4/30/20151 Current Status of Manufacturing Statistics 4 th – 7 st May th – 7 st May 2009 WS-ZAMBIAWS-ZAMBIA Isaac NdegwaIsaac Ndegwa

Kenya National Bureau of Statistics A semi-autonomous government agency The organization responsible for compilation of manufacturing statistics Decentralized statistical system

Publications Statistical Abstract Economic Survey- Chapter 11 Leading Economic Indicators Quarterly GDP Report

Classification ISIC Rev.3 Categories- 2 nd level-27, 3 rd level-62, 4 th level-127 All the data is compatible up to 4 th level Deviations- ISIC Emphasis on coffee, 1546-Tea and 1547-other foods n.e.c

Manufacturing Statistics Annual statistics regularly Published A lag normally of 4 months after the reference date

Short-term statistics released both on monthly and quarterly basis Covers 1520,1531,1542,1553,1554,1600,2320,2424,2511,2694,2710,3410 Indicators are:

Indicators Processed Milk Wheat/Maize flour, Sugar, Beer, Mineral Water (Carbonated drinks) Cigarettes Laundry/Toilet Soap New Motor Vehicle Tyres Portland Cement Galvanized Sheets (Rolled) Assembled Vehicles

Basic Indicators Quantities Production Value Volume Index of manufacturing is calculated and is used for extrapolationVolume Index of manufacturing is calculated and is used for extrapolation

Definitions Quantity:- Final physical output of any manufacturing process in any one industry Value:- Valuation of the above quantity produced and is defined as follows- It is the selling price as charged to customers less:- –Discounts or rebates, allowance for returnable cases/containers or other packaging materials and other drawbacks allowed to customers –Charges for carriage outward (transport) –Commission paid to selling agents

4/30/ Data Sources Censuses- last done in 1977Censuses- last done in 1977 Annual Surveys- Last 1986Annual Surveys- Last 1986 MSIP-Monthly Survey of Industrial Production ;Collects Data on quantities & values of output for major products;MSIP-Monthly Survey of Industrial Production ;Collects Data on quantities & values of output for major products; KRA-TurnoversKRA-Turnovers

Manufacturing Sector About 5,000 establishments per the master frame Sector contributes about 10 % to GDP Valuation: At basic prices

Limitations Poor-response (about 40 per cent) Inconsistencies with units of measurement Incomplete returns-quantities or values Capacity Lack of appreciation of statistics by the establishments Operational costs- Insufficient resources for collection of comprehensive data

Business Register Available but outdated In the second phase of updating the register. System already in place

4/30/ Quantity Index of Industrial Manufactured Production- Quantum Index The Index is calculated on an annual basis and the source of data is the Monthly Survey of Industrial ProductionThe Index is calculated on an annual basis and the source of data is the Monthly Survey of Industrial Production Weights for each manufacturing subgroup are taken to be their GDP contribution total value of Manufacturing GDP calculated from Survey/Census of Industrial ProductionWeights for each manufacturing subgroup are taken to be their GDP contribution total value of Manufacturing GDP calculated from Survey/Census of Industrial Production These weights are then distributed to each indicator in the subgroup according to their annual contribution to total value of production of each sub-groupThese weights are then distributed to each indicator in the subgroup according to their annual contribution to total value of production of each sub-group The current basket of indicators was selected from a numbers of indicators given in the Monthly Survey of Industrial Production (MSIP)The current basket of indicators was selected from a numbers of indicators given in the Monthly Survey of Industrial Production (MSIP)

4/30/ METHODOLOGY Weights are derived from GDP ratios as explained earlierWeights are derived from GDP ratios as explained earlier Example: Suppose group ISIC 3116 has value added of Ksh.200 and total value added for manufacturing sector is Ksh.800Example: Suppose group ISIC 3116 has value added of Ksh.200 and total value added for manufacturing sector is Ksh.800 The weight to be given to group 3116 is 200/800 = 0.25The weight to be given to group 3116 is 200/800 = 0.25 Thus weights add to 1 for total manufacturing sectorThus weights add to 1 for total manufacturing sector since the interest is to obtain weight for each indicator in the subgroup, this weight is then distributed to the indicators according to their sales data obtained from MSIPsince the interest is to obtain weight for each indicator in the subgroup, this weight is then distributed to the indicators according to their sales data obtained from MSIP The Quantum Index is then computedThe Quantum Index is then computed For each sub-group the index is computed as follows;For each sub-group the index is computed as follows;

4/30/ Quantum Index (1976=100). An annual volume index.An annual volume index. It is a chained Laspeyers base year weighted index compiled at the 4-digit level of ISIC.It is a chained Laspeyers base year weighted index compiled at the 4-digit level of ISIC. There are 194 indicators used in the calculation of the index out of which 192 are physical output indictors and 2 are employment indicators.There are 194 indicators used in the calculation of the index out of which 192 are physical output indictors and 2 are employment indicators. Weights derived from value added for the previous year. Benchmark estimates based on the 1976 Census of Industrial Production brought forward with earnings from the Labour Enumeration (LE) survey.Weights derived from value added for the previous year. Benchmark estimates based on the 1976 Census of Industrial Production brought forward with earnings from the Labour Enumeration (LE) survey.

4/30/ The two variables needed in the calculation of quantity index are weights and quantity relatives.The two variables needed in the calculation of quantity index are weights and quantity relatives. Q.R is the arithmetic ratio of the current period quantity or any other period’s quantity to the base period quantityQ.R is the arithmetic ratio of the current period quantity or any other period’s quantity to the base period quantity Where:qij is the quantity produced in year ‘i’ of commodity “j” Where:qij is the quantity produced in year ‘i’ of commodity “j” qoj is quantity produced in year ‘o’ of commodity ‘j’ Qot is quantity relative Next step is to calculate the cross products of the weights and quantity relatives i.e. WixQi and sum for all indicators included in a particular sub-group.Next step is to calculate the cross products of the weights and quantity relatives i.e. WixQi and sum for all indicators included in a particular sub-group.

4/30/ nd step- Cross product of weight and quantity relative

4/30/ Conti.. Since there are many sub-groups, a particular sub- group can be represented by “j”. Hence expression (i) above now becomesSince there are many sub-groups, a particular sub- group can be represented by “j”. Hence expression (i) above now becomes “r” being the number of subgroups in manufacturing sector.“r” being the number of subgroups in manufacturing sector.

4/30/ Conti.. Similarly we have to obtain weights for particular sub-groups summed over all “n” indicators i.e.Similarly we have to obtain weights for particular sub-groups summed over all “n” indicators i.e.

4/30/ The last step is to calculate a binary quantity index. “Iot” for a particular sub-group “j”The last step is to calculate a binary quantity index. “Iot” for a particular sub-group “j” Hence IotjHence Iotj Where “o” is the base periodWhere “o” is the base period “t” is the current period.

4/30/ The Index for the whole Manufacturing Sector

4/30/ As stated, the indices calculated above are binary and for our case we are interested in a modified Laspeyre’s chained indices.As stated, the indices calculated above are binary and for our case we are interested in a modified Laspeyre’s chained indices. If we have say four years, we shall have to calculate four binary indices first then chain them to get the final index. For example Io4 the chained index for period four with base period “o”.If we have say four years, we shall have to calculate four binary indices first then chain them to get the final index. For example Io4 the chained index for period four with base period “o”. Where I(0+t)(t+1) are binary indices for t=0 to 4 and base year 0Where I(0+t)(t+1) are binary indices for t=0 to 4 and base year 0

4/30/ Challenge This methodology is expected to give reliable results as it has the advantages of chained indices modified to suit our National demands.This methodology is expected to give reliable results as it has the advantages of chained indices modified to suit our National demands. The big challenge to the Industry Section is to ensure that the figures on which these calculations are based are as reliable as possibleThe big challenge to the Industry Section is to ensure that the figures on which these calculations are based are as reliable as possibleTHANKS