1. HBS 2000/01: March 27 2002 National Bureau of Statistics ANALYSIS OF THE HBS 2000/01 INCOME POVERTY

2. HBS 2000/01: March 27 2002 Overview of trends in the Tanzanian economy. GOT has achieved macroeconomic stability. Through financial liberalisation inflation is down to single digits, the budget deficit reduced to close to zero, modest depreciation of the exchange rate in line with inflation. GOT has made progress in reorienting its economy to a market based operation and begun to create incentives for private investors. But have the benefits of these efforts been realised by Tanzanians? INTRODUCTION

3. HBS 2000/01: March 27 2002 HOW HAVE THE ACTIVITIES OF TANZANIANS CHANGED OVER THE DECADE?

4. HBS 2000/01: March 27 2002 HOW HAVE THEIR MAIN SOURCES OF INCOME CHANGED?

5. HBS 2000/01: March 27 2002 Overview Data Issues Defining the consumption aggregate Defining a Fisher index Expenditure tables Defining the poverty line Estimating levels of poverty Conclusion WHAT HAS HAPPENED TO POVERTY LEVELS? – OUTLINE OF ANAYLSIS

6. HBS 2000/01: March 27 2002. House- hold Data Total Exp. Non- Cons. AE Poverty Line Not Poor OVERVIEW OF POVERTY ANALYSIS

7. HBS 2000/01: March 27 2002 THE CONSUMPTION DATA: QUALITY Over 1000 HHs in 2000/01 with out of range calorie consumption (> 8,000 or < 400, mostly too high). Causes included: Grams recorded as kilograms and other unit miscodes Purchased for trade and miscoded Home produced and stored/sold rather than consumed Under-reporting Large number of wrong units-codes in 1991/92 Corrections involved: correcting unit miscodes and imputation.

8. HBS 2000/01: March 27 2002 General rule followed in cleaning food data: 1. Calculate median consumption per adult equivalent for each of the 128 food commodities 2. Flag outliers as those with consumption over 20 times the median (confirm calories of household too high) 3. Impute consumption per adult equivalent for outliers using medians calculated from prices and quantities in the Fisher index CLEANING FOOD DATA

9. HBS 2000/01: March 27 2002 Used methodology described in Blaizeau: 1. To identify which items to take from diary or from annual records 2. To identify which items to include (due to user cost recovery, ratios on education, medical, water bills and telephone and postage suggested their exclusion) 3. Identified outliers based on 2 times the standard deviation with reference to the share of budget spent on the item. Mean values were imputed for outliers. CLEANING NON-FOOD DATA

10. HBS 2000/01: March 27 2002 Calculate household consumption levels: Based on 1 month diaries and 12 month recall Includes purchased and home produced items, payments in kind and gifts Standardise for household size and composition (adult equivalents) Includes food, some non-durables and some consumer durables (excludes health, education, telephone and postage and water bills) CALCULATING THE CONSUMPTION AGGREGATE

11. HBS 2000/01: March 27 2002 CALCULATING THE CONSUMPTION AGGREGATE Total Expenditure Consumption Expenditure Total Food Monetary Food Expenditure Non-Monetary Food Expenditure Non-Lumpy Consumer Durables Other Non- Durables Non- Consumption Expenditure

12. HBS 2000/01: March 27 2002 Have used Fisher Ideal Index Reasons for not using the CPI: does not reflect changes in consumption patterns (1994); weights some food items very heavily; not representative of poverty bundle; coverage – only urban areas, heavily weights Dar es Salaam COMPARING CONSUMPTION LEVELS OVER TIME AND SPACE

13. HBS 2000/01: March 27 2002 CPI & PRICE INDEXES FROM HBS DATA 1991/92 relative to 2000/01 Laspeyres index2.55 Paasache index 2.44 Fisher index 2.49 CPI (Dec 1991 relative to Jan 2000)4.36

14. HBS 2000/01: March 27 2002 1991/92 (per capita)2000/01 (per capita) Dar es Salaam73,531(13,268)91,012 (17,237) Other Urban 70,023(11,276)70,719 (12,719) Rural50,996(7,110)54,735 (8,305) Total54,598 (7,964)59,009 (9,423) All priced in 2000 TShs. MEAN HOUSEHOLD EXPENDITURE PER MONTH (real)

15. HBS 2000/01: March 27 2002 COMPOSITION OF HOUSEHOLD EXPENDITURE (real – 2000 TSh.)

16. HBS 2000/01: March 27 2002 HOUSEHOLD EXPENDITURE – items not in consumption aggregate (real – 2000 TShs.)

17. HBS 2000/01: March 27 2002 Setting the poverty line Price a New Food Consumption Basket for both 1991/92 and 2000/01 Advantage: large data set allows us to define a basket that reflects consumption patterns now POVERTY ANALYSIS

18. HBS 2000/01: March 27 2002 Define typical food consumption pattern for Tanzania using the consumption data (for the poorest 50% of the population) Define minimum quantities required to meet calorific requirements Price this basket with national median prices from HBS data – gives food poverty line Basic needs poverty line = FL*1/(food share) Adjust the lines (or for ease the consumption aggregate) to reflect different prices that regions and rural/urban households face, using a Fisher Index PRICING A NEW FOOD CONSUMPTION BASKET

19. HBS 2000/01: March 27 2002 1991/922000/01 Food poverty line 2,083 5,295 Basic needs poverty line (0.75) (0.73) 2,777 7,253 1991/92 lines adjusted using Fisher index (2.49) Food poverty line 5,189 Basic needs poverty line 6,915 Ratio of food baskets2.54 POVERTY LINES – TShs. For 28 days per adult equivalent

20. HBS 2000/01: March 27 2002 Poverty lines for 2000/01: Poverty lines for 1991/92: POVERTY LINES - cont

21. HBS 2000/01: March 27 2002 CALCULATING POVERTY ESTIMATES Compare consumption per adult equivalent to poverty line for each urban/rural region Household are poor if they fall below the line. Individuals are poor if they live in a poor household Sum the weighted number of poor individuals in each urban/rural region to obtain consistent estimates for larger populations

22. HBS 2000/01: March 27 2002 REVISITING THE ANALYSIS OF THE 1991/92 DATA To recap: 1991/92 now comparable with 2000/01 Data now systematically cleaned Consumption aggregate redefined Food basket redefined and priced Revised consumption aggregates, priced in 1991/92 prices, compared with revised poverty line priced in 1991/92 prices

23. HBS 2000/01: March 27 2002 POVERTY ESTIMATES

24. HBS 2000/01: March 27 2002 POVERTY ESTIMATES - cont

25. HBS 2000/01: March 27 2002 MEASURE OF INEQUALITY

26. HBS 2000/01: March 27 2002 FISHER INDEXES BY REGION

27. HBS 2000/01: March 27 2002 REGIONAL POVERTY ESTIMATES

28. HBS 2000/01: March 27 2002 FOOD POVERTY - HEADCOUNT

29. HBS 2000/01: March 27 2002 BASIC NEEDS POVERTY – HEADCOUNT

30. HBS 2000/01: March 27 2002 DSMUrbanRuralTotal 2000/017.5011.3619.5617.74 1991/92 (best estimate) 13.6014.9923.1321.60 1991/92 using Fisher index 14.3415.1224.3022.61 1991/92 with DSM adjustment 2.1114.9923.1320.98 SENSITIVITY OF FOOD POVERTY – P0

31. HBS 2000/01: March 27 2002 Differences due to: 1. The recalculation of the poverty lines. 2. The re-estimation of the Fisher index. POVERTY VERY SENSITIVE TO PRICES EXPLAINING DIFFERENCES WITH PREVIOUS ESTIMATES

32. HBS 2000/01: March 27 2002 CONCLUSIONS Rise in mean real expenditure Income poverty has fallen Inequality has increased Results are consistent – fall in food share improvement in housing construction macroeconomic reforms COMMENTS PLEASE