Africa's outlook by the (poor) numbers
Mozambique is Africa's eighth poorest nation says one index -- and its 12th richest says another.
Grant Lee Neuenburg/Reuters/File
When it comes to African statistics – handle with care. They aren't reliable, says Canadian economist Morten Jerven.
His 2013 book, "Poor Numbers," has hit the edifice of African data like a 10-ton sledgehammer. Systematic research shows "large errors and levels of uncertainty" in gross domestic product and growth data. "This 'numbers game' has taken on a dangerously misleading air of accuracy," he writes.
Consider also that in 2010 Ghana suddenly revised its GDP by 60 percent, marking an increase of $13 billion that hadn't been accounted for.
The situation makes it often difficult for investors to accurately assess just how we or poorly a nation or region is doing -- even as there are a slew of new investors on Africa's block besides China [see story].
Key to bad numbers is that currency differences are rarely reconciled. Also, the three main sources of data for Africa – the World Bank, the Maddison Project in the Netherlands, and World Tables, which is run out of the University of Pennsylvania – use different criteria. Finally, "baseline" GDP figures are estimates that often border on fiction, Mr. Jerven says.
At a London-based Chatham House presentation, Razia Khan, the head of Africa research for Standard Chartered Bank, recently predicted that the global status of Nigeria's economy will change dramatically since its GDP status will be rebased, like Ghana's. Its $290 billion economy may actually be closer to $400 billion. But one US expert on Africa said it is impossible to know, because billions are missing in Nigeria and its top banker was suspended recently. That highlights another data problem: corruption.