Cardiff – 16-21 October 2005
Session 5 – Developing New Register Systems and Tools
Geoff Mead, Statistics New Zealand
Business Register Guidelines for Small Developing Nations
Proposal for Discussion
1. Executive summary
Existing international standards for business registers have predominantly been developed to meet the requirements of well developed economies, with comprehensive and well established statistical systems. With "best practice" business register examples in most National Statistics Offices in developed countries. These standards and best practice examples are typically complex in both the way they are engineered and documented.
Despite this programme of development resulting in a robust and comprehensive framework, it may potentially be 'over engineered' in relation to the immediate needs of small developing economies. From this perspective, there may be value in identifying the core elements and associated features and functionality required to establish a business register that is scaled to support the immediate statistical needs of developing countries.
Statistics New Zealand has a history of involvement with the development of official statistics in the small island economies of the Pacific, regularly providing resources to assist with capability and capacity building initiatives in the region. Through this work, it has become clear that at least in this region there is a need for simple, but statistically robust methodology and systems to support the official statistical requirements of these countries. It appears that the lack of a robust business survey frame is hindering economic statistical development and making it difficult for some of these countries to address a number of statistical goals. It seems feasible that this is an issue that has wider applicability for National Statistics Offices in other developing regions.
This paper raises the issue for wider discussion and suggests as an initial focal point a potential minimum set of business register guidelines for small developing nations. Other agencies participating in the Roundtable Conference will have extensive experience in developing both their own business registers and assisting other countries with business register development.It is hoped that feedback from the Roundtable Conference on the business register guidelines presented will be an important step in developing statistical infrastructure for small developing nations. It is suggested that the paper and associated feedback be reviewed by statistical agencies in a number of small developing nations to test the potential benefit of such an initiative in supporting the development of their statistical infrastructure.
2. Introduction
A study visit to Statistics New Zealand by the Mauritius business register Head was the impetus for this paper. The Mauritius Statistics Office has a project under way to implement a central business register. Currently they have a number of stand-alone business registers associated with individual surveys. Discussions during this study tour highlighted the need for business register guidelines and possibly a generic register system that are aligned with the size of the country, and the scale of the statistical infrastructure required for a small countries official statistical system.
The guidelines may also be of benefit for larger developing nations. While the size and complexity of their economies and the associated statistical requirements may justify a more sophisticated business register system with for example a hierarchy of statistical units, a core business register may provide a ‘stepping stone' towards this eventual goal.
Figure 1 - Business register development phases
If the guidelines eventually lead to the development of a generic computer system for a business register in a small nation, then this will be of even greater benefit. Many countries using a common tool facilitates knowledge sharing and capability building, and potentially spreads development and maintenance costs which in turn supports longer term sustainability.
3. Statistical requirements of a small developing nation
This section is based on Statistics New Zealand involvement in the development of official statistics in a number of small island nations in the South Pacific. These countries all have an official statistics office, with the same broad objectives as statistics offices in large developed countries. The size of each office is relatively small and in the smallest countries could be just one or two people. As a result one staff member can be responsible for many outputs without the support of technical and methodological experts.
In general terms the priorities for robust official statistics in these countries include:
1. Population census, with associated social statistics (education, health etc).
2. Macro economic indicators:
- CPI (consumer price index)
- Imports and exports of goods, for many of these economies imports of goods are relatively significant compared to the total size of their economies. Exports can be dominated by a number of locally produced commodities.
- BOP (balance of payments) annual statement
- Statements of central government expenditure & income
- A set of annual national accounts. These are constructed from the trade statistics and other BOP data, government sector data, and typically some measurement of domestic business activity. As well as other sources.
3. Key local economic statistics, for example visitor statistics in countries with a significant tourism sector, production of local commodities, etc.
4. In terms of business statistics the requirements then can extend to for example:
- Annual and quarterly measurement of business activity
- Employment and wage statistics collected from employers.
The requirements for a business register will differ by country and for the very smallest countries may not be formalised in a register. The situation also differs in terms of the administrative data sources available to support a business register, existing business register(s), the requirements for a business register, the resources available to the statistics office and the priorities of the statistics office. Most countries will have an existing business register(s) of some type or a source of information that is currently used to create a business register as required. Despite these variations when:
(a) The number of formal sector businesses in a country numbers in the 00's and,
(b) The production of business statistics extends to more than one statistical survey of the population of businesses.
The benefits of a centralised business register that is used as a frame for all the surveys can be achieved, rather than the option of using stand-alone registers for each individual survey.
Benefits include:
- Statistical cohesion and integration with the same statistical units and classifications being used across collections. (A robust business register is the foundation for quality official business and economic statistics.)
- A quality survey frame that provides an unduplicated list of the units of interest.
- An integration framework to integrate survey data with administrative data sources.
- Efficiency, with update activity only being required for one register. Not repeated across more than one register.
These benefits are achievable for a small country if a robust business register can be readily implemented, without major costs or time requirements. This is the objective of the proposed guidelines presented for discussion in this paper.
4. PC Trade case study
The benefits that targetted statistical systems development can provide have been demonstrated in the Pacific with the development of PC Trade. PC Trade is a PC based system, developed as a tool for the processing and analysis of overseas trade data by small countries. It has been specifically designed for use by Customs and statistical agencies with limited staffing and computing resources. The system can be operated on a single PC or networked.
The system provides a user-friendly data entry facility and a built in reporting module that makes it possible to produce a variety of tabulated reports with the click of a button. Analysis of trade data is possible from within PC Trade or the data can be exported to a wide variety of other spreadsheet or database applications. The system uses standard trade classification codes and provides robust functionality that facilitates the production of quality trade statistics.
Customs specific functions include the production of assessments, risk management, issuing of receipts and manifest reconciliation. The system can be used with importer self assessed declarations and also provides for the electronic transfer of declarations from the importers.
The system was first developed in the early 1990's and its use by small nations has progressively grown. Currently the PC Trade system is being used by Albania, Cook Is, Federated States of Micronesia, Guam, Kiribati, Marshall Is, Nauru, Niue, Northern Mariana Is, Palau, Samoa, Tonga, and Tuvalu. The Solomons are planning to use the package.
The PC Trade system and its methodology has significantly assisted these countries in producing quality trade statistics. It has been relatively easy to implement in each country. The system is a demonstration of the benefits that can be gained by an appropriately defined and sized solution for a statistical system that can be used in many countries.
5. Potential business register guidelines for discussion
5.1 Coverage of the business register
Small developing countries have both formal and informal business sectors. The formal sector is made up of businesses that typically have some 'legal' standing (e.g. a limited company, a partnership, a government department), that maintain financial records, and which carry out business in a systematic and organised way. Businesses in the informal sector generally operate at a low level of organisation, on a small scale; have no financial accounts, and little or no division between labour and capital as factors of production.
The coverage of a business register is typically restricted to the formal business sector. Formal sector businesses will:
- Be potentially eligible for the populations of more than one business survey, so the business register provides the benefits of standard classifications, data integration opportunities, longitudinal links over time and operating efficiencies.
- Have the records required to complete statistical questionnaires.
- Be identifiable as an "entity" (e.g. legal name, administrative record ID's) in the real world and administrative systems (e.g. tax).
- Be expected to continue operations for a period of time.
There will be requirements to measure the size of the informal business sector but an ongoing business register is generally not critical to assist with this work. Survey techniques and methodologies are also likely to differ between the formal and informal business sectors. Informal business sector surveys often need to use enumeration and interviews due the lack of record keeping by the businesses.
5.2 Population source for the business register
The size and scope of statistical business registers make it unlikely that they can be satisfactorily populated and maintained solely by survey and the stand-alone efforts of the statistical office. Ideally an administrative data source (e.g. tax, business registration system, etc) will be available to provide the base information for the formal business sector in the business register. This allows the statistics office to leverage off the typically much larger resources and infrastructure of administrative agencies (e.g. the tax office). This collaborative approach has the dual benefit of both increasing operational efficiency while lowering the across government compliance load.
The sources of information available to create and maintain a business register population will vary by country. Common examples of administrative data sources that are used to support business registers include business registration systems, VAT tax systems, and other tax systems such as employee payroll tax. The following section assumes an administrative source(s) is available.
The organisation responsible for the collection of administrative data (e.g. tax office) operates under the rules and regulations defined for the administrative processes (e.g. collection of tax). To use this administratively sourced data in the statistical system the statistician needs to:
- Clearly understand the rules and processes that define the administrative data. These rules and processes will influence the coverage, timing, quality, completeness etc of the administrative data. The administrative system may already include many of the variables required by the business register.
- Understand the differences between the model defining the statistical data requirements and the administrative data that is available e.g. statistical units on the business register versus units defined in the administrative system.
- Develop appropriate methodology and processes for the statistics office to transform, model or adapt the administrative data to the statistical business register requirements.
If more than one administrative source of register information is used (e.g. tax and business registrations)by the business register then it is very important to identify the overlap between the coverage of the two sources to avoid duplicated records on the register.
The administrative data supply could change or stop with little notice, for example with a legislative change influencing the tax system. This is a risk and needs to be mitigated by a strong relationship and formal agreement with the supplying organisation(s).Including agreement that the statistics office will receive warning about impending changes,will be included as a stakeholder in planned changes, and recognition from a whole of government approach of the benefits of the official statistics being supported by the administrative source.
5.3 Statistical unit(s)
Statistical unit models and hierarchies within business registers are very important for mapping real world business activity to the statistical business register. Medium and large sized countries require statistical unit models that meet the requirements for different outputs (e.g. industry data, regional data, institutional sector) and the fit with data availability from businesses. The Eurostat manual for example defines a core unit model including the legal unit, enterprise unit and local unit.
Many developing countries do not currently produce the full range of statistical outputs and it is proposed that a simplified unit model be employed. The proposed statistical unit model would have only one unit, the enterprise, and would define the enterprise as being equivalent to the legal unit. This approach has the advantage of simplicity and supports matching with any administrative sources based on the legal unit (e.g. tax systems). It does however mean that local unit (e.g. regional) information will not be directly supported by the business register for enterprises with more than one local unit.
Figure 2 - Proposed statistical unit model
5.4 Core variables for the business register
As a starting point for discussion, the following list of core variables has been developed. The criteria used in the development of the list were based on the requirements of a business register to:
- Uniquely identify the enterprise statistical unit.
- Link the statistical unit to administrative data sources.
- Classify the unit to standard classifications required for statistical outputs.
- Provide contact information for the unit e.g. a postal address.
- Provide information to understand changes on the business register over time and to review the quality of the register.
Variable / Entry required in field? / Comment
Unique identifier for enterprise unit. / Yes / Either a unique number generated by the statistical office, or an administratively sourced ID if the administrative rulesfor maintaining the number are compatible with the business register purposes.
Administrative data link ID for the enterprise / See comment / Provides link to administrative source if available and if the administrative ID is not used as the enterprises main ID.
Legal name of the enterprise / Yes
Trading or alternative name for the enterprise / No
Industry classification for the enterprise / Yes / Either ISIC or a local derivative of ISIC if one exists
Text description of the business activity (e.g. food retailer,clothing manufacture) / No / This information can be used to code industry descriptions.
Sector classification for the enterprise / Yes / Based on SNA standards (e.g. government, private, household etc)
Life cycle of the enterprise / Yes / Birth date
Cease date
Reactivated date
Enterprise size variable / Ideally yes / For example total number of employees.
A size variable on a business register is very useful for statistical processes related to stratification (e.g. for sample designs, non response imputation etc). Also for focusing effort and resources in business register maintenance and quality control processes.
Postal address / Yes / Some basic contact information should be compulsory to facilitate survey contact and collection processes.
Number of address fields and required format will depend on local requirements. Proposed default is a 4 line postal address field.
Location address / See comment / If the enterprise has more than one business location, then this location address is where the predominant number of employees is located.
Phone number / No
Core information quality status / Ideally yes / This quality flag is set to a positive value when all the core variables have valid values. The objective of this variable is to help with the quality control of the register.
All variables require fields for:
- Source code (for example "tax source", "employment survey source") - compulsory field
- Update date - compulsory field
- Text comment field - optional field
The text field can be used to explain an update.
A history within the system of all previous values for variables that have been updated. / Ideally yes / The history of values (together with the source code, date of update and text comment) can be very useful for understanding changes on the register over time.
5.5 Optional variables
Depending on local requirements and data sources the following variables could be usefully included on the business register.