GDP doesn't adequately translate to economic well-being in sub-Saharan Africa

07 August 2018 Authored by Consultancy.africa

The Boston Consulting Group (BCG) has released the latest edition of its Sustainable Economic Development Assessment (SEDA) scores for countries across the globe, and the results for Africa remain consistent with last year but continue to be mildly surprising, as Nigeria remains at the bottom despite being the largest economy on the continent.

BCG’s SEDA scores periodically invoke the well-threshed-out debate around GDP as an indicator of a country’s economic situation. Critics of the metric have essentially argued that it is a blanket assessment that hides individual inequalities, given that a majority of the GDP in developing countries is often contributed by a small group of wealthy businesses.

Mechanisms such as income per capita and the United Nations Human Development Index are some examples of efforts taken in the international community to come up with a more multidimensional and truly reflective method of measuring economic prosperity. BCG has its own solution to the problem.

SEDA well-being assessment

The SEDA is a holistic evaluation tool, developed by BCG to measure various aspects of economic stability. The consulting firm measures well-being of a country’s citizens across a set of ten indicators, which are broadly categorised into three categories, namely economics, investments, and sustainability.

In the economics dimension, for instance, the firm measures income, economic stability (inflation, etc), and employment levels. The investments dimension covers the level of access that citizens have to healthcare, education and infrastructure such as power, transport, sanitation, and technology.

The sustainability category covers the important social and environmental aspects of economic growth, such as income equality & distribution, the level of involvement amongst civil society, government effectiveness & accountability, and the quality of the environment and the protective measures therein.

 

Global well-being scores

SEDA includes a total of 40 indicators – a framework that it applies to data gathered from public records to score countries across the world. When applied to Africa, SEDA reveals just how sharp the contrast can be between GDP and a country’s overall economic well-being.

Nigeria has the largest GDP and the highest Gross National Income (GNI) in Africa by far, but has ranked amongst the bottom countries not only on the continent but across the world in the last two editions of BCG’s SEDA. With its population of nearly 180 million people, Nigeria scored a 25.5 on the SEDA index, well behind its neighbouring countries.

Not surprisingly, countries from economically lucrative East Africa registered amongst the best scores on the continent. Uganda, for instance, registered a score of 30.9, with its near-40-million population. Similarly, Ethiopia’s score was 32.5 for its population of nearly 100 million people.

 

A decade of SEDA scores

The report highlighted the juxtaposition between the economic scenarios in Nigeria and Eithiopia, wherein both countries began the decade at a very similar well-being score, but the former is now classified as an already weak country losing even more ground, whereas the latter is labeled by the report as ‘weak but improving,’ given its steadily improving scores.

Kenya continued the high representation for East Africa with a score of 35.4 for its near 50-million population, while Ghana registered one of the highest scores on the continent, with 40.2 points for its population of 27 million. This is perhaps to be expected, given the country’s position amongst the most politically stable countries on the continent. 

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