News: Building datasets as the basis for sound policy making in Egypt: the case of CAPMAS-IFPRI collaboration

Perrihan Al-Riffai, Sr. Research Analyst, Development Strategy and Governance Division, IFPRI.

Many people in Egypt these days think about the best ways for getting the economy back on track, how to create jobs and how to cushion the inevitable side-effects of the exchange rate devaluation, value added taxes, subsidies and other reforms. So the issue of data may not be a top priority in many people’s minds, but perhaps they should think twice. To decide which policies, investments and programs may be best suited to tackling Egypt’s pressing challenges, sound data in combination with cutting-edge economic tools can make a big difference. Decision making based on evidence can not only increase intended impact, but it can also help avoid making costly mistakes as well as add transparency as to why certain policies are taken.

IMG_4743With this rationale and the related policy questions in mind, the Central Agency for Public Mobilization and Statistics (CAPMAS) and the International Food Policy Research Institute (IFPRI) continued an ongoing collaboration in September of 2014 to work together towards building datasets suitable for ex-ante economy wide policy analysis. Funded by the CGIAR’s Research Program on Policies, Institutions and Markets (PIM), the collaboration was sealed with a memorandum of understanding signed between the two parties in June of 2015. Since then, CAPMAS and IFPRI have been working to construct a series of social accounting matrices for Egypt. A social accounting matrix (SAM) is a snapshot in time that shows all the interlinkages of an economy’s national, household, government, and foreign sector accounts. The main dataset used for computable general equilibrium (CGE) modeling, a SAM provides a vital dataset in a modeling framework that can inform decision makers of the direct and indirect impacts of intended policies on the economy and on the welfare of the Egyptian people.SAM

The first of a long standing interaction between IFPRI and the National Accounts Team started with a training session that covered the different components of a SAM, based on the IFPRI SAM construction manual developed by Breisinger, Thurlow and Thomas (2009)and the different data sources used to produce it. The product of that training session was a SAM made up of 53 activity sectors, 78 commodity sectors, one household sector, one government sector, two tax accounts, and one foreign sector representing the rest of the world (the foreign sector). Upon its construction and prior to its launch in August 2015, a feedback session was organized inviting all of the different stakeholders in the Egyptian economy; policymakers, researchers, and line ministry representatives whereby the methodology and data used were extensively discussed in order to solicit feedback. The 2010/11 SAM for the Egyptian Economy was launched on the 17th of August, 2015 and was made available for all on CAPMAS’ website. Both the actual SAM (tables) are available, as well as its detailed documentation.

The above-mentioned feedback session set the agenda for further disaggregating the SAM especially related to the agriculture, household sectors, and the labor factor, to allow for assessing the distributional and poverty implications of pending Egyptian policy reforms. Over a period of ten months, the National Accounts team members at CAPMAS and IFPRI set up weekly sessions online to discuss the disaggregation process and the methodology followed. The disaggregated 2010/11 Egypt SAM will be composed of 55 activity sectors (22 of which are agriculture), 49 commodity sectors (18 of which are agriculture sectors), three levels of the factor of production labor (unskilled labor, semiskilled labor and skilled labor), and 20 household sectors equally divided regionally into urban and rural households and each disaggregated into deciles. During this phase of the collaboration, a new methodology is used where the SAM is disaggregated and balanced using the cross entropy method using the General Algebraic Modeling System (GAMS) an approach developed by Robinson, Cattaneo, and El-Said (2000). To date, both onsite and virtual training sessions are used for training. The agriculture, household, and labor disaggregated 2010/11 Egypt SAM is expected to be launched mid-October of this year.

The NEW SAM IS NOW AVAILABLE ONLINE and will be launched on October 11 together with a set of results that highlight the use of the dataset for policy making. As such, the event will not only highlight a new dataset, but will also provide concrete evidence as to how data help to improve the life of the Egyptian people.