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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 top 10 countries according to the KPMG Africa Good Life Index

The top 10 countries according to the KPMG Africa Good Life Index

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.

Download a copy of the KPMG Africa Good Life Index

For more information

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Lullu Krugel
Chief Economist
KPMG in South Africa
E: lullu.krugel@kpmg.co.za
KPMG profile

 

About Femi Oke

Relentless passion for creativity and digital acumen to help a professional services firm thrive in the digital space. Femi is an individual with a rich experience on regional African knowledge, its diverse business culture and he understands the continent’s economic drive. He thrives on selfless service and lasting mutually beneficial relationships with colleagues and especially clients encountered in the course of his duties. He is creative, practical and self-motivated with business judgement in corporate, brand and strategic communications, social, digital & traditional media and executive profiling. Roles in the firm include New Media, Digital Communication, Corporate Communication, executive profiling and Brand Management execution. Working on the multi-million dollar Africa high growth market project stands out for femi; besides this, managing all KPMG’s digital communication for the World Economic Forum on Africa is another project that gives him great delight. Femi holds a Masters Degree in Global Marketing from the University of Liverpool.

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One Response to Africa Good Life Index: Why understanding more than GDP is important

  1. Joseph Ezenwa November 14, 2016 at 2:19 pm #

    GDP and GNP are essentially economic indices.GDP is concerned with the quantity of goods and services produced by a given country measured in monetary terms.What constitutes the Gross National Product(GNP) and Gross National Income(GNI). GDP per capita is another relevant economic index.How relevant is this?.I agree on the fact that a person’s wellness is influenced by such variables as surroundings, living conditions, political conditions and environment.These are influences that are external to individuals living in a given country.The political conditions and environments amongst other variables also are uncontrollable factors that impact on organizations.This is why political.economical,socio-logical,technological,environmental and legal (PESTEL) analytical tools are used in external environmental analysis.If organizations are exposed to these factors especially when they are unfavourable they impact on organizations contribution to GDP and GNP.
    Wellness measures are essentially critical because it people that are exposed from unfavourable economic conditions.I believe Bhutan Gross National Happiness (GNH) index and the Organisation for Economic Co-operation and Development (OECD) Better Life Index are good measures. It is good to note that wellness measures has gained interest, not only in the field of economics but also been researched by environmentalists, psychologists, religious and political leaders.

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