analysis and major findings - african development bank...14 analysis and major findings 3.1 overview...

Preface

ANALYSIS AND MAJOR FINDINGS

PART3

14

Analysis and Major Findings

3.1 OVERVIEWPurchasingpowerparitiesareusedtocontrastestimatesofthesize

ofacountry’seconomy,itsaggregatewelfare,thewell-beingofits

residentsandhowitspricescomparewiththoseinothercountries.

Theresultsof2005ICP-Africaarepresentedbelow.Thedescrip-

tiveanalysiscoversgrossdomesticproduct(GDP)andsomeof

itsmain components: actual final consumption expenditures

(AFCEs), individual government consumption expenditures

(IGCEs), collective government consumption expenditures

(CGCEs)andinvestment.Africaregionalvaluesincludeonlythe

48Africancountriesthatparticipated in2005 ICP-Africa.The

mainresultsarepresentedintablesandfigures.Themainindi-

catorsusedarepricelevelindices(PLIs)andpercapitaGDP,its

expenditurecomponentsandtheirexpendituresharesinterms

ofthetotalAfricaregion.

Figure 1: Real GDP By Country in Billion AFRIC, 2005

20

0

40

60

80

100

120

140

160

180

Sou

th A

frica

Egy

ptN

iger

iaM

oroc

coS

udan

Tuni

sia

Ang

ola

Ken

yaE

thio

pia

Tanz

ania

Cam

eroo

nC

ôte

d'Iv

oire

Uga

nda

Gha

naB

otsw

ana

Sen

egal

Gab

onM

adag

asca

rC

ongo

, Dem

ocra

tic R

epub

licC

had

Bur

kina

Fas

oM

ozam

biqu

eZa

mbi

aM

aurit

ius

Equ

ator

ial G

uine

aM

ali

Con

goB

enin

Nam

ibia

Gui

nea

Mal

awi

Nig

erR

wan

daZi

mba

bwe

Sw

azila

ndM

aurit

ania

Togo

Sie

rra

Leon

eC

entr

al A

frica

n R

epub

licLe

soth

oD

jibou

tiC

ape

Verd

eLi

beria

Gam

bia

Gui

nea-

Bis

sau

Com

oros

Sao

Tom

e an

d P

rinci

pe

Note: For more details, see Table T10 in part 6. Burundi is not shown because it did not supply national account data.

15

AnalysisandMajorFindings

PPPs, real expendituresandper capita real expenditures canbe

computedforallthe155basicheadingsandatanydesiredlevel

ofaggregation.However,resultsatthedisaggregatedlevelarein-

clinedtobelessreliable.Forpurposesofdisseminatingtheresults

toawidevarietyofusers,abalancehasbeensoughtbetweenpro-

vidingasmuchinformationaspossibleandensuringadegreeof

reliabilityof the results.Thereforethisanalysisconcentrateson

thehighlightsofthe results.Researchersandother institutions

interested in conducting further analyses of the results are re-

ferredtopart4,whichcontainsdetailedtables.

3.2. LARGEST AND SMALLEST ECONOMIES GDPisthemostcommonlyusedmeasureofthesizeofacountry’s

economy.TheICPprovidesanopportunitytocomparethesizeof

heterogeneouseconomiesonthebasisoftheirpurchasingpower

andtorankcountries’contributionstoaregion’soutput.Allreal

expenditureresultsareexpressed intermsofanotionalAfrican

regionalcurrency(AFRIC).

ThetotalsizeoftheAfricaneconomyisAFRIC839.2billion(US$

1856.3billion)5.AsFigure 1 indicates,SouthAfrica is the largest

economywitharealGDPofAFRIC179.7billion(US$397.5billion),

closely followedbyEgypt andNigeriawith a realGDPofAFRIC

169.0billion($US373.7billion)andAFRIC111.81billion(US$247.3

billion),respectively.Afterthetopthreecountries,Figure1shows

asignificantgapinrealGDPfortheremainingcountries.Morocco

ranksfourthwithlessthanone-halfofNigeria’srealGDP.Thefour

countriesfollowingMoroccoareSudan,Tunisia,Angola,andKenya

witharealGDPbetweenAFRIC21.7billionandAFRIC36.0billion.

Theremaining39countrieshavearealGDPoflessthanAFRIC20

billion,with33countrieshavingarealGDPoflessthanAFRIC10

billion,rangingfromAFRIC9.3billionforBotswanatoAFRIC0.1

billionforSãoToméandPríncipe.

SouthAfrica is the largesteconomy inAfrica,whetherGDPfig-

uresareexpressedinU.S.dollarsusingtheexchangerateorinreal

termsusingPPPs.SouthAfricaandEgypt,thetwolargestecono-

mies,accountfor41percentoftheAfricaregionin2005.

5 ThefiguresdonotincludeAlgeria,Libya,Somalia,EritreaandSeychelles,

whichdidnotparticipateinthe2005ICP-Africaprogram.

SouthAfricaisthelargesteconomyinAfrica,whetherGDPfig-

uresareexpressedinU.S.dollarsusingtheexchangerateorin

realtermsusingPPPs.SouthAfricaandEgypt,thetwolargest

economies,accountfor41percentoftheAfricaregionin2005.

SouthAfricaandEgyptarealsothelargesteconomiesintheAf-

ricaregionwhenusingPPP-basedGDP,accountingfor21percent

and20percentrespectively(seeFigure2a).Theyarefollowedby

Nigeria (13percent),Morocco (6percent)andSudan(4percent).

Thesefiveeconomiesaccountfornearlytwo-thirdsoftheAfrica

region’sGDPwhenitismeasuredinPPPs.Fourcountries(South

Africa,Egypt,NigeriaandSudan)aremineralresources-producing

countriesandareamongthemostpopulatedcountriesinAfrica.

Whenusingamarket-basedexchangerate,thesamefivecoun-

tries (SouthAfrica,Egypt,Nigeria,MoroccoandSudan)account

for approximately the sameshareof theAfrica region’sGDPas

whenPPPs are used. Significant changes in the share occur for

Egypt and South Africa, however. As Figure 2a and 2b show,

Egypt’sweightintheAfricaregion’saggregateGDPis20percent

whenusingPPPsbutonly12percentwhenusingthemarketex-

change rate.Measuring theeconomyofEgypt inU.S.dollarsat

market exchange rates underestimates its weight. Conversely,

SouthAfrica’sshareintheAfricaregion’sGDPfallsfrom29to21

percentwhenitsGDPisconvertedusingPPPsratherthanmarket

exchangerates.

South Africa 21%

Egypt 20%

Sudan 4%

Rest of Africa 36%

Morocco 6%

Nigeria 13%

Figure 2a: Africa, Shares in Real GDP, 2005

16

Teneconomieswithrelativeindividualsharesvaryingfrom1to3.5

percentaccountfor20percentoftheregion’soutput:Tunisia(3.5

percent); Angola (3 percent); Kenya (2.6 percent); and Ethiopia,

Tanzania,Cameroon,Coted’Ivoire,Uganda,GhanaandBotswana

(about1percenteach).Theremaining33countries,eachwithless

than 1percentof the region’soutput,accountcollectively for 14

percentofthetotaloutput.

3.3. RICHEST AND POOREST COUNTRIES RealGDPpercapitaistheusualyardsticktodistinguishbetweenrich

andpoorcountries.PercapitaGDPremovesthedistortioncreated

bypopulationsizeandallowsacomparisonofthestandardofliving

acrosscountries.RealGDPpercapitameasurestheflowofgoods

and services that are available to countries to contribute to their

economicwellbeing.Figure3illustratesthedistributionofrealand

nominalpercapitaincome(inAFRICandU.S.dollars)bycountry.

AsFigure3shows,whenrealGDPpercapitaisused,thefiverich-

esteconomiesareGabon,Botswana,EquatorialGuinea,Mauritius

South Africa 29%

Nigeria 14%

Sudan 4%

Rest of Africa 34%

Morocco 7%

Egypt 12%

Figure 2b: Africa, Shares in Nominal GDP, 2005

Note: For more details, see Table T9 and Table T10 in part 6.

andSouthAfrica.Fourofthesefivecountrieshaveasmallpop-

ulation—between 1 and 1.7million—and their share in real terms

oftheAfricaregionaloutputvariesfrom0.68to1.1percent.The

Africaregion’saveragerealGDPpercapita isAFRIC1,016 inPPP

terms.Thirty-five,closetothreequarters,ofthecountrieshave

a realGDPper capita that is smaller than the regional average.

One-quarterhaveaGDPpercapitaof lessthanAFRIC360,half

havearealGDPpercapitaoflessthanAFRIC620,and34econo-

mieshavearealGDPpercapitaoflessthanAFRIC1,000.Astrik-

ing feature of these data is a huge dispersion,with the richest

economyhavingapercapitarealGDPofmorethan45timesthat

ofthepoorest.Onaverage,oil-producingcountries6havearealper

capitaGDPofAFRIC1,917,whichishigherthannon-oil-producing

countriesbyAFRIC970.Thisdifferencecanbeattributedtoapure

incomeeffectarisingfromhighwindfallrevenue.Muchmorevari-

ationexistsamongoil-producingcountriesthanamongnon-oil-

producingones.7

ComparingthecountriesonthebasisofGDPpercapitainnominal

termsmaycauseachangeintherankofacountrydependingon

whethertheexchangerateunderstatesoroverstatesthepurchas-

ingpowerof itscurrency.Asshown inFigure3,sevencountries

(Cameroon,Djibouti,Mali,Nigeria,Sudan,CongoDemocraticRe-

publicandSãoToméandPríncipe)havethesamerankingirrespec-

tiveofwhetherGDPpercapitaisexpressedinU.S.dollarsorinreal

termsusingPPPs.Elevencountries(Angola,Burundi,Botswana,

Gabon,Morocco,Mauritius,Niger,Senegal,Swaziland,Tunisiaand

SouthAfrica)haveanincreaseordecreaseofonepointfromthe

comparisonofGDPper capita inU.S.dollars to thatofGDPper

capitameasuredbyPPPs.Therankingsoftherestofthecountries

varybytwotomorepointsfromonecomparisontotheother.

Egyptpoststhebiggestrankgainandisranked13thwhentheper

capitaGDP isexpressed inU.S.dollarsbutfalls tothe7thplace

6 Oil-producingcountriesintheregionareAngola,Cameroon,Chad,Côte

d’Ivoire, Egypt, Equatorial Guinea, Gabon, Mauritania, Nigeria, Congo and Sudan.

Note thatAlgeriaandLibya, twomajoroilproducers inAfrica,arenotamongthe

countriessurveyedfor2005ICP-Africa.

7 Pooreconomicgovernanceisapossibleexplanationforsuchahighvari-

anceamongoil-producingcountries.

IntermsofGDPpercapita,Gabon,Botswana,EquatorialGuin-

ea,Mauritius,SouthAfrica,Tunisia,EgyptandNamibiaarethe

wealthier African countries. The poorest countries are Demo-

cratic Republic of Congo, Liberia, Zimbabwe, Guinea-Bissau,

EthiopiaandNiger.

17


whenthepercapitaGDPisexpressedinrealterms,reflectingits

relatively lowprices. Indeed,althoughEgypt isamiddle-income

country, it is the cheapest country in thesample,with the low-

est PLI (aswill be further elaborated in section 3.3). Egypt ties

with Ethiopia, which is much poorer. The difference in Egypt’s

rankingprovidesanillustrationoftheextenttowhichPPP,rather

thanmarketexchangerates, isregardedasabettermeasureof

therelativecostoflivingbecausePPPmeasuresarebasedonthe

goodsandserviceshouseholdscanbuywiththeirdomesticcur-

rency.Egypt’slowPLIarisesinpartbecauseofinterventionsinthe

marketforgoodsandservices.

3.4. MOST AND LEAST EXPENSIVE ECONOMIES Acountry’sPLI isaratioobtainedbydividingitsPPPbytheex-

changerateofitscurrency.Itisgenerallyexpressedasapercent-

age.PLIsforagivenproductoraggregateindicatethenumberof

unitsofAFRICneededtobuythesamevolumeoftheproductor

aggregateineachcountry.Theseindicesprovideacomparisonof

thecountries’overallpricelevelswithrespecttotheAfricaregion-

alaverage.Thus,aPLIgreaterthan100meansthatthecountry

pricesarehigherthantheregionalaverage,andaPLIlowerthan

100meansthatpricesarerelativelylowerthantheregionalaver-

age.Figure4providesarankingofallcountriesfromthemostex-

pensivetotheleastexpensive.Inotherwords,ifapersonbought

precisely the samebasket of goods and services in each of the

48participatingcountries intheAfricanregion,heorshewould

spendthemostinCapeVerdeandtheleastinEthiopia.

Foodandnonalcoholicbeveragesaremostexpensive inAngola,

Gabon,EquatorialGuinea,Nigeria,CongoandComoros.

Alcoholic,beveragesandtobaccoaremostexpensiveinComoros,

Morocco,SudanandMauritius.

Angolaisthemostexpensivecountryonthreebasicheadingsin

individualhouseholdconsumption:health,foodandnonalcoholic

beverages,andrecreationandculture.

EthiopiaandGuineaarethecheapestforrestaurantsandhotels

andrecreationandculturerespectively.

Mauritius is by far themost expensive countrywith respect to

education.

WhileonaveragePLIsarehigherinricherthaninpoorercountries,

somenotable exceptions occur. CapeVerde has the highest PLI

followedbyNamibia,SouthAfricaandComoros.Onthecontrary

EthiopiashowsthelowestPLIamongtheparticipatingcountries.

Figure 3: Real GDP Per Capita in AFRIC and Nominal GDP Per Capita in US$, 2005

1000

0

2000

3000

4000

5000

6000

7000

Gab

onB

otsw

ana

Equ

ator

ial G

uine

aM

aurit

ius

Sou

th A

frica

Tuni

sia

Egy

ptN

amib

iaS

waz

iland

Con

goM

oroc

coA

ngol

aC

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Verd

eS

udan

Afri

ca A

vera

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amer

oon

Djib

outi

Nig

eria

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dM

aurit

ania

Sen

egal

Côt

e d'

Ivoi

reS

ao T

ome

and

Prin

cipe

Leso

tho

Ben

inK

enya

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mbi

aB

urki

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aso

Com

oros

Mal

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nzan

iaU

gand

aM

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asca

rG

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goR

wan

daS

ierr

a Le

one

Moz

ambi

que

Gam

bia

Mal

awi

Cen

tral

Afri

can

Rep

ublic

Nig

erE

thio

pia

Gui

nea-

Bis

sau

Zim

babw

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beria

Con

go, D

emoc

ratic

Rep

ublic

Real GDP per Capita, in AFRIC Nominal GDP per Capita, in US$

Note: For more details, see Table T3 and Table T4 in part 6. Burundi is not shown because it did not supply national account data.

18

Therefore,EthiopiaisthecheapestplaceinAfricainwhichtolive

orbuythings.Othercountrieswithrelativelylowpricelevelsare

Egypt,TheGambiaandBurundi.

Figures5aand5bshowthethreemostandleastexpensivecoun-

triesinsevencategories:housingandutilities;health;education;

foodandnonalcoholicbeverages;alcoholicbeveragesandtobacco;

recreationandculture;andrestaurantsandhotels.Angolaisthe

mostexpensivecountryinthreecategories:health,foodandnon-

alcoholicbeverages,and recreationand culture.Thesecondand

thirdmost expensive countries for health are South Africa and

Morocco,whileSwaziland,EthiopiaandTanzaniaarethecheap-

estcountries.Angola,GabonandEquatorialGuineaarethethree

most expensive countries for food and nonalcoholic beverages,

while the cheapest countries are Uganda, Egypt and Ethiopia.

In recreation and cultureAngola ranksfirst, closely followed by

EquatorialGuineaandGabon,whileMadagascar,TheGambiaand

Guineaaretheleastexpensivecountries.

Mauritius, South Africa, Tunisia, Egypt, Swaziland, Gabon, Bot-

swanaandEquatorialGuineahavethehigheststandardofliving.

InAfrica,themostexpensiveplacetoliveandworkinisCape

VerdefollowedbyNamibia,SouthAfricaandComoros.Ethiopia,

Egypt,andTheGambia,arethecheapestplaces.

Zimbabwe, Cape Verde, Angola, Gabon, Equatorial Guinea, Na-

mibiaandComorosarethemostexpensiveintermsofindividual

householdfinalconsumptionexpenditure.

With regard to the remaining categories housing and utilities

cost themost in Cape Verde, Namibia and Swaziland and the

least inSierraLeone,ChadandTheGambia.Educationismost

costlyinMauritiusataboutninetimestheAfricanaverage,fol-

lowedafterawidegapbySouthAfricaandNamibia.Educationis

availableatthelowestcostinGuinea,BurundiandMadagascar.

Comoros,MoroccoandSudanarethemostexpensivecountries

for the purchase of alcohol and tobacco, showing a price level

of2to2.5timeshigherthantheAfricanaverage.Thecheapest

FoodandnonalcoholicbeveragesaremostexpensiveinAngola,

Gabon,EquatorialGuinea,Nigeria,CongoandComoros.

Alcoholic, beverages and tobacco are most expensive in Co-

moros,Morocco,SudanandMauritius.

Angolaisthemostexpensivecountryonthreebasicheadings

inindividualhouseholdconsumption:health,foodandnonalco-

holicbeverages,andrecreationandculture.

EthiopiaandGuineaarethecheapestforrestaurantsandhotels

andrecreationandculturerespectively.

Mauritiusisbyfarthemostexpensivecountrywithrespectto

education.

Figure 4: Country PLI at GDP Level, 2005

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

Zim

babw

eC

ape

Verd

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amib

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Afri

caC

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and

Prin

cipe

Sw

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Cen

tral

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can

Rep

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Mau

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sLi

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Gab

onS

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Bot

swan

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biqu

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Afri

ca R

egio

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ongo

, Dem

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tic R

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Nig

erB

enin

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kina

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aurit

ania

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ia

Uga

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Rw

anda

Mal

awi

Mad

agas

car

Bur

undi

Gam

bia

Egy

pt

Eth

iopi

a

Note: For more details, see Table T2 in part 6.

19


Mauritius,SouthAfrica,Tunisia,Egypt,Swaziland,Gabon,Bot-

swanaandEquatorialGuineahavethehigheststandardofliv-

ing.Zimbabwe,CapeVerde,Angola,Gabon,EquatorialGuinea,

NamibiaandComorosarethemostexpensiveintermsofindi-

vidualhouseholdfinalconsumptionexpenditure.

countriesforalcoholandtobaccoareMali,BurundiandGuinea,

wherepricesareaboutone-halfoftheAfricanaverage.Restau-

rantsandhotelsinNamibia,AngolaandComoroscostthemost,

withapricelevelofabouttwiceasmuchthantheAfricanaver-

age.RestaurantsandhotelsarecheapestinKenya,Guineaand

Ethiopia.

Figure 5b: Most and Least Expensive Countries by Sector (PLI by Sector), 2005, Africa = 100

Figure 5a: Most and Least Expensive Countries by Sector (PLI by Sector), 2005, Africa = 100

50

0

100

150

200

250

300

350

400

450

Zim

babw

e

Ang

ola

Gab

on

Uga

nda

Egy

pt

Eth

iopi

a

Zim

babw

e

Com

oros

Mor

occo

Mal

i

Bur

undi

Gui

nea

Zim

babw

e

Ang

ola

Equ

ator

ial G

uine

a

Mad

agas

kar

Gam

bia

Gui

nea

Zim

baba

we

Nam

ibia

Ang

ola

Ken

ya

Gui

nea

Eth

iopi

aFood & Non-Alcoholics beverages Alcohol & Tobacco Recreation & Culture Restaurants & Hotels

200

0

400

600

800

1000

1200

1400

Zim

babw

e

Cap

e Ve

rde

Nam

ibia

Sie

rra

Leon

e

Cha

d

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bia

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babw

e

Ang

ola

Sou

th A

frica

Sw

azila

nd

Eth

iopi

a

Tanz

ania

Zim

babw

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Mau

ritiu

s

Sou

th A

frica

Gui

nea

Bur

undi

Mad

agas

kar

Housing and Utilities Health Education


20

Figure6aand6bshowtheexpenditurepercapita(inAFRIC)on

variousgoodsandservicesinindividualconsumptionexpenditure.

MauritiusspendsmorethananyothercountryinAfricaonfourof

thesevenbasicheadingsinindividualhouseholdconsumption:al-

coholicbeveragesandtobacco(almostninetimesabovetheAfrica

regionalaverage);housing,water,electricity,gasandotherfuels

(almost eight times above the average); recreation and culture

(eighttimesabovetheaverage);andfoodandnonalcoholicbev-

erages(threetimesabovetheaverage).Thelowestexpenditures

areZambiaonalcoholicbeveragesandtobacco(one-thirdofthe

average)andrestaurantsandhotels(0.6percentoftheaverage)

andZimbabweonprivateeducation(AFRIC1)andprivatehealth

(AFRIC0.7).

Figure 6b: Highest and Lowest Per Capita Expenditure by Sector, 2005

Figure 6a: Highest and Lowest Per Capita Expenditure by Sector, 2005

200

0

400

600

800

1000

1200

Mau

ritiu

s

Egy

pt

Sou

th A

frica

Mal

awi

Con

go, D

emo-

crat

ic R

epub

lic

Libe

ria

Bot

swan

a

Equ

ator

ial G

uine

a

Leso

tho

Con

go, D

emo-

crat

ic R

epub

lic

Zim

babw

e

Mau

ritan

ia

Sw

azila

nd

Sou

th A

frica

Equ

ator

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Cen

tral

Afri

can

Rep

ublic

Con

go, D

emo-

crat

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epub

lic

Zim

babw

e

Mau

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Tuni

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th A

frica

Con

go

Libe

ria

Con

go, D

emo-

crat

ic R

epub

lic

Food & Non-Alcoholics beverages Education Health Housing & Utilities

50

0

100

150

200

250

300

350

400

Mau

ritiu

s

Sou

th A

frica

Bot

swan

a

Con

go, D

emo-

crat

ic R

epub

lic

Eth

iopi

a

Zam

bia

Mau

ritiu

s

Sou

th A

frica

Zam

bia

Libe

ria

Ehi

opia

Con

go, D

emo-

crat

ic R

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Tuni

sia

Mau

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s

Mor

occo

Gha

na

Tanz

ania

Zam

bia

Alcohol & Tobacco Recreation & Culture Restaurants & Hotels


21


3.5. HIGHEST AND LOWEST LIVING STANDARDS While the full range of goods and services that comprise GDP

measure countries’ general economic development, amore ap-

propriatemeasureoftheeconomicwell-beingofthepopulation

isobtainedbycomparingpercapitaactualfinalconsumptionex-

penditure (AFCE). In fact,GDPper capita includesother compo-

nentsofGDPsuchasgrossfixedcapitalformation(GFCF)andcol-

lectivegovernment consumptionexpenditure (CGCE).Therefore,

thestandardof livingof individuals isbestmeasuredbyAFCE.8

Figure7providespercapitaAFCEbasedonPPPandmarketex-

changerates.

Thesamecountriesthattopthelistonthebasisofpercapitareal

GDPdominatethetoprankingswhenthecomparisonisbasedon

percapita realAFCE.AsFigure7 indicates,Mauritius ranksfirst

witharealpercapitaAFCEofAFRIC3530,showingquitealarge

differenceofapproximatelyAFRIC800andAFRIC1500,respec-

tively,overconsecutivecountriesSouthAfricaandTunisia.Egypt

andGabonrankfourthandfifthwitharealAFCEofAFRIC1835

andAFRIC1543,respectively.Eightadditionalcountriesrankabove

8 The results for AFCE presented here are slightly different from those

published in March 2007. The differences result from the inclusion or revision of

databysomecountriesintheir2005GDPestimates.Angola,Burundi,CapeVerde,

Comoros,TheGambia,Liberia,Malawi,Rwanda,SãoToméandPríncipe,Sudanand

Zambiahadseveralgapsintheirdataatthetimethefirstresultswerereleased.

theAfricaregionalaverageofAFRIC727,whiletheremaining35

countrieshavearealpercapitaAFCElowerthantheaverage.Ap-

proximatelyhalfofthecountries inthesamplerangebelowthe

thresholdofAFRIC500.DemocraticRepublicofCongoisranked

lowestwitharealpercapitaAFCEofAFRIC69.Thethreeother

lowest-rankingcountriesareGuinea-Bissau,ZimbabweandLibe-

ria,whichrangebetweenAFRIC201andAFRIC122.

ComparingFigure7withFigure3,whichshowsrealGDPpercap-

ita, revealsthatalthoughthesamecountriesrankatthetopof

thelist,therankingisdifferent.Gabon,BotswanaandEquatorial

Guineadropbyfivepositions,movingrespectivelyfromfirst,sec-

ondandthirdtofifth,seventhandeighth.Mauritius,SouthAfrica,

TunisiaandEgyptmoveupbythreepositionsfromfourth,fifth,

sixthandseventhtofirst,second,thirdandfourth,respectively.

ThecountriesthatdropthemostareAngola,fromthe12thto36th;

Figure 7: Real and Nominal Per Capita Actual Final Consumption Expenditure (AFCE), 2005

500

0

1000

1500

2000

2500

3000

3500

4000

Mau

ritiu

sS

outh

Afri

caTu

nisi

aE

gypt

Gab

onS

waz

iland

Bot

swan

aE

quat

oria

l Gui

nea

Nam

ibia

Cap

e Ve

rde

Mor

occo

Sud

anLe

soth

oA

frica

Ave

rage

Cam

eroo

nS

ao T

ome

and

Prin

cipe

Sen

egal

Nig

eria

Djib

outi

Ken

yaM

aurit

ania

Côt

e d'

Ivoi

reB

enin

Con

goG

hana

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omor

osZa

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aso

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nda

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ania

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agas

car

Mal

iS

ierr

a Le

one

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ola

Gui

nea

Cen

tral

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can

Rep

ublic

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anda

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bia

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awi

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Mauritius,Egypt,GabonandSouthAfricahavethehighestIGCE

inAfrica.

IGCEservicesarethemostexpensiveinMorocco,SouthAfrica,

Botswana,CapeVerdeandNamibia,andtheleastexpensivein

Chad,EgyptandBurundi.

Botswana,Gabon,Mauritius,SouthAfrica,Egypt,Namibiaand

TunisiaspendthemostonCGCE.

22

Congo,from10thto26th;andChad,from18thto30th.Thesecoun-

tries have the smallest share of real consumption expenditures

ofhouseholdsinGDP(19percentforAngola,25percentforCongo

and46percentforChad).Thecountriesthatincreasethemostare

Lesotho,fromthe23rdto13th;Togo,from35thto25thandSãoTomé

andPríncipe,from22ndto15th.9

3.6. GOVERNMENT CONSUMPTION EXPENDITURE Government consumptionexpenditure isdivided into twobroad

categories. Individual government consumption expenditure

(IGCE) is theexpenditure incurredbygovernmentson individual

services,especiallypubliceducationandpublichealth.Collective

governmentconsumptionexpenditure(CGCE) istheexpenditure

oncollectiveconsumptionofgoodsandservices,suchasdefense

andpolice.Surveysonthecompensationofemployeeswerecon-

ductedinallparticipatingcountriesforaselectednumberofoccu-

pations.Dataonwagesandsalariesofhealthandeducationper-

sonnelwereusedtocomputePPPsforIGCE.PPPsforCGCEwere

computedusingdataonwagesandsalariesfortheotheroccupa-

tionsinthedefenseandpublicadministrationheading.

3.6.1. INDIVIDUAL GOVERNMENT CONSUMPTION

EXPENDITURE

Table2showsthepercapitaIGCEandPLIasapercentageofthe

Africa regional average for individual government consumption.

ThegovernmentsofMauritiusandEgyptspendmoreonhealth

andeducationthandothegovernmentsofothercountriesinthe

Africaregion.MauritiusandEgyptspendaboutsixandfourtimes

morethantheaverageonindividualgovernmentservicesofedu-

cationandhealth.TheyarefollowedbyGabon,SouthAfricaand

Namibia.Countriesthatspendtheleast,withlessthan4%ofthe

Africanlaveragepercapita,areDemocraticRepublicofCongo,Ma-

lawiandComoros.

When the IGCE is separated into public education and public

health(columns6and7),Mauritiusspendsthemostoneducation

(almostsixtimestheAfricaregionalaverage),followedbyGabon

andEgypt (almostfivetimestheaverage)andSouthAfrica (al-

mostfourtimestheaverage).TheDemocraticRepublicofCongo,

MalawiandComorosspendtheleastoneducationinmoreorless

thesameproportionsbelowtheAfricaregionalaverageasforto-

talIGCE.

9 Angola, Burundi, Cape Verde, São Tomé and Príncipe and Zimbabwe

couldnotberankedintermsofpercapitaexpendituresatallbecausetheyhadnot

yetprovideddataoneitherhouseholdconsumptionorpopulation.Asaresult,the

rankingofsomecountrieshaschangedwhileothercountriesarebeingrankedforthe

firsttime.

Forpublichealththepictureissimilar.Mauritiusspendsmoreon

publichealththandoesanyothercountryinAfrica(almosteight

timestheAfricaregionalaverage),followedbySouthAfricaand

Egypt (almostfive times theaverage).Malawi (1percentof the

average), Ghana (3 percent of the average) and theDemocratic

RepublicofCongo(4percentoftheaverage)spendtheleaston

publichealth.

Columns2,3and4ofTable2showthePLIsfortotalIGCE,educa-

tionandpublichealthrespectively.Column2showsthatMorocco

(three timestheAfrica regionalaverage)andSouthAfrica,Bot-

swana,CapeVerdeandNamibia (two times theaverage) spend

themostforIGCEservices.Chad(one-tenthoftheaverage),Egypt

(one-fourthoftheaverage)andBurundi(one-halfoftheaverage)

spendtheleast.

Morocco, SouthAfrica and Botswana spend themost on public

education in thesameproportionsas in total IGCE.CapeVerde,

MoroccoandZimbabwe(threetimestheAfricaregionalaverage)

spendthemostonpublichealth.Chad(one-tenthoftheaverage)

andEgyptandDemocraticRepublicofCongo(one-thirdoftheav-

erage)spendthe leastforpubliceducation.Egypt(one-tenthof

theaverage),Chad (one-fifthof theaverage)andBurundi (one-

halfoftheaverage)spendtheleastforpublichealth.

Botswana,Namibia,SwazilandandSouthAfricahavethehighest

price levels and thehighest per capita real IGCE.Morocco, Cape

Verde,Côted’IvoireandAngolapresentthesamepicturebutwith

a lower real expenditure, for instanceMorocco has the highest

pricelevelandranks14thonrealIGCEs.Ontheotherhand,Congo,

Egypt,Gabon,MauritiusandChadhavelowpricelevelsbuttheir

IGCEsareamongthehighest.Lowpricesmayresultfromahigh

levelofgovernmentexpenditure.Withhighgovernmentspend-

ing,citizenswouldnotneedtopaythefull costofspendingon

healthandeducation.

3.6.2. COLLECTIVE GOVERNMENT CONSUMPTION

EXPENDITURE

Theresultofpercapitacollectiveconsumptionbygovernmentis

slightlydifferentfromthatofpercapitaGDP,householdsandIGCE

discussedabove.Botswanaspendsthemost inCGCEs.Botswa-

na‘sCGCEisninetimestheAfricaregionalaverage..Botswana’s

highgovernmentrevenuemayhaveinducedthehugegovernment

expenditure.BotswanaisfollowedbyGabon(fivetimestheaver-

age),MauritiusandSouthAfrica(aboutfourtimestheaverage)

andEgyptandNamibia(aboutthreetimestheaverage).

Liberiaspendsthe leastonCGCE.This isunderstandableasthe

country was just beginning a post-conflict era during the data

23


Table 2: Price Level Index and Individual Government Consumption Relative Africa = 100

COUNTRY Individual of which

Education PLIAfrica = 100

of whichHealth PLIAfrica = 100

IndividualGovernmentConsumption

of whichEducationConsumptionExpenditureIndes;Africa = 100

of which HealthConsumptionExpenditureIndex;Africa = 100

Government Consumption Expenditure PLI Expenditure Africa = 100 Index; Africa = 100

Angola 185 185 185 47 39 68

Benin 104 110 87 45 46 42

Botswana 222 224 211 251 279 182

Burkina Faso 88 87 91 34 36 29

Burundi 52 55 45 … … …

Cameroon 110 106 125 49 55 33

Cape Verde 215 204 310 103 128 39

Central African Republic 120 119 125 13 16 8

Chad 11 10 20 155 193 59

Comoros 84 80 96 4 4 4

Congo 71 69 75 146 161 107

Congo, Democratic Republic 72 38 87 1 1 4

Côte d’Ivoire 196 221 146 28 26 33

Djibouti 109 107 114 110 116 97

Egypt 26 33 10 463 464 460

Equatorial Guinea 56 53 61 85 77 106

Ethiopia 72 69 97 10 12 4

Gabon 104 106 97 438 482 325

Gambia 68 83 52 76 55 129

Ghana 140 141 124 19 25 3

Guinea 57 58 50 25 30 13

Guinea-Bissau 69 64 84 8 9 8

Kenya 156 160 121 62 77 23

Lesotho 138 139 135 115 117 111

Liberia 118 119 114 9 9 9

Madagascar 73 70 76 39 27 71

Malawi 55 49 84 2 3 1

Mali 91 89 98 34 38 23

Mauritania 71 71 73 69 80 41

Mauritius 95 88 108 649 593 794

Morocco 340 348 301 97 112 58

Mozambique 95 90 115 30 33 23

Namibia 208 205 217 300 304 288

Niger 126 126 127 11 12 8

Nigeria 64 57 86 54 58 44

Rwanda 63 62 69 38 44 24

Sao Tome and Principe 81 85 67 48 50 44

Senegal 136 147 107 61 60 63

Sierra Leone 72 73 64 45 57 14

South Africa 230 238 213 407 373 495

Sudan 131 126 143 8 7 9

Swaziland 179 192 152 118 110 139

Tanzania 79 80 77 9 10 8

Togo 87 82 124 31 37 16

Tunisia 172 201 131 226 184 335

Uganda 71 69 75 55 56 54

Zambia 104 98 109 93 54 193

Zimbabwe 100 87 294 48 62 11

Africa Region 100 100 100 100 100 100

For more details, see Table T2 and Table T12 in part 6.

24

collectionandhadapaucityof funds forgovernmentactivities.

OthercountriesthatspendlessonCGCEareDemocraticRepublic

ofCongo(one-sixthoftheAfricaregionalaverage)andCentralAf-

ricanRepublicandGuinea(aboutone-fifthoftheaverage).

Figure 8: Real Per Capita Collective Government Consumption Expenditures Relatives 2005, Africa Region = 100

Figure 9: Country PLI at Collective Government Consumption Level, 2005, Africa = 100

100

0

200

300

400

500

600

700

800

900

1000

Bot

swan

aG

abon

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150

200

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25


Figure 9 presents country PLIswith respect to CGCE. Chad and

Egypthave the lowestPLI for per capitaCGCE.WithPLIsmore

thantwicetheAfricanregionalaverage,LiberiaandMoroccohave

themostexpensivecostofCGCE.TheyarecloselyfollowedbyNa-

mibia,whichisslightlybelowtwicetheAfricanaverage.Thecost

ofCGCEinmostcountriesincludingNigerandTogoislessthanor

equaltotheregionalaveragecosts.

3.7. GROSS FIXED CAPITAL FORMATIONGrossfixedcapital formation(GFCF) isameasureofcountries’

investment expenditures. The main components of GFCF are

machineryandequipmentandconstruction.Theratioofinvest-

menttoGDPisimportantbecauseitisanindicationofeconomic

growth.Generally localandforeign investment is lowinAfrica.

TheregionalaverageinvestmentisAFRIC83percapita.Figure

10providesacomparisonofpercapitainvestmentexpenditures

based on PPP andwhen nominal exchange rates are used for

conversion.

ThecountriesthatrankhighestonthebasisofrealGDPpercapita

alsodominatethetoprankingswhenthecomparisonisbasedon

realGFCFpercapita:Gabon,Botswana,EquatorialGuinea,Mau-

ritius,andSouthAfrica.Gabon,BotswanaandEquatorialGuinea

haveinvestmentexpendituresofAFRIC1,467.8,1,402.9and1,323.8

percapitarespectively,about16timestheAfricaregionalaverage.

Theresultisnotsurprisingduetothefactthatthethreecountries

arerelativelyrichcountries.GabonandEquatorialGuineaarenet

exportersofoilandgas,whileBotswanaisthelargestproducerof

diamondsintheworld.

Figure 10: Real GFCF Per Capita in AFRIC and Nominal GFCF Per Capita

500

0

1000

1500

2000

2500

Gab

onB

otsw

ana

Equ

ator

ial G

uine

aM

aurit

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Sou

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frica

Tuni

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occo

Sw

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Columns5,6and7ofTable3showtherealpercapitaexpenditure

forGFCF,construction,andmachineryandequipmentrespective-

ly.Column5showsthatGabon,BotswanaandEquatorialGuinea

(seven times theAfrica regional average),Mauritius (five times

theaverage),andSouthAfricaandTunisia(aboutfourtimesthe

average)spendmoreonGFCFthandotherestoftheAfricancoun-

tries.CentralAfricanRepublic,DemocraticRepublicofCongoand

Zimbabwespendthe leastonGFCFatbetweenone-eighthand

one-sixthoftheaverage.

Asshownincolumn6,Botswana,MauritiusandGabon,Tunisia,

andAngolaandCapeVerdespend6to4timestheAfricaregional

average on construction per capita respectively. Liberia and Ni-

geriaandZimbabwespendthe leastonconstructionpercapita.

Formachineryandequipment(column7),EquatorialGuineaand

Botswana (eight times theaverage),Gabon (six timesaverage),

SouthAfrica (five times theaverage),Mauritius (four times the

average) and Namibia and Morocco (three times the average)

spend themost. Democratic Republic of Congo, Central African

RepublicandEthiopiaandBurundispendtheleastonmachinery

andequipment.

At the level ofGCFC,PLIsprovideameasureof thedifferences

in investment costs between countries. Figure 11 showsPLIs of

GFCFofparticipatingcountries.Thefiguresareexpressedasper-

centageswiththeAfricaregionalaveragebeing100.Côted’Ivoire

andCongo(almosttwotimestheaverage)arethemostexpensive

countries.ThecheapestcountriesareMalawiandEthiopia(about

one-halfoftheaverage).

analysis and major findings - african development bank...14 analysis and major findings 3.1 overview...

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