Rami Abulnaga, Deputy Governor, the Central Bank of Egypt (CBE), said it has always been imperative to critically reflect on decision-making tools and policies, but in the wake of the COVID-19 pandemic, it has become necessary, if not urgent.
He noted that the world has not seen such an abrupt halt in economic activity of this scale since the 2008 financial crisis.
Decision-makers are often faced with the duty of prompt and effective policy response. Such response becomes especially difficult when the effects of economic shocks cannot be measured in a timely fashion.
Furthermore, in times of recovery from periods of economic downturn, it remains important to gauge different aspects of the economy to ensure policies are enacted correctly.
In today’s fast-paced modern economy, fluctuations and changes are inevitable and frequent, more so than ever before.
This begs the question if more is needed to supplement decision-makers in effectively measuring the economy? There is an indisputable need for the use of more granular, timely, rich, and accurate data that may have not been traditionally used before in policy-making.
There is also a need for more capable tools and techniques that can capitalize on the data. Recognizing this need, we set out at the Central Bank of Egypt to create a Data Science function that will aid in unleashing the bank’s potential and inspire more data-driven decision making.
The Data Science and Advanced Analytics Hub was founded in 2020 in accordance with the Central Bank of Egypt’s vision and mission to empower decision making with new tools and techniques and embrace modernization.
Abulnaga said: “We created the Hub as a center of excellence for Data Science practices with a mission to help CBE in adopting some of the latest and best practices in data-driven methods. I am proud of how this was done in accordance with international best practices in central banking and policy-making.”
The CBE’s leadership believes in the power of data science and advanced analytics to drive economic policy making. In fact, we have selected executive champions from CBE’s senior management who successfully enabled and helped drive the quick wins that the hub has accomplished so far.
The Data Science Hub supports policy making at CBE in three distinct ways:
– Research – where our data scientists constantly collaborate with economists whilst leveraging machine learning and advanced analytics to answer policy relevant questions. The use of Machine Learning and Artificial Intelligence has proven to be useful. These techniques can lead to better results in many predictive tasks, like in forecasting macroeconomic indicators or in extracting insights from large datasets.
– Applied Data Science and Analytics where the Hub assists other teams within the CBE to make better use of their existing data, and discover new ways we could extract insights and gain value from our digital assets. This way, the hub helps us identify areas of unrealized potential from our data, and in the process, create forward-looking standards and practices related to data across the organization.
– Analytics Training and Outreach where our hub is mandated to upskill CBE’s talent in the advanced analytics domain. It is also where the hub proactively ensures that success stories are spread across the organization to build appetite for more projects. And this is where we develop and maintain a network of Data Science and Advanced Analytics champions across the CBE.
Abulnaga said: “I would like to highlight one of the key projects the hub is engaged in – which is the Alternative Indicators project. This project has successfully provided an alternative and complementary view of the economy for senior policy-makers at CBE through the use of nontraditional, or alternative, data – such as online prices, Google trends, satellite data, and ship movement data. We realize that every day, all around us, data is being generated and collected as we interact with our existing technology infrastructure.”
Some examples of this data include geolocations of people or objects, timestamps of events, receipts of transactions, interactions with social media, and many more. Among this pool of data, some is useful in generating insights related to the economy or the domain of the decision-makers. We believe that alternative data and the insights generated through it would be complementary to existing traditional analytics efforts across our organization.
There have been extensive ongoing efforts in adopting alternative indicators internationally by many of the world’s central banks and statistical organizations. And I am proud that our hub is leveraging alternative data in a way that helps us overcome challenges traditional data faces in terms of frequency or availability.
Egypt has been on a transformational journey towards our ambitions to achieve the goals of Vision 2030. Large scale digital transformation initiatives are being enacted, and a trend towards modernization and embracing a technological future is clear.
The Central Bank of Egypt is committed to embracing and playing an important role in this trend, and the foundation of the Data Science Hub is an example of this commitment.
We aspire to grow the Data Science Hub to harbor more talent, assist teams across the organization and build better data-driven capabilities.
We value and seek collaboration with our fellow African nations on building better data-driven functions and sharing best practices around the use of data in policy-making. It is remarkable how resilient Africa has been during recent times of turbulence, and embracing new techniques in policy-making will only increase our readiness and resilience in the face of adversity. We look forward to a fruitful discussion.
