Better economic data can drive inclusive growth in Africa

Better economic data can drive inclusive growth in Africa

“In God we trust, everyone else must bring data,” said the statistician W. Edwards Deming.

The debilitating effect of Covid19 on the economies of Africa makes inclusive growth imperative, now more than ever, and there is a need for renewed efforts to drive prosperity. Around the world, economies that have grown rapidly- from the Asian Tigers to the Baltic states and others- show that sustained growth requires planned and strategic support for the private sector. The private sector is a critical stakeholder and partner in economic development. It generates more than 70% of jobs globally, produces most goods and services, and contributes over 80% of government revenue in low and middle-income countries through taxes. Across sub-Saharan Africa, developing the private sector has the potential to transition economies from low-income to middle-income status. National governments and development institutions typically understand the role of enterprise in eradicating poverty and have been actively deploying development resources to the private sector; providing funding, managing risks, and encouraging participation from other institutions.

However, for resource deployment to be effective in driving sustainable economic growth, Africa countries need to develop a coordinated and harmonised data-driven plan that directs, monitors and evaluates the flow of resources. The absence of a data-driven strategy, informed by proper and representative statistics, encourages misallocation of resources. A World Bank press statement explains the need for improving data collection in West Africa thus: “Regular population censuses, household surveys, data of critical social concerns and key economic statistics such as agricultural and enterprise censuses and surveys are key to inform the decision-making process, enable efficient allocation of resources, and assess the effects of development policies and interventions.”

Although efforts to improve data collection on the continent have improved, important and accurate data points to aid private sector development are still often missing. At the moment, there’s a marked paucity of accessible data to inform policy making for private sector development, particularly in Fragile States. This has resulted in several fragmented programs with varying agendas implemented by donor organisations, governments and domestic institutions. The lack of an integrated plan makes it difficult to aggregate functional data that provides quality insights. Every country requires a national roadmap for private sector development to anchor efforts toward a common goal. This is necessary because donors often have differing agendas and priorities that create multiple approaches to development, which combined, might be counter-productive. The lack of coherence is further compounded by the different political interests sponsoring programs and interventions.

Governments need to take the lead and build coherent data-driven strategies that support the private sector. To start, well-designed data collection efforts should be put in place to understand the different components of the sector and identify the needs of stakeholders. Data collection should be representative, otherwise, it shuns certain segments of the population due to remoteness or perceived irrelevance. Thus, well-designed efforts must be nationwide, providing accurate panoramic statistics that can be relied upon for inclusive policymaking.

Following this, data gathered can be converted into insights to determine pain points and inform decision making in terms of what efforts should be prioritized and the sequence of interventions to ensure that efforts are properly aligned.

To ensure that a coordinated strategy succeeds, a proper monitoring and evaluation plan needs to be integrated into the strategy. Monitoring provides frequent information on the status of the plan relative to the goal, allowing a nation to measure progress at different stages and make requisite adjustments where necessary. With accurate results-based evaluation, a nation is able to explore causality to delineate if outcomes being achieved are a result of the strategy. Monitoring and evaluation systems must be baked into data-driven strategies for private sector development to ensure continuous and far-reaching results.

Our work and experience providing strategic private sector development advice to governments at Entrepreneurial Solutions Partners provide some learnings in this wise:

  1. Most governments donot have a clear data-driven private sector development agendas informed by the needs and perspective of the real economy i.e actual human beings and small and medium-sized businesses.
  2. Lack of coordination (and sometimes competition) from both donors and within governments lead to suboptimal /misallocation of (limited) resources supporting a consulting industry that lives on (micro) studies on all kind of topics and driving competition from different agencies /institutions within the same government to secure resources
  3. Lack of data-driven hamper effective monitoring and evaluation efforts of private sector development.

The absence of a data-driven roadmap for the private sector in African countries means that economic growth on the continent is subject to the whims of key players. To ensure sustained economic growth, governments must tap the knowledge of private-sector experts to design coordinated strategies, starting from data collection to analysis, strategy development, implementation, and monitoring and evaluation. If donors want to be more helpful, they should mutualize their efforts to i) Build and reinforce local capacity to collect private sector data on a regular basis; ii) Favor one time coordinated private sector data collection exercises versus dozens of small studies on similar topics, iii) Coordinate their actions better and align behind one shared agenda /roadmap.

On the other hand, governments should i) Appreciate the need for private sector data in drafting private sector policies; ii) Build the capacities to collect these type of information on a regular basis to inform policies and to measure and evaluate the impact of their actions and reforms on the real economy; iii) Support and encourage greater coordination from within and from donors. Clear, shared and coherent strategies do not remove execution risk but tend to reduce it. Governments and donors alike then still do the hard part: execute.

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