By Razia Khan of Standard Chartered Bank
Africa is rising, but poor data availability means that we can’t be sure by how much.
There are proxies that help shed some light. Chinese customs data show that Africa-China trade ballooned to $210bn last year from $5bn-$7bn at the end of the 1990s. Lending to the private sector in Africa has also surged, with private-sector credit growth more than doubling in real terms between 2000 and 2010.
Such data points aside, however, little is known about the true magnitude of Africa’s growth surge.
Data quality in most Sub-Saharan African economies is weak. In many instances, the official data are too out of date to tell us much that is useful.
The lack of data complicates decision-making for both the private sector and governments. It reduces certainty, adds to the cost of doing business and can delay the formulation of much-needed policy.
While Africa has seen surging inflows from foreign direct investment and private portfolio investment in recent years, investors – especially those new to the region – are often shooting in the dark when it comes to data.
Improved data quality can alter our perceptions dramatically. When Ghana released its rebased GDP figures in 2010 (the first rebasing since 1993) the economy turned out to be 63 per cent larger than previously thought.
Nigeria’s rebasing this year was even more dramatic, with the estimated size of the economy increasing by 89 per cent. Nigeria ‘became’ the largest economy in Africa and the 26th-largest in the world.