1 A PRESENTATION ON THE STATUS OF ECONOMIC STATISTICS (MANUFACTURING) IN UGANDA By John Bonaventure Musoke Senior Statistician

2 “A CANDLE LOOSES NOTHING BY LIGHTING ANOTHER CANDLE” Prof. Ssenteza Kajubi

3 Content The Business Register 2001/2002 and 2006/7 Uganda Business Inquiry 2000/2001 Index of Industrial Production (IoP – M) Producer Price Index (PPI) Challenges

4 The Business Register 2001/2002 Defn: A business register is a record of all active business establishments. Essentially it contains structural information about each business. Objectives - Create a comprehensive list of businesses - Provide a frame for future business surveys

5 The Business Register ….. Prior to the start of the Registration exercise an attempt was made to compile the register from administrative sources; - The Uganda Revenue Authority - Uganda manufacturers Association (UMA) - Uganda Investment Authority etc.

6 The Business Register ….. Variables collected - Name of Establishment, Activity ( ISIC), Location, GPS Coordinates, Tel:, Postal Address, Employment by sex, Type of Ownership, Start date, if enterprise – name.

7 The Business Register ….. Coverage We covered all businesses operating from a fixed location, regardless of employment size band A total of 160,883 businesses were registered out of which 11,968 were for manufacturing

8 THE UGANDA BUSINESS INQUIRY (UBI) 2000/2001 Defn: This is an economic survey covering all sectors in the economy for the financial year 2000/2001

9 UBI Cont……… Objectives - Compute VA for estimating GDP - Estimate capital Formation - Update input output table - Compile SAM - Update weights for IIP - Establish wts for PPI

10 GO and VA for manufacturing 2000/1 Sub sectorGO (mil. shs)VA (mil. shs) VA/GO Food processing 912,140325, Other manufacturin g 812,823284, Total1,724,963609,

11 Annual Business Inquiry 2006/7 In order to produce high frequency data that can enable us update these important indicators we are now carrying out an ABI with ref. yr 2006/7. We finished data collection and have just finished data entry. A draft report is expected around July 2009.

12 Index of Production (Manufacturing) By John B. Musoke

13 Historical Background of IIP Work started in 1990 after the Census of Business Establishments (COBE) The IIP was based mostly on measuring quantities of production for products available in the base period.

14 Errors within the IIP System Challenges encountered in using Quantity to measure volume change…. - Establishments that close - New Establishments and products - Non Homogeneous products - Conversion factor related problems or problems related to human error

15 Index of Production (IoP) Index rebranded IoP to expand and Cover - Manufacturing - Services - Utilities - Mining

16 IoP – Manufacturing……. The index computation mostly utilizes deflated Sales values to measure change. It still remains a volume/quantity index. Q * P = V Q = V/P Qindex = Vindex/Pindex

17 IoP – Manufacturing……. Just as PPI, data for IoP is collected from formal manufacturing across the country majority of it coming from the industrial belt of Uganda C:\Documents and Settings\john.musoke.UBOS.000\My Documents\Maps\ugandan map1.docC:\Documents and Settings\john.musoke.UBOS.000\My Documents\Maps\ugandan map1.doc

18 IoP – Manufacturing……. Monthly data is collected on a quarterly basis but entered by month in an Excel data file.(IoP DATA SALES) There are three sources of data:- - Survey data - VAT data - Quantities data from mandated Authorities

19 IoP – Manufacturing……. The index is derived in two steps: First, for each “basic heading” (product or activity group) a value index is compiled by adding total turnover for each business (no weighting – full coverage assumed) The value index is then divided by a corresponding price index (PPI) This operation delivers volume indices at “basic heading” level

20 IoP – Manufacturing……. Second, these basic level indices are combined using the Laspeyres formula into the major Divisions/Groups and all Manufacturing. The weights used to aggregate are based on gross value added taken from the UBI

21 IoP – Manufacturing……. The index is based on 2002 Until June 2004, the basic heading indices were based on the old system (quantities) From July 2004 onwards, deflated turnover has been adopted in most cases The new indices are “linked” to the old before being aggregated.

22 IoP – Manufacturing……. Quality control (Sales are much more variable than prices and more subject to error) We calculate the response rates based on known (or assumed) average values of turnover in the previous 12 months and impute for non-respondents. We check the month-to-month change in sales values and query large changes

23 IoP – Manufacturing……. Challenges - Correcting outliers with VAT data. - Reliability of monthly series - Using survey data – small economy - Using survey data – few estabs.

24 UGANDAS EXPERIENCE WITH THE PRODUCER PRICE INDEX (LUSAKA 4 th – 7 th May 2009)

25 What is a Producer Price Index (PPI)? PPI is a PRICE index (number) used to measure the rate of change in the prices of goods and services bought and sold by producers. PPIs can differently be calculated to suit specific goals thus we have a PPI for Manufacturing PPIs for Mining and Quarrying, Agriculture, Hotels and Utilities are in the initial stages of development.

26 Output PPI.. UBOS started compiling PPIs (Manufacturing) in 2004.What is generated is an output PPI which measures the rate of change in the prices of products sold as they leave the producer. The PPI generated is categorized btn. - the Local Market (PPI for Local Market) - for goods and services produced for export, (PPI for Exports) - And PPI combined which combines the two above

27 Which PPI are we measuring? PPI-M measures both goods produced for the local market and those produced for export. This PPI covers the ‘formal’ Manufacturing sector It measures the change in the effective unit selling prices received by manufacturers for products sold for both the home market and for exports.

28 PPI - M cont… Products are priced at Basic Price Basic Price is the price per unit of goods/ services receivable by the producer. Because the producer does not receive taxes on products but does receive subsidies. Taxes on products (excise, non-refundable VAT, taxes on exports, etc) are excluded, while subsidies on products are included.

29 Methodology & Sample Size determination WHY PPI was generated? Out of the UBI which was conducted in 2000/01, the Bureau then had comprehensive data on Value Added (VA) and Gross Output (GO) for establishments. The data on GO was then used for generating weights for PPI-M.

30 Methodology Ctd The PPI Manufacturing is based on a sample of establishments with 10 or more employees as reported during the UBI. A wide range of representative products were selected in July 2004 PPI-M covers all ISIC Manufacturing Divisions from 15 to 37 (Table of ISIC)

31 Methodology Ctd A sample of 200 establishments as of now are covered in the PPI with close to 600 products. The sampling method used was Probability Proportional to size combined with Concentration of businesses and personal judgment based on previous data/information. There are 36 main headings based on 4-digit ISIC.

32 Challenges before - Establishments that close - Inclusion of new establishments and products - Non Homogeneous products - Conversion factor related problems or problems related to human error

33 Methodology Contd… These are collapsed into 21 groups. Closely related activity codes producing almost homogenous commodities are grouped together to form the 21 as shown in the table. Which are later put into 8 major headings which are re-grouped to suit the requirements in National Accounts.

34 Challenges after - Correcting outliers within VAT data files. - Variability of monthly sales/ turnover series - Using survey data – respondent fatigue - Using survey data – few establishments - Need for specialized respondents - Harmonizing data collection within UBOS and without

35 Challenges cont… Getting transaction prices (actual) other than price-list prices.

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