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African Journal of Business and Economic Research, Volume 3, Numbers 2 & 3, 2008

About This Edition

ISSN : 1750-4562 (online);1750-4554 (print)

Table of Contents :

Editorial Comments: Challenges of Economic Liberalisation and Growth in Africa
John Kuada4

We have argued earlier in this journal that private enterprise-driven economic growth provides a realistic promise for absolute poverty reduction in Africa through lowering the levels of real unemployment and strengthening individuals’ capacity to care for themselves and their families. Furthermore, businesses tend to generate revenues necessary for anti-poverty policies of governments. The challenge is how to design policies and strategies that induce pro-poor growth without de-motivating the more industrious segments of an African country and without dependence on donor assistance.

Is Privatization the Answer?
Samuel Adams7

Privatization has become a global phenomenon in the last decade. This paper reviews the privatization literature with a particular reference to developing countries in general and Sub Saharan Africa in particular. Toward this end, the paper offers critiques of both the theoretical and empirical foundation of the privatization literature. The review suggests change of ownership alone is not sufficient to ensure economic efficiency, and that the market structure, competition and regulatory infrastructure are more important than ownership per se. The issue then is not just reducing the role of the state or by-pass government or which is better (private or public) but even more important, who is better at doing what and how to make government more accountable.

Keywords: Privatization, Competition, Regulation, Sub –Saharan Africa

External Reserve and the Nigerian Economy: The Dual Folded Debate
Evans S.C. Osabuohien* and A. J. Egwakhe28

The external reserves-economy relationship argument has generated debate due to unsatisfactory theoretical and empirical consensus. This paper provides an economic assessment and empirical insight to the debate in Nigeria. Towards this, the paper used secondary data from CBN statistical bulletin (1994 - 2005). The outputs generated revealed that external reserves exceeding the three months benchmark equivalent was in excess: its holding cost was high. In addition, the results suggested dual fold interpretation of the analyses: 1) holding of external reserves do promote exchange rate stability, 2) positive relationship exists between external reserves and exports; however, the relationship was not significant, hence suggesting that export was not induced significantly by the nation’s external reserves. The paper suggests that domestic production efficiency is required not really external reserve accumulation to improve macroeconomic performance.

Keywords:Exchange rate; Export; External reserve; Holding cost; Import.

Bid-Ask Spread: Evidence from the Mauritian Equity Market
Ushad Subadar Agathee , Sooraj Fowdar, Raja Vinesh Sannassee and B. Ruwaydah Hossenbocus42

This study analyses the daily bid-ask spread for twelve companies on the Stock Exchange of Mauritius (SEM) for a period of 17 weeks to see the effects of several determinants such as closing price of the stock, daily volume traded, the level of market activity and the return on the stock. The main results show that most companies’ spreads are influenced by their daily prices and the level of market prices. Furthermore, results from the panel data regression shows that firm size and liquidity are important considerations when determining the bid-ask spread. Finally, a Thursday effect was noted when considering the relationship between day of week effect and daily bid-ask spread.

Keywords: Intraday effects; Microstructure; Bid-ask spread; Mauritian Equity Market; Efficient Market Hypothesis

Market Orientation and Export Performance: A Ghanaian Study
Robert Hinson, Dan Ofori, Adelaide Kastner, and Mahmoud Mohammed62

The paper investigates antecedents and environmental moderator effects on market orientation and export performance of Ghanaian firms. The results of our survey of 142 exporters show that market orientation relates positively to export performance for both subjective and objective measures used. Environmental moderators do not have any effect on market orientation and export performance for the firms under study. Antecedents to market orientation presented mixed findings - some were found to be prerequisites for market orientation whilst others were not. On the strength of the findings from this study, we posit that market-oriented firms compete more effectively and efficiently than their competitors.

Keywords: Market orientation, Export performance, Environmental Moderators, Antecedents, Ghana

Power Asymmetries and Relationships between MNCs and Local Firms in Africa
John Kuada91

This paper discusses the problem of power asymmetry of MNCs and the temptation that it carries for MNC managers to shift investment burdens to small local firms, lock them up in captive relationships and reneges on the contracts that they sign with them. The asset specific nature of the investments made by the small firms in order to satisfy the MNCs makes the losses that they incur rather devastating to them. These arguments have been illustrated with two cases of MNC outsourcing agreements with local firms in Ghana. The paper also discusses the implications of this misuse of power for relational governance mechanisms that small firms must put in place to deal with the MNCs.

Keywords: Power asymmetry, relational governance, outsourcing, MNCs

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