Kenya, Gambia and Cabo Verde economic freedom gains defy the pandemic

Three African countries recorded some of their biggest improvements in freeing up their economies for the citizenry just as COVID-19 hit global economies hard.

The Gambia, the smallest country on the continent (more than twice as small as Lesotho and smaller than Djibouti or Eswatini) moved up 24 places - the most places in a global ranking of economic freedom - to settle at position 58, reflecting higher levels of personal choices, access to finance and markets enjoyed by citizens.

Cape Verde, the island nation in the Atlantic Ocean, moved 10 places to 30th while East Africa’s largest economy, Kenya climbed eight slots to position 78 according to Canada’s Fraser Institute ‘Economic Freedom of the World: 2022’ report.

A total of 146 out of 165 jurisdictions recorded lower scores in 2020 compared to the previous years, due to increased government spending on responses to the pandemic, monetary expansion, travel restrictions, limited business and working hours and total lockdowns.

The report shows the average rating fell to 6.84 in 2020 from 7.00 in 2019, erasing about a decade’s worth of improvement in economic freedom in the world.

“While the report takes no position on whether public health measures were merited, there’s no question that government policies during the first year of the pandemic reduced economic freedom,” said Fraser Institute Research Economic Freedom Chair, Fred McMahon.

Sound regulations that promote freedom of exchange in credit, labour, and product markets helped to lift The Gambia’s scores and overall ranking. The country had its highest global score in labour market regulations.

Cape Verde scored high points in access to sound money - resulting in macroeconomic price stability and predictability - and credit market regulations, which regulate lenders and access to growth funds. Over the last decade, the country has seen a consistent rise up the ranks, improving by 73 positions since 2020.

Kenya’s highest metric score was also in access to sound money, with marginal improvement in size of government, legal systems and property rights.

Mauritius remained Africa’s top country with the most economic freedom, despite a two-point drop in its global ranking, to position nine, followed by Cape Verde and Botswana (49) after falling four places.

All other African countries – including Uganda (60), Seychelles (72) and Rwanda (81)  - in the "top ten" category of most-free African economies recorded drops in rankings.

Among the continent’s biggest economies, only Kenya improved its overall rankings in a pandemic year.

“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” said McMahon.

The report points to higher levels of well-being for people in freer economies - with the average income of the poorest 10 percent of jurisdictions with the most freedom being more than twice the average, per-capita, in the least-free nations.

Nigeria (92) though with among the highest scores in labour market regulations (8.9), dropped from position 84, South Africa also dropped from a similar position to rank 99th (tied with Tanzania and Morocco) while Egypt fell by four ranks to 150.