Batswana enjoy fifth highest standard of living in Africa

MBONGENI MGUNI
Staff Writer | Friday June 24, 2011 00:00

An annual survey by New York-based financial magazine, Global Finance, reveals that Botswana's purchasing power parity (PPP) per capita in Africa is lower only than Libya, Gabon, Equatorial Guinea and Seychelles.

While the first three countries are powered by oil revenues, Seychelle's success is linked to its world-leading tourism sector and status. According to the survey, Botswana's PPP per capita - the generally used measure of comparative standards of living - was equivalent to US$14,792 (P96,148) last year, compared to US$13,992 (P90,948) in 2009.

The figures suggest that productivity levels, standards of living and values added at individual level were on the rise across the two years. The latest figures place the country well ahead of neighbours such as South Africa (US$10,466), Namibia (US$6,717) and Zimbabwe (US$365) with the latter ranked second lowest in the world.

Global Finance researchers involved in the latest survey stressed the importance of using PPP per capita to compare standards of living between countries with varying inflation, exchange rates and other factors. Reads a note accompanying the survey:

'Using a PPP basis is arguably more useful when comparing generalised differences in living standards on the whole between nations. This is because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates, which may distort the real differences in income.

'This is the measure most economists prefer when looking at per-capita wealth and when comparing economic strength between countries and living conditions or use of resources across countries.'

Using the PPP model, Qatar, Luxemburg, Norway and Singapore have the highest standards of living in the world, with the values produced in these economies favouring 'the good life' for their citizens. Critics of the PPP model argue that in wealth comparisons, it is uniformly applied to suggest high standards of living for individuals, while overlooking critical factors such as governance and socio-economic indicators such as health and education. For instance, while citizens of Libya theoretically live in a high-value economy, the prevailing unrest has virtually eroded any 'standards of living' they may have been enjoying.

Similarly, stark socio-economic stratification in many societies means even within the high value economies, wealth is concentrated and distributed in a pyramid structure, with few mega-rich and many poor.

PPPs proponents argue that the model is the most appropriate among the various standards used to measure and compare national and individual wealth, poverty, standards of living and other indicators.