• Average interest on new external debt commitments

  • Average maturity on new external debt commitments

  • Debt service on external debt as $US per person

  • Interest payments on external debt, %GNI

  • Interest payments on external debt, $US per person

  • Exchange rate stability

  • Inflation level, average annual (CPI)

  • Inflation, year-on-year change

  • Debt service as % of exports

  • Debt service: interest and amortization, as $US per person

  • General government gross debt, %GDP

  • General government revenue, %GDP

  • General government total expenditure, %GDP

  • General government surplus/deficit, %GDP

  • Exports of goods and services, %GDP

  • Exports of goods and services, $US per person

  • Imports of goods and services, %GDP

  • Imports of goods and services, $US per person

  • External debt stocks, %GNI

  • Net official development assistance, %GNI

  • Net official development and official aid, $US per person

  • Total reserves as % of total external debt

  • Total reserves as months of imports

  • Total reserves as $US per person

  • Growth in per person $US total reserves

  • Current account balance, %GDP

  • Current account balance, $US per person

  • Gross national savings, %GDP

  • Terms of trade in goods and services

  • Terms of trade in goods and services, year-on-year change

  • Bank liquid reserves to assets ratio

  • Commercial bank branches per 100,000 adults

  • Domestic credit provided by financial sector, %GDP

  • Domestic credit to private sector, %GDP

  • Domestic credit to private sector by banks, %GDP

  • Foreign direct investment, $US

  • Foreign direct investment per person, $US

  • Growth in $US foreign direct investment per person

  • Foreign direct investment, %GDP

  • Year-on-year change in %GDP foreign direct investment

  • Foreign direct investment as % of gross fixed capital

  • Year-on-year change in %GFC foreign direct investment

  • Foreign direct investment as % of goods and services trade

  • Year-on-year change in % goods and services trade foreign direct investment

  • Foreign direct investment as % of good trade

  • Year-on-year change of % goods trade foreign direct investment

  • Gross private sector capital formation as $US per person

  • Growth in per person $US private sector capital formation

  • Gross private sector capital formation, %GDP

  • Price level ratio of $PPP to market exchange rate

  • Year-on-year change in price level ratio

  • Household final consumption in $US per person

  • Growth in $US household final consumption

  • Household final consumption, %GDP

  • Year-on-year change in %GDP household final consumption

  • Wired broadband subscriptions per 100 people

  • Fixed telephone subscriptions per 100 people

  • Mobile cellular subscriptions per 100 people

  • Secure internet servers per 1 million people

  • Internet users per 1000 people

  • Cost of business start-up procedures, as % of GNI per person

  • Cost to export, $US per container

  • Cost to import, $US per container

  • CPIA economic management cluster average

  • CPIA financial sector rating

  • CPIA property rights and rules-based governance rating

  • CPIA quality of budgetary and financial management rating

  • CPIA public sector transparency-accountability-corruption rating

  • World Bank ease of doing business ranking

  • Total tax rate as % of commercial profits

  • GDP ($US)

  • GDP ($PPP)

  • GNI ($US)

  • GNI ($PPP)

  • GDP real growth

  • GDP real growth, % change

  • GDP per person ($US)

  • Growth in $US GDP per person

  • GDP per person ($PPP)

  • Growth in $PPP GDP per person

  • GNI per person ($US)

  • Growth in $US GNI per person

  • GNI per person ($PPP)

  • Growth in $PPP GNI per person

  • Value added in agriculture, %GDP

  • Growth in value added in agriculture

  • Value added in agriculture, $US per person

  • Growth in $US value added in agriculture per person

  • Value added in industry, %GDP

  • Growth in value added in industry

  • Value added in industry, $US per person

  • Growth in $US value added in industry per person

  • Value added in services, %GDP

  • Growth in value added in services

  • Value added in services, $US per person

  • Growth in $US value added in services per person

How do you set about evaluating the comparative strengths and weaknesses within a bloc of 52 countries (combined population of one billion and a combined GDP of 2.2 trillion USD) in a way that captures yet weeds out exogenous/systemic factors (e.g. 80s debt crises, 00s world recession, civil unrest) and provides a clear picture of each country’s economic and business prospects?

 

The goal here is to develop an empirical process by which the (macro) economic performance of Africa’s 52 countries can be evaluated, resulting in an Index that will express the performance of each country relative to the rest of the continent. This (general economy) Index will have component sub-Indices that express the performance of each country in ten major areas, as shown in the boxes at right.

 

Africa is ideal for this macroeconomics project because it is a continent that is quickly emerging as a promising business destination (witness the rapid rise in the mobile phone industry there, for example) and is at the same time plagued with a myriad of daunting challenges that demand innovation and thinking-outside-the-conventional-economics-box in devising ways to accommodate and even exploit these otherwise frustrating conditions (such as the challenge of paucity of data, the seeming intractable problems that a lack of sturdy social and political institutions presents, and so on).

 

No such index exists presently; certainly none that meets with wide acceptance. If successful, it would be a key tool that many organizations engaged with the continent - from business enterprises to development agencies to diplomatic missions - will find indispensable. What I propose here is comprehensive and rigorous, and it strongly emphasizes the advantages of a cross-country comparative evaluation of economic performance rather than current exclusive reliance on stand-alone country assessment.

 

Methodology - broad strokes

 

To be effective, the Index must meet certain requirements, which I consider to be crucial for any discourse involving the appraisal of African economies. While Africa’s countries cannot be taken to be exempt from general economic laws and principles, they nevertheless possess characteristics that must inform any analyses and evaluation involving them. One of these is that they are relatively unsophisticated societies and economic arrangements, and so - as far as is possible - the treatment of them must be correspondingly direct and clear to follow.

 

The Index and its sub-indices must therefore meet the conditions laid out below in two groups: the general and the specific.

 

General:

 

Simplicity: the Index should be clear and its components and derivation concise; a common complaint regarding appraisal methods involving developing countries is that they turn out to be more sophisticated than the data gathering process itself.

 

Acceptability: it should involve credible data and tangible/concrete indicators.

 

Credibility: the data source(s) should be seen as an external umpire with no stake or interests in the appraisal outcomes. This is important and would ensure that there isn’t country level data bias or “padding”.

 

Specifics:

 

The Index should also account for or avoid a number of pitfalls:

 

- Country level endogenous positive or negative factors that might heavily distort the picture of country performance; for example, civil unrest during the period.

 

- Exogenous/systemic positive or negative factors that might do similar; for example the 80s debt crises; 00s world recession; more recently, the commodities glut and price collapse; etc.

 

- Non-holistic excessive focus on isolated socio-economic indicators as measures of effectiveness; as much as possible, the Index should incorporate and reflect across-the-board socio-economic performance.

 

- Endogenous social/economic factors that pose significant but distorting advantages; for example, a particular country’s lucrative natural resources that might actually mask internal structural inefficiencies.

 

Meeting these challenges:

 

The following steps are taken to ensure that the Index methodology fulfills the conditions stated above.

 

Data and sources: All data is taken from the collection gathered and held by leading multilateral agencies like the World Bank, IMF, United Nations Conference on Trade and Development (for investment data), etc; country domestic data is everywhere avoided. The economic indicators will span across clear and specific macro and socio economic categories. This helps to keep country assessment to tangible levels. Where a country is assessed as performing well or poorly, it should be possible to see how that is so. I have used 96 adjudged “critical” economic and growth indices out of the near 1,000 that were available. Several of them have been formulated as ratios and growth indices to aid accuracy as explained below.

 

Ratios, not absolute size: The indicators incorporated into the index should be on ratios bases. That is, they should be expressed in per capita terms, or other appropriate ratio formulations such as % of GDP, etc. This would help limit the problem of country level endogenous advantages or disadvantages like gross economy size, that might hide, say, the absence of real change if expressed in absolute terms. So, for example, rather than use solely size of GDP outright for cross-country comparisons, GDP per person of population is applied, instead. That is a more accurate measure of country output; what is being appraised here is the efficiency with which the country deploys its resources and factors of production in producing the volume of GDP. Otherwise, countries like Nigeria and South Africa would stand out for the sheer volume of their GDP whereas, when that performance is rated across their populations, South Africa ranks higher than Nigeria. That ranking shows that economic productivity in South Africa is more efficient and robust.

 

The same applies to Foreign Direct Investment (FDI), Manufacturing Output, etc. For the purpose of country performance assessment, they are all better evaluated as a proportion of either the overall size of the economy (percentage of GDP) and/or its population (per person). In effect, ratios are the important parameters for comparison.

 

5-year averages, rather than yearly takes: Assessing country outcomes and performance for a stand-alone year could be misleading as there might be, say, one-off endogenous or exogenous events that distort the picture.

 

The common and conventional 5-year moving average approach to country evaluation is adopted here. The Index will incorporate 5-year moving averages which would seem to be a reasonable time frame for assessment accuracy on the one hand, and for country policy remedies to register their effects, on the other.

Macroeconomics of Country Performance

 

Empirical appraisal of 52 countries in Africa across 15 years, using 96 independent parameters, 100,000 data points and tons of analyses.

Select a button at right to access interactive charts and tables for all 52 countries:

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Comparative assessment: each country assessed relative to rest of the continent, not stand-alone. As mentioned earlier, this is one of the most important characteristics the Index need possess. The objective is to measure country performance relative to the rest of the bloc (Africa).

 

Movement; not static indicator: One purpose of the Index is also to illustrate country trend. Assessing countries on a yearly basis by their Index values would help to show in what direction a country is headed. Because the Index would have been evaluated by comparative country performance across the continent, it would already allow for different endogenous and exogenous factors to be smoothed, and so its value should be a fair country outcome assessment, given each country’s characteristics. The question would then be: where was country A and where is it now? Where is it likely to be tomorrow?

 

Results

 

The outcomes are as shown in the different web pages accessible by clicking on the boxes at right (or the top of this page), in the form of tables and charts. All the charts are interactive: you can explore how a particular country fares over the past 15 years by selecting the chart and clicking on the country name. Due to space limitations, it has not been possible to show charts for all of the 96 parameters across the 10 sections, but 2 parameter-charts for each section are available, as well as a summary chart for the aggregated sub-Index performance across all the parameters in a section. For each of the 10 sections, therefore, there are 3 fully interactive charts available, each involving all 52 countries; and a Ranking Table that summarizes the performance of the 52 countries for that sub-Index is shown as well.

 

For context, alongside each country’s outcomes, the charts also show the performance of other key economic zones of the world economy for that same parameter: USA, Europe, Latin America.

 

The chart below shows the Overall Performance Index for each of the 52 countries; and the table next to it is a ranking of the countries according to their Performance Index for 2015.

[This section is best viewed on a computer or tablet.]