Ahead of its Annual Meetings in this Chinese commercial hub, the African Development Bank (AfDB) Group has released the first report on comparative consumption and price levels in African countries.
The report, part of the “International Comparison Programme” (ICP), is based on critical time-bound and multi-country comparable data that seek to provide appropriate answers to questions related to issues such as the living standards in Africa and the continent’s efforts at meeting the UN Millennium Goals.
These are some of the challenges that researchers, governments, corporate bodies and international agencies among others, often grapple with.
Increasing globalisation and economic integration underscore the importance of the ICP as a reliable tool for more precise measurements and realistic comparisons of global, regional and country performances a well as development trends.
The ICP is a global programme involving more than 140 participating countries worldwide, 48 of which are in Africa. It aims at providing a reliable basis for comparing Gross Domestic Product (GDP) and its m ain aggregates using Purchasing Power Parities (PPPs).
It allows comparisons of the real value of production for each country, using a standardised benchmark, free of price and exchange rate distortions.
The Programme’s origin lies in the United Nations International Comparison Project, which was started in 1968, for the purpose of conducting global comparisons.
Comparisons were made every five years from 1970 and initially, 10 countries were involved including one from Africa.
But by 1993, the Programme included 118 countries with 22 countries from Africa.
The AfDB Group is responsible for managing the African component of the Programme, known as the International Comparison Programme for Africa (ICP-Africa).
“This marked the first time, since the inception of ICP nearly 40 years ago, that an African institution has taken the lead position in implementing ICP activities in the region; previous work in Africa having been managed by Eurostat,” AfDB Chief Economist Louis Kasekende explained.
In its coordination role, AfDB is supported by four sub-regional organisations (AFRISTAT, COMESA, ECOWAS and SADC) that help to supervise administrative activities as well as coordinate some field activities at the sub-regional level.
The UK’s Office of National Statistics and France’s INSEE also assist in providing some technical assistance on a needs basis and in line with the AfDB’s technical requirements.
The Africa programme was launched in 2002 by the AfDB with the aim of generating comprehensive and comparable measures of real incomes and price levels in African countries.
Extensive monthly price surveys in 48 African countries have been conducted since 2005 and GDP expenditure data have been compiled during the same period to generate information on PPPs, adjusted real GDP expenditures, as well as Price Level Indices (PLIs) for 48 participating countries.
The current report, produced by the Bank Group’s Statistics Department, is the first of two key publications to be produced this year.
The next report will be released by December and will feature more detailed information on incomes and price levels in the participating African countries, the Bank said.
The ICP results are critical for policy management and decision-making at both national and international levels, facilitating cross-country comparison of GDP and related aggregates, for comparing regional poverty incidences and for poverty analysis across countries and across regions within the same country.
The PPP adjusted US$1 per day poverty line is also used as a threshold for poverty measurement.
ICP information can also facilitate the process of harmonizing economic policies across countries thus fostering regional integration; analysis of a country’s comparative advantage and hence facilitate policy decisions relating to investment and trade.
Information generated on wage differentials and cost of production in general can be used for decisions on investment.
“In view of the importance of ICP data for development policy management, it is important that the Bank and African countries sustain ICP activities beyond the current round. In particular, it would be necessary for countries to make ICP activities integral part of their regular activities with a specified resource envelope,” the report said.
“The international community, on the other hand, should ensure that country efforts are adequately supported in order to maintain the credibility of the process and the results,” it added.