According to new research from the Legatum Institute, which last week ranked prosperity in 38 African countries around criteria ranging from economics to education to health, the title belongs to Botswana, the diamond-rich country in southern Africa.
As well as posting a relatively high per capita Gross Domestic Product (GDP) of $15,176, Botswana also fared well in terms of governance, education and personal freedom. As the country spends 8% of its GDP on education, it is among the biggest proportional spenders in the world according to the World Bank. This is the third year in a row that Botswana has topped the index.
In contrast, the Central African Republic was the lowest ranked country on the continent. The country, which has a per capita GDP of $584, has seen increasing violence since the end of 2012, and only 21.5% of the population have access to sanitation according to the prosperity index.
Rwanda was the best improver, gaining five ranking places to end up as the eighth most prosperous country in Africa. The country was found to have the sixth highest ranking in regulation and government effectiveness, the eighth highest score in rule of law and the lowest perceptions of corruption in Africa.
“Rwanda deserves credit for actively encouraging women to play a central role in shaping the future of their country. And it seems to be paying dividends,” says the report.
These findings bucked trends across the continent, where 41% of women are out of work, as opposed to 23% of men.
“We cannot talk about the prosperity of women in Africa if we don’t change the inappropriate policies that hinder their progress,” argues Marieme Jamme, a Davos Young Global leader and CEO of SpotOne Global Solutions. “We cannot sugar coat the issues of funding, mentoring, gender equality, recognition and representation and expect women to come winners within the current framework and plans we have in Africa.”
Other notable gainers since 2012 included countries from East Africa — while neither Kenya nor Mozambique featured in the top 10 most prosperous countries in Africa, they both rose by four places in the rankings since 2012.
As over 44% of Kenyans thought it was a good time to find employment, the country ranked ninth in terms of entrepreneurship and opportunity. But following the 2013 siege in Nairobi’s Westgate Mall the country ranked 32 of 38 in terms of safety and security.
Falling down the ranks
Regional partner Tanzania, by contrast, fell eight places since 2012 going from 11th to 19th in the latest rankings. A drop in five-year average growth and an increase in inflation were coupled with a decline in confidence in financial institutions and falling satisfaction with living standards.
The country fared particularly badly in terms of personal freedom, where it fell from 24th to 28th.
While Tanzania’s education score rose by one place in the rankings, the report argues that Tanzania needs to improve the quality of education in schools rather than focusing on enrollment rates. “Tanzanian education is not producing graduates with the skills needed to work in the formal sector,” the report says. “The lack of an adequately skilled workforce is a hindrance to investment in sectors such as manufacturing, construction, mining, agriculture, finance, and communications…Tanzania needs education that improves students’ chances of finding employment.”
The biggest faller was Malawi, which dropped 11 places since 2012 to 20th in the index. The report cites a drop in the five-year GDP growth rate as part of the reason the country fell by 18 places in the Economy sub-index.
In all, average prosperity in Africa has been on the up since 2012. In the past two years all countries have seen increases in at least one area tracked by the report.
But Nathan Gamester, program director of the Prosperity Index ,added a cautious note to the findings: “As African economies grow, a chief concern for many governments is how to ensure that the fruits of growth benefit a majority of the population and contribute to true long term prosperity.”
THESE ARE THE 10 MOST PROSPEROUS AFRICAN COUNTRIES
Senegal’s economic freedom score is 57.8, making its economy the 106th freest in the 2015 Index. Its score has increased by 2.4 points since last year, driven by improvements in half of the 10 economic freedoms, including freedom from corruption, business freedom, and fiscal freedom, that outweigh declines in labor freedom and the management of government spending. Senegal is ranked 16th out of 46 countries in the Sub-Saharan Africa region, and its score is below the world average.
After four years of little progress, economic freedom in Senegal has advanced by 2.1 points since 2011, and the country has recorded the fourth highest score improvement of any country graded in the 2015 Index.
However, the Senegalese economy remains “mostly unfree.” Senegal’s economic freedom remains suppressed by weak rule of law and a poor regulatory environment. The judiciary lacks the resources to prevent corruption and move cases efficiently. Registering a business is expensive, and the rigid labor code confines many to informal employment.
Former President Abdoulaye Wade amended Senegal’s constitution over a dozen times to augment executive power and weaken the opposition, but his run for a third term ended in his defeat by Macky Sall in March 2012. In September 2012, lawmakers voted to abolish the Senate and the vice presidency to save money for disaster management. Sall appointed Aminata Touré prime minister in 2013. After more than 30 years of conflict between the government and southern separatists, the rebel leader of the Movement of Democratic Forces of Casamance declared a unilateral cease-fire in May 2014. Economic reforms have proceeded slowly. Some 75 percent of the workforce is engaged in agriculture or fishing. High formal-sector unemployment is a major factor in high rates of emigration to Europe. Senegal remains heavily dependent on foreign aid and has suffered from the 2014 Ebola virus outbreak in West Africa.
RULE OF LAW
Despite steps to fight corruption, there still are few checks and balances. Several large-scale scandals have involved government construction contracts, but high-ranking officials remain largely unaccountable, and there have been few bribery or corruption convictions. The judiciary is independent but under-resourced and subject to external influences. Property titling procedures are uneven across the country.
Senegal’s top individual income tax rate has been lowered to 40 percent, but its top corporate tax rate has increased to 30 percent. Other taxes include a value-added tax and an insurance tax. Tax revenue equals 19.2 percent of domestic income, and government spending is equal to 29.1 percent of domestic output. Public debt equals 46 percent of GDP.
Administrative procedures have been streamlined, and the minimum capital required has been reduced, but the overall cost of launching a business remains high. The underdeveloped labor market still traps much of the labor force in informal economic activity. Electricity subsidies exceed 2.5 percent of GDP, reflecting prices that are about 40 percent below production costs.
Senegal’s average tariff rate is 8.0 percent. Non-tariff barriers restrict some agricultural imports. The government does not typically discriminate against foreign investment but may screen new investment. With 19 banks and two financial institutions, the financial sector is underdeveloped and dominated by foreign banks. The capital market remains rudimentary, and few firms have access to credit.