Failure to adopt data analytics hurts Africa

Give me a one-handed economist,” an irritated US President Harry Truman once said. “All my economists say, ‘on the one hand...on the other’”.

To this day, economists have failed to take bold steps and make conclusive decisions especially in this era of Information and Communications Technologies (ICTs) that have enabled better predictive analytics rather than simply reporting historical data.

Like Truman, I had a similar frustration during last week’s press release of Africa’s Pulse, an analysis of issues shaping Africa’s economic future, when World Bank’s chief economist for Africa Region Albert Zeufack warned of hard times in the coming days due to the slowing down of GDP growth, external shocks as a result of strengthening of the US dollar, vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt, declining productivity in especially agriculture, and rising public debt.

But when I asked why the World Bank fails to factor predictive data analytics when they discuss the continent’s economic future, he responded that economic models have no room for predictive data.

For example, from predictions, we know that most African countries will have a pumper harvest this year. We also know that what Zeufack described as the “decoupling” (failing) of commodity prices especially in maize, is as a result of an impending glut.

Farmers, especially in Kenya, have the previous year’s crop as they gear up to this year’s harvest. Perhaps I am being too hard on Zeufack when indeed it is the role of policy makers to intervene in situations that could hurt the farmers.

Had policy makers warned farmers last year that a situation like the emerging one will occur, they could have given incentives to grow other crops to avoid a crisis that will put most of the farmers into greater debt.

To compound the problem, weathermen predict an el Niño deluge in the coming year, which means more rains and even greater production of commodities.

Both the World Bank and the Ministries of Agriculture see no evil at the moment despite overwhelming evidence that farmers will further suffer unless commodity supply chains are streamlined. It is not enough to forecast that Africa will experience a bumpy economic future without incorporating advanced data analytics to facilitate better decisions with meaningful outcomes in the days to come Agriculture still contributes almost 30 percent to the GDP of most African countries.

The science of agriculture has greatly improved so much so that predictions are almost precise. This means that many of the mistakes made by African countries in the past can be eliminated. The tragedy, however, is the fact that productivity in agriculture is declining and may not improve in the near term due to cultural practices of excessive land subdivision.

Although the World Bank says they are supporting land reforms, no one wants to talk about land consolidation. In the meantime, some commodities like maize in Kenya have been so highly politicised with incentives to smallholder farmers that any land reforms will be met with swift resistance.

The North Rift, which used to be the breadbasket of Kenya, is now witnessing its large productive farms being subdivided into smaller pieces unabated. And although everyone knows the consequences of these actions; a nation that was able to feed itself is slowly sliding into a basket case.

The highlight of Zeufack’s message was what he said in his concluding remarks, “To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.”

More than 50 years after independence for many African countries, investments in quality human capital still is a contradiction in terms as some of the highly educated are wasted in informal sectors.

To reverse this trend, lower taxes could act as an incentive to encourage formalisation of the informal sector and precipitate the development of sustainable enterprises and reduce resource misallocation.

The writer is an associate professor at the University of Nairobi’s School of Business.

The views expressed in this article are of the author.

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