* Better stats needed as race for cash heats up
* Big informal economies make calculations a challenge
* Lack of reliable figures a deterrent to investors
By Duncan Miriri
NAIROBI, July 3 African countries' rapid growth
over the past decade may have been the envy of many developed
economies, but their number crunchers have struggled to keep up.
That barely mattered when investors were desperate to find a
place to park their cash as more developed markets careered off
But now that a global recovery is increasing competition for
fund inflows, Africa can ill afford to pump out dodgy data from
poorly funded statistics bureaux or leave investors in the dark
about central bank policymaking.
Years of neglect, a lack of technical skills and large
informal economies make reliable data collection a huge task.
Failure to address these challenges could drive away
investors unable or unwilling to pay for their own research if
they cannot see an economy's true scale or potential.
"It is important for us to boost the quality of statistics
in Africa," said Mthuli Ncube, chief economist at the Africa
Development Bank (AfDB), which is working to improve its data
"The better the data, the better the information to
investors. So it is: more transparency, better data, better
investments," he said.
Nigeria showed in April what a review of out-of-date figures
can mean: it vaulted South Africa to become the biggest African
economy after rebasing its numbers to 2010 from 1990.
For the first time, it properly calculated the impact of
mobile phones and its huge "Nollywood" film industry.
Ordinary Nigerians were quick to point out that a more
accurate measure of the nation's gross domestic product didn't
mean that they were now richer or roads had fewer potholes. But
economists and investors say it could have a longer-term impact.
"There has been a tendency to underestimate economic
activity in Africa," said Razia Khan, Africa researcher at
Standard Chartered Bank. "This may have discouraged some
investment in the region, as investors would not have
appreciated the true size of those economies."
Some statistics shortcomings are glaring, creating headaches
for governments seeking to plan ahead and making it difficult
for companies to understand a market's prospects.
In Kenya, for example, more than 40 percent of births and
more than half of deaths are not captured by the national
registry, said Mwende Gatabaki of the Kenya Citizens and Foreign
Nationals Management Services. Kenya is now spending 5 billion
shillings ($57 million) to create a digital registry.
Statistics that do emerge can spark strong debate. The AfDB
raised eyebrows in 2011 when it said Africa's middle class had
risen to 350 million people in 2010, or about 34 percent of the
continent's total population, from about 126 million in 1980,
about 27 percent at the time. This was based on those living on
$2 to $20 a day.
Given that $2 a day or below is widely accepted as a poverty
indicator, many economists viewed the AfDB's middle class range
in that study as optimistic, saying any sudden sharp rise in
food or fuel prices could plunge people back into poverty.
Some economists suggested a more "African-appropriate"
measure of middle class would be those on $15 to $20 a day.
Hardened Africa investors have long learned to give official
figures short shrift, relying on their own close knowledge of
markets. But gathering this kind of data can be hard work and
Jonathan Oppenheimer, director of investment firm E
Oppenheimer & Son Ltd, said the lack of reliable data forced
investors to open local offices or make more frequent trips than
they would in other markets.
"You have to be on the ground," said Oppenheimer, whose $300
million Tana Capital, held jointly with Singapore-based Temasek,
invests in consumer firms across Africa.
Some, however, see the opacity of Africa as an attraction.
"That is what makes Africa compelling," said James Mworia,
chief executive of Nairobi-based Centum Investment.
"When markets are extremely efficient you can't get the sort of
returns we are getting."
Centum, which invests in listed firms, property and private
equity, has delivered returns that beat the benchmark Nairobi
bourse index by 19 percent over the five years to the
end of last March. The return on its private equity portfolio
was 42 percent in the year to March.
To achieve this, however, it has a team of number crunchers
sifting markets and other data, the kind of investment not
everyone can afford or wants to pay for.
While local analysis and the figures from corporate earnings
reports may trump GDP figures as a guide to the outlook,
reliable figures contributing to inflation and growth, or
consumer purchasing power, are valuable elements.
"BEHIND THE CURVE"
So too is greater clarity about policymaking by central
banks and other official institutions.
"People need to understand the basis on which a policymaker
is making a decision," said Bob Collymore, head of Kenyan mobile
phone operator Safaricom, a unit of Britain's Vodafone
"It is of the utmost importance because otherwise people
will take their money to markets where they will get that
transparency," he said.
That is particularly pertinent for Africa's central banks,
slowly emerging from the shadow of their governments.
"They are behind the curve," said Paul Collier of Oxford
University, which organises an annual conference for African
central bankers. Central banks, he said, were now more
authoritative but needed to learn that "they are there to
communicate with citizens not just (act) as technocrats advising
Only one African central bank - the offshore centre of
Mauritius - issues minutes after monetary policy meetings, which
offer an insight into how members voted. That, in turn, helps
investors see where rates could head next. Other central banks
are wary about following suit.
"If the minutes are issued with a view to improving the
public's understanding of discussions on the economy at the
meetings, then that is helpful," said one African central
banker, who asked not to be named.
However, he said, in Africa's often cliquey markets, "there
is a risk of the issues being personalised" and members might
worry about voting against a rate change if their names were
Nevertheless, more African countries are seeking to provide
greater clarity on their economies, and are seeing the benefits
of investing in better statistics data and more transparent
"We used to have different statistics from the World Bank,
from the IMF, the U.N., from everywhere," said Claver Gatete,
finance minister of Rwanda, which has won praise for reforming
its economy, left in ruins after genocide 20 years ago.
Rwanda has rebuilt its National Institute of Statistics and
issues data that now has broad acceptance, Gatete said.
In addition, "the central bank holds regular press
briefings, communicating every quarter," he said - although
central bank minutes remain elusive.
(Editing by Edmund Blair and Susan Fenton)