Why saying ‘seven out of ten fastest growing economies are in Africa’ carries no real meaning – By Morten Jerven

Posted on August 26, 2014 by AfricanArgumentsEditor

MortenJervenBefore, during and after the US Africa summit one of the most frequently repeated factoids supporting the Africa Rising meme was that ‘seven out of ten fastest growing economies are in Africa.’ In reality this is both a far less accurate and much less impressive statistic than it sounds. More generally, narratives on African economic development tend to be loosely connected to facts, and instead are driven more by hype.

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The ‘seven out of ten’ meme derives from a data exercise done in 2011 by The Economist. The exercise excluded countries with a population of less than 10 million and also the post-conflict booming Iraq and Afghanistan. This left 81 countries, 28 of them in Africa (more than 3 out of 10) and, if you take out the OECD countries from the sample, (which are unlikely to grow at more than 7 percent per annum), you find that every second economy in the sample is in Africa. It might not give the same rhetorical effect to say: ‘on average some African economies are expected to grow slightly faster than other non-OECD countries,’ but that would be more accurate.

And before we literally get ahead of ourselves (The Economist was reporting forecasts made for 2011 to 2015) there is a difference between forecasted and actually measured growth. According to John Kenneth Galbraith, the only function of economic forecasting is to make astrology look respectable. So how good is the IMF at forecasting growth in Low Income Countries?

According to their own evaluation, IMF forecasts “over-predicted GDP growth and under-predicted inflation.” Another study looked at the difference between the forecasts and the subsequent growth revisions in low income countries, and found that “output data revisions in low-income countries are, on average, larger than in other countries, and that they are much more optimistic.” Forecasts are systematically optimistic all over the world, but in Low Income Countries even more so.

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Among those on the list of the fastest growers were countries like Nigeria, Ghana and Ethiopia. The news that both Nigerian and Ghanaian GDP doubled following the introduction of new benchmark years for estimating GDP in 2010 and 2014 should remind us that the pinpoint accuracy of these growth estimates is lacking. How confident should you be about a 7 percent growth rate when 50 percent of the economy is missing in the official baseline? Recent growth in countries with outdated base years is also overstated.

While Ghana has reportedly had the highest growth rates in the world over the past years, a peer review of the Ghana national accounts noted that “neither a national census of agriculture nor other surveys, such as a crop and live-stock survey, have been conducted…there is no survey to provide benchmark data for construction, domestic trade and services.” It was recently reported that an economic census is being planned for next year. What we do know is that Ghana (together with Zambia, another of the projected ‘top ten growers’) has returned to the IMF to seek assistance following their entry into international lending markets.

Most of the time we simply do not know enough to assert accurate growth rates. There are also known biases and manipulations. Ethiopia, for example, is notable for having long-standing disagreements with the IMF regarding their growth rates. Whereas the official numbers have been quoted in double digits for the past decade, a thorough analysis suggested the actual growth rates were around 5 to 6 percent per annum. More generally, one study used satellite imaging of nighttime lights to calculate alternative growth rates, and found that authoritarian regimes overstate reported rates of growth by about 0.5 to 1.5 percentage points. Another recent study argues that inflation is systematically understated in African countries – which in turn means that growth and poverty reduction is overstated.

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Data bias is carried across from economic growth to other metrics. The pressure on scholars, journalists and other commentators to say something general about ‘Africa’ is relentless, and so the general rule is to oblige willingly. When talking about average trends in African politics and opinion, analysis is influence by the availability of survey data, such as Afrobarometer, and the data availability is biased. According to Kim Yi Donne, on The Washington Post’s ‘Monkey Cage’ blog, of the 15 African countries with the lowest Polity IV rankings, only seven have ever been included in the Afrobarometer, whereas all but one African country rated as a democracy by the same index is included.

Any quantitative study which says something about the relationship between growth and trends in inequality and poverty, relies on the availability of household survey data. One paper boldly stated that African Poverty is Falling…Much Faster than You Think! The data basis was very sparse and unevenly distributed. There were no data points for Angola, Congo, Comoros, Cape Verde, D.R. Congo, Eritrea, Equatorial Guinea, Seychelles, Togo, Sao Tome and Principe, Chad, Liberia, and Sudan. In addition, six countries only have one survey. The database included no observations since 2004 – so the trend in poverty was based entirely on conjecture. Famously you need at least two data points to draw a line. Yet the study included a graph of poverty lines in the Democratic Republic of Congo from 1970 to 2006 – based on zero data points.

A result of doubts about the accuracy of the official evidence, and a dearth of evidence on income distributions, scholars have turned to other measurements. Data on access to education and ownership of goods such as television sets from Demographic and Health Surveys were used to compile new asset indices. In turn, these data were used to proxy economic growth and in place of having a measure of the middle class. In both cases the data may paint a misleadingly positive picture. While claiming to describe all of Africa over the past two decades, these surveys are only available for some countries sometimes.

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The statement ‘seven out of ten fastest growing economies are in Africa’ carries no real meaning. To utter it is merely stating that you subscribe to the hype. It is particularly frustrating, and it surely stands in way of objective evaluation, that the narratives in African Economic Development switches from one extreme to the other so swiftly. The truth lies somewhere between the ‘miracles’ and ‘tragedies’. It is nothing short of stunning that in a matter of 3-4 years the most famous phrase relating to African economies has turned from ‘Bottom Billion’ to ‘Africa Rising’.

Because of a lack of awareness on historical data on economic growth it was long claimed that Africa was suffering “a chronic failure of growth”, but growth is not new to the African economies, growth has been recurring. There is no doubt that there are more goods leaving and entering the African continent today than fifteen years ago. More roads and hotels are being built and more capital is flowing in and out of the African continent than before. But what is the real pace of economic growth? Does the increase in the volume of transaction result in a sustained increase in living standards? The evidence does not yet readily provide us with an answer. It is the job of scholars to give tempered assessments that navigate between what is make-believe and what passes as plausible evidence.

Morten Jerven is Associate Professor at the Simon Fraser University, School for International Studies. His book Poor Numbers: how we are misled by African development statistics and what to do about it is published by Cornell University Press. @MJerven

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Ethiopia: Embracing Development and Security Means Embracing Free Expression

By: Birtukan Mideksa

Last week, Washington D.C. hosted the US-Africa Leaders Summit, where over 50 African heads of state discussed important issues ranging from public health to trade and development. I was honored to participate in a parallel civil society conference that highlighted the challenges faced by civic leaders on the continent, including the all too prevalent crack-down on free expression.

During the summit, participants repeatedly noted that respect for fundamental human rights, including freedom of expression, is critical for sustainable economic growth. The press is a vital component of society, allowing diverse voices to be heard and balancing the power between the government and the people. The independent media also plays a particularly important role in combating corruption as it oversees how governments spend development and aid money.

In his post-summit address, President Barack Obama echoed these sentiments, noting that “even though leaders don’t always like it, the media plays a crucial role in assuring people that they have the proper information to evaluate the policies that their leaders are pursuing” and that “nations that uphold these rights and principles will ultimately be more prosperous and more economically successful.” Secretary of State John Kerry—who spoke at the civil society forum—reiterated the belief that “when people can trust their government and rely on its accountability and transparency on justice, that society flourishes and is more prosperous and more stable than others.”

According to Secretary Kerry, the U.S. “will continue to support press freedom, including for journalists charged with terrorism or imprisoned on arbitrary grounds.” However, one of the United States’ most important security and development allies in Africa, my home country of Ethiopia, is also one of the continent’s worst jailers of the press.

On April 25 and 26, less than three months before President Obama highlighted the importance of a free press, three independent journalists and six bloggers were arrested and eventually charged under Ethiopia’s widely-criticized 2009 Anti-Terrorism Proclamation. The journalists were known to write on a wide range of topics, including corruption. The bloggers, for their part, were part of group called “Zone 9,” which had a large following on social media and were known for their campaign to promote the rights provided under Ethiopia’s constitution. They were all arrested shortly after Zone 9 posted an announcement on Facebook indicating that the group would begin blogging again after a seven month hiatus.

The six bloggers and three journalists were held without any formal charges against them for over two and a half months and were finally charged on July 18. In response, 41 NGOs sent a letter to Ethiopian Prime Minister Hailemariam Desalegn calling on his government to immediately release the detainees and revise the law. The U.S. government has also condemned such an abuse of anti-terror legislation. Secretary Kerry publicly expressed his concern about the arrests during a visit to Addis Ababa just days after the they were detained. He specifically mentioned blogger Natnail Feleke, with whom he had met on a previous visit, and adamantly insisted that the Anti-Terrorism Proclamation should not be used as a mechanism to curb the free exchange of ideas.

Unfortunately, what happened to these independent journalists and bloggers is neither new nor surprising.

On September 14, 2011, Eskinder Nega, a prominent journalist and human rights defender, was arrested and charged under the Anti-Terrorism Proclamation. Ten months later, he was sentenced to 18 years in prison. While the Ethiopian government asserts that Mr. Nega’s prosecution is unrelated to his work as a journalist, an independent inquiry found otherwise. In Opinion No. 62/2012, the UN Working Group on Arbitrary Detention held that Mr. Nega’s imprisonment violated Ethiopia’s obligations under international law. In addition to procedural violations, the Working Group found Mr. Nega’s detention resulted directly from his exercise of free expression. They concluded that the overly broad offenses established by the 2009 Anti-Terrorism Proclamation constituted “an unjustified restriction on expression rights and on fair trial rights.” Thus far, however, the government has ignored the Working Group’s call to release and compensate Mr. Nega. It also continues to imprison journalists Reeyot Alemu and Woubshet Taye on similar grounds.

Other international bodies have also criticized the use of anti-terror laws against journalist, including the African Commission on Human and Peoples’ Rights and five United Nations special procedure mandate holders.  During Ethiopia’s Universal Periodic Review earlier this year, a number of countries, including the United States, raised similar concerns. Most recently, the UN High Commissioner for Human Rights, Navi Pillay, denounced the arrests of journalists and bloggers declaring that “the fight against terrorism cannot serve as an excuse to intimidate and silence journalists, bloggers, human rights activists and members of civil society organizations. And working with foreign human rights organisations cannot be considered a crime.”

The Ethiopian government has long relied on the same arguments to defend its actions—falsely claiming that the Anti-Terrorism Proclamation copies equivalent European standards. The international community can no longer tolerate these kinds of wholly inadequate explanations, especially when respect for human rights impacts the prospects for growth and security on the continent so greatly. If we are serious about development and peace in Africa, we need to hold the Ethiopian government accountable and reinforce the proposition that there can be no robust, sustainable growth without respect for the fundamental rights for all Africans.

Birtukan Mideksa is former federal judge, political leader, and prisoner of conscience in Ethiopia. She has held fellowships with the National Endowment for Democracy and Harvard University and is a member of Freedom Now’s Board of Advisors.

Source: Freedom Now