Africa Good Life Index: Why understanding more than GDP is important
Gross domestic product (GDP) and gross national product (GNP) are widely used to indicate the difference between poor and rich countries. However, GDP and GNP do not distinguish between activities that increase a nation’s wealth and deplete the natural resources. While there is a significant correlation between well-being and GDP, citizens’ quality of life is not merely a simple function of wealth. A number of things influences a person’s wellness including their surroundings, living conditions, political conditions and environment. It is valuable to take as many of these external influences into account to get a more balanced reflection of the overall quality than life, based on more than GDP.
The United Nations supported a study co-sponsored by 69 countries stating that:
“…happiness is a fundamental human goal and universal aspiration; that GDP by its nature does not reflect the goal; that unsustainable patterns of production and consumption impede sustainable development; and that a more inclusive, equitable and balanced approach is needed to promote sustainability, eradicate poverty, and enhance well-being and profound happiness.”
The KPMG Africa Good Life Index does not base quality of life on income only, but includes three wider pillars: good socio-economic conditions, good environment, and good governance. Each of these pillars consists of 12 different topics, which in turn are built up using 22 weighted indicators. This index is built specifically for the African continent and yields a comparison of the countries within Africa.
This index helps gain a better understanding of the differences in quality of life across Africa. The index yields a more balanced perspective of Africa’s quality of life at a country level but could also change the way governments make policies and allocate resources.
The history of wellness measures
Economists have made various attempts at creating an alternative measure to GDP that would better reflect the well-being of a nation beyond economic activity. The Bhutan Gross National Happiness (GNH) index and the Organisation for Economic Co-operation and Development (OECD) Better Life Index are well known examples of initiatives in this field. Wellness measures has gained interest, not only in the field of economics but also been researched by environmentalists, psychologists, religious and political leaders. By using the Bhutan GNH and the OECD Better Life Index as inspiration1, KPMG developed the KPMG Africa Good Life Index to determine how African countries compare in terms of quality of life. Similar topics based on data availability were grouped into three unique pillars. Data for African countries are difficult to obtain, yet 22 indicators were obtained that fit the necessary statistical criteria. A better understanding of people’s wellbeing is essential to developing better policies and, effectively, better lives.
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