Sound statistical data critical to Africa's development

by Busani Bafana

Africa needs to invest in generating and applying sound statistical data as a tool for economic and social transformation at a time of growing global investments in the continent that has recorded steady economic growth in the last decade.

According to the International Monetary Fund's Outlook report, Africa as whole is expected to grow by five percent in 2014, a figure the World Bank Africa’s Pulse report, projects to grow over five percent on average by 2015 driven by among other factors, high commodity prices worldwide, growing investments and strong consumer spending. However, poor statistical data available to citizens and investors hinder investment decision making and general transparency in tracking development dollars.

There is an urgent need to upgrade Africa's statistical capacity to foster the measurement and monitoring of development progress but more importantly, to facilitate informed investment decisions, experts say.

Improved data is a tool for transformation, says the UN under Secretary and the Executive Secretary of the Economic Commission for Africa (ECA), Carlos Lopes, arguing that good data aids planning. African countries he said are slowly rebasing their economies to remain competitive as they realise the value of good reporting and sound statistics.

"Only 12 countries have national accounts up to date according to the UN Statistical commission methodologies that requires rebasing of economies be done every five years maximum," says Lopes adding that, "Look at the deficit of information and its quality across the continent but countries are all of a sudden interested in doing the rebasing because they are reform-minded and want the data for all kinds of reasons and not just about reporting. That is the shift that we need."

Good data and high transparency is good for governance and civil society as well as for businesses wanting to invest in Africa because they can see what the government is doing with the money they contribute, says ActionAid's International Campaign manager for tax justice, Martin Hojsik.

"Investors and citizens lose knowledge when there is no good data and with that is the question of what is the real situation as they need to base their decisions on solid data," Hojsik said. "It is not only about having a solid legal environment but also about knowing what the real situation is and what the economic conditions in the country are so that they can plan their businesses better."

Up to date statistical data is also key to facilitating investment decision on the back of a fourfold increase in Africa's private capital inflows in the last ten years which have notched an estimated four percent of regional GDP. Foreign Direct Investment has accounted for the bulk of capital inflows into Africa in 2013, according to the ECA/OECD's report, the Mutual Review of Development effectiveness in Africa: Promise & Performance, launched in October 2014 at the Ninth Africa Development Forum in Marrakesh. In addition to private equity funds are making inroads into Africa but the continent still accounts fora small percentage of global private companies in the emerging markets.

Mike Casey, director in the Emerging Markets Private Equity Association’s told a panel at the Ninth ADF, that data from Bloomberg indicated that there are 26  300 private companies for Africa and the Middle East compared to 40 000 companies in Latin America, 155 000 in eastern Europe and 220 000 in emerging Asia. Casey offered two explanations to this trend suggesting that there are actually relatively few registered companies operating in formal economies in Africa and secondly that there was not enough quality data to aid investment decisions.

"If there is paucity of data maybe its better to go into markets where there is slightly more transparency and to be frank other emerging markets are not repositories of robust transparency and data either," Casey said.