Sub-Saharan Africa Logs Most Progress in Economic Freedom

Sub-Saharan Africa continues to rank last in most measures of economic freedom, but it made more progress in that area last year than any other region, according to the 2011 Index of Economic Freedom, released today by The Heritage Foundation and The Wall Street Journal.

Mauritius earned the top Index rating for the region, ranking 12th in the world. It was the only sub-Saharan nation to break into the Top 20. But the region boasted many of the most improved scores.

Rwanda logged the largest gain of any country, increasing its Index score by 3.6 points to 62.7 (on a scale of 100). That improvement was enough to lift it from the category of “mostly unfree” to “moderately free.” Burkina Faso also moved into the company of “moderately free” economies with a score of 60.6 – up 1.2 points over the previous year.

Other sub-Saharan nations making significant improvement in their scores were Djibouti and the Seychelles, whose ratings rose more than three points, and Guinea-Bissau, Cape Verde, the Gambia and Burundi, all of whose scores improved by more than two points.

While the region’s average rating for economic freedom increased by 0.6 points to 53.5, it still trailed the global average of 59.4. One category in which the region fell short was freedom from corruption. Only three countries – Mauritius, Botswana and Cape Verde – scored even 50 on the 1-100 scale. Only three others scored in the 40s.

“Although there were encouraging developments, this region continues to lag far behind in most measures,” write the editors of the Index. “Political instability and poor management of macroeconomic policies severely impede overall economic development” in much of the region.

The Index, compiled as a joint project of The Heritage Foundation and The Wall Street Journal, ranks countries on a 1-100 scale in 10 categories that evaluate openness, the rule of law and competitiveness. The 10 scores are averaged to produce the overall score.

Countries that score well demonstrate a commitment to individual empowerment, non-discrimination and the promotion of competition. Their economies tend to perform better, and their populations tend to enjoy more prosperity, better health and more positive measures on a variety of quality-of-life indices.

Sub-Saharan Africa ranks last among the six regions of the world in seven of the 10 measures. It lags more than 10 points behind in business freedom and about 12 points behind in property rights and freedom from corruption. Labor freedom scores also are low, reflecting in part the region’s lack of progress in developing modern and efficient labor regulation.

But scores in 28 of the region’s 46 countries improved this year thanks, in many cases, to trade facilitation and regulatory reform.

Mauritius continued to show the way, scoring above the global average on eight of the 10 categories and demonstrating its commitment to economic freedom by embracing and accelerating major tax reforms.

This region is the world’s poorest. Yet, countries that embrace economic freedom do much better than those that don’t. The region’s top five countries on the Index rankings – Mauritius, Botswana, Cape Verde, Namibia and South Africa – enjoy per capita GDP of more than six times greater than that of the bottom five: Zimbabwe, Eritrea, Democratic Republic of Congo, Republic of Congo and Comoros.