Legatum Institute index says Nigeria – Africa’s biggest economy – is only the 26thmost prosperous African country, as fuel shortages hamper growth.
The Legatum Institute’s Africa prosperity index, published on Wednesday, rates countries by opportunity, freedom, education and security, as well as social bonds.
It found that some African countries are much better at creating prosperity than others, and this is disproportionate to the amount of wealth they have. Researchers gave the example of Rwanda, which despite having a third of the wealth of oil-rich Angola, has been far more successful at creating a prosperous society.
Although Nigeria is Africa’s biggest economy, it is only the 26th most prosperous, according to the index, while South Africa came top. Rwanda was ninth, and Angola 33rd.
The director of the index, Alexandra Mousavizadeh, said it was “a powerful message for policymakers trying to write a new narrative of Africa rising, in a slow-growth climate”.
She said: “Countries like Rwanda have delivered a lot with very little wealth while in Angola, the situation is the complete opposite. The country has, until recently, benefited from a wealth perspective due to a boom in commodity prices yet it has generated very little prosperity for its citizens.”
“By far the most important drivers of prosperity alongside a country’s ability to generate wealth are the promotion of civil liberties, a strong rule of law and effective institutions as well as a diversified economy. By making these structural changes, many countries could start to see levels of prosperity rising quite rapidly even if overall growth begins to slow.”
African growth, which has been strong for the past decade, could slide to 2.9% this year, according to several forecasters.
Yvonne Mhango, sub-Saharan economist at Renaissance Capital, said the continent needed several more years of significant growth – “4%-5% at the very least” – for wealth to start trickling down. Also, growth is not the be-all and end-all, she said.
“It seems counterintuitive, but what I’ve observed in the continent [is] that there’s no substitute for governance. It doesn’t matter what commodity a country is producing and at what price it’s selling – if they don’t have the right leaders in place that are putting forward the right policies, you will not see that trickle down to the people. Some of the wealthiest countries on paper have some of the most abjectly poor people on the continent.”
Nevertheless, growth does have an impact, and the continent’s two biggest economies are struggling.
In Nigeria, Mhango said, “we’ll be lucky if we see positive growth this year. They’ve had a really dire, epic fuel shortage. Even if it does grow in the second half of the year, 1%-2% will be fantastic. Some think the economy will just contract as a whole.”
The shortages have affected productivity as people have to spend hours queuing for fuel to run their cars and generators. South Africa has been dealing with low commodity prices.
“Just the two countries on their own – if they can’t scrape together 2% growth for themselves, we’re probably going to see one of the lowest rates of growth in sub-Saharan Africa since the beginning of the millennium,” Mhango said.