Visa has launched the 4th edition of its Africa Integration Index that measures the degree of economic integration with key trade corridors of sub-Saharan Africa.

Launched at the World Economic Forum in Durban, South Africa, the report aims to better understand Africa to help unleash the enormous growth potential in electronic payments on the continent, and includes countries of Francophone Africa for the first time since its first edition in 2013.

The Africa Integration Index has become a significant research project for Visa and is now beginning to show trends and deliver insights that are impactful and significant to provide policymakers with an insightful and academically sound tool to help shape economic decisions.

Measuring connectedness

The extent and nature of a country’s connections to both the global and regional economy is one of the single biggest influencers of socio-economic change. While mainstream measures of economic integration have focussed more intently on trade flows and capital movements, they have a tendency to overlook other key pillars of economic connectedness, such as flows of information, knowledge, data and people, across borders.

Measurement becomes more complex in many emerging and frontier economies, as data are often incomplete or missing entirely. This is especially true for the countries that make up Sub-Saharan Africa. The Visa Africa Integration Index, now in its fourth edition, aims to improve our understanding on the importance of economic connectedness and to redress the deficit in information and knowledge about the mechanisms of socio-economic integration, which enable and promote development.

Assimilating country and industry data, together with country-specific information proprietary to Visa, the index has measured and offered insight into economic connectedness for 11 indicative Sub-Saharan economies since 2011. The latest index highlights several important observations that, overwhelmingly, confirm the earlier findings. These are detailed below in this updated version, which extends to 19 countries divided into four regions – Central Africa, East Africa, Southern Africa and West Africa – representing 75% of the subcontinent’s population and 85% of output. Several clear trends emerge:

• Sub-Saharan African economies rank amongst the least connected in the world. Since our measurement began five years ago, however, the evidence points to connections growing quickly and effectively, particularly in east Africa, although Cameroon, Ghana and Zambia also stand out.

• In line with data for different countries studied over other periods, there is a strong correspondence between rising connectedness and improvements in economic and social wellbeing. Rwanda is an example of a stand out economy. Over the past five years, the country has displayed the largest relative gain in connectedness amongst the 19 countries in the index. This has manifested in a gain in per person income of 7.0% per year.

• All boats do not rise with the same tide. Kenya and Rwanda have made large gains in connectedness off relatively low bases over the five years covered by this research, Botswana has not moved much off its relatively high base, and Angola has struggled to improve off a low base. The Democratic Republic of Congo’s score has fallen.

• The Visa Africa Integration Index makes an important and necessary contribution towards filling gaps in data and knowledge relating to many Sub-Saharan economies. It affords better understanding of the drivers and shapers of economic development in the region, helps inform data-driven policy and offers industrial and economic intelligence to business decision makers.

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Download: Visa Africa Integration Index: Connecting for Growth, Economic Inclusion & Prosperity (PDF)