20130327-105544.jpgWhat do we know about poverty, income and growth in sub-Saharan Africa? The answer is: much less than we like to think.

The data is unreliable and potentially seriously misleading. The question is of great importance. Economic growth rates or per-capita income estimates are commonly used in statements about development in Africa.

If income and growth statistics in Africa do not mean anything, a great part of current development analysis and policy targets are similarly meaningless. So far, debates on whether Africa is rising or not have failed to ask the question whether the growth data is telling us what we would like to think.

The research I conducted for my book, “Poor Numbers: How We Are Misled by African Development Statistics and What to Do About It,” clearly shows that any evaluation of whether Africa’s rise is real or not must begin and end with a careful evaluation of the growth and income evidence. Without such analysis, one runs the risk of reporting statistical fiction.

In November 2010, Ghana Statistical Services, the official provider of statistics in that country, announced that it was revising its gross domestic product estimates upwards by over 60 percent, suggesting that economic activities worth about $13 billion had been missed in previous estimates. After the revision, a range of new activities were accounted for. As a result Ghana was suddenly upgraded from a low-income country to a lower-middle-income country.

In the fall of 2011, Nigeria also announced an upward revision of its GDP. This revision is not yet complete, but it has been suggested that revision will cause a similarly large jump. If GDP doubles in Nigeria following the revision, it will mean that the GDP for sub-Saharan Africa will increase by more than 15 percent. The value of the increase amounts to as much as 40 economies roughly the size of Malawi’s.

These revisions, which were caused by changes in the base year, methods and basic data of the national accounts, have resulted in confusion and disbelief in the development community.

If we know so little about growth and income in Ghana, one of the best studied economies in Africa, how shall we interpret the data from other African economies? In response to these emerging uncertainties, Shanta Devarajan, the World Bank’s Chief Economist for Africa, has declared the current state of affairs “Africa’s statistical tragedy.”

In “Poor Numbers,” I show that these well-publicized statistical events are only the tip of the iceberg.
These big jumps in the income statistics for Nigeria and Ghana mean that a large amount of economic activity has previously gone missing in the years since the 1990s, and it thus becomes guesswork to write or rewrite the economic history of Nigeria and Ghana based on the official statistics. It also means that any ranking of African economies today according to GDP or similar national income derivatives are meaningless.

Read more: Morten Jerven, CNN

AfricaBusinessEconomic growthGhanaOpinion

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