Category Archives: Development

Africa and Its Mirage of Statistical Fortune

I am one of those people who have mixed feelings about statistics. The more statistical information I read (or hear) about Africa, the more my ambivalent attitude towards statistics is strengthened. Indeed numbers could be of help in presenting situations in ways that are easy to understand or in ways they appreciate as speaking in percentage terms is seen as actually a way of placing value on something. If 90% of people who use an item like it, it represents a positive valuation of that commodity. In such a situation, minimal value is placed on the opinion of the 10% who did not like it. In the end, statistics become a measure of value. The down side of statistical analysis is that it involves the manipulation of figures. The expression “the figures speak for themselves” is used to suggest that statistical data represent “true” information. This kind of assertion fails to recognize that figures could be manipulated to tell a particular story. Africa’s economic circumstances have been valued and undervalued depending on whose statistics one is using. Recent economic figures put out by major international financial institutions like the International Monetary Fund (IMF) and the World Bank paint a very bright picture of Africa’s economic future. While many continue to express delight and optimism in these figures, my purpose as concerns this article is to discuss the supposed economic boom in Africa as a statistical deception intended to further exploit the resources of the continent.

Over the past five years, IMF and World Bank figures on economic growth have consistently featured Angola, the Democratic Republic of the Congo, Ethiopia, Ghana, Mozambique, Nigeria, Rwanda, Sierra Leone, Tanzania, Uganda and Zambia among the 20 fastest growing economies in the world, based on GDP figures. The 2014 IMF Regional Economic Outlook predicts that African economies are likely to experience continuous robust growth of up to more than 5% in 2015. The World Bank’s statistics are not that different from that of the IMF. Coming from a history in which Africa is rarely talked about in favorable terms, these statistical projections sound like a change in global opinion about the continent. However, within the fine lines of promising statistics lies a treacherous plan to continue exploiting the resources of Africa.

Like anyone who is interested in the development of Africa, I have been waiting for the forecasted golden future to become a reality. But, disappointingly the end of each day seems to stretch the golden dream far out of reach. Clearly, there is no correlation between the Africa which is supposed to be booming economically and the one that many of its citizens know and experience on a daily basis. For example, South Africa has, for long, been ranked as the strongest African economy. The recurrent xenophobic violence in South Africa however tells a different story about the country. The underlining cause of these instances of violence is that people feel economically marginalized; that is, the highly rated economic advancement does not reflect in the lives of these people. In the face of this clear disconnect between statistics and reality, one would wonder why economic forecasters continue to raise the hopes of Africans with these promising figures. It appears to me that all of these numbers are intended to keep the wheels of globalization turning. Though its proponents argue that economic globalization integrates the economies of the world creating a single large and accessible market for all countries, in reality it is a trade zone where only the economically strong do survive. Here, “Integration” is a euphemism for the takeover of so-called developing economies by the developed ones. For this reason, I find a correlation between globalization and colonialism. Both are motivated by the insatiable quest for amassing wealth at the expense of others. The only difference between the two is the method of operation. While colonialism was established with military might and divide and rule tactics, globalization relies (in part) on economic statistics. Investors go to where they are sure of making profit. In that sense, statistics function as profit barometers, identifying areas of African economies that are profitable to exploit. Ideally, this is not supposed to be a problem because after all every entrepreneur (African and non-African) does same.   However, in the context of globalization which allows for the economically strong to bully the weak, African businesses are at a disadvantage when it comes to tapping the economic potential of the continent. The positive valuation of Africa by international financial institutions therefore benefits foreign businesses more than local ones.

Interestingly, economic statistics about Africa have also had political implications. Some governments in Africa have often used these figures to justify their economic policies despite the fact that there is no correlation between numerical narratives and practical experiences. I recall in 2010, when the World Bank declared Ghana a middle income country. The incumbent government argued that it was an endorsement of its economic policies. Since 1995, Ghana has set the target of attaining middle income status by 2020. When this target was “achieved” earlier than projected, the government claimed that it is the prudent and effective economic policies it implemented which ensured this record time economic success. But, to the contrary, this supposed unprecedented economic milestone was not the direct result of government policy but rather a “technical statistical adjustment”[i]. Basically, what this means is that Ghana technically (statistically) is a middle income country but in reality it is a low income nation. The government has taken this statistical designation as a reflection of what the situation is in practical terms. The disconnect between statistics and reality came to the fore in 2014 when Ghana finally acknowledged that it was in the midst of economic crisis and therefore needed financial bailout from IMF.

A similar statistical (mis)fortune befell Nigeria in 2014. The country’s statistical service, declared the country as the largest economy in Africa. This was based on the recommendation of the United Nations Statistical Commission. The Commission made this recommendation following a “complicated statistical recalculation”[ii] which ended up adding $240 billion to Nigeria’s GDP. Dr. Doyin Okupe a Senior Adviser to President Goodluck Jonathan argued that this new economic status will benefit “ordinary” Nigerians in the sense that it will increase per capita income of Nigerians. This position is misleading in the sense that the increase in per capita income is not resulting from actual economic growth but from the manipulation of statistics. Consequently, the new per capita income will be a bloated figure which does not reflect the real economic circumstance of Nigerians. When policymakers use statistics to validate their policies they stand to lose sight of the masses of people who are economically marginalized. If the government lives in the statistical illusion that the economic circumstance of the country is technically and practically experiencing unprecedented growth, then it will not be willing to accept the reality that the majority of the population continue to live below the middle income ranks.

The overall objective of this paper is to advocate a practical rather than statistical approach to the management of Africa’s economies. Statistics are good but they make no sense when they are used to paint an image to which people cannot relate. Practical approach implies doing what will cause tangible improvements in the lives of people. For example, countries with high per capita income are considered to be economically robust. However, per capita income does not necessarily reflect an even distribution of national income. Therefore though statistically, a nation might seem prosperous, the majority of people might in fact be earning nothing close to the per capita income. A government with practical approaches to problems will institute measures to help lessen the economic burden of those who are outside of the per capita income range. Measures like setting or increasing minimum (or living) wage is more likely to have a tangible effect on the lives of the poor. Also, instead of relying detrimentally on foreign investment, it is important for African countries to offer financial and technical support to local entrepreneurs because the profits they make will most likely remain within the country. Unlike their local counterparts, the capital accumulation of foreign investors is repatriated to their home countries. The effect is that though statistically, the country’s economy might show substantial growth, in reality however, the profits leave the local economy.

 

References

[i] Todd Moss and Stephanie Majerowicz (2012). “No Longer Poor: Ghana’s New Income Status and Implications of Graduation from IDA.” <http://www.cgdev.org/files/1426321_file_Moss_Majerowicz_Ghana_FINAL.pdf>

[ii] Nigeria Guardian Africa Network (2014). “Nigeria overtakes South Africa to become Africa’s largest economy.”

<http://www.theguardian.com/world/2014/apr/07/nigeria-south-africa-largest-economy>

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