Official statistics put Africa’s GDP at about 1.5 trillion dollars. However, Mthuli Ncube, chief economist and Vice President of the African Development Bank (AfDB), told CNBC Africa during the bank’s annual meeting in Kigali, Rwanda’s capital, the figure is larger.
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“Many countries have basis that are out of date. Re-basis is done in a way that we measure a countries economic activities,” Mthuli explained.
Base-year analysis expresses economic measures in base-year prices to eliminate the effects of inflation. By eliminating inflation, the trend of economic growth is more accurate, as price level changes are accounted for.
“We have a program for helping countries build their statistical capacity to provide better statistics to inform policy decisions and provide information for business and citizens in general,” Mthuli said.
African countries are revising their economic statistics, measuring for the first time in decades growing sectors such as the banking industry. Earlier this year Nigeria recalculated the way that it reports GDP, a move that made it surpass South Africa to become the biggest economy in the continent.
He expressed hope that African countries will also re-base their economies as this will change some of the indicators that will make the region look at how to work towards solutions to the extreme poverty in the continent.
“From the work we are doing in re-basing the GDP, we think the final figure for Africa’s economic size will be closer to 2 trillion dollars, if not higher,” said Mthuli.
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Economic Commission for Africa (ECA) center for statistics reported in a survey conducted in January 2014 that seven African countries still base on 1990 or earlier years, 10 countries have base years between 1991 and 2000, and a further 19 have base years between 2001 and 2005.
The need for African countries to rebase their GDP in order to encompass sectors that aren’t currently included is pressing.
BY: ELAYNE WANGALWA