THE latest edition of multinational professional services network PwC’s bimonthly Global Economy Watch has found that African economies could receive a windfall of £23bn if each economy applied similar governance reforms equivalent to those made by Cote d’Ivoire since 2013.
The continent-wide economic analysis modelled the performance of each country across six of the World Bank’s Worldwide Governance Indicators (2013-17), which covers aspects such as regulatory quality, rule of law and government effectiveness.
The analysis has found that if each African economy made an improvement to governance equivalent to that made by Côte d’Ivoire over the past four years, these gains would be worth around $23bn if realised across the continent.
The countries with the largest potential gains are those with a comparatively high GDP per head but a poor track record on governance. Accordingly, oil-rich Libya and Equatorial Guinea would see the greatest increase, with each person gaining an additional $400 and $200, respectively.
Those with lower GDP per capita, such as Niger and Malawi, would see a smaller improvement, despite their governance rank being below the average for the region. By contrast, economies like Rwanda, which have made similar improvements to Côte d’Ivoire, would also only realise a small benefit, with greater gains made through further diversification of their economies.
Regional differences are significant
The forecast also notes strong regional differences in economic growth across the continent. Economic growth has been particularly strong in East Africa (at around 3 percent a year since 2013). Central Africa, by contrast, saw annual real GDP per capita fall by an average of 1.3 percent over the period. North Africa and the Southern region experienced very sluggish growth (of 0.4 percent and 0.8 percent a year respectively), while West Africa saw faster growth of 1.9 percent a year.
Mike Jakeman, senior economist at PwC UK says,‘Given that Africa contains more countries than any other land mass on earth, it is vital that we consider each economy in its own terms. Economic performance has varied wildly in recent years, but the correlation between strong economic growth and improvements in governance suggests a way for all of Africa to grow more quickly.
‘It is important to acknowledge the real benefits that governance reform can bring. Improved governance can also help countries identify other opportunities for growth. Although we should move away from a single narrative about the African economy, we can also acknowledge areas of mutual interest and benefit across regional economies.’