Posts Tagged ‘gdp’

The African Informal Sector: GDP Contribution vs Scale of Human Impact

The informal economy in sub Saharan Africa (SSA) tends to be measured as a share of GDP, counting its contribution to the national economy. By this metric, Nigeria has the most economically empowered informal sector, contributing over 60% to the GDP. On the other extreme, South Africa, has one of the smallest contributions to the GDP from the informal sector, but the highest unemployment rate.

Yet both Nigeria and South Africa are neck to neck when it comes to the title of “largest economy on the African continent”, or place in the top 3. So what does this tell us about these IMF metrics being used to measure the informal sector?

The human impact story is missing from the equations

South Africa might have one of the smallest informal sectors in terms of contribution to their GDP, but the number of people generating their income from the informal sector is almost as large as Tanzania, whose informal sector contribution is more than double, second only to Nigeria.

WIEGO’s research, from which the above employment figures are drawn, highlights the social impact and scale of the informal sector in human terms. Already, the informal sector’s employment opportunities are growing faster than the much smaller formal sectors in most major African economies. New graduates and working age adults still need to find a way to put food on the table.

Its not enough to simply look at GDP contribution when it comes to the complex value embedded (and untapped) in the informal economies of these nations. Where social safety nets are scarce, and systems variable in their functioning, the human and social impact of the informal cannot be ignored in development planning and policy design.

Internet penetration by population in African countries: mapping opportunity

Since we’re currently working on a market entry exploration study for Village Telco in Kenya, I’ve been taking a deeper look at the spread and adoption of internet use.  It struck me that the landscape is actually far more fragmented than it used to be – things have been changing so fast that gone are the days where you could look at the situation in one Sub Saharan country and extrapolate it reasonably accurately for many others.  This is particularly true for ICT as cheaper rates and smarter devices impact some locations before diffusing to others. While playing around with the numbers, some interesting observations emerged:

Data Source: www.internetworldstats.com (click for large) Chart: Semacraft Consulting Partners

I sorted the internet usage numbers by size of country – the chart above shows the top 10 countries in Africa by percentage of total population i.e. almost 15% of the continent’s people live in Nigeria, and then added on what percentage of that country’s population was online.

Data source: www.internetworldstats Chart: Semacraft Consulting Partners

The findings were surprising when you compare to this chart where I’ve sorted the countries by percentage of the population accessing the internet. (I’ve removed the French island Reunion  which showed up in 3rd place nudging Nigeria out of the top 5). Their proportion of the continent’s population is seen next to them.

The only countries that fall in the top ten – both by total population and percentage of population on the internet – are Nigeria, Egypt, South Africa and Algeria.  I had started out thinking that if I looked at internet penetration rates by population it would give me some clues about where the internet was being most rapidly adopted (and then perhaps, why). But instead, I found myself surprised by the gaps instead – Tanzania being the unexpected. The reality may be entirely different in Ethiopia and the Democratic Republic of Congo.  Maybe if the data is looked at again separating North African countries from Sub Saharan, a different set of clusters will emerge.  I’d also like to remove all the little island nations to see what happens.

Update:  I decided to take a look at the GDP based on PPP per capita for 2011 (IMF data) for selected countries (based on the earlier two sets) just to see if there were any correlations between that and the internet.

Now this starts to get even more interesting:- Morocco, Nigeria and South Africa show internet adoption figures very different from their relative position in the comparative economy chart. You’d think that greater economic strength would demonstrate a higher internet adoption and vice versa. But South Africa’s internet adoption is  too low compared to its economic standing while Morocco’s is outstanding compared to its economy.  In the East African region, Tanzania is still the internet laggard compared to its neighbors Uganda and Kenya.