Archives for posts with tag: South Africa

Last week I wrote a blog post titled “Africa is rising, employment is not” reporting some figures from a new paper by John C. Anyanwu  on the African Statistical Journal. I briefly mentioned in the post that employment stats are not very reliable in Africa because of informality of the labour market. But I kept it a bit vague and some readers put me on the spot: if the data is garbage, why are you blogging about it?

Good question. The reality is that I knew that the data was “not very reliable”, but I didn’t  look in-depth into the issue -so I’ll try to do this now. Look at these national-level definitions taken from the ILO laborista database:

In Kenya, employment data is taken from this question in the national census: 

What was X mainly doing during the last seven days preceding the census night? 1) worked for pay or profit; 2) on leave/sick leave; 3) working on family holding; 4) no work; 5) seeking work; 6) student; 7) retired; 8) disabled; 9) home makers; 10) other

A person is considered employed if over the last week she/he worked “most of the time” for wages, salary, commission, tips, contract or payment in kind

 In Uganda, stats are based on a labour-force survey. You are considered employed if

a) performed “some work” for pay or profit during the reference week; b) were temporarily absent from work during the reference week because of illness or leave, but were definitely going to return; and c) were engaged in production of goods for on use. “Some work” is defined as 1 hour or more during the reference week.

I checked the definitions for a few other countries and they looked rather similar – they tend to include all kinds of casual labour in their employment stats. In Uganda it was quite extreme, if you worked for 1 or 2 hours the week before the interview, you are considered “employed”. When we talk about the importance of “job creation” for development, random casual jobs for one or two hours a week is definitely not what we are talking about. The problem is that when we look at the general graph, it is difficult to make sense of the differences between some countries.

Source: Anyanwu (2013)

Source: Anyanwu (2013)

I’m not an expert of labour markets in each of these countries. But how realistic is it that Burkina Faso, Ethiopia and Central African Republic have relatively high employment rates, while Egypt, Algeria and South Africa are relatively low? Initially I thought that high employment rates could be an indicator of large informal sectors. But that seems like a partial explanation – the reality is that employment statistics are fundamentally unreliable and country-level comparisons cannot be accurate.

A recent paper by Fox and Pimhidzai looks at the problem more in-depth for Africa and particularly for Uganda. Excerpts from the abstract:

 A cursory review of employment data for low-income Sub-Saharan African countries shows both large gaps and improbable variation within countries over time and among countries, suggesting that low quality data are routinely reported by national statistics offices. Unfortunately, policies are formed and projects developed and implemented on the basis of these statistics. Therefore, errors of measurement could be having profound implications on the strategic priorities and policies of a country… [The paper] finds that estimates of employment outcomes are unreliable if the questionnaire did not use screening questions, as labor force participation will be underestimated. Likewise, surveys that use a seven-day recall period underestimate or potentially misrepresent employment outcomes, owing to seasonality and multiple jobs. […] The paper concludes that there is a knowledge gap about employment outcomes in Sub-Saharan Africa that will continue unless collection techniques improve.

So the lesson of the day is “to always be suspicious about employment stats in Africa”, especially cross-country comparisons. Thanks to  @RachelStrohm and @RowanEmslie among others for questioning the issue.

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Late in 2010, after a visit to the Democratic Republic of Congo, the United Nations’ special rapporteur on sexual violence called that country the “rape capital of the world.” Last month, a South African politician named her own country the “rape capital of the world.”

Data analysis from Google shows that since 2004, the most common single term related to searches from the United States for “Africa” has been “AIDS.” This year, the charity Save the Children named Niger the “worst place to be a mother.” On the United Nations’ Web site, Africa is the only continent listed under “Issues.”

The rest of the article is on successful women entrepreneurs.

I’ve been reading an interesting World Bank report on finance for small and medium enterprises (SMEs) in South Africa (the only link I found online is here). There is an interesting passage on how the Black Economic Empowerment (BEE) program has (not) changed the bank’s behavior towards SMEs:

In contrast to the economic drivers, political economy considerations appeared to play only a marginal role in determining bank strategies toward the small enterprise sector. For example, most banks said that in the absence of the Financial Sector Charter (FSC), under which the banking industry agreed to lend R5bn to Black- and women-owned SMEs between 2003 and 2008, their lending to SMEs would stay the same.

Their response does not suggest that banks were unaware of the developmental importance of small enterprises in South Africa but, rather, that the market-based incentives shaping bank strategies were comparatively stronger. Banks generally were well attuned to the opportunities generated by the structural changes taking place in the country’s economy and responded accordingly—but in a commercial way rather than out of any sort of societal or political obligation. This commercial orientation is borne out by the fact that banks’ utilization of the Khula guarantee scheme was very low. In most cases, less than 5 percent of their total small enterprise loan book was covered by a Khula indemnity. It could be surmised that if the banks felt the political pressure to lend more to small enterprises, they would have made more active use of the Khula indemnity scheme, even if they had felt it needed reform and did not operate efficiently. As mentioned above, the banking industry generally was happy to go along with government calls for them to adopt a more lenient stance toward small businesses that were struggling during the downturn. The banks did react more leniently, not because they wanted to please the government but because it made business sense for them to do so.