School of Economics and Finance (ETDs)
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Item Original equipment manufacturers' perspectives of barriers to the adoption of electric vehicles in South Africa(University of the Witwatersrand, Johannesburg, 2023) Kupa, Ramaabele Yolanda; Soko, MilfordThe introduction of EV’s to the automotive industry is not new, there is evidence that the first electric vehicle was developed more than three decades ago (Chege, 2021), however the pursuits of its development at the current moment have become increasingly aggressive due to some of the technological breakthroughs and environmental advantages it brings forth. The environmental degradation due to global warming caused by greenhouse gas emissions has become a global concern and mission to address. Automotive vehicles are amongst the highest contributors to these emissions. EV’s offer solutions to environmental degradation. Electric vehicles offer less noise pollution, smaller carbon footprint through the life cycle of the vehicle compared to their combustion engine counterparts. Furthermore, EV’s have challenged countries to rethink their energy distributions entirely. Due to the benefits EV’s bring forth, adoption has thus increased across the world over the years. Much of this increase in adoption numbers is owed to assistance offered by government and OEMs in the form of incentive schemes during the purchase phase and in ownership costs. There are however challenges which continue to hinder other countries from adopting electric vehicles, especially developing countries such as South Africa. This paper unpacks issues around the poor adoption of EV’s from an OEM’s perspective in South Africa. The seven local OEM’s stakeholders are some of the greatest enablers for the adoption. South Africa is known as the gateway to Africa through its diversified supply chain, it further houses the highest number of OEMs in Africa. Studies from the 2022 Delloitte’s consulting report shows that combustion engine vehicles are still leading in sales locally, and government’s focus is more on the export market (Deloitte , 2019). The EV market might be growing globally post Covid-19 throughout the world but local sales contribution is small. The study uses semi structured qualitative interviews conducted with 15 industry experts from different OEM’s, government, and academia. It then uses the TOE framework and literature from published papers and journals to unpack these findings. Issues which emerged from the analysis include lack of charging infrastructure, energy complexities with regards to an overloaded energy grid which cannot further support EV adoption or home charging. Other issues included government support with regards to regulations, enforcement and enabling policy development. Lack of public acceptance of EV’s due to high ownership costs such as import tax. Other issues noted include lack of incentives as compared to countries with leading EV sales. Product development issues such as batteries and driving range were noted. This study is aimed at enabling decision makers in the academic institutions, automotive OEMs, and government bodies on key topics that could promote EV sales locally if addressed. It further identifies the linkages and relationships of the issues. These recommendations made stand to benefit OEMs through improved sales which can drive production volumes and thus employment in the automotive industry. Future studies can be conducted to rank the identified issues for a more focused approach. They can also examine issues from a customer’s perspective, drawing on Insights from the business vs customer, or simply demand vs SupplyItem Land Rights in Kenya: The Role of Law in Protection against Forced Evictions(University of the Witwatersrand, Johannesburg, 2024) Njoroge, Stephen Chege; Moyo, KhulekaniThe land question in Kenya from the colonial to the post-colonial periods has direct implications to the prevalence of forced evictions affecting individuals and communities. Land laws and policies enacted during the stated periods contributed largely to the problem of forced evictions. The independence Constitution also did not address the problem. The promulgation of the Constitution of Kenya 2010 (the Constitution) however laid the basis forprotection against forced evictions. The Constitution guarantees the right to housing, which is a component for protection from forced evictions as well as the right to dignity. However, it does not make provision for protection from forced evictions in the Bill of Rights. The legislature has not enacted substantive legislation on forced evictions. The courts have made efforts, though minimally, to infuse international standards on evictions in their decisions. This thesis interrogates the Kenyan legal framework, policies and institutions dealing with land and housing to identify their inefficiencies in protecting against forced evictions and has suggested recommendations for reform. The thesis establishes that Kenyan law inadequately protects individuals and communities against forced evictions. The thesis answers questions: (i) what are the limitations of the legal and institutional framework in addressing the problem of forced evictions in Kenya? (ii) what are the legal and policy measures that are necessary to mitigate the problem of forced evictions? (iii) what can Kenya learn from another comparable jurisdiction in addressing the problem? In answering the questions, the thesis provides a synopsis of issues related to forced evictions which include access to land and security of tenure. The thesis examines the genesis of the problem of forced evictions and its prevalence on individuals living in informal settlements, indigenous communities and other communities. Importantly, the thesis evaluates the impact of forced evictions on human dignity as well as interdependence of all rights to demonstrate that forced evictions have implication to other human rights. The thesis discusses protection from forced evictions in international law through the International Covenant on Economic, Social and Cultural Rights, thematic instruments, regional human rights instruments and institutions and their relevance in incorporating international best practices towards addressing the problem of forced evictions in Kenya. The thesis also draws best practices from the South African legal framework, norms, jurisprudence and judicial developments with a view to recommending the incorporation of best practices on land rights and protection against forced evictions in Kenya. This study is significant and breaks new ground because it measures the Kenyan legal framework against international norms and practices in the area of land rights and forced evictions. By drawing best practices, the study highlights the limitations and deficiencies in the Kenyan legal framework and provides options for reforms. The development of an appropriate legal framework with substantive and procedural safeguards on evictions for individuals and communities in Kenya serves as the original contribution of the studyItem Essays on Inflation Targeting and Macroeconomic Performance(University of the Witwatersrand, Johannesburg, 2024) Buthelezi, Norbert Sfiso; Malikane, ChristopherThis thesis focuses and investigates the impact of inflation targeting on macroeconomic performance, whether the level of the inflation target is consistent with optimal economic performance and finally, we investigate whether inflation targeting affects the behaviour of fiscal policy in such a way as to deliver fiscal sustainability. This is important because many central banks have adopted inflation targeting as their monetary policy framework. In chapter 2, we investigate the effect of inflation targeting on macroeconomic performance. We do so by formulating a measure of IT that is closely related to the degree of monetary policy activism that is used in the literature. Applying this to advanced and emerging market economies, we find that IT has an ambiguous effect on economic growth in advanced economies and it has negative effect in emerging markets. We also find mixed results on the effect of IT on inflation performance. Lastly, we find that IT tends to lower bond yields across economies. We argue that the financial market benefits of IT do not find expression in real economic activity because of the disconnect that may exist between financial markets and real economic activity. In chapter 3 we argue that there exists a non-linear relationship between inflation one hand and economic growth and unemployment rates on the other. IT requires an explicit announcement of a numerical target for inflation. However, it is not clear whether the announced targets are consistent with maximum economic growth and minimum unemployment rates. We derive a simple growth model in which economic growth and the unemployment rate are nonlinearly related to the inflation rate. Our findings are that there are some advanced economies that sacrifice growth to maintain low inflation rates. This sacrifice is more prevalent in emerging markets, and it ranges from 0.5 percentage points to 3 percentage points. The same results hold for the unemployment rate, excess unemployment rate to maintain the low inflation targets ranges from 0.5 to 4.5 percentage points. We argue that policymakers should consider ways to align inflation targets to optimal levels in order to include more people into employment. In chapter 4 we investigate whether the implementation of fiscal policy is consistent with the monetary policy stance. A number of economies have adopted inflation targeting as an overall framework to guide monetary policy. However, a key requirement of this framework is that fiscal policy should not be implemented in a manner that is not consistent with inflation targeting. We investigate the behaviour of fiscal authorities under inflation targeting by estimating simple fiscal rules that incorporate the targets of monetary policy as normally specified in simple Taylor rules. Our results suggest that for many of the economies in our sample, fiscal authorities respond in a counter-cyclical manner. In advanced economies they do not restrain fiscal policy when inflation rises. This is in contrast to fiscal authorities in emerging markets. Lastly, we do not find uniform adherence to Bohn’s principle of fiscal sustainability across economiesItem Is the Fed Hindering Development? Impacts of US interest rates on growth, income distribution and macroeconomic policy space in developing countries: a demand-led growth model(University of the Witwatersrand, Johannesburg, 2023) Vaz, João Emboava; Hein, Eckhard; Lavoie, Marc; Tinel, BrunoThe US Fed has responded to recent inflation pressures with the most rapid interest rate hike since the 1979-82 Volcker’s disinflation. The hike in the beginning of the 1980s was followed by harsh external crises in the developing world, especially in Latin America. The current situation adds tot that the role the US monetary policy plays on quickly shifting massive capital flows in a world of open and volatile capital accounts (Rey, 2015). On the other hand, interest rate levels remain low on historical levels and developing countries come from decades of relative growth and record international reserve accumulation. Following the recent development in external policy space debates, this thesis aims to understand how a deterioration of external conditions, especially through higher foreign interest rates, may impact growth, income distribution, and macroeconomic policy space in developing countries.Item An analysis of transient and chronic multidimensional poverty in South Africa between 2008 and 2017(University of the Witwatersrand, Johannesburg, 2024) Munzhelele, TumeloThis study derives a Multidimensional Poverty Index (MPI) for each wave using data from the South African National Income Dynamics Study (NIDS) between 2008 to 2017. The MPI is measured using the counting method of Alkire and Foster (2011). In addition, the duration approach of Foster (2009) is used to measure, depending on the MPI, whether households suffer multidimensional chronic or transient poverty. Furthermore, variables that increase a household's likelihood of experiencing chronic or transient multidimensional poverty as opposed to never experiencing multidimensional poverty are found using multinomial logit regression analysis. The results show that the MPI decreased from approximately 7% to 4% between 2008 and 2017. Additionally, the share of South African households which experienced multidimensional poverty decreased from approximately 15% to 10% between 2008 and 2017. However, the intensity of poverty has only decreased by two percentage points from 44% during the same period. This indicates that there has not been much progress in the number of dimensions in which poor households are deprived even as multidimensional poverty decreased. Years spent in school for adults living in the household and unemployment were the dimensions which contributed the most towards the MPI for households that were either chronically or transiently poor. Approximately 73% of households in South Africa never experienced Multidimensional Poverty between 2008 and 2017. Based on the specified deprivation score cut-off, between 1% and 13% of South African households were living in chronic multidimensional poverty. Transient multidimensional poverty affected more than 25% of South Africans. Notably, a higher portion of South Africa's multidimensional poverty is transitory in nature. Black households and female-headed households had the highest incidence of both chronic and transient multidimensional poverty. The multinomial logit model indicates that the likelihood of experiencing chronic or transient multidimensional poverty is higher among households led by individuals without formal education, those with an economically inactive head, and those based in rural areas.Item The role of loyalty programmes on retail fuel site profitability in Gauteng(University of the Witwatersrand, Johannesburg, 2021) Mtungwa, Muzi; Lamola, MedupiLoyalty programmes are one of a number of instruments used by businesses to retain existing customers, attract new customers and in the process retain them over a long term to sustain business profitability. They have been extensively investigated in the developed world with models developed to explain their role in customer retention. In the developing world, they are still being studied to understand if the models that have been developed in the developed world can be extended to the developing countries. Loyalty programmes were extended to the fuel retail industry in 2010 by First National Bank (FNB) and its oil partner, Engen Petroleum. The role of these programmes in the fuel retail industry and their correlation to profitability, whether positive or negative has received little attention from researchers. Here, the author reports on the correlation of these programmes to business profitability. The report shows that there is a positive correlation between these programmes and the profitability of an oil company, while at the same time the report supports the assertion by the non-loyalty programme oil companies that these programmes have a negative effect on their business. These non- loyalty programme oil companies which have a market share of less than 7 percent have been forced to exit the retail industry due to the introduction of these programmes by the major oil companies and their partners. The findings recommend that the role of these programmes in the fuel retail industry is further researched as the authourities do not allow for discounting of the retail price of petrolItem An assessment of the determinants of IT entrepreneurs' level of awareness of the most common causes of start-ups failures in Johannesburg, South Africa(University of the Witwatersrand, Johannesburg, 2023) Mkhavele, NhlamuloIn South Africa, more than 70% to 80% of small to medium-sized businesses (SMMEs) fail within the first three years. In order to gain insight into the level of awareness of IT start-up entrepreneurs regarding the causes of SMME failure, this study conducted an empirical review of the literature and developed a hypothetical framework, the study builds on the work done by Justino Vicente on the factors influencing the failure of small enterprises in order to achieve its objective. It then makes recommendations for future research on the topic. In the aftermath of several economic adversities, prominent among them unemployment, poverty, and HIV and AIDS, SMME failure and success are key among national strategic concerns in the Republic of South Africa, where this study is being conducted in the Johannesburg region. The research employed a quantitative research methodology and the main instruments for gathering data was a survey/ questionnaire, and the snowball sampling method was used. 100 ICT start-ups owners and managers received surveys. The statistical package for the social sciences (SPSS) program was employed to analyse the quantitative data collected. Tables, pie charts, and bar charts were used to display the statistically descriptive results. Due to the many different reasons why SMMEs fail, this study focused its conclusions on the following factors: determinants of IT entrepreneurs' level of awareness of the most common causes of start-ups failures in Johannesburg, South Africa, determinants of accessibility to information of the most common causes of start-up failures and the willingness of entrepreneurs to consume information related to start-up failures were also presented. Among the results of failure include unemployment, societal ills, poverty, and loss of revenue. The study concludes by recommending various interventions to improve the level of awarenessItem Benchmarking the Technical Efficiency of South African Municipal Water Utilities: A Double-Bootstrap Dea Approach(University of the Witwatersrand, Johannesburg, 2023-03) Matutu, Amanda; Dikgang, JohaneEfficiency enhancement in the water sector can help to optimise the use of available resources and mitigate the impact of climate change on water resources, while promoting sustainable water usage. Ultimately, this can lead to cost savings that may be channelled into enhancing service delivery and expanding access to water. Benchmarking is considered a useful method for improving water sector efficiency. The production frontier approach is the most commonly used technique for benchmarking, which can be computed using either non-parametric techniques, including data envelopment analysis (DEA), or parametric methods, including stochastic frontier analysis (SFA). A review of the literature reveals that DEA has become the most frequently used method for efficiency analysis in the water sector. Though a predictable approach, the DEA method may be influenced by measurement errors and anomalies, and it cannot be used to draw statistical conclusions. To address this problem, the double-bootstrap DEA technique was introduced, which permits statistical inference in DEA models. This technique helps the researcher to estimate efficiency scores that have been corrected for bias, and also identifies the factors that influence efficiency. For these reasons, this research employs double-bootstrap DEA to evaluate the efficiency scores of municipal water utilities in the South African water sector. The truncated double-bootstrap regression outcomes show that water consumer debt, consuming units receiving free water, and the effects of climate change (such as temperature variation and altered rainfall patterns) all impact the relative efficiencies of municipal water utilities. The results indicate notable distinctions in rankings and efficiency scores between the double-bootstrap DEA model and the traditional DEA model for both urban and rural municipal water utilities. Using the regression model, this research discovered that water consumer debt and consuming units receiving free water are significant factors influencing the efficiency of urban and rural municipal water utilities. These findings raise concerns about the prospects of South African municipal water utilities, particularly their ability to strike a balance between supporting indigent households and securing revenue for maintenance and future water infrastructure development, as well as efficiently managing water consumer debt and addressing the effects of climate change to deliver desired results consistently and sustainably.Item An Essay on the Welfare and Growth Implication of the Energy Mix in the South African Economy(University of the Witwatersrand, Johannesburg, 2023) Sesele, Masedi; Kutela, GeloThis study investigated the welfare and growth implications of introducing renewable energy in South Africa’s energy mix. The investigation is divided into three chapters, providing a holistic analysis of climate change mitigation on developmental goals in South Africa. The first chapter determines the impact of the usage of non-renewable energy sources on selected sectors’ economic output in South Africa. The second chapter determines the pass-through effect and the response of consumer prices to renewable energy share increases in South Africa while using the exchange rate as a threshold. The third chapter determines through a natural experiment the impact of renewable energy policies such as the White Paper on the Energy Policy of the Republic of South Africa (1998), the White Paper on Renewable Energy Policy (2003) and the Integrated Resource Plan (2010) on South Africa’s economic growth by comparing the gross domestic product (GDP) growth path before and after the introduction of these policies. Results from the second chapter showed that coal was the least contributing factor to production for most sectors, showing that excessive coal usage may hinder economic output within the country. Petroleum has a positive and significant effect on the transport and agriculture sectors but has less of an effect on the other sectors. Electricity is a major contributing factor to production in some sectors, except for the industry sector, which may be adversely affected by the increasing electricity costs and constant load shedding in the country. Results from the third chapter showed that at an exchange rate threshold value of 7.7 R/$, the share of renewable energy pass-through to consumer prices is statistically significant below and above the threshold exchange rate value. When the exchange rate is above the threshold value, the pass- through effect is negative, indicating that an increase in the share of clean energy will decrease consumer prices. These results are largely attributed to the cost of renewable energy, which has been declining significantly in periods where the exchange rate was above the threshold value and, as a result, it had a negative pass-through effect on consumer prices. Results from the fourth chapter showed that each of the three green energy policies has a positive impact on the GDP, which shows that implementing renewable energy policies in South Africa has not only resulted in generating clean, renewable energy but also fosters economic growth within the country. Using a natural experiment, the study constructed a synthetic GDP growth path that vi would have been in place had there been no renewable energy intervention and compared it with the current GDP growth path post the intervention of renewable energy policy to identify the causal positive impact of green energy on economic growth. This thesis’ results encourage policymakers to further implement and improve renewable energy policies as the share of clean energy within South Africa’s energy mix not only mitigates climate change by decreasing greenhouse gas emissions but also positively affects economic growth by creating a clean ecosystem, job creation, increasing innovation and capital formation and overall improving total factor productivity in South Africa and the standard of living of ordinary South AfricansItem Bank regulation, cross-border banking and interest rate pass- through in Sub-Saharan Africa(University of the Witwatersrand, Johannesburg, 2023-03) Gondwe, Sopani; Mahonye, NyashaThe thesis comprises five interrelated chapters that seek to advance empirical literature on banking and financial sector stability (risk) by focusing on some salient regulatory and monetary issues of policy relevance and interest to developing countries of Sub-Saharan Africa (SSA). The market structure and regulatory environment in which banks operate in SSA have significantly changed over the last two decades, and the banking systems of a number of countries have also markedly grown during this period. For instance, and especially after the global financial crisis (GFC), supervisory authorities in most countries introduced new regulations, and/or in some cases, enhanced their existing bank regulatory frameworks to conform with international best practice and standards. However, questions have been raised as to whether developing countries like those in SSA need to adopt international regulatory standards indiscriminately – and whether the benefits arising from the adoption of such policies or standards outweigh the costs. At the same time, the SSA region has witnessed significant penetration of foreign banks – a development that has heightened the risk of financial contagion and cross-border spill over effects. In most countries, there have also been considerable changes in the design and implementation of monetary policy over the past two decades. These changes have triggered a considerable debate on whether and how regulatory and structural factors in the financial system impede or facilitate monetary policy transmission – a debate that, as yet, is not fully settled. This study interrogates the above issues by focussing on three related questions. First, how do regulations – that are based on international best practice and standards, impact or shape risk- taking behaviour (i.e. stability) of banks in SSA? Second, what are the banking sector stability implications of increased foreign bank penetration in the host countries? Finally, how does competition and capital regulation affect the transmission of monetary policy to commercial banks’ lending and deposit rates i.e. the interest rate pass-through (IRPT) in SSA? In addressing each question, the study applied panel econometric analyses using bank and country-level data. The data was obtained from various sources, namely; Bankfocus database, the World Bank Regulatory and Supervision Surveys (BRSSs), IMF International Financial Statistics (IFS), IMF Financial Soundness Indicators (FSIs), World Bank Governance Indicators (WBGIs), Global Financial Development Database (GFDD, 2019), and The Heritage Foundation.