Does Better Data Mean Better Finances? Statistical Capacity and Fiscal Sustainability in Africa

Despite theoretical arguments linking statistical capacity to fiscal performance, no empirical study has explicitly tested whether improvements in statistical systems enhance fiscal sustainability in Africa, nor has it identified the transmission channels. This study fills that gap. Using panel data for 54 African countries from 2016 to 2023, we employed pooled OLS, Driscoll-Kraay, quantile regression, Lewbel (2012) IV, and mediation analysis to examine the effect of the World Bank's Statistical Performance Index (SPI) on fiscal sustainability. Results consistently show that higher statistical capacity significantly improves fiscal sustainability: a one-point increase in SPI raises the primary-balance-based sustainability measure by 0.19-0.21 units. The effect is robust to alternative measures, disaggregated SPI components, outlier exclusion, and regional truncation. Quantile regressions reveal larger marginal returns for countries already in the upper tail of fiscal performance. Mediation analysis indicates that governance quality, particularly regulatory quality, corruption control, and the rule of law, accounts for 25-63% of the total effect. Policy implications include prioritising statistical investment in fiscal infrastructure, targeting governance channels, differentiating investments by capacity level, leveraging specific SPI subcomponents, and incorporating statistical capacity into debt sustainability frameworks. These findings establish statistical capacity as an actionable lever for fiscal resilience in Africa.