United Nations Economic Commission for African Centre for

United Nations Economic Commission for African Centre for Statistics Short overview of institutional sectors accounts EN/ADM/2014/Pres/09 Clementina Ivan-Ungureanu Expert Group Meeting on the Use of Administrative Data in National Accounts 23 -27 June 2014 Kigali, Rwanda

SNA • The SNA is a system of macroeconomic accounts based on a set of concepts, definitions, classifications and registration rules. It provides a framework within which economic data can be collected analyzed to assist decision-makers and provide guidance on economic policies. African Centre for Statistics

SNA answers • • Who takes action in the economy? What do they do? Why do they take action? How are the actions known? African Centre for Statistics

African Centre for Statistics

WHO? Institutional units and sectors - Classification by industry, called ‘functional classification’ represents the production process and the flows experienced by goods and services produced in the economy. - Classification by institutional sector where the units are defined according to their economic behavior, economic function and economic objectives. African Centre for Statistics

WHO? Institutional units and sectors Definition: An institutional unit is an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities. African Centre for Statistics

WHO? Institutional units and sectors Characteristics - It is entitled to own goods or assets in its own right; it is therefore able to exchange ownership of goods or assets in transactions with other institutional units; - It is able to take economic decisions and engage in economic activities for which it is itself held directly responsible and accountable at law; - It is able to incur liabilities on its own behalf, to take on other obligations or future commitments and to enter into contracts; - It has a complete set of accounts, including a balance sheet of assets and liabilities, or it would be possible and meaningful, from an economic viewpoint, to compile a complete set of accounts if required African Centre for Statistics

WHO? Types of institutional units There are 2 main types of institutional units: 1. Persons or a household A household is defined as a group of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food. African Centre for Statistics

WHO? Types of institutional units 2. Legal or social entities A legal or social entity is one whose existence is recognized by law or society independently of the persons or other entities that may own or control it. African Centre for Statistics

WHO? : Categories of units Includes: • Corporations (financial and non-financial)= covers legally constituted corporations and also cooperatives, limited liability partnerships, notional resident units and quasi-corporations; • Non-profit institutions (NPIs) =legal or social entities created for the purpose of producing goods and services but whose status does not permit them to be a source of income, profit or other financial gain for the units that establish, control or finance them. African Centre for Statistics

WHO? : Categories of units • Government units = Government units are unique kinds of legal entities established by political processes that have legislative, judicial or executive authority over other institutional units within a given area. African Centre for Statistics

WHO? : Categories of units Classified in institutional sectors based on: - Type of producers - The principal activity and function. African Centre for Statistics

African Centre for Statistics

Who ? : Institutional sectors The SNA includes five main institutional sectors: • Non-financial corporations; • Financial corporations; • General government; • Households; • Non-profit institutions serving households (NPISHs). African Centre for Statistics

Who ? : Institutional sectorscont • Each sector can be divided in subsectors: S 11 Non-financial corporations - Public non-financial corporations -National private non-financial corporations - Foreign controlled non-financial corporations African Centre for Statistics

Who ? : Institutional sectorscont S 12 Financial corporations: - Central bank – S 121 Deposit-taken corporations – S 122 Money market funds – S 123 Non-MMF investment funds – S 124 Other financial intermediaries , except insurance corporation and pension funds- S 125 Financial auxiliaries – S 126 Captive financial institutions and money lenders –S 127 Insurance corporations – S 128 Pension funds – S 129 African Centre for Statistics

Who ? : Institutional sectorscont S 13 General Government - Central government – S 1311 - State government – S 1312 - Local government – S 1313 - General government social security –S 1314 African Centre for Statistics

Who ? : Institutional sectorscont S 14 Households - Employers –S 141 - Own account workers – S 142 - Employees – S 143 - Receipts of property and transfer income- S 144 S 15 Non-profit institutions serving households S 2 Rest of the world African Centre for Statistics

WHO? : Institutional sectors The allocation of a unit to an institutional sector is based on the following questions: • Is the unit resident? • Is it a household, institutional household (ex. a hospital) or a legal unit? • Is the unit a non-market or market producer? • Is the unit controlled by the government? • Does the unit provide financial services? • Is the unit foreign-controlled? African Centre for Statistics

African Centre for Statistics

Accounts • The sequence of accounts describes how income is generated, distributed, redistributed and used for consumption or the acquisition of assets and when assets are disposed of, or a liability is incurred, in order to acquire other assets or undertake more consumption than current income permits. African Centre for Statistics

African Centre for Statistics

Accounts • Value Added = Output - Intermediate consumption African Centre for Statistics

Accounts • Production account with the rest of the world African Centre for Statistics

Accounts • Identities: Account totals on the uses side = Account totals on the resources side African Centre for Statistics

Accounts • Generation of income account • After the production account, the next account in the sequence shows how gross value added is distributed to labor, capital, government and, where necessary, flows to and from ROW. This distribution process is called the primary distribution of income and includes: - Generation of income account - Allocation of primary income account African Centre for Statistics

Generation of income account African Centre for Statistics

Accounts • The allocation of primary income account shows the remaining part of the primary distribution of income. • Contains: - Resources side: operating surplus / mixed income and other forms of income on the resources side: compensation of employees, net taxes and incomes received from sources other than production (property income) - Uses side: property income paid The balance for this account is called primary income. African Centre for Statistics

Allocation of primary income account • Property income: income receivable by the owner of a financial asset or a tangible non-produced asset in return for providing funds to or putting the tangible non-produced asset at the disposal of, another institutional unit; it consists of: – Interest; – Distributed income of corporations (i. e. dividends); – Reinvested earnings on direct foreign investment; – Property income attributed to insurance policy holders; – Rent. African Centre for Statistics

Allocation of primary income account African Centre for Statistics

Secondary distribution of income account The secondary distribution of income account follows the conversion of primary income into disposable income, which is the income available for final consumption. African Centre for Statistics

Secondary distribution of income account Includes: -Current taxes on income, wealth; - Net social contributions; -Social benefits other than social transfers in kind - Other current transfers; these consist of the following: – Net premiums and claims for non-life insurance; – Current transfers between different kinds of government units; – Current transfers such as those between different households African Centre for Statistics

Secondary distribution of income account African Centre for Statistics

Accounts • Use of disposable income account shows how the available disposable income is used up, mainly on final consumption expenditures. • These include expenditures by households and by government. African Centre for Statistics

Use of disposable income account African Centre for Statistics

Accounts • Transactions in non-financial assets are recorded the capital account, the first accumulation account. • The capital account records transactions linked to: - Acquisitions of non-financial assets; - Capital transfers involving the redistribution of wealth. African Centre for Statistics

Capital transfers • Capital transfers are transactions, either in cash or in kind, in which the ownership of an asset (other than cash and inventories) is transferred from one institutional unit to another, or in which cash is transferred to enable the recipient to acquire another asset, or in which the funds realized by the disposal of another asset are transferred. There can be capital transfers to and from ROW. African Centre for Statistics

Capital transfers • Capital transfers can be divided into: - Capital taxes; - Investment grants; - Other capital transfers. African Centre for Statistics

Capital account African Centre for Statistics

Macroeconomic Aggregates • • Gross Domestic Product (GDP) Gross National Income (GNI); Gross National Disposable Income; Gross Saving. African Centre for Statistics

GDP- production approach African Centre for Statistics

GDP- expenditure approach African Centre for Statistics

GDP- income approach African Centre for Statistics

GNI includes products and services produced by enterprises owned by a country's citizens. • GNI adjusts GDP for two transactions with ROW, coming from the allocation of primary income account: - Compensation of employees payable to / receivable from ROW; - Property income payable to / receivable from ROW. African Centre for Statistics

GNI African Centre for Statistics

Gross National Disposable Income • Gross National Disposable Income is based on transactions from the secondary distribution of income account. The flows with ROW are: - Current taxes on income, wealth, etc. ; - Current transfers receivable / payable. African Centre for Statistics

Gross National Disposable Income African Centre for Statistics