By Dr. Suleiman Walhad
November 17th, 20022
I remember I first heard of a gross national product as a young student in my geography class at grade 6. There was this flamboyant teacher, Mr. Hassan Aw Ali, who taught us about geography, countries and where many of the products that people consume are grown and/or produced, and the necessary climes and soils for each of these products. He taught us about wheat, cotton, rice and potatoes, and he would claim his shirt was made of cotton grown in the Nile valley in Egypt. He would teach us the nature of the cotton seed and where it grows, and which countries produce it most and so on so forth. It was in one of those lessons when I came across the term Gross National Product of each country and the Gross National Income and the per capita income and related topics. I used to wonder how they make such calculations for where I was growing, it was almost impossible to calculate the income of each person. Many of the people around me and the village then, where I was growing in, appeared impossible to me. Yet they were measuring and producing numbers for Somalia, Ethiopia, and other countries.
As I grew up, these numbers kept coming back to me through my studies and profession, which required required that I know about them not in terms of how these numbers are calculated but mostly how they are used and what they meant for each country. In a nutshell, I came to learn and respect that the numbers represented the economic pie of each country vis a vis other countries and that the bigger the number was, the better the economy of each country was. Yet something never added for me for countries like those of the Horn of Africa States and many other countries where the use of numbers was limited and where hardly statistical models were used to determine for development.
As I moved on from Africa to more developed countries, it became clearer how those numbers and mathematical calculations were made and I had to appreciate why they were important numbers. I came to learn that each individual’s income was calculated and kept through each nation’s tax regulations. Here it was possible not only to record the gross national product of each company in the country but also the income generated by each adult individual, even if they were in welfare situations. Each company or institution has to make a return each year on its financial activities and so is the case for each individual. It clearly then makes sense to talk about the gross national product or gross national income of a country or nation.
A Gross National Product of a country is not fully accurate but generally represents a close estimate of the total value of all products and services produced by a country through its production and services facilities. It is measured as the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports, and incomes earned from overseas investments minus the income earned by foreign residents. Note net exports represent the difference between what a country exports minus any imports of goods and services. A Gross national Product is related to the gross Domestic Product (GDP), which represents all output produced in a country regardless of who owns the means of production. These statistical numbers lead us to the important other economic indicator used to compare nations or countries, which is known as the “Per Capita Income.” A Per capita income (PCI) or “average income per person” represents the average income per person of a country for a specific period, usually a year. It is used to calculate and represent the living standard and quality of life in a country.
How is it then possible to have a comparable number for countries where neither each individual nor any of the institutions, public or private make returns on their activities each year or a specific period. I know the majority of the people of the Horn of Africa States do not make returns financially or otherwise on their products or services and the largest number of its adult population do not make returns on their incomes or expenditures. They do not even pay all the necessary taxes due from them by law as citizens of the country, though they expect the governments to build schools, hospitals or roads or other economic and social infrastructures for them. The main reason for lack of these numbers and data is the fact that most of the population of the region is rural and do not record any of their activities through which they earn their living. They are either small farmers living on subsistence or pastoralists living off their animals.
The small businesses in their villages and towns do not make any returns and perhaps pay partially only some of the taxes such as property taxes, import taxes through the country’s import entry points and sometimes export taxes again through the country’s export exit points. There is also little of income taxes paid by persons who work for government and other registered international institutions. Many of the major corporations pay only taxes on unverified or unaudited incomes and hence whatever number given for the “per Capita Income” or “Gross National Product” or “Gross Domestic product” appears to be based solely on estimations that do not make any sense at all for the region.
Cathy O’Neil in her book “Weapons of Math Destruction” and I borrowed the title of this article from her book, clearly points usage of wrong data on how to deal with countries such as those of the Horn of Africa States. In this regard, let us perhaps look on the implications of these numbers:
First a “Per Capita Income” is a measure of the wealth of a nation. When one says the per capita income, of the Horn of Africa States, is such a number and the number is an incredibly a low number, it permanently condemns the region to eternal poverty for no major corporation would seek to go into that region. It is a wall against potential investments in the region. In fact, the numbers reported for the region has no relevance to life in the region. No one can live off some US$ 500 to US$ 1,000 per year anywhere, let alone in the Horn of Africa States.
Second, it is used by nongovernmental organizations to come into the region to disrupt the life systems and ecosystems of the region with the pretext of assisting the region, when in fact they participate in worsening situations the region could have managed on its own. They come running to distribute food to empty the stores of their original countries so that new harvests can be stored, and this prevents the local farmers to farm their own lands and produce their own food as was always the case in the past. Many live off food aid these days instead of producing their own food.
Third, a high per capita income allows foreign investors to seek opportunities in the country. The fact that they report low statistical data for the region prevents others to pursue developmental opportunities in the region. These opaque numbers for the region should not be allowed by the governments of the region as a measure of the economies of the region. They are used as unquestionable statistical data and hence are unaccountable. They reflect a region, which would permanently be poor and create vicious models that would not be good for the region. We must remember that no statistical data is accurate or can be perfect and the region should not be a collateral damage for numbers created out of thin air and such are the Gross National Products or Gross Domestic products or the Per capita Income of the SEED countries.
