What is the real population in Nigeria? - We're guessing 200 million by now, but no one knows for sure. How many people are currently unemployed in Burkina Faso? What proportion of the population in Togo is comprised of the undocumented informal sector?
Sadly, even statisticians in Africa cannot always give accurate and reliable answers to these and similar questions. Statisticians for the Mo Ibrahim foundation revealed in a report that statistics provided on Africa cover only one-third of the relevant data. The rest? Blind spots. Basically, Africa knows little about Africa.
For some countries like Zimbabwe, the problem is lack of infrastructure to support the collection of accurate and reliable economic data. In addition, only 22% of African nations have independent statistics institutions. From 2014, several estimates have been made of the unemployment rate in Zimbabwe, ranging from 5% to 95%. A publication from BBC news took a reality check of these estimates. First, the Zimstat report gave an 11% estimate for unemployment in Zimbabwe, a 5% figure was claimed by the International Labour Organisation meanwhile, and a 90% estimate came from the Zimbabwe Congress of Trade Union, all within the same period. The reason for the inconsistency in unemployment data was attributed to the different definitions of unemployment. Nonetheless, unemployment data in Zimbabwe has been unreliable for the past 5 years.
Similarly, in countries in West and Central Africa, information relating to unemployment, inflation and GDP growth is often difficult to access or lagged. In 2014, Nigeria was tagged the largest economy in what seemed like an overnight miracle. How did it happen? - GDP was recalculated. A review of the country's method of calculating GDP was supposed to be carried out every 3-5 years but was ignored for decades. Nigeria had not rebased its GDP since 1990. So when GDP was rebased in 2013, Nigeria witnessed a dramatic 89% increase with GDP rising from $270 billion to $510 billion. Furthermore, in central Africa, about 60% of the indicators for Millennium Development Goals were last measured in 2010, while others were simply estimated. Lagged economic information has long been a constraint to knowledge-driven economies in Africa.
And trade information?
Sadly, the story with trade information isn't so different. Currently, Intra-African trade is at about 15%. African countries are barely aware of trade opportunities in other African countries and prefer to trade with countries in Europe and Asia. For instance, in 2009, a significant shortage of millets existed in Kano, Nigeria. A town in a neighbouring country, Niger, happened to have an abundance of millets at that particular time, but this information was not available to either of these nations. Had this information been available, Nigeria would not have been forced to seek millets outside the continent, at higher costs. In 2017, Dr. Benedict Oramah, President of Afreximbank, cited a recent study on regional value chains for leather products. The study revealed that some African countries including Kenya, Mauritius, South Africa and Nigeria, were importing certain products at higher costs from outside Africa. These same products could easily be imported for much less from nearby African countries, that is, if they were aware of this information.
In a nutshell, trade information has also been lacking significantly. However, it is hoped that the implementation of the AfCFTA will see to bridging the trade information gap in Africa.
Nonetheless, this has been the trend for decades - the lack of reliable, accurate and timely data in Africa.
It goes without saying that lack of reliable information not only hampers economic growth but results in undervalued and untapped investment opportunities in Africa. In essence, it prevents investors from making informed investment decisions. Frankly, the difficulty in understanding Africa and not being equipped with adequate information turns investors away from African opportunities. While investors are largely aware of the vast potential the African continent sits on, many are too hesitant and have limited access to information to harness this potential. Others that do forge on to invest often make uninformed investment decisions due to the lack of understanding of African consumers and cultural factors.
Another flaw is that strategies that work in one African country are assumed to work in another country. With 54 African countries, there are 54 different markets. So, what works in Gambia or Cote d'Ivoire, may woefully fail in Liberia or Senegal. This results because information is hardly available on investment opportunities in different African countries. Unfortunately, Africa is often classified as one economy with one type of consumer. The key to understanding Africa, lies in understanding the comparative advantages of each African country and how best to harness the available resources of these countries.
So, is there light at the end of the tunnel?
There is indeed hope. Yes, information in Africa is limited and difficult to access. However, it is not an impossible feat. While little can be done to immediately change the state of data availability in African countries, a major cause of this information friction is simply lack of research. Proper, in-depth research.
The importance of in-depth background research in Africa cannot be overemphasised, as it is the best way to uncover hidden facts and figures. It doesn't end with uncovering data and statistics, but actually drawing insights from this data. The truth is, data is useless if it is not understood. Which is why the need for research experts and analysts is increasingly important in Africa.
To build a more knowledge-based economy, economic research is a catalyst that cannot be ignored. As a matter of fact, investors need to know the comparative advantages of a particular African country before putting in their money.
In order to increase confidence in investing across Africa, the information friction in Africa needs to be eliminated. While there is no single answer to the problem of information, this information friction will be reduced by the cooperation of African countries, the successful implementation of the AfCFTA and ultimately, market research platforms where real-time data and insights on Africa can easily be accessed.
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