An off-the-wall African Index: 10 indicators that tell you how an economy is really doing

Why Brazilian weaves, church attendance, and mistresses might well be a better indicator of an African country's economic situation than GDP.

THE International Monetary Fund’s forecasts for the Kenyan economy are too optimistic for a nation struggling to cope with a weakening currency and rising interest rates, a senior official of the main bankers’ lobby group has said.

The IMF’s assessment “has left many questions in its wake given the increasingly difficult environment that East Africa’s largest economy has lately faced,” Jared Osoro, director of research and financial markets and policy at the Kenya Bankers Association, wrote in an opinion piece in the Business Daily newspaper on Wednesday.

The Washington-based IMF is projecting economic growth of 6.5% this year for Kenya, faster than the 5.3% achieved in 2014.

The confusion as to whether Kenya’s prospects are headed up or down isn’t unique to the country, or to the IMF. The problem with economic measurements is that headline economic figures, do not always reflect the sentiment on the ground – do people actually think they getting wealthier, or poorer?

This week, a group of 24 journalists from Kenya, South Africa and Nigeria met in Naivasha, Kenya, as part of a business journalism fellowship sponsored by Bloomberg Media Initiative Africa and in partnership with the Africa Leadership Initiative (ALI).

The ALI Media Fellows came up with 10 unconventional indexes that might do a better job at tracking people’s incomes, and what people think about their prospects in the near future. But first stop, was “Fun Economic Indexes” by South African journalist Yolandi Groenewald, that was published by City Press in September that looked at other off-the-road indexes.

She reviewed six indexes, five of which were: 

a. Lipstick Index - that when finances are tight, consumers will not go for luxury goods.

b. Men’s Underwear Index - this holds that when economic times are hard, men hold on to their underwear longer, although it is not true for countries like South Africa.

c. Baby Diaper Rash Indicator - it has been observed that in times of economic uncertainty, parents tend to leave the children in their soiled diapers a bit longer, leading to more little ones suffering diaper rashes.

d. The Tile Index - when pockets run low, people don’t spend on home improvements and therefore the sales of tiles drop. The reverse happens on the upswing.

e. Data Usage Index - when times get tough, users curtail expensive data use, and play fewer YouTube videos. But there was a problem there, because less spend on data often reflects a larger shift to effective data products like WhatsApp.

The imagination of the journalists was fired, and they came up with their own indexes below:

-Additional reporting by Helen Nyambura-Mwaura, Bloomberg


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