Expert Group Meeting on Statistics for SDGs: Accounting for Informal Sector in National Accounts

1. Expert Group Meeting on Statistics for SDGs: Accounting for Informal Sector in National Accounts 11-14 January 2016, Addis Ababa, Ethiopia Accounting for informal sector in national accounts through indirect method: Approach followed, other than labor input methods A FRAMEWORK BASED ON INDEXES AND SNA RECOMMENDATIONS B. François RAMDE Director of the Department of economic statistics and synthesis, INSD – Burkina Faso

2. OUTLINE Introduction • Definitions and scope of the informal sector in Burkina Faso • Main data sources • Data processing • Methods of integration in the national accounts (steps) • Results Conclusion and recommendations

3. Introduction • The purpose of the method: Estimating the informalsectoraccounts in the context of lack of regulardirect surveys • Estimating the production and generation of incomeaccounts of the informalsector by activity

4. 1. Definitions and scope of the informal sector in Burkina Faso • In Burkina Faso, the informalsectorconcerns all the activitieswhicharen’tregistered and/or don’t have a formal administrative accounting. • Theseactivities are conducted by independantworkers and own-accountworkers

5. 2. Main data sources • A smallsurveyon informalsectorrealized in 1997 • General censuses of population (active population’s rate) • Price indexes by product • Previousyear’s national accounts • Taxes on informalsector

6. 3. Data processing • 1. Production estimates (atcurrent and constant prices) • 2. Intermediateconsumptionsestimates • 3. Compensation of employeesestimates • 4. Distribution of taxes on informalsector by activity

7. 3.1. Production estimates (1/2) • At constant prices Where : • isthe currentyear production of the activityiat constant price, • isthe currentyear production of the activityi, product j (j describe the number of main products of the activity and maybehigherthan 1)at constant price, • isthe active population’sgrowth rate, • is the previousyear production of the activityi,product j,atcurrentprice.

8. 3.1. Production estimates (2/2) • Atcurrentprices Where : • is the currentyear production of the activityiatcurrentprice, • is the price index of the product j, • is the currentyear production of the activityi, productjat constant priceestimatedpreviously.

9. 3.2. Intermediateconsumptionsestimates (1/3) • The intermediateconsumptions by activity are estimated by projection according to Leontief’smethod. • At constant prices

10. 3.2. Intermediateconsumptionsestimates(2/3) • isthe vector of intermediateconsumptions of the currentyear for the activityiat constant prices, • isthe vector of intermediateconsumptions of the previousyear for the activityiatcurrentprices, • is the currentyear production of the activityiat constant prices, • is the previousyear production of the activityiatcurrentprices.

11. 3.2. Intermediateconsumptionsestimates(3/3) • Atcurrentprices Where : • isvector of intermediateconsumptions of the currentyear for the activityiatcurrentprices ; • is the price indexes’ vectorcorresponding to eachproduct of the intermediateconsumptions’ vector.

12. 3.3. Compensation of employeesestimates Where : • representsthe compensation of employees of the activityiduring the currentyear, • representsthe compensation of employees of the activityiduring the previousyear, • is the value added of the activityi during the currentyear, • isthe value added of the activityi during the previousyear.

13. 3.4. Distribution of taxes on informalsector by activity • Taxes on informalsector are provided by the fiscal administration • The first distribution by activityis made by referring to previousyear structure • Someadjustmentsmaybedoneafter but the total amount for all the activities must beequal to the amountgiven by the fiscal administration

14. 4. Methods of integration in the national accounts (steps) • Commodityflowsapproach (production) • Equilibrium of the intermediate exchange table (Inter-industrial exchange table) • Global synthesis of the national accounts (conciliation of the threeapproaches of the GDP)

15. 4. Results (1/2) Production accounts of the Informalsector (includingprimarysector) In billions XOF

16. 4. Results (2/2) Production accounts of the Informalsector (excludingprimarysector)

17. Conclusion and recommendation • The methodallows to compile informalsectoraccountsatlowcostsand solve to a certain extent the problem of exhaustiveness • Necessity to renew the indicatorsperiodicallyin order to update the method’sfoundations, otherwisethereis a risk of inconsistencies

18. Thankyou for yourkind attention