Venture capital's success in aiding enterprise creation in developed economies and its characteristic design for channeling equity capital to fledgling enterprises beyond the limits of bank term loans, have led some to suggest venture capital can play a role in bridging the enormous capital (financing) gap in the less endowed capital markets of emerging economies. I conduct a set of empirical tests on the importance of venture capital support for enterprise creation in an emerging market as well as examine its motivations for being. I find evidence of venture capital support for enterprise creation; in particular, its combined effectiveness on firm performance is positive when firms' corporate governance characteristics are appropriated. Results also suggest that the dominant motivation for venture capital existence in the South African market is the mitigation of information asymmetry rather than the timing of exit from portfolio firms.
This paper examines the impact of the monetary policy instrument, the repo rate, mainly on output gap and inflation rate in South Africa, over the period 1998-2008. Use is made of a simple structural vector autoregressive (SVAR) framework in assessing the impulse response functions (IRFs) of output gap and inflation rate to monetary policy shocks. The VAR includes output gap, rather than output, to control for the price puzzle. The results of the IRFs show that monetary policy instrument, the repo rate, did not impact on inflation in South Africa over the sample period covered by the paper.
This paper analyzes the effect of external finance on African exports of manufactured varieties to the EU. Results from cross-section and panel regressions show that external finance has a positive and significant impact on the exports of manufactured varieties. Related literature has shown that an expansion in the variety of manufactured exports contributes to the observed productivity gains from exposure to trade. The paper thus contributes to the identification of effective strategies for encouraging export diversification among manufactured products in order to realize higher productivity and economic growth in Africa.
This paper examines the determinants of pension participation in contributory funds by private sector workers in South Africa using Labour Force Survey data. Pension participation increases with income, education, job-tenure, firm-size and working in the formal sector. Household-size and being self-employed have a negative impact on pension participation. Policymakers will register greater success in encouraging pension participation by promoting efforts to increase incomes, improve educational outcomes and encourage job creation within the formal sector. Measures to reach the self-employed, agriculture, trade and construction sectors, and small firms should be pursued as part of efforts to expand participation.