Visa in Nigeria released the second annual Visa Africa Integration Index that measures the degree of economic integration within key trade corridors of sub-Saharan Africa, namely West Africa, East Africa and Southern Africa.
The purpose of the Index is to better understand and help facilitate economic growth from greater cross-border interaction and economic openness. Together with its partners, Visa touches 500 million people in Africa.
Ade Ashaye, country manager for Visa in West Africa, said: “Since the launch of the Visa Africa Integration Index in 2013, the African economy has extended its best period of economic growth on record by delivering growth of 4.8 percent in 2013.”
The Index is built from country-level macroeconomic data, and a wealth of proprietary data drawn from Visa in sub-Saharan Africa, that sum to more than 4 million observations measured across 19 elements. The final outputs are economic integration scores at the country and regional levels measured on a semi-annual basis for the period 2011-2013.
It is widely expected that buoyant economic growth will continue for the foreseeable future and it is likely that the African economy will achieve a growth rate approaching 5.5 percent in 2014, Ashaye said, saying with a collective gross domestic product (GDP) of over $1.9 trillion – a figure that is expected to exceed $2.6 trillion by 2020.
Nigeria, which recently overtook South Africa to become the largest economy in Africa, had a score of 40.5 at the end of 2013 on the Visa Africa Integration Index, improving from 37.7 at the start of 2011. At the end of 2012, the Index level was virtually the same at 40.6.
South Africa has the highest score on the Visa Africa Integration Index, improving from 61.1 at the start of 2011 to 66.7 at the end of 2013.
Said Ashaye: “Nigeria will benefit enormously from greater integration, as its growing market matures and modernises, and the demand for capital and a diversity of trade partners rises to address the needs of increasing industrialisation, a rising appetite for production and services and growing sophistication in lifestyles.”
The analysis also considers the depth and breadth of integration, and how integrated each country is globally and regionally. Measuring economic integration by way of depth and breadth provides for a more granular description and better understanding of the nature of integration beyond conventional economic measures.
In terms of “depth,” a country is considered to be “deeply integrated” if the economy is particularly open and highly connected to the rest of the world. However, integration only becomes “deep and broad” if a highly connected economy is engaged with a wide variety of counter parties across the different strands of its global relationships.
South Africa scores highest amongst the 11 countries for global integration with a score of 42.6 out of 50.
However Nigeria has made significant strides in regional integration efforts where its score increased from 30.8 to 34.8 during the three year period ending 2013. This is likely to translate into broader integration across the continent and further afield in global integration.
Kenya scores highest for regional integration, narrowly overtaking Ghana. But all of these countries – South Africa, Ghana, Kenya and the other eight – are a long way off the global median of 50.
“The Index offers Visa an academically rigorous foundation to understand how we can serve Africa better. We also hope the Index provides another useful tool for policymakers when making strategic economic decisions,” Ashaye said.
Visa is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments..
