PJ Lehohla Statistician-General 24 October 2008

1. Industrial and Investment Development: Do statistics matter to Africa and Africans? PJ Lehohla Statistician-General 24 October 2008

2. The nature and posture of statistics in state administration Post-colonial Africa and its political forms Economic performance and statistics in Africa Political strife and statistics in Africa Post 1995 economy and statistical development in Africa Crisis in financial markets and collapse of economies International comparisons programme: Can industry and investment benefit from it? Issues addressed

3. Do Africans know anything about these? Can Africans do anything about it? Do these have an impact on Africans? Are Africans capable of measuring the impact of these? What is Africa’s and African industrial and investment strategy in dealing with the past and current crisis and for certain future ones? Crisis in financial markets and collapse of economies 1929, 1980’s, 1997, 2008

4. Environment for statistical practice

5. Policy in Africa is driven by impulse and not evidence Statistics law do not exist or are outdated in Africa Statistics are of service to the ministry and not state Statistics poorly funded At best known as a census office Dependent on aid Skewed priorities Staff capacity very poor Political profile non-existent Nature and posture of statistics in state administrations up to recent past

6. Establishment of a statistics office Establishment of training institutions Developing a work programme Economic Commission for Africa and its role Building statistical infrastructure in post-colonial Africa

7. Influenced by bipolar world of West and East Embroiled in military coups and counter coups for example Ghana Nigeria in 60’s Uganda Liberia 70’s Lesotho Somalia Ethiopia 80’s Onset of democracy post collapse of Berlin wall Unipolar world Resource rich economies and rapid economic growth Post-colonial Africa and its political forms

8. Poor economic performance Debt Structural adjustment prescriptions Destruction of health and education infrastructure Low investment High unemloyment No statistics Economic performance and statistics in Africa

9. Birth of democracy Broad based initiatives PARIS21 comes on the scene 1998 Catalytic role of censuses for democracy in post 1995 Africa Mozambique and international funding agencies 1997 International Comparisons Programme Africa (ICP Africa) and Purchasing Power Parities (PPPs) 2005 The General Data Dissemination Standards (GDDS) and the Special Data Dissemination Standards (GDDS and SDDS) 1999 The making of the Africa Symposia for Statistical Development (ASSD) 2006 Better Growth 6% The Current Financial Crisis. Can Africa handle it? Post 1995 statistical development in Africa

10. With democracy there is better prospect for statistical development in Africa Statistics in Africa are better positioned to date Paris Declaration for aid effectiveness sets the tone for statistical development All African countries are to run a census with the exception of Somalia The adoption of evidence linked Poverty Reduction Strategies The adoption of GDDS and SDDS have helped states to see the value of statistics Strong leadership from countries have raised hope Politcal support International comparison Programme The future

11. The ICP is a programme that seeks to produce national/country and or regional output net of exchange rate effects. It uses purchasing power parity (PPP). What is the International Comparison Programme (ICP)?

12. ICP 2005 What are PPPs? • Purchasing Power Parities (PPPs) convert values in local currency prices to “real” values in a common currency. • They are based on multilateral comparisons of prices between countries. • They permit the comparisons of real levels of output or income between countries, just as price deflators or a consumer price index allow real comparisons over time.

13. The ICP Governance ICP under auspices of the UN Statistical Commission ICP Executive Board Global Office World Bank Technical Advisory Group Africa (48 countries) Asia (23 countries) CIS (10 countries) LAC (10 countries) West Asia (11 countries) Eurostat/ OECD (46 countries) Note: Egypt and Russia participated in two regional comparisons.

14. Global Development economists and media analysts (poverty analysis, understanding development strategies, investment analysis) International organisations (IMF, World Bank, EU) International and national donors (analyzing policy effectiveness, funds allocations) National Policy makers (investment policy, fiscal policy) Central Banks (monetary policy to the extent that CBs can influence exchange rates) Businesses (use of comparative price levels to assess business opportunities, setting compensation) Who are some of the key users of ICP?

15. Carbon emissions per unit of GDP Energy use per unit of GDP GDP per number of workers GDP per hour worked PPP measures of financial Aid PPP measures of remittances Per capita comparisons for health, education Compare PPP GDP with volume measures –other economic variables

16. Applications of PPPs • System of National Accounts calls for real comparisons between countries to be done using PPPs • UNDP includes GNI measured at PPP in the Human Development Index. • World Bank uses PPPs to establish international poverty lines—1 $ per day poverty line • IMF measures size of economy and aggregate growth rates in PPP terms • EU allocates Structural Funds to member states

17. Other Applications of PPPs—national level • PPPs differ from sector to sector allowing price levels for components of GDP to be compared across countries • Use comparative ratios of consumption goods vs investment to GDP and relationship with economic growth • Evaluate living standards using PPP per capita expenditures for food, clothing, housing, etc. • Identify areas of competitive advantage

18. 146 Historical Global ICP Participation Number of countries participating • 2005 ICP requirements for participation • Each country must provide: • National annual average prices for a set of well defined goods and services; and • Estimates of its GDP compiled in line with the framework described in SNA93

19. Economies in the ICP 2005

20. Prices Prepare specification for products to be priced Determine survey framework Collect prices Data validation Compute PPPs within region Regional Results - By Stages Each region worked in parallel with Economies National Accounts 1. Ensure consistency with SNA 93 2. Allocate expenditures on GDP to the 155 ICP basic headings To produce regional results

21. Diversity of regions required different methods • Five regions • (plus Eurostat-OECD) • Have different: • Economies (size, structure) • Statistical capacity • Methodologies Africa Asia CIS South America Western Asia Eurostat-OECD

22. A snapshot of the world in 2005 Purchasing Power Parities • Size of the world • Economic well being • Relative living costs

23. New view of world economy World Share of GDP Based on Market Exchange Rates World Share GDP Based on PPP Low-income economies, 7% Low-income economies, 2% Middle-income economies, 19% Middle-income economies, 32% High-income economies, 78% High-income economies, 61%

24. The size of the world economy • * Excludes exporting countries. • Note: Regional totals do not include all ICP participants.

25. More countries included in the 2005 ICP Round China first time — India first time since 1985 More African countries. New methodology for housing, government, linking regions Data quality improved due to better statistical capacity of countries. Products priced differed from 1993 to 2005 ICP Rounds. System of National Account (SNA) changed from SNA 68 to SNA 93 in many countries. Previously extrapolated data were at GDP level, while new PPPs are computed at individual product/basic heading level. Reasons new PPPs differ from previous data in the WDI

26. People and their spending World Population (%) World PPP GDP (%)

27. Twelve economies account for two-thirds of world expenditures. The five largest are US, China, Japan, Germany, and India. Seven are high income economies: US, Japan, Germany, the UK, France, Italy, and Spain. And five are low- or middle-income economies: China, India, Russia, Brazil, and Mexico. The largest dozen

28. PPP- Based Actual Individual Consumption per capita, $ 30,000 25,000 20,000 15,000 10,000 5,000 0 Eurostat/OECD CIS South America Western Asia Asia/Pacific Africa Economic well being –PPP consumption per capita

29. GDP and its main components by regions

30. Price level indexes are the ratio of an economy’s PPP to its exchange rate with another economy Measure cost of living or cost of doing business Or simply the most expensive or cheapest places to travel Comparing price levels

31. 200 180 160 Japan 140 United States 120 Price level index (World=100) Fiji 100 80 Brazil 60 Congo, D.R. China 40 India Bolivia 20 0 GDP per capita Prices higher in rich countries Iceland Denmark Switzerland Norway

32. Price level index, GDP components by regions

33. Introduction • ICP-Africa: • Undertaken in 48 African countries • Capacity building dimension in addition to main outputs • Implementation of the program in a collaborative mode involving a broad range of partners • Integration of ICP into the usual activities of African NSOs: publication of PPPs yearly from 2006 up to the next round in 2011

34. Selected Results

35. ICP Africa 2005 Household Final Expenditure: Price level and expenditure share: Africans live to eat

36. Real GDP Shares(Africa = 100%) 21%

37. Ranking by Nominal and RealPer Capita Income Levels

38. Ranking by Nominal and RealPer Capita Income Levels

39. Real Individual Consumption Expenditure Shares(Africa = 100%)

40. Real Investment Expenditure Shares (Africa = 100%)

41. Price Level Indicesfor Selected African Countries(At GDP Level)

42. Price Level Indices for Investment Expenditure in Selected

43. Per Capita Actual Household Consumption in Selected

44. And the poorest economies ICP 2005 GDP per capita Consumption per capita • Congo Dem Rep • Liberia • Zimbabwe • Guinea Bissau • Ethopia • Congo Dem Rep • Liberia • Zimbabwe • Guinea Bissau • Ethopia

45. ICP 2005 Average PPP consumption across all PPP consumption per capita (US$) 35,000 1,000 20,000 5,000 30,000 25,000 World Average 20,000 6,096 15,000 10,000 5,000 0

46. ICP Africa 2005 GDP Per Capita (in “Afric”/PPP)

47. ICP Africa 2005 Nominal Vs Real Measures – GDP per capita

48. ICP Africa 2005 African GDP vs Price levels

49. ICP Africa 2005 Gross fixed capital formation

50. Questions?