1. Expert Group Meeting on Statistics for SDGs: Accounting for Informal Sector in National Accounts January 2016, Addis Ababa, Ethiopia
Measuring informal economy through mixed household-enterprise surveys in Cameroon
Erith NGHOGUE VOUFO
Head of unit of provisional and quarterly national accounts
National Institute of statistics - Cameroon
18/09/2018

2. Objective of the paper
… aims to assess the contribution of the informal economy in terms of employment and value added in Cameroon
…through mixed household-enterprise surveys conducted in 2005 and throughout the national territory.
18/09/2018
Measuring informal economy through mixed household-enterprise surveys in Cameroon

3. Content Definition and scope of the informal sector
Main data sources and their processing
Methods of integration in the national accounts
Comparison of the results : survey vs national accounts
Conclusion, remarks and future initiatives
18/09/2018
Measuring informal economy through mixed household-enterprise surveys in Cameroon

4. Definition and scope of the informal sector
… defined as all production units without taxpayer identification number and/or not taking a formal written accounting under the OHADA* accounting plan
Informal jobs are mainly those of the non- agricultural informal sector units and agricultural labor
*Organization for the Harmonization of Business Law in Africa
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

5. Main data sources and their processing (1/7)
… Survey of Employment and the informal Sector (EESI): two-phase statistical survey conducted in 2005 and 2010
Employment Survey (phase 1) holds as statistical unit the regular household and its individual members aged 10 and over
Informal Sector Survey (phase 2) is a type of survey "companies" with informal settlements, called "informal production units" (IPU), since many of them do not have their own premises (workshop, shop, etc…), which is an element usually associated with the concept of establishment in national accounts
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

6. Main data sources and their processing (2/7)
… During the survey, the informal production units (IPU) are identified from the following 3 questions :
Question
Answer
What is your socio-professional category ?
Non wage earner:
06. Employer/boss
07. Own account worker
Is the enterprise in which you exercise your main employment (or which you manage) registered ?
2. No Taxpayer’s number
Do you keep accounts? No
Not detailed accounts
Other
Finally, is eligible as IPU if the socio-professional category=06, 07 and (taxpayer number =2 or accounts =1,3,4)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

7. Main data sources and their processing (3/7)
Charateristics of the survey :
The two surveys cover the national territory, urban/rural
The second phase includes informal production units (IPU) engaged in industry, trade and services. The primary sector activities are excluded with the exception of forestry and logging
Year
Random sample
Number of IPU identified
Number of IPU surveyed
2005
8 540 households
5 274 units
4 815 units (91,3%)
2010
8 160 households
4 705 units
4 592 units (97.6%)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

8. Main data sources and their processing (4/7)
The processing of the data (phase 1) provides, for the needs of the national accounts :
detailed table of national jobs (main and secondary) by (i) activity, by (ii) institutional sector (public, private formal, non-agricultural informal and agricultural informal) and by (iii) occupational status (employee, employer, own account worker, family aid and apprentice)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

9. Main data sources and their processing (5/7)
For the needs of the national accounts, the processing of the data (phase 2) provides :
(i) the output by industry and product, (ii) trade margin by product, (iii) self-consumption by industry and product, (iv) intermediate consumption by industry and product, (v) compensation of employees by industry, (vi) taxes paid by industry and (vii) gross fixed capital formation by industry and product
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

10. Main data sources and their processing (6/7)
Graph 1 : Employment by institutional units in 2005 and 2010
The informal sector employs about 90% of the occupied workforce in and 2010
Informal employment is very low in the formal sectors, less than percent within both public administration and private sector
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

11. Main data sources and their processing (7/7)
Table : Average monthly output and average monthly value added per IPU (in thousands of CFAF)
Sector and industry
Monthly output
Monthly value added
2005
2010
Industry sector
87.6
260
48.9
100.7
Manufacture of food products
58.7
123.6
21.3
36.5
Clothing
76.8
199.2
44.3
102.5
Construction and civil engineering
152.6
732.3
124.1
267.4
Other industries
157.9
462.6
106.7
202.6
Trade
86.3
133.6
68.3
96.9
Wholesale trade
340.7
475.7
276
344.5
Retail trade
70.6
97.0
55.5
70.5
Services
175.4
200.3
79.8
89.9
Transportation
207.1
238.4
111.5
137
Restaurant and hotel
201.2
244.6
60.6
70.7
Repair of motor vehicles and motorcycles
96.7
119.4
69.6
74.8
Other services
146.3
166.1
100.1
83.5
Total
110.2
198.3
62.4
95.9
… IPU of construction, wholesale trade and clothing have most improved their economic performance between 2005 and 2010
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

12. Methods of integration in the national accounts (1/3)
Step 1 : load in the database, all sources on employment
Detailed table of national jobs by industry, by institutional sector (public, private formal, non-agricultural informal and agricultural informal) and occupational status (phase 1)
Ministry of Finance, Ministry of Public Service provide the number of civil servants (central administration, etc.)
National Social and Insurance Fund and the Business Register or statistical and tax statements give jobs in the private formal sector
Step 2 : confrontation of data from survey vs administrative data particularly in the formal sector (private and public administration)
Step 3 : Analytical work : elaboration of the production accounts by industry (control the evolution of the economics ratios such as output per capita, productivity per worker, average per worker)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

13. Methods of integration in the national accounts (2/3)
Step 1 : load in the database, all sources by industry and product
Detailed table of output, (ii) trade margin, (iii) self-consumption, (iv) intermediate consumption, (v) compensation of employees, (vi) taxes paid and (vii) gross fixed capital formation (phase 2)
other data sources on the same operation (administrative data, others surveys …)
Step 2 : Analytical work : elaboration of the supply and use balance of products (make consistent informal data with other data sources which give information on the import and export of products, the output of the formal sector, the final consumption of households and public administration, the gross fixed capital formation, the change in inventories, etc.)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

14. Methods of integration in the national accounts (3/3)
Graph 2 : Contribution of the informal sector to the GDP (%)
The results show that the contribution of informal sector to GDP is percent in 2005 and 38.4 % in 2010
The non-agricultural informal sector accounts for almost 60 % of the jobs and about 30 % of GDP in 2005 as in 2010
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

15. Comparison of the results : survey vs national accounts (1/2)
Table : value added from national accounts work and surveys results (in millions of CFAF)
EESI 2005
National accounts 2005
Gap (%)
EESI 2010
National accounts 2010
Manufacture of food products
86,6
133,9
Clothing
67 385
51,8
13,7
Construction
65 956
-45,3
76 152
-71,7
Other industries
50,4
54,9
Trade
Wholesale trade
161,5
148,8
Retail trade
86,8
79,0
Services
Transport
31,2
-19,3
Restaurant and hotel
-21,5
6,9
Repair of motor vehicles and motorcycles
37 958
38 054
0,3
50 240
42 529
-15,3
Other services
22,1
70,9
Total
45,3
48,5
Value added obtained from the national accounts analytical work to that of the survey in 2005 and 2010 revealed differences of more than 45%
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

16. Comparison of the results : survey vs national accounts (2/2)
These differences could be mainly explained by:
The contract work (purchase of raw materials by the customer) is very common in the context of the informal sector. Indeed, in certain activities such as sewing, carpentry, hairdressing and even the construction, it is the customer who buys inputs. The output is underestimated when input costs are not taken into account.
The consumption of part of the output of IPU for the satisfaction of his household needs (self- consumption) is often underestimated, because it is generally important in activities such as trade, food service activities and manufacture food products.
For informal production units exercising at home, expenses such as electricity, water, rent must be shared between the household and the production unit (indivisible loads). However, this separation is very difficult to perform in the survey.
During the survey, several informal production units have not had a regular activity in the 12 months preceding the survey (seasonality of activities). The impact of the seasonality or irregularity of the activity leads to a bias in the measurement of the IPU indicators.
Taking into account other data sources in the compilation process of national accounts
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

17. Conclusion, remarks and future initiative (1/4)
The results show that :
The non-agricultural informal sector contributes at 30% to GDP and concentrate almost two-thirds of jobs.
Labor productivity is very low compared to the formal sector, because it is characterized by a multitude of survival activities and essentially with low profitability.
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

18. Conclusion, remarks and future initiative (2/4)
…The mixed household-enterprise surveys are carried out at intervals of five years or more, which poses the problem of data for compiling the national accounts for the intervening years between the two surveys:
For the years after the benchmark estimates of informal sector, the employment is estimated by using the annual population growth rate.
Assuming the constancy of the economic ratios, the output at constant prices by industry is obtained by multiplying the output per capita by industry of the benchmark year by the previous estimated employment.
The result of the output at constant prices by industry is multiplied by the price index to obtain the output at current prices by industry
These estimations of the output by product are confirmed or modified in the supply and use balance where all resources (production and imports) are faced with the demand (consumption, investment, exports and changes in inventories)
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

19. Conclusion, remarks and future initiative (3/4)
…Regarding the GDP exhaustiveness in terms of under reporting of output by formal establishments:
A mode of production is usually created in the production account by industry to handle this phenomenon.
The correction of the output is often carried out if the technical coefficient of the formal establishment is very high in the current year in comparison to the technical coefficient to the previous year.
… However, the correction of the output of the informal production units is made in the context of supply and use balance by product
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

20. Conclusion, remarks and future initiative (4/4)
…In terms of illegal activities, such as drugs and prostitution, smuggling, etc.:
… Until now, there is no specific method for taking it into account directly.
However, adjustments can be made on the level of production, consumption, imports or exports of the products identified in the economy to be the subject of smuggling and cross-border trade within the supply and use balance.
… Finally, the international community must handle these issues by defining appropriate methodologies that can help the national statistical offices
Measuring informal economy through mixed household-enterprise surveys in Cameroon
18/09/2018

21. Thank you for your attention!
18/09/2018