IOA’s Africa Country Benchmark Report (ACBR) assesses African country performance from a holistic perspective, with the primary objective of providing readers with an all-encompassing picture that provides the most accurate profile of every country on the African continent.

With this objective in mind, the ACBR draws on various reputable indices spanning a complementary array of focus areas – business, economic, political and social, as well as insights from more than 40 IOA experts across the African continent. The result is a clear view of African country performance through a comparative assessment, revealing the true country benchmarks of the continent.

Assessing African benchmarks across business, economy, politics and society

Africa is comprised of 54 independent nations and the disputed territory of Western Sahara. While some nations are blessed with abundant natural resources and others are harsh desert environments or isolated volcanic islands, all have the potential for greatness. The ACBR shows a wide divergence in African countries’ success at obtaining economies, political systems and social welfare benefits for their people. Some countries do very well, while others are virtual ‘failed states’ – dangerous, miserable places with dysfunctional political and social systems.

Failure or success when applied to a country can be objectified statistically, which is what the component indices of the ACBR do. With numerical ratings and charts, data show the rise or fall of gross domestic products and other indicators of national prosperity. Education levels and health measurements are determined mathematically by the social welfare indices rather than being rooted in anecdotal evidence. Some index data relies on subjective analysis, such as a corruption perception index in which business people provide input; however, by relying on expert opinion, this data becomes credible rather than whimsical. The indices used to compile the ACBR have earned their reputation for probity. From its findings, the ACBR draws larger conclusions that are more than generalisations because they are founded on data from the constituent indices.

How to account for the successes and failures as presented by the indices used to compile the master ACBR? What are the commonalities that influence how a nation performs on the index? With the ACBR a holistic approach is used, in which data from several sources is combined. Having done this, the opportunity is at hand to look at these ‘complete country pictures’ and examine them for clues as to the reasons for good versus bad rankings in the report. What are the microcosmic features that determine the larger picture of a country’s overall standing?

Overall, an analysis of the continent’s 54 nations to determine which succeed and which fail does find a common thread: political maturity in African countries corresponds with stable governance and sound economic development. Such political maturity, in which Rule of Law is enshrined above the power of the leader or faction and where human rights are respected, term limits are honoured by presidents and separation of power guides governing institutes, is not a result of a country’s age but of the will of a country’s people to be ruled by equitable governments that respond to their needs and which put laws above men. Where political maturity is absent, where autocrats run roughshod over oppressed populations and governance institutions are no more than the will of one powerful man, a state falters on instability and its people are mired in armed conflict, ill health and poverty.

As the ACBR examines the business, economic, political and societal indices compiled by a variety of organisations throughout the world, Africa’s best performing countries in terms of prosperity, security and stability are all grounded in Rule of Law. From an examination of myriad charts and graphs on which organisations as diverse as Human Rights Watch and the World Bank seek to illustrate in numerical form the fortunes of nations, it is clear that some qualities are closely bound to other qualities; indeed, they cannot exist in isolation from each other. Good governance goes hand in hand with economic prosperity. Pluralism is linked to the state of a nation’s security. Quality of life is best enjoyed by those living in democracies.

On the opposite end of the scale are the miseries of nations under dictators and autocrats. Non-democratic states drain an economy’s vitality through corruption, overregulation, nepotism and cronyism. The greedier and more power-hungry a leader, the less free, healthy and prosperous are his subjects.

For instance, South Africa enjoys Africa’s most economically advanced economy and a human rights-based democratic government that is the governance ideal of the continent. However, nothing is static in any country’s development. Having liberated South Africa from the apartheid era, the African National Congress (ANC) is becoming insular and allegedly corrupt, and shows a desire for a state-controlled command economy that is opposed to the free market economy that has been so successful. The result has been a business confidence crisis and street protests against government’s inability to provide social services. If the ANC government continues with its current policies, the economic and political data that inform the ACBR will reflect a shift in the country’s fortunes.

Politically, then, countries do well that have gained a grounding in democracy that curbs political ambitions for the greater good of all citizens. The countries’ performances in the remaining categories considered in the ACBR follow accordingly. Where political tyranny exists, rankings on societal indices decline. Countries may have high per capita incomes according to the indices, and these may be real in the case of Mauritius where national wealth is relatively evenly distributed, or the statistic may be illusionary, such as in Angola and Equatorial Guinea where corrupt leadership commands a lion’s share of the GDP at the expense of ordinary citizens.

ACBR Business Analysis

African countries that perform best overall in the business quadrant have governments that strongly support entrepreneurs both local and foreign, and strive to stimulate business growth. These countries are aware that there are few things more detrimental to the healthy growth of a country than a poorly structured environment for business development. In order for African countries to move away from natural resource dependency in an age of services and value-added resources via manufacturing, countries with successful business models have in place structures that attract foreign as well as domestic investors, and both understand and implement pro-business policies.

A conducive business environment for start-ups and new entrants alike is a pre-requisite for good performance in the business quadrant. Countries such as Ghana, Mauritius, Namibia, South Africa, Tunisia and Zambia have all put in place mechanisms that enhance the functioning of businesses from registering property to dealing with construction permits. These nations have enshrined policies that protect minority investors and ensure smooth trade across borders. Unlike countries favoured by the possession of natural resources who become complacent with the income from extractives and, in effect, become poorer because they do not diversify their economies, nations with successful business models constantly look to expand their economies in bold new directions. A common denominator between countries that enjoy good foreign investment are policies that offer incentives to both foreign and local investors.

Top performers within the business quadrant have another commonality: a strong capacity for civil society oversight with regard to business operations. Countries such as Mauritius, Rwanda, South Africa, Tanzania and Zambia have in place means to monitor business fair play. Without oversight, businesses would be able to flaunt laws of governance in an attempt to maximise profit at the expense of local communities, as has been the case throughout Africa where totalitarian regimes look to benefit from multinational deals to the detriment of the domestic population.

Illicit business activities have been one form of corruption that has most negatively impacted nations’ business environments. A system of checks and balances in business deals is essential for any country seeking to provide an environment that will favour business development and growth. African nations that perform well in the business quadrant have in place systems to control bribery in business activities. These same countries also look to enhance efficiency and stimulate innovation within the business sector, leading to policy reforms if these prove necessary. New technologies being introduced into the markets can stimulate innovative solutions to problems while also maximising the available output on a daily basis.

Conversely, the worst performers in the business quadrant show similar ailments that necessarily deter business development and drive away investors who then seek out more feasible markets. Poor business and poor governance environments go hand in hand, as witnessed by the problematic business landscapes of the Central African Republic, Chad, Eritrea and South Sudan. From starting a business and dealing with construction permits, through to registering property, getting credit and paying taxes, these four nations all perform poorly. Without the necessary tools and mechanisms for business operations to function optimally, new enterprises generally do not survive beyond the first 24 months. These countries also fail at stimulating the private sector and necessarily leave business operations up to government, which is invariably inefficient. In the current global sphere of capital markets, African nations with command economies cannot compete with freer markets and their businesses are at a disadvantage in cross-border deals.

Further deteriorating the business environment is poor enforcement of anti-bribery laws. Angola, Burundi, Chad and Guinea are foremost amongst nations that fail to stifle illicit business activities. Some nations, as in the case of Angola, even encourage corruption as a means to enrich the political leadership. Lack of civil society oversight and transparency in government invariably accompany poorly enforced anti-bribery laws in these countries. If a nation is not willing to decentralise power to its citizens and restricts information on the true state of the economy and government actions, the business environment becomes untenable for the success of local and international businesses. The only firms that survive are those that are subservient to government demands that come with government-controlled financial opportunities. Angola again is a case in point – there is a lack of government transparency in business operations and also restrictions on the involvement of civil society at any level, so that profits from Southern Africa’s most lucrative oil industry line the pockets of the ruling Dos Santos family.

ACBR Economic Analysis

African countries that enjoy the best economic performance possess characteristics of strong institutions that guide economic development that are in line with international law on trade governance. Political and economic development go hand in hand and the economies of these countries are well governed through enacted laws and regulations that maximise the benefit accrued by economic growth. Through the implementation of appropriate laws and structures, property rights, business, investment and trade freedoms are enshrined in business activities and operations and are made evident through consistent growth and development.

Those countries that have performed well in the economic quadrant have developed strong market and business sophistication. Again, countries such as Mauritius and South Africa, but also Seychelles and Tunisia, have evolved their markets in a way that is conducive to economic development and entrepreneurial growth. Although small countries geographically and in terms of populations, both Mauritius and the Seychelles have looked to diversify their economies over time and attract investment in sectors that have been targeted for development. South Africa has also looked to more than resource exploitation and given substantial attention to a variety of sectors, including agriculture, financial services and tourism.

Regulation and strong institutions are other common factors that the top performers exhibit. Countries such as Kenya, Rwanda and Uganda look to exercise less regulation over business activities, but have put in place increasingly adaptable institutions to steer economic development. The Rwandan market is small but it is dynamic and looks to constantly re-position itself to attract investment. Such a system of de-regulation coupled with good governance seeks to enhance the independent growth of business activity while also ensuring that procedures and laws are followed.

African countries that are excelling in the economic realm also make use of the human capital at their disposal and ensure property rights. Countries throughout Africa that excel economically are incorporating their young citizens in development initiatives. Botswana, Ghana and Zambia perform well in this regard. Each of these countries has the ability to tap into a large pool of under 25-year-old human capital that will both be included in development and contribute to economic growth from a consumer perspective. Though South Africa is another top performer, there is still a way to go in terms of the government’s development plans to incorporate greater portions of the youth into the labour force.

African nations that are the worst performers in the economic quadrant display commonalities that inhibit stable and consistent economic growth. Foremost of these is overbearing levels of government involvement in economic activities. At the same time, they also show a dire need for infrastructural development to stimulate economic growth. Economically failing states such as the Central African Republic, Chad and Zimbabwe highlight a consistent inability to allow free market forces to dictate supply and demand. Other countries with poorly performing economies, such as Burundi and Somalia, fail to stimulate economic development or to step back from the overregulation of their markets.

Weak knowledge and technology outputs have also been the downfall of economic growth in African states. Burundi and Swaziland are examples of conflicted or undemocratic countries where little innovation takes place and output is confined primarily to natural resource extraction. Such countries tend to have totalitarian regimes in power that show no interest in economic growth to benefit the general population, but rather growth that directly enriches the governing regime. King Mswati III of Swaziland and Pierre Nkurunziza of Burundi are both notorious for benefitting from state coffers while allowing their citizens to live in poverty. As a result, they also have an underutilised labour force that is poorly educated and lacks the knowledge to participate meaningfully both in the economy of their countries and the political development thereof. Nigeria, with nearly 180 million people, also makes poor use of the available labour force, far preferring a dependency on oil revenue without the necessary economic diversification one would expect from the largest economy in Africa.

Given the dominance of capitalism and free markets in Africa since the 1990s, it is an inevitability that countries need to open up their markets to foreign investment and trade. Regulation is necessary but it must be calculated to generate the greatest returns possible both for governments and the citizenry. Africa’s best performing countries economically are those that have allowed free market mechanisms to dictate supply and demand trends, but also have in place strong institutions to steer market forces. They also look to increasingly adjust and adapt their markets and businesses that function within them to accommodate the evolution of the economy. Business owners are provided with property rights to take control of their enterprises, while labour is well utilised in areas of growth and demand. By comparison, African nations that perform poorest economically have overbearing government regulation of the market space that makes it difficult to conduct business. They also tend to lack efficient energy and transportation infrastructure, which makes it difficult for businesses to thrive and grow. Compounding these maladies is a poorly educated and underutilised labour force. An environment of poor knowledge and technology output tends to leave countries at the mercy of foreign aid and donors in times of economic instability.

Meanwhile, governments that are successful at stimulating economic growth are those that have managed the right balance between governing economic growth and making the best use of their human capital. Those that fare poorly allow government to meddle in economic initiatives, resulting in stagnant growth while also restricting avenues to free market forces.

IOA’s closing remarks and a look ahead to 2016

The ACBR combined extensive African in-country presence and expertise with an assessment of some of the leading indicators of country performances to achieve an ultimate, holistic picture of each African country and to identify the commonalties and differences the define the top and bottom performers. The report presented some expected results and also some surprises.

The conclusiveness of index performance clustered into four quadrants – business, economy, politics and society – showed that often, though not uniformly, individual indicators can suggest a country’s standing in other fields. A country that is performing poorly in political indicators is unlikely to perform well in economic and social indicators because government is unable to create sound economic policies or provide for the needs of its citizens.

Consequently, some results that might be anticipated include poor holistic performances of countries in conflict, such as the Central African Republic, the Democratic Republic of Congo and Somalia, or countries led by despots, such as Equatorial Guinea and Zimbabwe. It may have come as no surprise that politically stable and democratically-run countries rank highly on business, economic and social indicators. No country’s quadrants exist in isolation and they should therefore not be treated as such – in research or in practice.

The surprises include the higher than expected rankings relative to other African nations of such countries that seemingly have little to offer, with Lesotho and Swaziland as two examples - ranked higher on the totality of indices than such continental giants as Côte d’Ivoire and Nigeria. This is indeed an anomaly until the phrase “relative to other African nations” is considered. These countries do particularly poorly relative to Western nations and even to developing countries elsewhere in the world.

However, some of Africa’s giant democracies, rich in resources and human capital, are plagued by crises such as Nigeria’s Boko Haram terrorists and Egypt’s post-revolution struggle to balance civil liberties and security against ISIS terrorists.

Smaller, resource poor and non-democratic countries may be spared civil war or insurgency crises during a year under review, and this assists them in the rankings relative to other countries. In other words, often the ACBR shows countries that are performing poorly across all four quadrants, and yet holistically perform better relative to the perceived giants of the continent, who continue to struggle with balancing economic growth and international business interest with strong political governance and social development.

The top five countries in terms of overall performance in the ACBR are Mauritius, Botswana, Namibia, Cape Verde, and Seychelles. They all have one commonality: they are small nations in terms of either size (Cape Verde, Mauritius and Seychelles are islands) or population (the relatively sparselypopulated desert lands of Botswana and Namibia). Smaller populations do not mean fewer social issues, and all these countries have had to deal with poverty, education, health and the creation of a modern economy. Where these five nations succeed is their ability to provide better economic opportunities and social services, and this is grounded on responsive and sometimes progressive governance. While hardly flawless, the governance in these countries is still the bedrock on which the country’s business, economic and social sectors rise. Secondly, although Botswana has its diamond reserves, the other four countries have no appreciable natural resources and must rely on innovation and the attractiveness of their natural environments, be these the pristine deserts of Namibia or the lure of a tropical island paradise to attract foreign investment. ACBR’s top five performers have worked hard for national advancement.

Thirdly, these countries have achieved the inclusion of all their people in the success of their country that is the heart of representational democracy. Social, ethnic and religious tensions can be found in even the best performing countries in the ACBR. However, these are managed with respect between groups. Lesser performing countries are torn by civil war, terrorism and tribalism, in which respect for others is not a consideration, or by coups d’état in which usurpers respect only the efficaciousness of blunt power.

Crises come and go, transforming political landscapes and affecting countries business climate and the economic and social welfare of populations. Such crises also affect the indices that comprised the ACBR. African nations’ rankings are in constant flux. Comparable rankings for European countries are stable to the point of seeming frozen in place, as are the developed countries of Asia. A coup d’état in Africa can cripple a prosperous country’s performance across all quadrants, as was the fate of Côte d’Ivoire in 2000 before the country’s slow rise in indices reflected its return to political stability and prosperity. Other African nations have experienced precipitous drops in rankings, only to recover.

The results on display in the 2016 edition of the ACBR are definitive but transitory. As events unfold in the months and years ahead, many African nations will persist in their efforts (however significant or insignificant they may be) to climb the rankings across all four quadrants to improve the lives of their citizens and increase foreign interest and investment. As they do so, it is the IOA team’s hope that the ACBR will provide governments with valuable insights into the yardsticks that should be strived towards and their fellow African countries that they should look to as examples to follow (or not follow). The ACBR also serves to better inform international businesses and institutions on the true, holistic standing of African nations and reveals for the first time Africa’s country benchmarks.

» Download the full IOA Africa Country Benchmark Report (ACBR) 2016.