Once shrugged off by investors during the boom years, haphazard economic data in many African countries has become a big headache, increasing reliance on ad-hoc indicators of growth such as beer or phone sales.
When African countries were barrelling along at 5% or more annual growth and commodity prices, stock markets and tax receipts were soaring, a few percentage points of GDP mattered little, Reuters reports.
But with the global slowdown tipping many into recession or in most cases more marginal growth, the accuracy issue has gained in importance.
“Not only is there a lot of pessimism, but the range of expectations is quite wide,” said UBA Capital analyst Richard Segal, citing the case of
“Given that uncertainty, it’s hard to take the risk,” Segal said.
Last week, the African Development Bank bailed out
“It’s a very key point. In a very short space of time, budget deficits just blow out,” said Peter Leger, manager of Cape Town-based Coronation’s African Frontier Fund.
The World Bank says many statistics offices across the region are undervalued and underfunded.
Regional policymakers are under unprecedented pressure to steer a path to stability even though the data at their finger-tips may be painting a picture at best fuzzy, and at worst misleading.
Take inflation, a relatively easy number to assess but one beset by problems.
While
The challenges of data-gathering in war-scarred countries such as Burundi, Congo and Angola mean inflation is only computed for the capital or second cities, ignoring swathes of the population working in small-scale farming.
“Often what they are measuring is what one might call ‘urban inflation’ — imported products used in the urban communities. But there’s no point in including baked beans in the inflation index in
Even relatively sophisticated countries have issues, with Kenya’s 26.1% headline inflation rate in April probably more than twice what it should be because of the simple mean, rather than the more fancy ‘weighted geometric mean’ favoured by rich countries, used to crunch its consumer price index basket.
“It’s not the data. It’s just a different mathematical formula,” said International Monetary Fund (IMF)
Other numbers such as gross domestic product (GDP) are infinitely more complicated to calculate, requiring estimates of everything from industrial output to productivity gains to agricultural yields.
“My view on GDP in Africa is that whenever GDP rises by 10% in real terms, it’s as much a reflection of the stats bureau hiring 10% more people that year,” said one analyst with first-hand experience of data-gathering in a large African country.
Faced with such myriad complexities and uncertainties, many investors rely on other indicators of underlying economic health, such as the amount mobile phone firms make per user, or the earnings of beer and soft-drinks companies.
Cement demand, electricity consumption and the growth of loan books at banks are other keenly watched yardsticks.
“Coca-Cola sales and results from the brewers tell you a lot more about what’s happening on the margins of the economy than some poor guy with an 8-year-old laptop and dodgy phone line in Abuja or Accra,” the analyst said.
If these guides are to be believed, things are not going too badly in
Gross earnings at Guinness
“Obviously, the more you know, the better informed you are,” the IMF’s