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Work related Learning Report N0070465E

Abstract
This report is prepared in partial-fulfilment of the requirements of the BSc (Hons) Degree in Operations
Research and Applied Statistics wor related learning e!perience that spans for a full academic "ear
o#tained at the $entral Statistical Office ($SO) - Harare% &nformation contained in this report was
acquired through 'da" to da" acti(ities) and $SO pu#lications% The report sees to portra" a conceptual
framewor of m" e!periences during the era of m" industrial attachment at $SO% The report will
highlight the organi*ational #acground of $SO+ its operations+ the resulting products and ser(ices it
offers+ gi(ing an o(er(iew of how the theor" & acquired at the uni(ersit" managed to simplif" the duties
& performed during m" tenure in the ,rices Statistics Section% &t should also #e noted that this wor
related learning report will render how the placement period managed to de(elop e" industrial sills
and competencies including time management+ effecti(e planning and decision maing sills among
others%

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Work related Learning Report N0070465E
Acknowledgements
& would lie to profoundl" e!press m" gratitude to the .ational /ni(ersit" of Science
and Technolog" for granting me the pri(ilege to #e e!posed to a woring en(ironment
during m" academic learning+ a program that ena#les students to #lend their studies
with the actual practice% & would also lie to e!tend this gratitude to the staff and
management of the $entral Statistical Office for their unwa(ering support and for
recogni*ing me as one of their staff mem#ers regardless of m" student status% Though
the list of thans can ne(er #e e!hausted+ & would lie to nota#l" appreciate the
following ,rices Section staff 0
1r% A Dam#a
1r% $hiada"a
1r% , Safure
1s 1 D*iiti
1s $ $hirochierwa
1s Tom#ori
1s 2afansi"an3i
& would also lie to e!tend special regards to m" famil" and a#o(e all+ the Almight"
4od for gi(ing me the will and the power to prosper during the whole period of m"
wor-related learning%
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Work related Learning Report N0070465E
Executive summary

$entral statistical office is the ma3or producer of .ational Statistics in which the data
is used #" different Business staeholders% &n this regard $entral Statistical Office is
responsi#le for formulating statistical information from (arious sectors econom"%
&n this final report & am going to gi(e an outline of the organi*ation with special
emphasis on the prices section+ the producer of 6conomic &ndicators and the summar"
of ma3or departmental functions% & will carr" the readers through a guided e!pedition
of a thorough e(aluation highlighting the rele(ance of Operations Research and
Statistics Degree to the organi*ation%
The first chapter gi(es an introduction of the $entral Statistical Office outlining
histor" of the organi*ation and an o(er(iew of $SO mission +(ision as well as (alues
(Organi*ation culture) as well as the Organi*ational structure%
The second chapter gi(es an outline of the prices section where & was attached to and
its ma3or roles% A detailed description of the prices section and its roles% These include
$onsumer ,rice Sur(e" ($,S)+ &nternational $omparison ,rogram (&$,)+ $,&+ ,o(ert"
Datum 7ine (,D7)+Time series anal"sis and &ncome+ $onsumption and 6!penditure
Sur(e" (&$6S)%
The third chapter outlines the functions of 8inance section within $SO and the
functions of financial statistics%
The fourth chapter outlines the role of nation al accounts and its sources of data% &t also
calculates the 4ross Domestic ,roduct (4D,) as well as the 4ross .ational ,roduct
(4.,)%
The last chapter gi(es the conclusion and recommendations to #oth the organi*ation
and the institution with special emphasis to the department of Applied 1athematics%
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Work related Learning Report N0070465E
CHAPTER 1
1.1 Overview of te organi!ation
1.1.1 "ormation
The $entral Statistical Office came into e!istence in -:;< when the British South
African $ompan" (BSA$) first esta#lished a Record and Statistical Department which
was under the control of Hu#ert Har(e"% /pon his death in the 1atopos area+ the $i(il
$ommissioner #ased in Harare (the then Salis#ur") too o(er his functions% The Office
conducted its first census in Bulawa"o in -:;= for which the 1ining and $i(il
$ommissioners supplied estimates of the mining and ur#an population respecti(el"% &n
-:;> another census was conducted in Salis#ur" and information was collected
through the Office of the Acting 1agistrate%
A (ariet" of independent sections were set up #" -;5< to engage in the collection of
statistics% A recommendation was made that greater efficienc" would #e achie(ed if
these duties were centrali*ed in a department under a qualified statistician% A monetar"
pro(ision was made upon recommendations for the esta#lishment of a Statistical
Bureau under the 1inistr" of Home Affairs% The Bureau was tased with0
$arr"ing out an" census
$ollecting+ compiling and anal"*ing statistical information for the commercial+
industrial+ agricultural+ mining+ social spheres of the econom"%
$olla#orating with 4o(ernment in collection+ compiling+ co-coordinating+
anal"sis and pu#lication of statistical records of administration%
&n -;?@ the Office was transformed into a department under the 1inistr" of 6conomic
Affairs and su#sequentl" changed its name to the $entral Statistical Office ($%S%O%)% &n
-;:- it was transferred to the 1inistr" of 8inance and 6conomic De(elopment under
which it operated until the splitting of the 1inistr" in April 5@@=% The department was
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then transferred to the 1inistr" of 6conomic De(elopment from which it currentl"
operates under%
8ollowing wider consultations in -;;: and -;;;+ it was recommended that the
Department #e transformed into a semi-autonomous e!ecuti(e agenc"% Both the ,u#lic
Ser(ice $ommission and the then 1inistr" of 8inance and 6conomic De(elopment
em#raced the idea and offered their support% &n this regard preparator" wor has #een
undertaen #" the staeholders concerned% The internal staeholders ha(e alread"
adopted the name A&1STATS (Aim#a#we Bureau of Statistics) while the #ill to #ring
it into e!istence is under parliamentar" consideration% The name $SO will thus #e
dropped% The main aim is to free the Department from not onl" #eing a 4o(ernment
Statistician #ut also for the pri(ate pla"ers and unloc its (alue as it is liel" to
impro(e capacit" utili*ation%
1.1.# $tatutory information
The Department is a pu#lic office as it is wholl" #" the 4o(ernment of Aim#a#we and
its operations are go(erned #" the pro(isions of the $ensus and Statistics Act ($hapter
-@0@=) as amended #" Act 55 of 5@@- effect 55 Septem#er 5@@5% The Act pro(ides for
the office of the Director of $ensus and Statistics appointed #" the 1inister of
6conomic De(elopment or an" 1inister the ,resident ma" assign to administer the
Act from time to time% The Director is responsi#le for appointments of other staff
mem#ers and the da" to da" administration of the Department% He su#mits a report to
the 1inister after the 9@
th
of Bune each "ear detailing the operations undertaen in the
preceding "ear%
&t is a criminal offence under the Act to disclose information to outsiders without the
necessar" authorit" from the Director% &n some cases+ the Director cannot without the
appro(al of the 1inister+ disclose an" information to those outside the Department%
The pro(isions of the Act are mainl" there to enforce high le(el of confidentialit" and
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pri(ac" as statistical information is a (alua#le asset especiall" for in(estors and
planning agencies of #oth the pu#lic and pri(ate sectors%
1.1.% &ision
To #e the leading world class producer of national statistics
1.1.' (ission $tatement
To contri#ute to national de(elopment through the production and dissemination of
timel" and accurate national statistics that facilitate0
,olic" formulation
,lanning and decision maing
6(aluation and research
Transparenc" and good go(ernance
This will #e achie(ed through the use of automated technolog" with highl" silled and
moti(ated staff%
1.1.) Core values
&n pursuit of the mission+ the office holders shall #e respectful+ courteous+ open+
transparent and responsi(e to #oth users and suppliers of data% This will ensure high
le(el of confidentialit" of information in producing a high qualit" statistical ser(ice
with professionalism and integrit"%
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1.1.* OR+A,-$AT-O,A. CHART

OR+A,-$AT-O, CHART /C.$.O.0
Director of census
C statistics
Deput" Director
Social and
,opulation
di(ision T
Assistant Director
$ensus and
Sur(e"s Branch
Deput" Director
6conomic
Statistics Di(ision
Assistant Director
Social Statistics
Household
Sur(e"s
,opulation $ensus
$omputing
DT, and ,rinting
Health and Dital
Statistics
6n(ironmental
Statistics
&nternational
1igration and
Tourism
6mplo"ment and
6ducation
Budicial Social
Eelfare Statistics
Social indicators
and 7i(ing
$onditions
4ender Statistics
Assistant Director
,roduction
Statistics
Assistant Director
&ncome Anal"sis
Agriculture
Statistics
8oreign Trade
Statistics
,roduction
Statistics
.ational Accounts
Statistics
8inancial Statistics
,rices Statistics
&nformal Statistics
Training
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1.1.1 $ummary of (a2or 3e4artments
There are two main Di(isions each with two #ranches supported #" se(eral sections%
The two main di(isions are0
a0 Economic $tatistics 5ranc
The #ranch is responsi#le for the compilation of statistical information that relates to
economic acti(ities (acti(ities of the secondar"+ primar" and tertiar" industries) going
around the countr" and is under the control of a Deput" Director who reports to the
Director% The di(ision is further split into two #ranches namel" &ncome Anal"sis and
,roduction Statistics% 6ach #ranch is headed #" an Assistant Director who acts as an
interface #etween the sectionsF statisticians and the Deput" Director responsi#le for
the whole di(ision%
i. -ncome analysis 6ranc
This headed #" the assistant director (currentl" 1r% .% Taru(inga) who reports to the
director% This #ranch is further di(ided into three sections namel"0
,rices section+
8inance section+
.ational accounts%
6ach of the a#o(e sections is headed #" statisticians%
ii. Production $tatistics
This is su#di(ided into sections headed #" statisticians namel"0
Agriculture
8oreign trade
,roduction
iii. Training
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60 Po4ulation and $ocial $tatistics
The main tas of this di(ision is compiling and anal"sis of statistical information with
regards to the social welfare of the population and carr"ing out an" field sur(e"s and
mapping for the whole Department% The di(ision is further split into Household
Sur(e"s and $artograph" and Demograph" and Social Statistics% The Di(ision
compiles statistics used #" (arious organisations to determine the social welfare of the
different communities around the countr"%
i. $ocial $tatistics
This is responsi#le for gathering information relating to the social welfare of the
people in the countr" for e!ample le(el of emplo"ment+ health and education% The
sections which fall within this are0
Health
6n(ironment
&nternational migration and tourism
6mplo"ment and education
ii. Census and $urveys 5ranc
This includes sections lie0
Household sur(e"s
,opulation census
$omputing
,rinting
These ma3or departments are dependant on each other as the information from other
department ma" #e useful to another department%
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CHAPTER #
#.1 PR-CE$ $ECT-O,
7ey result areas8
$ollection+ compilation+ anal"sis+ interpretation and dissemination of prices
statistics%
1aintenance of prices data#ase
,roduction of reports
The section is responsi#le for calculation of price indices and running the &nternational
$omparison ,rogram on #ehalf of the Aim#a#we 4o(ernment% The ma3or pu#lications
are as #elow0
$onsumer ,rice &nde! ($,&)
$i(il 6ngineering ,rice &nde! ($6,&)
Buildings material inde! (B1&) and
,o(ert" Datum 7ine (,D7)
&n principle+ the indices are positi(el" correlated as the" all measure the rise in costs
for different sectors% An" differences can #e e!plained #" unscrupulous pla"ers in the
maret% At the moment it is the ner(e center of the Department #ecause of the h"pe
created #" the current inflation rates%
#.1.1 Te -nternational Com4arison Program
The &$, is an international program #eing carried out in -=@ countries at the present
moment in all the continents% Howe(er+ not all countries are participating in the
e!ercise% &t is #eing administered #" the /nited .ations and Eorld Ban through
(arious continental #odies for eas" of coordinating% The two #odies are also
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responsi#le for funding the pro3ect as some of the countries do not ha(e the capacit" to
#anroll it on their own% &n Africa+ it is #eing coordinated #" the African De(elopment
Ban (ADB) and countries ha(e #een grouped according to the official languages used
so as to allow eas" e!change of notes%
The program came into #eing as a result of the difficulties inherent in inter-countr"
comparisons using the traditional 4ross Domestic ,roduct (4D,) Approach% The main
aim is to come up with an a(erage price from the #aset of the goods and ser(ices
which was constructed after wider consultations with countr" representati(es% The
#aset is similar across countries in one region and has strict product specifications to
#e followed% The pilot pro3ect was undertaen in the period -;;@ to -;;- #ut in some
selected countries across the continents%
,roducts in the #aset list are traced e(er" month from selected outlets in all the
countr"Fs ten pro(inces% Data collection is done using speciali*ed questionnaires
which show all the products attri#utes needed% After price collection+ the files are sent
to the Head Office for capturing and entr" is done on a ,rotected 1icrosoft
Eorsheet% During data entr"+ errors are prone to occur% Dalidation taes place
thereafter to perfect the records #efore su#mission to the ADB% All the files from all
pro(inces are merged using 1erge 1acro D which creates a countr" data file% This
contains all the captured records for the whole countr"% The ne!t stage is to run macros
on the countr" data file using Semper Dalidation Software -%@ and the results are
deposited in a (alidation #oo% The Semper was specificall" designed for &$, data
(alidation% &t recalculates price a(erage for each item entered for the recommended
quantit"% The (alidation #oo is used to trac errors to their original pro(incial files
from where corrections are made% All products with the same code are grouped
together% T"pical outliers are indicated and these ha(e to #e (erified% &n the e(ent that a
wrong unit of measurement was used+ the product code will #e highlighted in red to
draw the attention of the data (erifier% The process of merging and running the Semper
continues until the records show consistenc"%
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Ehen satisfied that the errors ha(e #een eliminated+ the countr" data file is sent to the
ADB G Statistics Di(ision where Huaranta ta#les are produced to calculate the price
a(erages and su#sequentl" the ,urchasing ,ower ,arit"% The ADB Statistics di(ision
also produces a time series to find out if product prices are consistent o(er the period%
,rice mo(ements ha(e to #e in congruent with o#taining macro economic conditions%
8or the Aim#a#wean prices+ some ha(e #een found to #e dropping o(er the period
when inflation is so ra(aging% The root pro#lem lies in the enumerators who
sometimes do not adhere to product specifications as detailed on the questionnaires%
The countr" Representati(es meet e(er" quarter for refresher courses and strategic
planning where the" also re(iew the progress of the program and the challenges #eing
faced along the wa"% $urrentl" it is #eing run on a trial #asis with the ultimate aim of
ha(ing it as a perennial program% The coordinators from ADB tae the opportunit" to
e!plain new concepts to attendants%
#.1.1.1 O62ectives of -CP
To calculate the ,urchasing ,ower ,arit" of the currenc" com#inations in the
#aset and this shall #e used for con(ersion of 4D, figures to one currenc" for
comparison sae which is normall" the /S Dollar(/S I)% $urrentl" there are
difficulties in coming up with an e!change rate for two currencies that not are
hea(il" traded% &n some cases 4o(ernment interference in the foreign marets
also tends to distort e!change rates which carr" forward to 4D, con(ersion%
There are some deli#erate policies in some countries to ignore the Relati(e
,urchasing ,ower ,arit" which states that e!change rates ha(e to ad3ust to
changes in consumer price indices #etween countries% The &$, taes into
account inflation mo(ements as the same products in its #aset are the ones
used for calculation of the $,& and inflation%
The information produced will #e used to calculate and update po(ert" datum
lines in each region% The e!ercise is #eing used to identif" need" areas where
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Work related Learning Report N0070465E
donor funds should #e apportioned% The ,o(ert" Datum 7ines for each countr"
will #e con(erted into the /S dollar using the purchasing power parit" of the
&$, results%
To assist in decomposing the 4D, and its su#-aggregates as use of multiple
currencies does not assist in maing inter-countr" comparisons% &n this regard
the 4D, figures of the participating countries are con(erted to one currenc"
using the recalculated ,,,Fs% &t #ecomes easier to directl" compare the
standards of li(ing across countries under the different su#-groups namel"
food+ #e(erages+ to#acco and narcotics+ recreation and entertainment ser(ices+
health products+ furniture and operations+ clothing and footwear and transport
and communication%
Howe(er its ma3or weaness is that it does not include e!penditure on education and
acquisition of assets #" industries (4ross $apital 8ormation) which are (ital
components in an" countr"% &t is then difficult to compare the results at national le(el%
&t is onl" compara#le at household le(el% &t is interesting to note that the /nited
.ations and the regional coordinators ha(e noticed this and modalities are underwa"
to include such% $onsultants ha(e #een hired to help participating countries integrate
such elements%
#.1.# Te Consumer Price -ndex /CP-0
The $onsumer ,rice &nde! is considered the most widel" measure of inflation which is
the rate at which the purchasing power of consumers is falling i%e% increase in prices% &t
is thus regarded as an effecti(e indicator of fiscal and monetar" policies pursued%
The computation of $,& #egins with the $onsumer ,rice Sur(e" ($,S)%$,S is a
national sample sur(e"+ which is designed to pro(ide an estimate food and all items
inflation% The recording is done #" trained enumerators under the leadership of their
team leaders who generall" gi(e directions as to what should #e done% ,rices are
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Work related Learning Report N0070465E
recorded on a special questionnaire designed for each product and outlet which
specifies the product and outlet t"pes #ut gi(es the enumerator the leewa" to choose
the #rand and quantit"% The product is referred to #" a code so is the outlet and localit"
from which the data collection too place% /suall" the sur(e" falls in the wee falling
mid-month and this e!plains wh" some price changes ma" not #e captured and impact
on the o(erall inflation figures for the particular month%
#.1.% $am4ling design for CP$
A two-stage sample design was used for the $,S% The ward was the first stage
sampling unit in each pro(ince followed #" the outletJshop% All wards in each pro(ince
were listed using the -;;5 census map and within each ward a list of all outlets were
listed then a random sample done within each sampling frame% A total of -5@ clusters
outlets are used up to the present da"%
The $,& consists of a #aset of goods traced from month to month and currentl" has
<5: goods and ser(ices which are mainl" #ought #" consumers for final consumption%
The result of the calculations is an a(erage at which the rate of goods and ser(ices will
#e going up% The collection points are widel" distri#uted (in #oth the rural and ur#an
areas) o(er the countr" to e(en out price fluctuations in pro(inces% The current #aset
was adopted in Bune 5@@= as a response to changes in consumption patterns using
weights constructed from the 5@@- &ncome+ $onsumption and 6!penditure Sur(e"
(&$6S)%
#.1.' .imitations of CP-
Howe(er the main disad(antages of the $onsumer ,rice &nde! ($,&) are that it
assumes no change in consumption patterns as the le(el of income changes in the short
to medium term% The assumption is that consumers will continue to #u" the product at
the inflated prices #ut this onl" holds in sta#le economies and not h"perinflationar"
en(ironments lie the one pre(ailing in Aim#a#we last "ears although a change is
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Work related Learning Report N0070465E
#eing e!pected % &t does not tae cogni*ance of e!istence of su#stitutes out of the
product class which consumers can easil" switch to% &t ma" also tae a long time for a
new product to #e captured in the $,& despite it ha(ing an impact on the consumersF
spending patterns%
The Aim#a#we $,& is calculated using the modified 7aspe"eres formula which allows
for weights to #e assigned and changed to each product as the #ase "ear changes% &t is
d"namic rather than static when it comes to alteration of weights% The method also
drops the weights of products which would ha(e not #een recorded in the particular
month so that the o(erall inde! is not affected% The products ha(e #een put into two
ma3or su#groups namel" food and non-alcoholic beverages and non-food items% The
weights are 9-%; K and ?:%- K respecti(el"% To get the contri#ution of each group
towards o(erall inflation+ the particular group inflation rate is multiplied #" its weight%
The hea(ier the weight+ the more the impact on the o(erall rate and (ice (ersa%
After the collection process+ the super(isor has to (erif" that what has #een recorded
maes sense and thereafter+ the files are sent to the Headquarters in Harare where
capturing taes place% 6ach pro(ince has its own data#ase meaning data entr" is on a
pro(ince #" pro(ince #asis% Records from different pro(inces do not appear in the
same file to allow for eas" of reference should a quer" arise in the future% Data entr" is
done using $S,ro 9%@ and the s"stem is secure as it alwa"s prompts the user for
identification to gain access and mae corrections% This ensures that no#od" can alter
the records in the data#ase without authorit"% 6ach pro(inceFs data#ase has a statistical
cler who has the o(erall responsi#ilit" o(er it%
$S,ro can #e used to process data from censuses and sur(e"s+ #oth small and large%
T"pical su#3ect areas include0
L Housing and ,opulation
L Demographic $haracteristics
L Health and .utrition
L Agriculture
L 7a#or 8orce
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L Business 6sta#lishments
L 6ducation
L 7i(ing Standards
L 6nerg"
L &mmigration
L Household &ncome and 6!penditure
L $ommunit"
L &nstitutional
L ,ost-6numeration
L Dital Statistics
$S,ro includes the following modules0
L Data 6ntr" Applications
L Batch 6dit Applications
L $ross Ta#ulation Applications
L Tools
Data is then entered for the second time to minimi*e human errors and then done
manuall" #efore sending the data to the programmer for anal"sis%
After the data entr" process+ the records are sent to a programmer in a single folder
who is responsi#le for running in AS$&& file%
The data is then con(erted to a Statistical Anal"sis S"stem (SAS) program for
anal"sis%
#.1.) Com4osition of te index
&nde! #aset
The inde! #aset comprises the indicator commodities and ser(ices whose price
change is #elie(ed to represent all possi#le goods and ser(ices that cannot #e
practicall" included in the #aset% The classification of these is #ased on the /nited
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.ations S"stem of .ational Accounts% &t is #asicall" called the $lassification of
&ndi(idual $onsumption #" ,urpose ($O&$O,)
The smallest unit in the #aset is an ITEM (either a commodit" or ser(ice) e%g%
white #read is an item%
Related items are grouped together into sections which is a collection of items
that are related lie 'fruits and (egeta#les)% These are called groups% 8or
e!ample if we com#ine white and #rown #read from the a#o(e diagram we get
su69grou4 #read
SectionsJgrou4s lie 'fruits and (egeta#les)+ '#read and cereals)+ meat+ 'mil+
cheese and eggs)+ 'coffee and tea)+ fish+)oils and fats)+ condiments and
confectionar"+ and other foods are rolled o(er to form an e(en larger collection
of related items called FOOD or ma2or grou4.
The wider collections of items called food+ drin and to#acco+ clothing and
footwear+ rent +rates+ fuel and power+ furniture and household stores+ medical
care transport and communications+ recreation and entertainment+ education
+miscellaneous goods and ser(ices are rolled o(er to o#tain the ALL ITEMS.
#.1.*Calculation of mont on mont /m9o9m0: year on year /y9o9y0 and
annuali!ed inflation rate from te CP-.
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The Huic JRatio 1ethod
Ratio = (
BaseValue
ue CurrentVal
-1) M100

e%g% To calculate "ear on "ear annual inflation rate gi(en that the (alue for all items for
Decem#er -;;> was =-?%< and for Decem#er -;;: was >=>%5 then0
% change= (
< % =-?
5 % >=>
-1)*100=4.
8ull method recommended as a spreadsheet formula
% change =

,
_


BaseValue
BaseValue ue CurrentVal
*100
Annuali!ing Rates of cange
The formula for annuali*ing a short-term change e%g% a change #ase on sa" 9 months to
an annual rate is the following0
! % =

,
_

-
-
5
-
5
-5
n
p
p n
n
n
*100
Ehere
n
-
and
n
5
are the periods in question%
This is in fact the formula used for calculating the annual inflation rate i%e% the change
o(er -5 months% Since the denominator of the e!ponent (n--n5) N-5+ the e!ponent
reduces to -%
#.#.; Te .as4eyres "ormula in index com4utation
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The standard 7aspe"res 8ormula compares the current cost of the #ase period maret
#aset (the numerator) with the #ase period cost of the #ase period maret #aset (the
denominator)
The 7aspe"res ,rice &nde! is gi(en #"0
It
= (

<
-
@ @
<
-
@
i
i i
i
i it
q p
q p
)*100
Ehere iN-+ 5+ 9+ < representing the item at period tN@+ -+ 5+ 9
The use of 6!penditure Eeights and ,rice Relati(es in the 7aspe"res ,rice &nde!
formula
It
=
w@
-
(
w
@
p
p
t
@
)*100
Ehere "#=$=e%"en&it'!e $eight(
#.#.;.1 Advantages of using te 5ase <eigted .as4eyres "ormula for CP-
com4ilation
&t is easier to interpret compared to superlati(e ideal indices such as the 8isher
or Tornq(ist #ecause the impact of the prices and that of quantities can #e
isolated without great difficult"O
$,& users are usuall" familiar with the 7aspe"res &nde! as a standard
measurement of pricesF trendO
&t allows for the taing into account the changes in the product mi! and regular
updating of the selection of outletsO
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The structure and weights of the $,& #aset+ which are costl" and time
consuming to de(elop+ remain constant for se(eral "ears%
#.#.;.# $ortcomings of te standard .as4eyres "ormula

Does not pro(ide fle!i#ilit" required for the current situation in economies
going through significant and rapid changesO
O(ertime+ large (ariations in price relati(es are liel" to de(elop and no
meaningful checs can #e #uilt in at the editing stage%
#.#.1 (odified .as4eyres -ndex
The #asic formula is gi(en as0
It
N


w
t -
p
p
t
t
-
#.#.#<y use te modified .as4eyres "ormula
&t allows for the taing into account the changes in the product mi! and regular
updating of the selection of outletsO
Does pro(ide fle!i#ilit" required for the current situation in economies going
through significant and rapid changes
#.#.% E xam4le8 -ndex com4utation
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Product
p
@
p
-
1
1
]
1

p
p
@
-
Weight (
w
@
)
Index=
w
p
p
@
@
-
M
Bread 1500 2400 1.60 4.04 6.47
Sugar 1000 1350 1.35 5.20 7.02
Alcoholic Beverages 600 800 1.33 6.47 8.62
Transport and
o!!unication 5000 6500 1.30 13.86 18.01
"i#uid and $as %uels 2000 2500 1.25 12.70 15.88
&urchase o% !otor
vehicles 20000 3500 0.18 57.74 10.10
All Items Index 66.10
To guard against errors from affecting the whole process+ a price list for each pro(ince
is printed% &t shows the product code+ outlet code+ current inde!+ and the percentage
price change from the pre(ious month% The percentage price change is usuall" used to
chec for errors% Statistical clers go through editing noting down suspect price
changes and (erif"ing using the official file% &f the mistae is thought to ha(e
emanated from the recording e!ercise+ the enumerator and super(isor concerned are
conducted to (erif" with the outlet from which the price was recorded% This is meant
to minimi*e the amount of errors that could lead to distortions in the final figures%
&n the e(ent that errors are detected+ corrections are done in the original file% Thereafter
the files are sent #ac to the programmer who conducts a second run% The clers will
then conduct a final error checing in case some errors might ha(e escaped unnoticed
in the first stage and if no errors are detected+ the indices are copied to an 6!cel file
from where the ma3or calculations will tae place% 8ormulae are assigned in the sheet
to calculate the inflation rates for the different su#groups and the all items inde! on a
monthl" and annual #asis% The ad(antage of using the 6!cel worsheet is that it is user
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friendl" and also it has #een a#le to create a data#ase of indices and inflation rates for
a longer period%
#.#.' Relationsi4 6etween mont9on9mont and year9on9year inflation rates
The month on month inflation figures from the pre(ious "ear are an important
instrument in forecasting the annual inflation in the immediate ne!t period% Taing for
e!ample the monthl" inflation rate of April 5@@= which was >%<K and the 1arch 5@@?
annual figure which stood at ;-9%?KO for the April 5@@? annual figure to go #e"ond
;-9%? (the 1arch 5@@? rate)+ the month on month for April 5@@? has to #e o(er the
month-on-month rate for the same month in the pre(ious "ear which was >%<K% &f the
month-on-month for April 5@@? does not change from the April 5@@= figure+ then the
annual rate for April 5@@? figure will not go up% &t remains static at the pre(ious month
rate which in this case will #e ;-9%? K and an" drop on the month-on-month from the
pre(ious period+ the annuali*ed figure will go down% This pro(ides a good pointer as
to which direction the annual rate will tae% Annual inflation is also equal to the
compounded monthl" rates so it #ecomes easier to mae forecasts of annual inflation
when more than half monthl" inflation figures ha(e #een pro(ided% Simulation of
monthl" rates can #e produced with certaint"%
- ) - ( ) - )( - ( inf
) -5 ( + ) 5 ( + ) - ( +
+ + +
ir ir ir t m t m t m
lation Annual
where
ir t m t m ) -5 ( ) - ( +
P monthl" inflation rates for the "ear under
consideration
#.% Time series analysis
Time series follows after the $onsumer ,rice &nde!% This in(ol(es the trend
anal"sis which would then #e used for forecastingJpredicting future inflation
figures which is then an important tool in decision anal"sis% for e!ample if we are
to anal"se the mo(ement of inflation figures from 5@@@-5@@? we can see that from
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Work related Learning Report N0070465E
the second quarter of 5@@=-5@@? there was a sharp rise in the inflation figure and
#" so doing this will help (arious sectors of the econom" to mae more informed
decisions so as to tae necessar" measures to deal with this%
1icrosoft 6!cel was used for this to construct the graphs in order to mae
comparisons%
/ses of $,& Time Series
Time series can #e used #" (arious #usiness staeholders in maing more
informed decisions in0
Determining a(erage worers incomes in successi(e months+
,redicting compan" profits in successi(e "ears+
,redicting total e!port sales in successi(e months or "ears+
Anal"sing the sales figures in successi(e months through forecasting%
Exam4le
The following graph which shows annual inflation figures can #e used in
forecasting #" #usiness staeholders in coming out with some more informed
decisions
+ra4ical illustration of Average annual inflation /#;;; = #;;*0
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Work related Learning Report N0070465E

Time series can also #e used to see trend of the po(ert" for e!ample the graph
#elow shows the po(ert" #eha(iour from -;:?-5@@-% 8rom the graph we can see
that #etween -;;-- -;;9 and -;;:-5@@- most people were li(ing under po(ert"
datum line i%e% we can sa" that most people were lowl" paid or the" were poor%
&n -;;=--;;: high li(ing standards were achie(ed to most people%
Poverty 5eaviour /1>?*9#;;10
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#.' Poverty Analysis
,o(ert" datum line (,D7) represents the cost of a gi(en standard of li(ing that
must #e attained if a person is deemed not to #e poor%
The food po(ert" datum line (8,7) represents the minimum consumption
e!penditure necessar" to ensure that each household can (if all e!penditures were
de(oted to food) consume a minimum food #aset representing 5-@@ ilo calories%
The following is the #aset that is used to determine ,o(ert" Datum 7ine (,D7)
The quantit" used is as in the $,&%
$omputation of ,o(ert" Datum 7ine
8,7N
rams Ki in Units
Person Annum uantit! ice Average
log Q Q
J J M ,r Q
T$,7N
inde" #ood $on
inde" food
Q Q
Q
M
1
]
1

+
%eight #ood
%eight #ood $on
Q
Q Q
-
The following food items fall in the po(ert" #aset for calculation of ,D7
Bread 8ish Tomatoes
1ai*e 1il ,otatoes
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Rice 6ggs Beans
Ration 1eat $ooing Sugar
$hicen $a##age Salt
8lour Rape

#.) Average annual inflation rate and conversion factors
A(erage annual inflation for the "ear refers to what would ha(e #een the rate if had
there #e no (olatilit" in the mo(ing a(erages rates recorded% At the end of each "ear+
the a(erage inflation for the period under re(iew is calculated using the geometric
mean approach #ecause it is not sensiti(e to outliers unlie the arithmetic mean% The
office uses the geometric mean of the indices recorded and not the actual inflation
figures which were recorded within the period% The main o#3ecti(e is to eliminate
chances of carr"ing forward errors which might ha(e gone unnoticed to inflation
figures o#tained during the period% Howe(er the same annual inflation figure is arri(ed
at if the geometric mean of the actual rates o#tained is used%

#.).1 Conversion factors
$on(ersion factors are the (alues used to change indices from one #ase "ear to the
other to allow for compara#ilit" under different weight regimes% Due to the changes in
spending patterns+ the weights are changed usuall" #etween fi(e to ten "ears in sta#le
economies so that the indices calculated remain a #etter pro!" of what is pre(ailing in
the econom"% Howe(er inflation rates remain the same under different weight regimes%
( )
) -@@ (
M
-5
-5 5 -

period base in indices of geomean


factor conversion
I I I

EhereO ( )
-5
-5 5 -
M
I I I
is the geometric mean of the indices recorded in the "ear
to #e the new #ase%
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The current con(ersion factor used to con(ert indices to either -;;= or 5@@- #ase is
@%-59:<?55% To con(ert indices after 5@@- to the -;;= #ase+ the figure concerned is
di(ided #" con(ersion factor and to #ring indices #efore 5@@- to the current #ase+ the
indices are di(ided #" the factor%
#.* 3eriving weigts from ex4enditure data
The weights are mainl" deri(ed from the results of the &$6S which usuall" #ecomes
the #ase "ear period% The current weights were deri(ed from the 5@@- sur(e" hence
the use of 5@@- as the #ase "ear% $alculation of weights tae into account total
quantit" consumed and total e!penditure on the products% Howe(er+ due to
una(aila#ilit" of quantities consumed+ the total e!penditure on each product is used%
Exam4le
K -@@ M
e!p
,r

,
_

enditure &otal
product on e '"penditur
weight oduct
Product Expenditure (! m)
Weight (") =
K -@@ M
e!p
e!p
enditure total
enditure product
Bread
350 4.042
Sugar
450 5.1'6
Alcoholic Beverages
560 6.467
Transport and o!!unication 1200 13.857
"i#uid and $as %uels 1100 12.702
&urchase o% !otor vehicles 5000 57.737
#otal $660 100.000
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#.*.1 Relationsi4 6etween CP- and Purcasing Power
8rom the graph+ it can #e o#ser(ed that Hundred Aim#a#wean dollars (AI -@@%@@) in
-;;= was worth AI @%@@@>=- (>%= cents) #" the end of 5@@= showing the alarming rate
at which the currenc"Fs (alue has #een eroded #" inflation% &n real terms+ I-@@ in -;;=
is now worth nothing% There is negati(e relationship #etween the $onsumer ,rice
&nde! and the ,urchasing ,ower and a positi(e relationship #etween the $,& and the
cost of li(ing% Ehen the $,& is going up+ so is the cost of li(ing and the purchasing
power of the currenc" falls such that in times of sta#le+ low inflation the purchasing
power falls slowl" while in times of deflation the purchasing power rises% 8or the
countries e!periencing inflation in the negati(es such as 7i#"a and Bapan+ ha(e the
purchasing power of their currencies going up and the cost of li(ing going down%
There is an incenti(e to eep assets in cash as it does not lose (alue unlie in an
econom" e!periencing positi(e inflation the same amount of mone" toda" can #u"
more in the future%
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#.1 @ses of te CP- and inflation rates
a. &t is a measure of inflation as it affects households and thus pro(ides a #enchmar
on what in(estors should e!pect on their portfolios% The aim is to allocate funds to
those assets that #eat inflation so as preser(e oneFs wealth% /nfortunatel" for
Aim#a#weans+ most of the legal in(estments are gi(ing returns #elow inflation
resulting in the wealth of man" #eing reduced% This also e!plains wh" most people
ha(e turned to real estate in(estments as such in(estments are a#le to preser(e
wealth% Assets ha(e to #eat inflation in order to #e considered profita#le%
6. The $,& is used as an ad3ustment factor for inde!ation of prices+ wages and
salaries and (aluation of assets% &n most cases assets ha(e to #e ad3usted in line
with the inflation trends so as to at least maintain the purchasing power% &n
accounting+ financial statements ha(e to #e ad3usted in accordance with inflation+
which pre(ailed in the period under re(iew in h"perinflationar" en(ironments as
the one currentl" o#taining in Aim#a#we% &n accordance with the pro(isions of the
&AS 5;+ accounts in h"perinflationar" en(ironments ha(e to #e ad3usted for
inflation% &t is therefore important that the $%S%O% pu#lishes relia#le figures+ which
would allow for accounting statements to #e true%
c. The $,& is also used as a deflator of series in nominal terms to deri(e (alues in
real terms% &n this regard+ it is mainl" used for deflating 4D, figures to come with
constant prices compared to one #ase "ear%
d. &t is also an important instrument for formulation of monetar" and fiscal policies%
1onetar" authorities set interest rates and e!change rates #" use of inflation
figures deri(ed from the $,&% &n principle+ the e!change rate #etween two
currencies should #e equal to the inflation differential o(er the period% 8iscal
authorities use it to determine ta! #racets% The purpose of an" polic" is to create a
sta#le macro en(ironment so that inflation remains low% &n a world of little or no
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4o(ernment interference+ the inflation rates should sa(e as a #arometer as to what
the e!change rate should #e% This is in line with the theor" of Relati(e ,urchasing
,ower ,arit" which states that e!pected inflation differentials #etween two
countries should #e equal to the future e!change rate% This means that the currenc"
with the higher inflation should depreciate against the low inflation rate currenc"%
6!change rates should ad3ust according to trends in inflation% Due to 4o(ernment
interference through the RBA+ the e!change rate is #eing held constant def"ing the
#asic economic fundamentals% This is another factor which has dri(en inflation due
to speculation through the #lac maret where the e!change rate is allowed to
depreciate in accordance with the o#taining inflation rates% 1ost de(eloping
countries use a crawling peg in e!change rate management and these are arri(ed
after factoring in inflation mo(ements%
e. $,& is also used in forecasting i%e% in predicting future e(ents% Ee can #e a#le to
estimate the ne!t month inflation rate
f. &t is also used to measure the po(ert" datum line as the prices used +the quantit"
and the outlets used are the same as those from $,&
CHAPTER %
%.1 "-,A,CE $ECT-O,
8inancial Statistics are aggregates that measure and quantif" monetar" flows (i%e%
income and e!penditure) and stocs (such as assets and lia#ilities) e!isting in the
econom" of a countr" (in this case Aim#a#we)% 1onetar" flows are measured o(er a
period of one "ear while stocs are gi(en at an" point in time% The data refers to the
income and e!penditure and source of origin%
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The section is responsi#le for managing the data#ase or such data o#tained from the
following institutions #" wa" of secondar" sur(e"s% The data is mainl" collected from
the following institutionsO
$entral 4o(ernment for ,arastatals
7ocal 4o(ernment+
8inancial institutions ($ommercial and merchant #ans+ discount houses+
#uilding societies and the RBA)
.on-,rofit maing organi*ations
Huoted companies
%.1.1 @ses of financial $tatistics
The financial aggregates pro(ided are an important part in national accounts
compilation% The" are used forO
8ormulation of monetar" and fiscal policies
1aing in(estment decisions
1aing comparati(e studies #" researchers+ economists%
6conomic anal"sis #" international #odies such as the &18 and Eorld Ban%
The main tas of the section is to 3ust capture historical data and creating a data#ase
for such% &t pla"s a complementar" role to the RBA%
%.1.1.1 5anking $tatistics
Baning statistics refers to the gathering and anal"sis of information from the financial
ser(ices sector% The ultimate aim of gathering the financial statistics data is to come
with a $apital Accumulation Account% .ational &ncome Huestionnaires are sent to all
financial institutions concerned% The information required would #e on &ncome and
6!penditure (,rofit and 7oss Account) and $apital Account (Balance sheet)% This
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information is also (ital in the production of the 4ross 8i!ed $apital 8ormation+ which
is a main element in production of 4D, figures%
Ehen the Huestionnaires ha(e #een returned to the section together with each #anFs
documents+ the data is aggregated into its respecti(e sector namel" (merchant #ans+
commercial #ans+ discount houses and #uilding societies)% Ha(ing aggregated the
information according to the specific line of #usiness+ the" are aggregated for the
whole industr"%
1ost of the information is o#tained from the pu#lished end of "ear accounts and the
RBAFs monthl" re(iews+ which showO
Assets and lia#ilities of $ommercial #ans
Demand deposits of commercial #ans
Ad(ances made
1one" suppl" growth
&nterest rates for different #aning products and #ans%
The aggregates are then used to compile the Huarterl" Digest of Statistics% The
Department is there to complement the efforts of the RBA in compilation of
financial statistics% This e!plains wh" it is small and acts onl" as a data#ase for
such information%
CHAPTER '
'.1 ,AT-O,A. ACCO@,T$
.ational accounts portra" the essential phenomena which constitute economic lifeO
(production+ income+ consumption+ accumulation) in a format that is designed for
purposes of anal"sis+ decision taing and polic"maing% The accounts of Aim#a#we do
not as "et include data on wealth #ut plans are underwa" to incorporate the
information% The Aim#a#we national accounts are #ased on the /nited .ations S"stem
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Work related Learning Report N0070465E
of .ational Accounts (/.S.A)+ a framewor for preparing a statistical report on a
countr"Fs economic acti(it"% Another de(elopment of the national accounts is the
implementation of a spreadsheet-computeri*ed s"stem - nown as S"stem of .ational
Accounts on ,ersonal $omputers (S.A,$) for the compilation of national statistics%
The s"stem was designed #" Statistics Sweden and conforms to the re(ised standards
of the -;;9 S"stem of .ational Accounts (S.A)% A set of national accounts for the
same period for a num#er of countries will ena#le comparisons of those countries
pro(ided the concepts and definitions are consistent #etween countries% To date+ the
national accounts ha(e #een limited to the production account #" institutional sector as
per -;?: S.A%
'.1.1 Activities of te section
$alculating 4ross Domestic ,roduct #" industr" of origin namel" agriculture+
8inance and &nsurance+ 6ducation+ $i(il 6ngineering+ 1ining and Huarr"ing+
6lectricit" and Eater+ Health and others%
$alculating 4ross 8i!ed $apital 8ormation G this sees to assess the change in
the fi!ed assets in the econom" from the pre(ious period% Re(aluations are also
included in the calculations%
$onducting &ncome+ $onsumption and e!penditure Sur(e"s
$ompilation of the $entral 4o(ernmentFs transactions
'.1.# (ain $ources of 3ata
&t is the integral part of the whole $SO s"stems as other sectionsF outputs are its
inputs% 1ost of the information is gathered internall" from the other sections% Some of
the information is drawn from e!ternal sources such as the Reser(e Ban of
Aim#a#we+ 1inistr" of 8inance+ 1inistr" of transport and the parent 1inistr" and
,arastatals reports and field sur(e"s%
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Work related Learning Report N0070465E
'.# +ross 3omestic Product /+3P0
The 4D, is a measure of the total domestic economic acti(it" (production of goods
and ser(ices) in a period that is normall" one "ear to allow for comparisons% &t is the
sum of all income earned #" the production of goods and ser(ices on the Aim#a#we
economic territor"+ where(er the earner of income ma" reside and is a (alua#le
economic #arometer% 4D, is equi(alent to the (alue added to the econom" #" this
acti(it"% Dalue added can #e defined as income less intermediate costs% .ominal 4D,
growth reflects #oth changes in the econom" and price changes (inflation) o(er the
accounting period% The 4D, is calculated at #oth the maret and constant prices and
for the -9 industries according to the &nternational &ndustrial $lassification (&S&$
Re(ision 5)
'.#.1 A44roaces to measuring +3P
a0 Production A44roac
&n Aim#a#we+ corporations mainl" estimate the 4D, using this method #ecause it is
harmoni*ed with the information needs of other state agencies such as the Aim#a#we
Re(enue Authorit" that uses the (alue added at each stage to come with ta! pa"a#le%
This maes data collection easier% The method calculates 4D, as a sum of the 4ross
Dalue Added (4DA) of the (arious industrial sectors of the econom"% Dalue added of a
sector is the (alue of all goods and ser(ices produced (output) less the (alue of raw
materials+ and other goods and ser(ices consumed during the production process
(intermediate consumption)% The o#3ecti(e of factoring out intermediate consumption
is to eliminate the issue of dou#le counting as a product normall" passes through
(arious stages #efore #eing read" for consumption% &nclusion of net income from
a#road will gi(e the 4ross .ational ,roduct (4.,)%
60 -ncome A44roac
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The &ncome Approach sums up the incomes generated #" resident institutional units in
the process of production% 4D, under this approach is thus the sum of compensation
of emplo"ees+ all ta!es net of su#sidies lined to production and imports and the
#alancing item and gross operating surplus% This approach alternati(el" sums up the
net income (receipts less pa"ments) allocated to or recei(ed #" the resident
institutional units% &t sums up the components operating surplus (profits)+
compensation of emplo"ees (wages and salaries)+ ta!es on production and imports
(net) and propert" income (interest+ distri#uted income of corporations i%e% rein(ested
earnings on direct foreign in(estment+ interests+ di(idends+ withdrawals from income
of quasi-corporations and rent)% This approach usuall" "ields the 4ross .ational
&ncome as some of the incomes recei(ed net would #e from non-resident institutions
i%e% the rest of the world%
c0 Ex4enditure A44roac
The method is a sum of e!penditure on final goods and ser(ices measured at the
purchasersF prices+ minus imports of goods and ser(ices as the" are not produced
within the #orders of our econom"% The result of the production acti(ities of resident
producer units is also equal to the sum of the final uses of goods and ser(ices (all use
with the e!ception of intermediate consumption) measured at producersF prices less
the (alue of the imports of goods and ser(ices%
&n principle+ the three approaches should gi(e the same figure as the" measure the
same flow of income in the econom"% Howe(er due to comple!ities and difficulties in
gathering information+ there might #e slight differences #ut the" howe(er point in the
same direction%
8rom the 4ross Domestic ,roduct figures a portion attri#uta#le to each citi*en is
calculated% The main idea is to find out if uniformit" had pre(ailed in the creation
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Work related Learning Report N0070465E
process+ how much would each citi*en o#tained and is the one mainl" used for
comparison of standards of li(ing across countries% &t is 3ust a theoretical approach
which shows how much a person contri#uted towards 4D,% &ts ma3or weaness is that
it assumes e(en distri#ution of wealth #ut in realit" such a thing does not e!ist% The
#ul of the wealth ma" #e concentrated in the hands of a few as there are distortions in
the econom"% &n most countries+ o(er :@K of the wealth is concentrated in the hands of
a#out -@K of the population% &t is calculated #" di(iding the total 4D, figure #" the
a(erage population figures usuall" taen at mid-"ear so as to e(en out fluctuations at
the #eginning and end of "ear% The 4D, per capita suffers from the illegal migrations
which tae place% This has affected Aim#a#wean accounts as most of the migrants use
illegal points to enter into neigh#ouring countries%
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AA #;;) ,ational Accounts figures are still 4rovisional and are not ready for
4u6lic consum4tion.
'.#.% Real +3P growt
The 4D, estimates are made at maret prices (prices #eing o#ser(ed) and deflated to
tae into account the effects of inflation to the set #ase "ear which at the moment is
-;;@% This allows for comparison with other figures in the series as to which trend the
4D, has #een taing% The maret prices tae the (alue of transactions in the prices
relating to the period #eing measured% $onstant prices figures e!press (alue using the
a(erage prices of a selected "ear (#ase "ear)% The constant price concept is used to
show how the quantit" or (olume of goods has changed and are often referred to as
(olume measures% The deflator #ecomes the ratio of the current and constant price
series% 8or 4D, to grow in real terms+ the nominal growth should grow a#o(e the
deflator%
when
d
t
rate growth al no > min P The 4D, grows in real terms%
d
t
rate growth al no < min P The 4D, declines in real terms%
'.# Pro6lems in ,ational Accounts com4ilation
a0 Exclusion of oter activities
Despite some of the acti(itiesF impact on the welfare of the people+ the" are e!cluded
from 4D, compilation% 1ost of the acti(ities such as (ending are e!cluded despite the
fact that such ha(e #ecome the #ac#one of man" householdsF onl" wa" to ensure
sur(i(al% There is a selecti(e approach when considering the informal sector%
/nderground acti(ities must #e included and those acti(ities #" some organi*ations
that impact negati(el" on the general populace #e su#tracted%
60 Excange rate volatility: overvaluation and undervaluation
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Ehen it comes to inter-countr" comparison+ there is a difficult as to which e!change
rate to use% 4D, figures are con(erted using the geometric a(erage rate #ut ma" #e
distorted due to some e!change (olatilities in unsta#le marets% Some of the e!change
rates pre(ailing at the moment across countries def" #asic economic fundamentals% As
in the Aim#a#we case+ the e!change rate is static against ra(aging inflation% The result
is that if the 4D, is con(erted to the /S dollar+ the growth would not #e what reall"
too place on the ground%
A =@K o(er(aluation of a currenc"+ o(erstates that countr"Fs 4D, #" appro!imatel"
twice in /S dollar terms% The same applies with an under(alued currenc" which
understates its 4D, and a =@ K under(aluation understates real 4D, #"
appro!imatel" the same margin% This has gi(en some authorities in Aim#a#we a false
sense of confidence% The" argue that the current situation is far much #etter than an
a(erage African countr" #ut it is the misaligned e!change rate that is so misleading
when inter-countr" comparisons are done% The &$, will help #ring this pro#lem to a
minimum%

c0 Providing inaccurate information
1ost of the people and organi*ations do not pro(ide accurate information #ecause of
the illegal acti(ities the" engage in% The pu#lic is alwa"s septic a#out pro(iding
information to 4o(ernment agencies as the" fear there might #e ulterior moti(es
#ehind% The masses ha(e to #e educated on the importance of pro(iding correct
information and the draw#acs of pro(iding wrong information%
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Work related Learning Report N0070465E
Ca4ter )
).1 Pro2ect
The #elow pro3ect is #ased on how to calculate the ,o(ert" Datum 7ine for the month
of 1arch 5@@; using the a(aila#le data from the $onsumer ,rice Sur(e"%
1athematical applications as well as limitations and alternati(e suggestions were then
highlighted after%
).1.1 Calculation of 4overty datum line
The data used for ,D7 come from $,S% After $,& food items which fall in the po(ert"
#aset are grouped in their respecti(e pro(inces for e!ample for 1ata#eleland .orth+
the pro(ince which & was responsi#le for%
9;
Work related Learning Report N0070465E
& shall illustrate how we o#tained the po(ert" line for pro(ince = i%e% 1ata#eleland
.orth
8rom the #elow worsheet it can #e seen that for each item the there is a standard
quantit" consumed #" each person per annum per "ear for e!ample a person is
required to consume 9?@@ g of flour%
&llustration of how the food po(ert" lines for each item were o#tained%
6!ample
8or each item e%g% #read we di(ide annual quantit" #" standard quantit" and then
multipl" #" a(erage price to o#tain annual price required for consumption of #read%
Annual consumption amount for #readN
>5 % @
9 % -:
M%@;9N/SI59%>5
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Work related Learning Report N0070465E
1onthl" consumption amount N
-5
>5 % 59
N/SI-%;>
After the process of o#taining monthl" a(erage prices for each item we then calculate
the o(erall po(ert" line for the-? items in each pro(ince%
This is o#tained #" finding the geometric mean which is simpl" the .th root of the
product of . items
+eometric meanB
n
$
n
M %%% M
-
B%%.)1BPoverty .ine
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Work related Learning Report N0070465E
The same was done for the ; pro(inces to get the o(erall po(ert" line for one person at
a .ational le(el
(atematical a44lications: limitations and alternative suggestions
The use of the geometric mean used for calculation of ,D7 was a good estimate than
using arithmetic mean which would #e affected #" other pro(inces with missing prices
for some items% & didnFt now that this mathematical formula was (er" essential it
pro(iding #etter estimate of determining the standards of li(ing%
The sampling design which was used for $,S had pro#lems that during the past few
"ears some outlets were closing up so in some pro(inces up ended up #eing no prices
for collection% Although the use of the geometric mean tried to consider this the results
were di(erging from a #etter estimate as the si*e of the sample contri#ute much to the
results produced% & recommend that the organi*ation should re(eal its outlets sa" e(er"
= "ears so as to maintain the accurac" of results%
The introduction of the dual pricing #" the Reser(e Ban of Aim#a#we resulted in us
facing challenges in the computation of the ,D7 as the prices collected from the
pro(inces were di(erging from the standard quantit" price for e!ample clear #eer
which was costing /SI@%?: for the month of 8e#ruar" was now costing /SI5 for a
pac of 9%
&t #ecame a challenge as it was not meaningful to di(ide #" 9 and sa" it costs
/SI@%?> as the price do not #eha(e in a linear function suggest that non-linear
functions should ha(e had #een applied to tae into account ad(antages of #u"ing in
large quantities for e!ample the use of the quadratic functions e%g% "R5N!
&t is of great importance to note that ,D7 is (er" useful in our dail" li(es for
forecasting using past information so after the computation of ,D7 time series should
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Work related Learning Report N0070465E
#e done% Through the anal"sis of past information for e!ample #" anal"sis of the
#eha(ior of the trend more informed decisions would #e made% The graph #elow
shows the #eha(ior of po(ert" from -;:?-5@@-
Poverty 6eavior

CHAPTER *
*.1 RECO((E,3AT-O,$
&t has #een an enlightening period in which & got to understand the operations of
statistics+ the #eha(iour and relationship of (arious and statistical (aria#les% There is
howe(er some areas which & feel need to #e impro(ed%
%*.1.# Recommendations to te organi!ation
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Work related Learning Report N0070465E
&n line with the harsh economic en(ironment o#taining in our econom" as
of date feel that $SO as an organi*ation should address the welfare of its
emplo"ees% &n line with the mission statement that the department shall use
highl" automated technolog" and ha(e a moti(ated staff+ there is need to
in(est in its staff welfare% During the three months l has #een here l reali*ed
that the salaries of the ma3orit" of staff are well #elow the ,o(ert" Datum
7ine (,D7)% The greatest in(estment that an organi*ation can ha(e is its
staff as such it is imperati(e for the organi*ation to address the pro#lem so
as to hedge against #rain drain+ goodwill and pu#lic confidence
Despite ha(ing a well connected and secure 7ocal Area .etwor (7A.) at
the head office+ the same cannot #e said of the pro(incial offices% The" lag
#ehind in technolog" which at times posses a threat to maintenance of
confidentialit"% The" rel" on time consuming manual s"stems% The
resources should #e made a(aila#le to procure palmtops for use in data
collection such as is done in South Africa% &t allows data to #e sent on real
time #asis from the point of collection to the head office and queries can
thus #e resol(ed urgentl"%

*.1.% Recommendations to te 3e4artment of A44lied (atematics
The Department of Applied 1athematics should tr" to sensiti(e its undergraduates to
#e e!posed to the practical feel of the degree not onl" through attachments #ut also
worshops and field trips%
During this period of attachment l ha(e seen so man" institutions coming to the $SO
not onl" local institutions #ut also e!ternal institutions of higher learning% Secondl" l
would lie the department to impro(e communication with students on attachment
since the construction of the we#site is taing long to complete %This can #e achie(ed
through emails or an" form of communication which is cheaper%

*818' Recommendations To Te @niversity
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Work related Learning Report N0070465E
Te .i6rary
&t is m" understanding that $SO produces so man" pu#lications which are (er" much
essential to students to #uild their theoretical foundations into practical framewors
which is essential to trade and commerce% To this end l would recommend the
7i#rarian to source this material at the $SO%8or e!ample the $,& and ,D7
pu#lications are produced monthl" and cost onl" /SI9%
Conclusion
& want to than $entral Statistical Office for allowing me time to prepare this report in
spite of the hea(" wor load which needed to #e completed% Special thans also go to
.ational /ni(ersit" of Science and Technolog" (./ST) for their well structured
degree programme which has equipped me with the necessar" theoretical aspects
APPE,3-C
A44endix 18 Li(t o) )o!*'+ae
1. (odified .as4eyeres8
It
N
p
p
w
t
t
t
-
-


w
t -
P the weight of the product determined from the #ase "ear
sur(e"s%
<=
Work related Learning Report N0070465E
p
t
P the current price of the product
p
t -
P the relati(e price from the #ase "ear
It
P the inde! in current period
#. -nflation B
I
I
t
t
-
K -@@ M
It -
P &nde! in preceding period (either one month or a "ear ago)
It
P &nde! in the current period%
%. Purcasing Power B
!ear base in of value
inde" current
inde" !ear base
M
'. +3P 4er ca4ita B
population countr! average
()P total
A44endix --8 Li(t o) ta,+e(
Canges in CP-: Purcasing Power and average annual inflation
Dear -ndex Purcasing 4ower Average annual inflation rate /E0
-;;= -@@ -%@@@@ 55%?
-;;? -5-%< @%:59> 5-%<
-;;> -<<%9 @%?;9@ -:%:
-;;: -;@%- @%=5?@ 9-%>
-;;; 9@-%9 @%99-; =:%=
5@@@ <?;%? @%5-5; ==%;
5@@- :@>%= @%-59: >-%;
<?
Work related Learning Report N0070465E
5@@5 -::9%- @%@=9- -99%5
5@@9 :>=>%- @%@--< 9?=
5@@< 9;<@? @%@@5= 9=@
5@@= -99--;%; @%@@@: 59>%:
+3P annual growt rates /Real vs. ,ominal0
Dear Annual growt rate /E0
Real +rowt ,ominal +rowt
-;;@ 9%> 55%:
-;;- 9%; 9>%:
-;;5 ---%5 -?%-
-;;9 --%< 59%=
-;;< 5%9 95%5
-;;= -9%- -@%9
-;;? ?%5 <@%=
-;;> 5%< 5<%?
-;;: @%= 9>%5
-;;; -9 =<%?
5@@@ -: 9?%:
5@@- @ >=%;
5@@5 -=%= -@9%;
5@@9 -;%5 5;?%=
<>
Work related Learning Report N0070465E
5@@< -9 5<:
A44endix --- 8 C.A$$-"-CAT-O, O" -,3@$TR-E$ A$ PER -$-C
/RE&-$-O, #0
(i) Agriculture
(ii) 1anufacturing
(iii) 1ining and quarr"ing
(i() $onstruction
(() Trade+ restaurants and hotels
((i) Real estate
((ii) 8inancial intermediaries
((iii) Transport and communication
(i!) ,u#lic administration
(!) 6ducation
(!i) Health
(!ii) Domestic ser(ices
(!iii) Other ser(ices
<:

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