…By Nnimmo Bassey…
The roaring economic growth rates across Africa is the stuff that fables are made of. It is the sort of spin that leaves the heads of the subjects spinning while the reality tells a contrary story. It is indeed rather poetic that just as the rising economic indices are being announced the rising poverty profiles stand out defiantly and cannot be swept under the carpet, no matter how thick.
With the major news magazines trumpeting the African miracle of unmitigated economic growth the phrase “Africa Rising” has become a mantra. Consider the claims from The Economist illustrating that there has been major gains in human development in Sub-Saharan Africa: “Secondary-school enrollment grew by 48% between 2000 and 2008 after many states expanded their education programmes and scrapped school fees. Over the past decade malaria deaths in some of the worst affected countries have declined by 30% and HIV infections by up to 74%. Life expectancy across Africa has increased by about 10% and child mortality rates in most countries have been falling steeply.”
The statistics are the stuff that make for good speeches on soap boxes. For example there are three phones for every four Africans, although some individual own up to three or four phones due to unpredictable service from the network service providers. We are told that by 2017 there will be a five-fold increase over ten years of television set ownership with a third of the households having the picture box. We are also told that Nigeria produces more movies than the United States of America does.
The Economist sees this leap as the outcome of booming economies on the continent. It claims that Africa is the fastest growing continent and that “over the past ten years real income per person has increased by more than 30%, whereas in the previous 20 years it shrank by nearly 10%.” It is projected that the favourable economic climate is attracting more and more foreign direct investments (FDI), having already risen from $15 billion in 2002 to $37 billion in 2006 and $46 billion in 2012. Moreover, orthodox economic analysts opine that African GDP will rise by as much as 6% a year over the next one decade. The fact that the influx of FDIs has also meant massive land grabs, deforestation, irresponsible extractive activities and investment in questionable projects.
These optimistic GDP projections mask the reality on the ground. This shows even in official statistics. An example is a joint study conducted by the World Bank (WB) and the Nigerian Bureau of Statistics (NBS) on poverty in Nigeria. A blog on the report written by Mark Roland Thomas opens with an oblique statement that “The World Bank and the Nigerian Bureau of Statistics (NBS) have recently completed an in-depth analysis of Nigeria’s last set of household survey statistics, which were compiled in 2010 but until recently not fully understood.” (Emphasis supplied).
We must ask why it took the WB and the NBS so long to comprehend? It appears it was the stark contradiction between the huge growth rates being peddled and the “stubbornly high” poverty rates in Nigeria.
A report, “African Economic Outlook,” by the African Development Bank (AfDB) came out with a conclusion that the average Nigerian has no difficulties agreeing with. The report showed that the number of people living below the poverty line in Nigeria has increased from 65.5 per cent in 1996 to 69 percent in 2010 and that income disparity between classes of Nigerians had widened. The time span covered by the study includes the last four years of military rule and ten years of post-military rule by political elites.
The WB and NBS study calculated poverty rates in Nigeria by treating children as adults in the defining the consumption needs that underpin the poverty calculations. By this method, the conclusion was reached that poverty fell from 64 percent of the population in 2004 to just less than 63 percent in 2010.
Although the AfDB report angered the Federal Government of Nigeria, which faulted the report as untrue and politically motivated, an editorial in the Daily Trust Newspaper, saw the figures in the AfDB report as not differing “markedly from those supplied by the Central Bank of Nigeria which drew the same conclusions. The National Bureau of Statistics presented even worse figures covering the period. No matter how offensive these conclusions are to government, the general public sees no problem in agreeing with all the negative assertions concerning the nation’s level of development.”
Measuring economic growth in Nigeria and other countries of Africa cannot be an easy task. This is one reason why economists can really be challenged when attempting to analyze whatever data they may have collected. Besides the fact that a bulk of the population are engaged in the informal sectors of the national economies there are yet others who are in the hidden or underground economies. When we speak of underground economies we are not referring to criminal setups, we are talking of an economic sector with peoples depending on their wit, blood and knuckles for survival. Those who labour in this realm include domestic workers, informal street-corner-construction-workers, street hawkers, etc.
These are the people whose economic struggles are undocumented, unsupported and unobserved by the state. This economy runs without public electric power supply, no water supply, few social amenities and sometimes no all-weather access roads. They live in some of the most degraded and polluted environments and endure living conditions that make life expectancy a mere gasp.
Sadly the mantra of “Africa Rising” has been repeated so often that it has become a pacifier for policy makers and their advisers. It is profitable for them to swallow this tale from head to tail because by these claims they can bury their heads in the sand while the people are blown away by storms as they battle to keep their heads above water.
The Africa Rising refrain is a lullaby that lulls leaders to sleep and allows rabid exploitation of the continent’s natural resources. Our roaring economies are heavily dependent on export of raw materials at prices that are externally determined and are thus vulnerable to the sudden jolts. Dependence on raw material export has its roots in colonial economic systems where cash crops to meet external needs were promoted over food crops for local production and consumption. Today, the economies are booming, at a great cost to the environment and to the people at the wrong end of the stick.
Nigeria’s GDP growth rate has been up to 8% in the last decade, but this depends on an income structure of which 95 percent comes from the export of oil. Indeed petroleum exports make up a whopping 75 percent of government revenues.
Gross Domestic Product (GDP) has been incorrectly used as a means of gauging the economic health and wellbeing of nations since the end of the Second World War. It gives nations and citizens a false sense of wellbeing as is seen in the current fast track “growth” across Africa whereas the peoples are stuck in the rut of want and sundry crises.
There are reasons why the use of GDP has continued despite the general knowledge that it is a defective measure. One of the reasons is that it allows for the masking of the factors that matter most to citizens. For instance, it allows government expenditure to be equated to economic output and does not take care of the inefficiencies related to such expenditure. In order words, in a country where multiple contracts are awarded for particular projects such expenses would add up for growth even if a bulk of the cash went down the drain or into corrupt pockets.
The GDP measure allows political leaders to gloss over the political and economic freedoms deficit faced by the people and the state of human and social capital as well.
The rising growth that is often applauded does not take into account externalized project costs. For instance, environmental pollution and security problems are factored out. If the environmental pollution in the Niger Delta were to be factored into the computation of Nigeria’s GDP it is clear that the rates would drop significantly. Presumably pollution could be seen as job generation opportunity, after all someone would be hired to clean the mess. Right?
The report of the assessment of the Ogoni environment by the United Nations Environment Programme (UNEP) submitted to President Jonathan on 4 August 2011 indicated that $1billion would be needed to set up the structures for the cleanup of the environment and that the clean up itself would take up to 30 years. Observers believe up to $100 billion would be needed for the actual start up of the clean up of the Niger Delta.
According to Joseph Stiglitz, “Just as a firm needs to measure the depreciation of its capital, so, too, our national accounts need to reflect the depletion of natural resources and the degradation of our environment. Statistical frameworks are intended to summarize what is going on in our complex society in a few easily interpretable numbers. It should have been obvious that one couldn’t reduce everything to a single number, GDP. The report by the Commission on the Measurement of Economic Performance and Social Progress will, one hopes, lead to a better understanding of the uses, and abuses, of that statistic.”
The obvious implication of keeping a blind eye to externalized costs is that these are borne by the people and the environment – a form of subsidy that is scarcely ever spoken about or considered in the economic matrix.
The GDP also uses market prices to value goods and services, but as was seen by the sudden economic crises that occurred from 2008, many of such criteria were false measures, as they did not reflect the reality of the economic and financial bubbles that were set to burst. Neither do they reveal the huge economic disparities between the rich and the poor in society. And because GDP concerns itself with gross products it does not in reality give indications of the wellbeing of the population. Some analysts think that if the GDP were to be divided by the country’s population it would give a better measure of the wellbeing of the people of such countries.
When other measures such as the Human Development Index (HDI) are used to measure the wellbeing of a nation a strikingly different picture emerges. The HDI places people at the heart of the measure of development and, we dare say, progress.
The HDI measures progress in three basic dimensions of human development, namely: a long and healthy life, access to knowledge and a decent standard of living. A long and healthy life is measured in terms of life expectancy while access to knowledge is measured by the average number of years of education received by citizens that are up to 25 years of age and also by the expected number of years of schooling for school-age children. The Gross National Income (GNI) per capita gives an indication of a decent standard of living.
According to the UNDP, in 2011 Nigeria ranked 156 out of 187 countries and territories in the world in the HDI value. It moved one rank from its position the previous year. From 2005 to 2011 the country’s HDI value increased by an average of 1.1 per cent per year. Although the HDI also masks inequality in the overall distribution of human development it nevertheless tells a more realistic story about the quality of life and wellbeing of the people than the GDP.
The UNDP assessment of Nigeria in 2012 ranked her 153 out of 186 countries and territories, stating that the nation was not making remarkable progress according to the measures. African countries that have been adjudged as making good progress since 2000 include Angola, Burundi, the Democratic Republic of the Congo, Ethiopia, Liberia, Mali, Mozambique, Niger, Rwanda, Sierra Leone and Tanzania.
In 2012 average life expectancy in Nigeria stood at 52 years while 68% of Nigerians lived below $1.25 daily. The nation spent less than 2 per cent of her annual budget on health other health. All these despite that fact that the GDP showed the economic growth rate for 2012 was about 7 per cent.
It is obvious that a better measure is needed to gauge progress made in terms of national wellbeing and this by keeping the people the centre of such calculations. Perhaps we should take a cue from Bhutan and give a shot at using the Gross National Happiness (GNH) index.
GDP is the ultimate illusion and we do ourselves much harm by sticking to it.
This article was first published in November 2013 by the Perspectives, a publication of the Heinrich Boll Foundation