62 6.4.3 Informal Sector Informal sector comprises all units/enterprises that are engaged in production of goods or services aiming at generating employment and incomes for persons concerned. The characteristics of informal sector includes private unincorporated enterprises owned by individuals or households; they are not registered; all or at least some of the goods or services produced are meant for sale or barter; their employment size is less than 5 employees and they are engaged in non-agricultural activities.

6.5 Informal Employment Informal employment refers to jobs that generally lack basic social or legal protections or employment benefits and may be found in informal sector, formal sector enterprises or households.

6.6 Vulnerable Workers The vulnerable workers include contributing family and own account workers. These two status groups are considered as vulnerable because such workers are unlikely to have formal employment arrangements or access to benefits or social protection programmes, and they are more at risk to the effects of economic cycles.

6.7 Child Labour Child labour is a work which is hazardous or is likely to be harmful to the child's health and development and that affect the child's attendance at school, participation in vocational orientation or training programmes approved by the competent authority or the child's capacity to benefit from the instruction received.

6.8 Price Statistics Price statistics refer to the collection, analysis, and interpretation of data related to the prices of goods and services in a specific market or economy over time. These statistics are typically used to understand trends in inflation, deflation, or price stability, and they are essential for economic planning and policy-making.

6.8.1 Consumer Price Index (CPI) Consumer Price Index (CPI) is an index that measures the rate at which the prices of a fixed basket of goods and services that are commonly purchased and consumed by a representative sample of private households are changing over a period of time (Monthly, quarterly or annually).

63 6.8.2 Price Index Price index is a normalized average of prices for a given class of goods and services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

6.8.3 Laspeyres Price Index
Is the Price Index taking the bundle of goods using current prices and current quantities as the numeraire.

6.8.4 Paasche Price Index
Is the price index where the numeraire is the bundle of goods using base year prices but current quantities. 6.8.5 Harmonized Consumer Price Index (HCPI) Consumer price index developed from concepts, definitions and methods that are comparable by Member State (SADC, EAC etc.)

6.8.6 Price Relative
Ratio of a single price at a given point in time to the corresponding price in the previous period

6.9 Inflation Inflation is defined as a sustained increase in the general level of prices for goods and services over a period of time. Several variations on Inflation are; • Deflation which is when the general level of prices is falling. • Hyperinflation is when unusually rapid inflation. In an extreme case, this can lead to the breakdown of a nation`s monetary system. • Stagflation that is the combination of high unemployment and economic stagnation with inflation. 6.9.1 Inflation rate Inflation rate is the percentage change in the CPI between any two periods whether based on monthly, annual or any other time period.

6.10 Base Period
Is a point in time used as a reference point for comparison with some later period.

.

64 6.11 Basket of Goods and Services
Refers to a sample of goods and services that are commonly purchased by persons including all expenditure groups and households in the country.

6.12 A Representative Item
Is an item that has been selected to represent the consumption pattern in the basket of selected items in the Consumer Price Index. This should be an item that has the largest share of consumption compared to the items of the same type.

6.13 Brand
Is the trade name of the item which may be the manufacturer’s name or the name that the item.
Note that the same brand name may be used for different items.

6.14 An Outlet
Are places where goods and services are sold to the final consumers.

6.15 Consumption
Is any activity in which households use goods and/or services to satisfy their needs and wants but not for business purposes nor for the acquisition of wealth. Thus, investment in all forms of assets is excluded.

6.16 An item variety
Is the description and specification of the representative item to be priced. The item name may be too broad. The variety includes specification of quality, kind, style, size quantity and the brand name. Take special note that item variety means the full item specification. For example; Representative item
: Maize,

        Item variety Specification      : 5kg, white 

        Brand  

: Red Seal

6.17 Basket of Consumer Goods and Services Basket of consumer goods and services refers to list of goods and services derived from household budget survey that are commonly consumed by private households.

6.18 Reference Population for CPI Refers to the group of households included in the scope of a CPI. The reference population for the CPI is all private resident households from all socio-economic groups.

65 6.19 CPI Weight
CPI Weights represent the share of monetary expenditures on goods and services in the overall monetary consumer expenditures in the household in a specific period. It measures the importance attached to an item or group of items in the basket of goods and services.

6.19.1 Weight Reference Period for CPI The weight reference period refers to the time period to which the expenditure data used to estimate weights was collected.

6.19.2 Price Reference Period The period that provides the prices with which the prices in other periods are compared. The prices of the price reference period appear in the denominators of the price relatives, or price ratios, used to calculate the index.

6.19.3 Index Reference Period Index reference period is the period for which the index is set to 100.0.

6.19.4 Elementary Aggregates The smallest aggregate for which expenditure data are available and used for CPI purposes. The values of the elementary aggregates are used to weight the price indices for elementary aggregates to obtain higher-level indices.

66 CHAPTER SEVEN POVERTY AND WELFARE STATISTICS 7.0 Introduction Poverty and welfare statistics provide essential insights into the living conditions of individuals and families in an economy, helping to assess the extent of poverty and the effectiveness of social welfare programs. These statistics typically measure the percentage of the population living below a defined poverty line, which is often based on income levels that are insufficient to meet basic needs such as food, shelter, and healthcare. Welfare statistics, on the other hand, track the distribution and utilization of government assistance programs aimed at reducing poverty, such as unemployment benefits, food assistance, and housing support. By analyzing these statistics, policymakers can identify vulnerable populations, monitor the impact of poverty alleviation measures, and adjust welfare policies to improve living standards for those in need. These standardized definitions help the Government, researchers, and policymakers accurately assess poverty status and allocate resources where they are most needed..

7.1 Poverty Poverty refers to an assessment of the basic costs of a minimum standard of living in a particular society and measures the number of households and/or the proportion of the population that are deemed not to be able to meet these basic needs. Poverty statistics tries to identify within each society who are the poor, where they live and what are the characteristics that set these poor households apart from those that are better-off.

Poverty is a result of many and often mutually reinforcing factors, including lack of productive resources to generate material wealth, illiteracy, prevalence of diseases, discriminative socio- economic and political systems, natural calamities such as drought, floods, and man-made calamities such as wars.

7.2 Welfare It is the level or standard of living of an individual, household or community. Two approaches are commonly used to measure welfare. The first approach is in terms of needs satisfaction. The more an individual, household or community satisfies its needs, the higher the level of welfare and vice versa.

The second approach is in terms of the household’s command over resources in terms of food, money, property, health, schooling, working conditions, housing, security against crime, means of transport & communication as well as liberty.

7.2.1 Human Poverty Index (HPI) Measures deprivations in the three basic dimensions of human development such a lack of a long and healthy life, lack of knowledge and lack of a decent standard of living.

67 7.2.2 Poverty Head Count Ratio The poverty headcount ratio is the proportion of the national population whose incomes are below the official threshold (or thresholds) set by the national government. National poverty lines are usually set for households of various compositions to allow for different family sizes. Where there are no official poverty lines, they may be defined as the level of income required to have only sufficient food or food plus other necessities for survival.

7.2.3 Poverty line A poverty line typically specifies the income (or level of spending) required to purchase a bundle of essential goods (typically food, clothing, shelter, water, electricity, schooling and reliable healthcare). Or it implies a minimum consumption expenditure level required by a person to procure a standardized basket of goods and services to satisfy basic needs.

7.2.4 Poverty Gap Index (PGI) This is a measure of the depth/intensity of poverty. Poverty gap index is an improvement over the poverty measure headcount ratio which simply counts all the people below the poverty line in a given population and considers them equally poor.
Poverty gap index (PGI) is calculated as:
∑

⎟ ⎠ ⎞ ⎜ ⎝ ⎛ −

n i i N y z PGI 1

Where: N is the total population, n is the total population of poor who are living at or below the poverty line, z is the poverty line, and yi is the consumption of the poor individual

7.2.5 Depth of Poverty (Poverty Gap).
This provides information regarding how far off households are from the poverty line. This measure captures the mean aggregate income or consumption shortfall relative to the poverty line across the whole population.

7.2.6 Squared Poverty Gap Index (SPGI) This is a measure of the severity of poverty being experienced by a population or subpopulation. Squared poverty gap is related to poverty gap index but it’s calculated by averaging the square of the poverty gap ratio; by squaring each poverty gap data, the measure puts more weights the further poor persons observed income falls below the poverty line. The squared poverty gap index is one form of a weighted sum of poverty gaps, with the weight proportionate to the poverty gap. Poverty severity (squared

68 poverty gap) takes into account not only the distance separating the poor from the poverty line.

7.2.7 Gini Coefficient and Quintile Ratios: The Gini Co-efficient and Quintile ratios are the most common indices or indicators used to measure the depth of inequality (by per capita income) of a distribution.

7.2.8 The Gini Co-efficient
Is the measure of inequalities among the population. It refers to the extent to which income is distributed in an uneven manner among the population and ranges from 0 (every person has the same consumption) to 1 (one person has all of the consumption in the country). It is defined as the ratio between the area demarcated by the diagonal and the Lorenz curve and the triangular region underneath the diagonal of the Lorenz plot.

7.2.9 The Quintile Ratio
Is a ratio of consumption of the richest 90 percent to consumption of the poorest 10 percent.

7.2.10 Relative Poverty Lines:
These are defined in relation to the overall distribution of income or consumption in a country; for example, the poverty line could be set at 50 percent of the country’s mean income or consumption.

7.2.11 Absolute Poverty Lines: For monetary measures, these absolute poverty lines are often based on estimates of the cost of basic food needs, that is, the cost of a nutritional basket considered minimal for the health and well-being of a typical family, to which a provision is added for non-food needs.

7.3 Food Poverty Food poverty is the inability to access a nutritionally adequate diet and the related impacts on health, culture and social participation.

7.3.1 Food Poverty Line
This is the cost of buying the food bundle or basket that can provide the minimum nutritional requirements of a poor person. It is calculated by having prices of all food items in the basket.