be predicted, but oil demand growth is highly correlated with the growth in the industrial production of a country. The use of oil for energy consumption and the use of oil trading on the stock markets and the financial markets are all linked on the path of a country’s economic growth. In order to evaluate the link between the four variables of oil prices, exchange rates, manufacturing production index and the prime rate, qualitative research methods will be used. The methods which will be applied are the vector autoregressive model and the vector error correction mechanism. This study reveals that the movement in Brent oil prices has a relatively insignificant impact on the movement of the South African rand on a monthly basis.
Analysis of the Impact of Fiscal policy on economic growth in South Africa: VECM approach
(2018) Hlongwane, Tshembhani Mackson; Mongale, Itumeleng Pleasure; Tala, Lavisa
Fiscal policy ensures macroeconomic stability as a precondition for growth at the macro level. This study investigates the impact of fiscal policy on economic growth of South Africa from 1960 to 2014 through a Cointegrated Vector Autoregression approach. It seeks to contribute to the existing literature as well as in designing effective fiscal policy programmes which can propel economic performance. Theresults of the long run estimates revealed that government tax revenue has a positive and significant long run influence on economic growth, whereas the government gross fixed capital formation and budget deficit have a negative impact on real GDP. For that reason, the study recommends that some expansionary fiscal policy measures should be strengthened since they play a very important role in the economy so as to meet the government target of the National Development Plan Vision for 2030.
An analysis of the non-traditional agricultural export potential for Rwanda: a case of flowers
(University of the Western Cape, 2004) Rwigema, Jean Bosco Minega; Huda, S.N.; Dept. of Economics; Faculty of Economics and Management Sciences
Rwanda is constrained by an export structure that is heavily dependent on one or a few agricultural export products such as coffee, tea , pyrethrum and cinchona. The country did not manage to industrialize or to diversify its export structure significantly during the post-independence period. The situation was worsened by the civil war of 1994, which almost destroyed all sectors of the economy. Traditional export crops, such as coffee, cotton, tea, cocoa, palm oil, and tobacco are all subject to large price fluctuations and declining world market prices. This paper considered the case for diversification into non-traditional agricultural exports as a strategy for improving a developing country's terms of trade. The study put forward a case of Higland Flowers Project; a flowers project located in rural Kigali about 5 kilometers to the Kigali International airport.
The applicability of the quantity theory of money in a multicurrency economy: Lessons from Zimbabwe 2009-2019
(University of the Western Cape, 2022) Chivige, Tariro; Sheefeni, Johannes
One of the first economic theories to ever study the effects of money on price levels is the Quantity Theory of Money (QTM). Both traditionally and empirically, the tenets of this study have been studied in mono currency economies. However, due to the ever-changing modernday economies, countries suffering from intense economic problems like inflation have abandoned the use of their own local currencies opting to use multiple foreign currencies as legal tender. This study explores the applicability of the Quantity Theory of Money in a multicurrency economy, a yawning gap in scholarship. More so, no studies have sought to simultaneously look at the different approaches to the QTM in one study to establish their applicability in a multicurrency economy.
The application of the marketing concept to independent radio and appliance retail
(University of the Western Cape, 1982) Venter, J; van de Byl Smuts, Michael
Independent Radio and Appliance retailers face very strong competition from chain groups, discounters and hypermarkets. These organisations rely on bulk-buying and negotiated deals to elicit favourable terms from suppl iers. Due to the volume of their turnover they can afford to work on lower profi t margins than the independent operator. Large marketing organisations also benefit from economi es of seal e in adverti si ng and promoti ons. In short the 1arge groups have a di fferenti al advantage over the small er i ndependents i n that thei r cost of sales and overhead structure is generally lower. The purpose of this study is to develop a marketing strategy for independent radio and appliance retailers which will enable them to survive, grow and trade profitably under current highly competitive conditions.
Are microfinance institutions in South Africa efficient? - A case study in the Limpopo province
(University of the Western Cape, 2002) Kallis, Denver; Huda, Syed
This minithesis aims to determine whether South Africa's microfinance institutions are operating efficiently and whether efficiency can be enhanced. Using the United Nations model and framework for efficiency, it examines the key principles of operational efficiency in the South African microfinance context. The paper begins with an overview of the literature relating to the principles of efficiency as underscored in the United Nations model.
Assessing the economic viability of biofuel production in South Africa
(University of the Western cape, 2016) Jacobs, Denver; Ocran, Matthew
Against the backdrop of rising fuel prices and increasing transport fuel demand, biofuel production, driven by the potential to contribute to energy security, climate change mitigation and rural development has experience rapid growth in recent years. Apart from a few private initiatives, South Africa has no commercialized biofuel industry to date. The concerns are that economic, environmental and socio economic issues can be a hindrance to the success of the industry. In response to these concerns this research intends to ascertain whether biofuel production could offer a viable economic alternative to fossil fuels in South Africa. For decision makers it is hard to find reliable reference material and solid guidance. Uncertainty over the potential risks and benefits has left potential investors unsure whether biofuel production could be a viable investment opportunity. The aim of this study was to determine if the benefits derived from biofuel production are significant enough to justify the substantial investment required. The findings reveal that in the absence of clear government strategies and the availability of low cost feedstocks the production of biofuel cannot be viewed as viable. The results show that bioethanol from grain sorghum and sugarcane are not economically viable since the results turn out to be negative in terms of both net present values (NPV) and internal rate of return (IRR) calculations, thus rendering a viable payback (PBP) period as unattainable. Similarly, the NPV and IRR for biodiesel from soya beans and sunflower is negative and the PBP also unattainable. Sensitivity analyses indicate that these crops (except for sunflowers) could only become viable if there were to be a substantial reduction in feedstock prices. All other changes in parameters would not render any of the production plant viable.
Assessing the financial inclusion of micro-, small, and medium enterprises(MSMEs) in South Africa: 2010 and 2020 FinScope MSME data
(University of the Western Cape, 2024) Anthony, Calynn Kristen; Matsebula, Velenkosini
The financial inclusion of micro-, small, and medium enterprises (MSMEs) as major stakeholders in the economy remains meagre. MSMEs are the strongest economic activity drivers worldwide, yet many researchers have studied the effect of financial inclusion on MSMEs as it has become a global priority. International and local studies have agreed that removing certain financial system constraints can improve the financial inclusion status of MSMEs. Yet, local studies focused on this concept for South African MSMEs are scarce. The objective of this study is to assess the financial inclusion of micro-, small, and medium enterprises (MSMEs) in South Africa. This study offers the first of its kind to use FinScope MSME 2010 and 2020 surveys to assess the financial inclusion of MSMEs in South Africa and uses the Multiple Correspondence Analysis (MCA) to derive a financial inclusion index to assess the financial inclusion status of MSMEs. This study aims to fill the gap in the literature by using recent data and a different methodology to measure the financial inclusion of MSMEs in South Africa. The relationship between the computed MSME financial inclusion index and various explanatory variables is tested using the Ordinary Least Squares regression model. Thereafter, the likelihood of being financially excluded is measured by running probit regressions.

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