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

07 August 2018 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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Market trends that are emerging in a post-digital African economy

15 April 2019 Consultancy.africa

The discourse is now moving to a post-digital world, where the differentiating factor among a sea of digitalised firms will become the capacity to deliver personalised services based on individual customer needs – among other things – according to a new report from global management consultancy Accenture.

Businesses in Africa have been navigating a period of rapid digitalisation recently. The continent is set to have as many as 1 billion internet connections over the next two years, which means that the population is set to be wired in. The business environment has been looking to capitalise on this digital market.

While the bigger firms have been quick to adopt digital technology within their operations, smaller businesses were initially weary due to the high costs involved in digital transformation. Nevertheless, a number of these firms are realising the value of digital integration, and Accenture is looking towards the next step.

As per a new report from the firm, most businesses are on their way to digitalisation, which is restoring a certain uniformity to the market. In this context, digitalisation is no longer the differentiating factor. Businesses must now focus on developing mechanisms for customer relationships, among other enhancements.

Market trends that are emerging in a post-digital African economy

The technology that will take centre stage in the new scenario includes distributed ledger technology, artificial intelligence, extended reality and quantum computing (DARQ). Such technologies allow firms to “reimagine entire industries”, as per the firm’s analysis, and nearly 90% of firms are already experimenting with such technology.

Another key trend that is emerging in the post-digital world is the need for cyber security. According to Accenture, cyber security is no longer an individual effort from companies, but must be a collaborative effort across all stakeholders in any given sector that has digitally integrated.

“Ecosystem-driven business connections increase companies’ exposure to risks. Leaders recognise that just as they collaborate with entire ecosystems to deliver best- in-class products, services, and experiences, security must join that e­ffort as well,” says the firm.

“Technology is creating a world of intensely customised and on demand experiences, and companies must reinvent their organisations to find and capture those opportunities as they come,” adds the firm, urging that meeting customer needs is now more about speed than about service.