Banks step in to fill data gaps left by State agencies

From left- Kenya National Bureau of Statistics Board Chairman Terry Ryan, National Treasury Cabinet Secretaries Henry Rotich and his Devolution and Planning counterpart Anne Waiguru launch of the rebased national accounts statistics at KICC in Nairobi on September 30, 2014. Government’s slow pace in releasing economic data has been blamed for inaccurate information that investors get. The only timely data are inflation figures. PHOTO | SALATON NJAU  

In Summary

• Last week, two banks, CFC Stanbic and Barclays, stepped in to provide crucial economic data that the country’s business community can rely on to make informed decisions as they wait release of official data by the Sate agency.
• Barclays Africa’s head of macroeconomic research, Jeff Gable said accurate data is essential for economic planning and better service provisions by governments.
• He however says gathering the information is not only a huge task but  requires capacity that many governments may not have.

By EDWIN OKOTH
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Banks have now taken the role of providing regular economic updates to fill the yawning gaps caused by delayed government reports.

Government’s slow pace in releasing economic data has been blamed for inaccurate information that investors get. The only timely data are inflation figures.

“We usually allow a lag of between four and five months to give the mainstream market institutions time to announce their results before we compile and that is probably why some people may view ours (data) as slow but I can assure you that we are always precise and accurate,” said Mr Zachary Mwangi, Director General, Kenya National Bureau of Statistics.

Last week, two banks, CFC Stanbic and Barclays, stepped in to provide crucial economic data that the country’s business community can rely on to make informed decisions as they wait release of official data by the Sate agency.

“Africa’s investment potential is extremely strong. However, there is still the lack of credible market data. Improving this can be vital in demonstrating the region’s investment potential,” StanChart Africa CEO Ms Diana Layfield said.

LACKING CAPACITY

“Standard Chartered’s ground-breaking indicators will help to fill this gap by providing relevant, credible and real-time data from leading African markets.”

The bank will be publishing indicators for Nigeria, Ghana and Kenya.

Barclays Bank provided crucial data last Friday with its 174-paged African Market Guide 2015. The research analysed all the African countries by looking at their policy environments, trade, foreign markets, money markets and external debt snapshots. It also gave the countries’ economic outlook for the year.

Barclays Africa’s head of macroeconomic research, Jeff Gable said accurate data is essential for economic planning and better service provisions by governments. He however says gathering the information is not only a huge task but requires capacity that many governments may not have.

“You will struggle in Africa to find statistical agencies with appropriate staffing to give data that is sufficient, accurate, available and timely. This is across small and larger economies. The challenges exist mainly because most of these countries have very large informal sectors,” Mr Gable told Smart Company.

 “The need for timely and accurate data is however crucial for any country to carry out meaningful planning.’’

He says the recent rebasing of three major economies on the continent leading to significant leaps in their economic outlooks “is enough to paint a picture that most governments have either used wrong methodologies or relied on wrong information over time”.

Nigeria’s economy shot up 89 per cent after rebasing while Ghana’s jumped by 62 per cent. Kenya’s rebasing pushed it to a middle income status after its Gross Domestic Product grew by 25 per cent in

“Nigeria last year declared the biggest economy (in Africa), is an extreme example because rebasing GDP essentially means you are revising dynamics over a certain period. You can only measure what is there. In 1991, Nigeria had no mobile phones so there was no way you could even include them in the survey,” explained Mr Gable.

AUTHENTIC METHODOLOGY

“There was no Nollywood for example. When you rebase you are simply counting better.”

CFC Stanbic Bank also released yet another indicator survey on Wednesday. The bank partnered with global financial information service provider, Markit to release the Purchasing manager Indicator (PMI).

The survey, which will be available every third day of the month, provides business outlook of the country by measuring private sector operating conditions. The survey examines five aspects: New orders (30 per cent), output (25 per cent), employment (20 per cent), suppliers’ delivery times (15 per cent) and stocks of the purchases (10 per cent).

Markit economist Mr Philip Lake said the data is gathered through interviews based on business experiences for the previous month.

So far, six countries in Africa have embraced the report that provides an economic outlook for businessmen, banks, foreign investors and policy makers.

Mr Mwangi said while KNBS is the official source of government data, other institutions can release theirs as long as they use “authentic methodologies to give reliable information”.

“Not only KNBS has the monopoly of giving data information but we are the official source with the most elaborate and quantitative data. Others may use data based on perception and largely qualitative methods,” Mr Mwangi says.

Standard Chartered Head of Africa Research Razia Khan, says while the continent is rapidly growing, poor data makes it hard to know by how much.

“China’s customs data sheds some light on Africa’s growth, showing that Africa-China trade ballooned to $210 billion last year from $5-7 billion at the end of the 1990s.

TRANSFORM THE SPACE

Lending to the private sector in Africa has also surged, with private-sector credit growth more than doubling in real terms between 2000 and 2010,” noted the economic researcher.

 “Such data points aside, little is known about the true magnitude of Africa’s growth surge. Data quality in most Sub-Saharan African economies is weak. In many instances, the official data is too out-of-date to tell us much that is useful.”

She says better data exists for the private sec­­­tor, “though it is more ‘micro’ in scale and less accessible”.

Khan says institutions like banks have a good idea of the direction of growth by taking into  account loan  trends to identify the sectors that are gaining ground and those that are “fading in relevance,” concludes Ms Khan in her article How fast is Africa really growing?

“Independent, apolitical and transparent data has been a substantial hurdle in many African economies. However, technology and private sector indicators – when properly deployed – can transform this space.”

THE NUMBERS

25 

Percentage by which Kenya’s economy grew after rebasing

89 

Percentage by which Nigeria’s economy jumped after rebasing

62 

Percentage by which Ghana’s economy rose after rebasing