Economies

July 20, 2008

Keeping up on the news back home, I can’t avoid hearing about America’s rotten economy. Six months or so ago this had me feeling a touch smug. The job market would recover by the time I was interested, I told myself. Of course it hasn’t and I’m chastened. Still it’s somewhat dissonant to hear about the U.S. rut from places where the local economies can’t even be measured in the same terms. The unemployment rate in the U.S. is something like five and a half percent. In South Africa it’s at least 30% and far higher in some areas. Outside that second world nation unemployment rate referring to an unemployment rate sounds quaint. Think about Uganda. There the large majority depends on informal agriculture. Might one say the unemployment rate is 90%? Another measure: A couple months ago I visited the Uganda Stock Exchange. It was in an office that looked recently abandoned by a dodgy call center, or it would have if there were more than four computers. One guy ran the place, taking orders from a few traders at the end of the two hour session. (There were three weekly.) He wrote their bids and asking prices on a white board in magic marker. At the end of trading he shook a little bell. I forget the exact numbers but daily trading volume averages, under $500,000. At the time I calculated it as less than the NYSE churns through in one second. Numbers like these have no importance to decisionmakers or anyone else curious about Uganda’s sometimes impressive development efforts. Since almost no one has a pension plan or something like a 401k tied up in stocks, it doesn’t make sense to call the main index a measure of economic sentiment, even though it has done pretty well lately. The recent GDP spurts charted by many countries also seems inadequate. Most of those countries owe their growth exclusively to the export of raw materials and the global commodities boom. These industries don’t usually employ many local people. So how can African economies be measured? I’m no scholar but in the better off nations consumer spending might be a better gauge, especially if it could track the size and spending power of the middle class. If the Internet was fast enough, or power reliable enough, I’d try to find some numbers on spending in Kenya, which is one of few nations in sub-Saharan Africa which can claim a middle class.

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