DailyNews Online Edition

The politics of statistics

THE other day I read a front-page report in a weekly English language newspaper with the headline 'WEF-2012 fixed assets investments: Tanzania lags behind as tiny Lesotho leads!' [Business Times: August3,2012].

The story was founded upon Survey of 22 African countries by the World Economic Forum (WEF). Apparently, the survey was intended to determine how much the countries invest in ' fixed assets, or the
total business spending on fixed assets that would provide the basis of the means of production.”

Such investments are usually directed towards the costs of building new factories and housing units; acquisition of industrial machinery and construction equipment, as well as inventories on raw materials that provide the basis of total economic production in a given country.

'Fixed investment' is defined as total business spending on assets such as factories, machinery, equipment, dwellings and inventories of raw materials, all of which provide the basis for future production.It's measured gross of the depreciation of the assets, including investment that replaces scrapped capital.

That's the long and short of it. Now, to brass tacks...

The WEF Report shows the investment outlays of the G-22 countries surveyed in percentage terms of their gross domestic product (GDP). As it happens, Tanzania is one of them... With the exception of Algeria, Morocco and Tunisia, the other countries are located south of the Sahara. This is somewhat odd...

But then, again, sub-Saharan countries like Nigeria, Angola and South Africa – the continent's economic powerhouse – have been left out of the exercise!Missing, too, were the Democratic Republic of Congo and Somalia (too much internecine internal strife there, perhaps?), as well as Mugabe's Zimbabwe (where do  you begin assessing that beleaguered country, pray?)

What intrigued me was the way the Forum went about conducting the survey – and releasing its findings on the rather narrow basis of GDP percentage points. This can be grossly misleading. It's perhaps fair that I should reproduce the Survey findings herein below, fronted as the 'Top-Twenty Performers,' (with their fixed assets investments/GDP percentages shown in brackets)...

1). Lesotho (39.40%); 2). Gabon 39.20%); 3). Ghana (31.90%); 4).(30.90%); 5). Burundi (28.40%); 6). Namibia (27.40%); 7). Madagascar (27.20%); 8). (27.10%);  9). Uganda (26.50%); 10). Zambia (26%), and 11). Ethiopia (25.40%).

Others are: 12). Senegal (25.40%); 13). Algeria (24.80%); 14). Gambia (24.70%); 15). Burkina Faso (24.50%); 16). Tunisia (24.40%); 17). Tanzania (24.20%); 18). Mozambique (24.00%); 19). Botswana (23.90%); and 20). Rwanda (22.50%).

As already intimated herein above, such data presentation leaves a lot to be desired. Look at it this way... “Tiny Lesotho” reportedly spent 39.40 per cent of its gross domestic product in fixed assents investments. With an estimated GDP of only US$2.453 billion in  2011 assessed at the official exchange rate, the expenditure was only $966.482  million.

At Number 17 on the WEF list, Tanzania reportedly invests 24.20 per cent of its GDP on fixed assets development. That's a relatively whopping $5.646 billion out of its estimated $23.33 billion estimated
GDP for 2011! [CIA World Factbook].

Even if Lesotho were to spend all its GDP ($2.453bn) on fixed assets development, that would still be LESS than the sum (of $5.646bn) Tanzania invested in fixed assets during the year of the survey. So,who between these two is spending more on fixed assets? Sheesh!

Let us take another example...  Burundi – Number 5 on the WEF list, and one of the 5-state grouping of
the East African Community (EAC) along with Kenya, Uganda, Rwanda and Tanzania – leads the east African bloc by investing 28.40 per cent of its GDP in fixed assets. This translates into a mere $669.104 million out of its GDP of US$2.356 billion!

On the other hand Kenya – the biggest economy in EAC, with a  GDP of $34.8bn – doesn't even feature on WEF's Top-Twenty list; it is at Number 21, four places behind Tanzania,11 places after Uganda, and –
ye-gods – 16 places behind Burundi!

Yet, Kenya spends 21.60 per cent of its GDP on fixed assets investment, which comes to $7.517bn!
Now, to the blockbuster... The biggest of the economies surveyed,Algeria (GDP: $190.7bn) reportedly invested 24.80% of its GDP in assets. That works out at a whopping $47.293 billion! This is about 49
times what Lesotho invested in assets during the year of survey!

In view of the foregoing, how and why should Lesotho top the list of fixed assets investment performers? Why, indeed? I ask you! Anyway, that's the politics  of statistics for you! Cheers!