## 1. Botswana: Priority Recommendations

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---

### Summary of mission outcomes and priority recommendations
- A technical assistance (TA) mission was conducted by the International Monetary Fund’s (IMF) Regional Technical Assistance Center for Southern Africa (AFS) during November 22–26, 2021 to continue assisting Statistics Botswana (SB) with developing the producer price index (PPI).
- The mission was conducted remotely using Microsoft Teams, WhatsApp, and email due to COVID-19 related travel restrictions. Previous missions were held in February 2019 and October 2020.
- Representative price indexes are essential to understand inflationary pressure and to inform economic policy; robust PPIs support national accounts and more reliable volume measures for economic growth.
- SB reinstated dissemination of the PPI in September 2021 after suspending it in late 2019 due to extreme volatility in the component mining index for diamonds.
- The SB national accounts department requested expanded PPI coverage to include agriculture and manufacturing activities. A preliminary sample of establishments for manufacturing was selected during the mission.
- There are difficulties collecting price data from commercial farms; options to improve non-response and alternate data sources were discussed.
- The CPI currently excludes owner occupied housing costs (OOH). SB have a regular rental survey and indicated preference for the rental equivalence approach for OOH in the CPI. National accounts housing stock and average rental price level data appear suitable to compile expenditure weights for OOH, but further quality assurance is needed.
- The price statistics unit in SB consists of four full time staff; staff show capability but are limited by available resources. SB management should review staff and budgetary resources for an ambitious PPI expansion program.
- COVID-19 has restricted PPI development; resources prioritized for CPI and lockdowns impeded engagement with establishments, farmers, and associations. The 2021 population census was postponed and will be conducted during 2022; price statistics staff support for census data collection could impact progress.
- The mission developed and agreed a detailed action plan. Authorities agreed to complete the following priority recommendations:
  - January 2022 — Meet with the Botswana Agriculture Marketing Board to discuss availability of price data for PPI compilation. Responsible institution: Statistics Botswana
  - January 2022 — Finalize the manufacturing establishment sample and prepare for price initiation/recruitment in Q1 2022. Responsible institution: Statistics Botswana
  - March 2022 — Initiate/recruit commercial farms. Responsible institution: Statistics Botswana
  - June 2022 — Test the inclusion of OOH in the CPI and disseminate an analytical index internally for assessment. Responsible institution: Statistics Botswana

### A. Expanding PPI Coverage — findings and recommended actions
- Manufacturing activities highlighted as important, including diamond cutting and manufacture of alcoholic beverages; several manufacturing industries flagged as important for national accounts deflation.
- PPI manufacturing development requires price data from establishments classified by Botswana International Standard Industrial Classification, Rev.4 (BSIC), aligned to ISIC Rev.4.
- A 2019 SB census of manufacturing provided establishments classified by 4-digit BSIC, total sales by establishment for the 2017/18 financial year, and registered trading name and location. No product-level sales breakdown currently available; prices unit should discuss potential availability with national accounts or collect during initiation.
- Sampling guidance:
  - Ensure sample broadly represents total sales.
  - Mission demonstrated statistical and judgmental selection methods; recommended using a cut-off sample for simplicity and maintainability.
  - Cut-off threshold used: 80 percent of total sales for selecting industries and establishments.
- Preliminary manufacturing sample:
  - Initial sample: 36 establishments.
  - Some priority industries (e.g., wearing apparel BSIC 1410 and plastics BSIC 2220) were initially omitted; wearing apparel represents 13 percent of establishments but only 0.3 percent of sales.
  - Including the missing industries increased the number of establishments from 36 to 66 and increased total sales coverage from 80.7 percent to 83.0 percent (an increase of 2.3 percent), nearly doubling resources needed.
  - Mission recommended discussing with national accounts whether the smaller industries should be excluded given resource constraints; aim to finalize the sample by end of December 2021.
- Initiation/recruitment:
  - Initiation is resource intensive; recommended personal visits for initiation.
  - Preparation should include contacting each sampled establishment in advance, providing explanatory material, and agreeing appointment times.
  - Emphasized specification pricing and need to collect sufficient transaction detail during visits (Annex III referenced).
- Product and transaction selection:
  - SB will use purposive sampling to select products/transactions in discussion with establishments unless product-level sales by census are available.
  - If product-level sales are available, use a cut-off threshold to select products representing significant sales; otherwise identify most important products with the establishment.
  - Aim to collect one or two representative price transactions per product.
  - Recommended compiling PPI using detailed product-level weights where possible; alternatives include estimated proportions, ranking, or equal weights as last resort (Annex IV referenced).
- Timing:
  - With the preliminary sample, initiation/recruitment should begin in early 2022; finalize sample by end of 2021 and commence price initiation by March 2022.
- Recommended Actions:
  - Discuss availability of product level sales data for selected manufacturing establishments.
  - Select the manufacturing PPI establishment sample using a ‘cut-off sample’ methodology.
  - Initiate each establishment for manufacturing PPI by personal visit.
  - Prepare for initiation of establishments for PPI.
  - Discuss proposed industries with national accounts.
  - Finalize the PPI sample by end 2021.
  - Commence initiation of establishments for manufacturing PPI.
  - Compile the PPI using detailed product level weights.

### B. Agriculture — findings and recommended actions
- Intermittent progress on an agriculture PPI; problems collecting price data from commercial farms exacerbated by COVID-19.
- Priority to secure cereal crop price data from the Botswana Agriculture Marketing Board (BAMB):
  - BAMB compile and disseminate monthly producer prices broken down by crop and by grade reflecting market price per 50kg bag (Annex V referenced).
  - BAMB website currently inaccessible; BAMB continues to disseminate prices via social media, but mission recommended not relying on social media as a data source.
  - SB should meet BAMB to arrange supply of current and historic price data to begin preliminary cereal crop indexes.
- Seasonal missing prices:
  - Items such as root vegetables are seasonally available; when out-of-season, attempt to impute missing prices.
  - Recommended imputation methods: overall mean imputation and targeted imputation; avoid carry forward unless price is regulated or fixed.
  - If a price is missing and not due to seasonality, it is generally acceptable to impute for three successive periods before identifying a replacement transaction.
  - Discuss missing prices with the establishment/farm; when replacement is needed, use suitable implicit quality adjustment methods demonstrated by the mission.
- Farm engagement:
  - SB had limited success obtaining data from poultry and horticulture farms despite outreach and a letter from the SB National Statistician; COVID-19 constrained efforts.
  - Recommend extensive face-to-face engagement with poultry and horticulture farms, leveraging farming associations for support.
  - Consideration of legislation to support data collection was discussed but may generate undue bad feeling given recent difficulties.
  - Engagement exercise will be resource intensive; authorities should consider available resources.
  - Engage Department of Agriculture Business Promotion to identify large commercial horticulture farms to improve sample and response.
- Egg price data:
  - SB receives regular price data from the two main egg farms in Botswana; both provide monthly unit value prices, one provides disaggregation by egg size.
  - These data look stable and could support compilation of an egg price index.
  - Work with the second egg farm to provide price data by size of egg; if unavailable, begin compilation of a price index for eggs and consider disseminating alongside mining and utilities indexes.
- Recommended Actions:
  - Arrange meeting with BAMB to agree supply of price data for cereal crops.
  - If BAMB provides price data, begin compilation of a PPI for cereal crops.
  - Use either overall mean or targeted imputation for missing seasonal prices.
  - Commence intensive engagement with horticulture and poultry farmers to secure price data.
  - Engage Department of Agriculture Business Promotion to identify main commercial farms.
  - Work with second egg farm to provide price data by size.
  - Begin compilation of preliminary egg price index and consider dissemination alongside mining and utilities indexes.

### Owner Occupied Housing Costs (OOH) in the CPI — background, data, methodology, and timeline
- Background and context:
  - The Botswana CPI currently excludes owner occupied housing costs (OOH).
  - During the October 2020 TA mission, SB indicated they would like to use the rental equivalence approach for measuring OOH, making use of a rental survey that is currently conducted.
  - At that time, there was no source of expenditure data available with which SB could calculate a weight to include OOH in the CPI.
  - The CPI was last updated in 2018, using weights from the 2015/2016 Household Budget Survey (HBS).
  - The next HBS is scheduled to take place in 2022/2023, with the results expected to be available soon after. This will likely be in 2023/2024.
- Rental survey coverage and recommended scope:
  - SB have been increasing the sample of rental prices collected to better reflect owner occupied properties.
  - The rental survey collects prices for six representative housing strata in Botswana:
    - Low cost 1 room house
    - Botswana Housing Corporation house type LC48
    - Botswana Housing Corporation Type 2 ‘improved’
    - 2 ½ house with servant quarter
    - 2-bedroom house
    - 3-bedroom house with single garage
  - Price collection mainly takes place in the two major cities in Botswana: Gaborone and Francistown.
  - The mission reiterated that for OOH only market rent should be used, so the housing corporation strata should be omitted from index calculations.
- Data source and methodology for compiling OOH weight:
  - The SB national accounts have provided data on housing stock and average rental prices from the 2015/16 Botswana Multi-Topic Household Survey (BMTHS).
  - These data are broken down by cities/towns, urban villages, and rural areas.
  - The mission reviewed these data and determined they are suitable to compile an expenditure-based weight for OOH.
  - The weight would be compiled by taking the housing stock for OOH and multiplying this by the average annual rental price (the rental equivalent) in each area.
  - There appeared to be a further breakdown of the housing stock and average rent available by type of property (within area), such as detached, semi-detached, flat etc.
  - By introducing this additional level of stratification, SB should be able to compile a more accurate estimate of total expenditure that is less influenced by compositional effects.
  - SB should investigate this source of data further before using it to compile a preliminary weight for OOH.
- Findings and recommended analytical steps:
  - In the medium term, the authorities should assess the impact of including OOH costs in the CPI.
  - SB should compile a weight for OOH using the BMTHS data and use this along with the rental price survey to compile an analytical CPI including OOH.
  - This analytical index should be disseminated internally within SB only and used to assess the impact of OOH.
  - In the longer term, the authorities should continue work to make the rental survey more representative of OOH and aim to include OOH in the headline CPI as part of the next CPI update.
- Recommended Actions (as listed):
  - SB should continue expanding the amount of rental prices collected to ensure the survey is representative of the OOH sector.
  - Compile preliminary estimate of expenditure for OOH using data from national accounts.
  - Discuss the potential to use the more detailed stratification of data by type of property and assess the impact of this level of data on the initial estimate of OOH expenditure.
  - In the medium terms compile an analytical CPI including OOH and disseminate within SB only to trial the impact of including OOH.
  - In the longer term, assuming the internal testing of the analytical CPI including OOH proves to be successful, aim to introduce OOH in the headline CPI at the next rebasing.
  - SB should plan to update the CPI once data from the 2022/2023 HBS are available.
- Timeline, milestones, and status excerpts:
  - Additional price data collected for 2- and 3-bedroom house. Target: End 2022. Implementation status: Ongoing.
  - Preliminary estimate of OOH expenditure compiled and assured with national accounts. Target Completion Date: January 2022.
  - Meeting held with national accounts and an updated estimate of OOH expenditure compiled using up to date data. Target: February 2022.
  - Analytical CPI including OOH compiled and disseminated within SB only. Target: July 2022.
  - CPI including OOH disseminated monthly. Target: 2024. Implementation status: Not started.
  - Rebased CPI compiled using up to date weights data. Target: 2024. Implementation status: Not started.
  - SB should plan to rebase the CPI once data from the 2022/2023 HBS are available.

### Officials met during the mission
- Mr Tapologo Baakile — Statistics Botswana — tbaakile@statsbots.org.bw
- Ms Oneetse Gaosekelwe — Statistics Botswana — ogaosekelwe@statsbots.org.bw
- Mr Phaladi Labobedi — Statistics Botswana — plabobedi@statsbots.org.bw
- Mr Rejoyce Mbalekelwa — Statistics Botswana — rmbalekelwa@statsbots.org.bw
- Mr Daniel Magogwe — Statistics Botswana — Dmagogwe@statsbots.org.bw
- Mr Tetelo Thuo — Statistics Botswana — tthuo@statsbots.org.bw

*International Monetary Fund — Excerpt from mission report on Botswana CPI treatment of owner occupied housing costs (OOH).*

### 1. Botswana: Priority Recommendations ________________________________________________________________ 6

### 1. Botswana: Priority Recommendations

### Summary of mission outcomes and priority recommendations
- A technical assistance (TA) mission was conducted by the International Monetary Fund’s (IMF) Regional Technical Assistance Center for Southern Africa (AFS) during November 22–26, 2021 to continue assisting Statistics Botswana (SB) with developing the producer price index (PPI).
- The mission was conducted remotely using Microsoft Teams, WhatsApp, and email due to COVID-19 related travel restrictions. Previous missions were held in February 2019 and October 2020.
- Representative price indexes are essential to understand inflationary pressure and to inform economic policy; robust PPIs support national accounts and more reliable volume measures for economic growth.
- SB reinstated dissemination of the PPI in September 2021 after suspending it in late 2019 due to extreme volatility in the component mining index for diamonds.
- The SB national accounts department requested expanded PPI coverage to include agriculture and manufacturing activities. A preliminary sample of establishments for manufacturing was selected during the mission.
- There are difficulties collecting price data from commercial farms; options to improve non-response and alternate data sources were discussed.
- The CPI currently excludes owner occupied housing costs (OOH). SB have a regular rental survey and indicated preference for the rental equivalence approach for OOH in the CPI. National accounts housing stock and average rental price level data appear suitable to compile expenditure weights for OOH, but further quality assurance is needed.
- The price statistics unit in SB consists of four full time staff; staff show capability but are limited by available resources. SB management should review staff and budgetary resources for an ambitious PPI expansion program.
- COVID-19 has restricted PPI development; resources prioritized for CPI and lockdowns impeded engagement with establishments, farmers, and associations. The 2021 population census was postponed and will be conducted during 2022; price statistics staff support for census data collection could impact progress.
- The mission developed and agreed a detailed action plan. Authorities agreed to complete the following priority recommendations (Table 1):

  - January 2022 — Meet with the Botswana Agriculture Marketing Board to discuss availability of price data for PPI compilation. Responsible institution: Statistics Botswana
  - January 2022 — Finalize the manufacturing establishment sample and prepare for price initiation/recruitment in Q1 2022. Responsible institution: Statistics Botswana
  - March 2022 — Initiate/recruit commercial farms. Responsible institution: Statistics Botswana
  - June 2022 — Test the inclusion of OOH in the CPI and disseminate an analytical index internally for assessment. Responsible institution: Statistics Botswana

### Detailed technical assessment and recommendations — A. Expanding PPI Coverage
- Manufacturing activities highlighted as important, including diamond cutting and manufacture of alcoholic beverages; several manufacturing industries flagged as important for national accounts deflation.
- PPI manufacturing development requires price data from establishments classified by Botswana International Standard Industrial Classification, Rev.4 (BSIC), aligned to ISIC Rev.4.
- A 2019 SB census of manufacturing provided establishments classified by 4-digit BSIC, total sales by establishment for the 2017/18 financial year, and registered trading name and location. No product-level sales breakdown currently available; prices unit should discuss potential availability with national accounts or collect during initiation.
- Sampling guidance:
  - Ensure sample broadly represents total sales.
  - Mission demonstrated statistical and judgmental selection methods; recommended using a cut-off sample for simplicity and maintainability.
  - Cut-off threshold used: 80 percent of total sales for selecting industries and establishments.
- Preliminary manufacturing sample:
  - Initial sample: 36 establishments.
  - Some priority industries (e.g., wearing apparel BSIC 1410 and plastics BSIC 2220) were initially omitted; wearing apparel represents 13 percent of establishments but only 0.3 percent of sales.
  - Including the missing industries increased the number of establishments from 36 to 66 and increased total sales coverage from 80.7 percent to 83.0 percent (an increase of 2.3 percent), nearly doubling resources needed.
  - Mission recommended discussing with national accounts whether the smaller industries should be excluded given resource constraints; aim to finalize the sample by end of December 2021.
- Initiation/recruitment:
  - Initiation is resource intensive; recommended personal visits for initiation.
  - Preparation should include contacting each sampled establishment in advance, providing explanatory material, and agreeing appointment times.
  - Emphasized specification pricing and need to collect sufficient transaction detail during visits (Annex III referenced).
- Product and transaction selection:
  - SB will use purposive sampling to select products/transactions in discussion with establishments unless product-level sales by census are available.
  - If product-level sales are available, use a cut-off threshold to select products representing significant sales; otherwise identify most important products with the establishment.
  - Aim to collect one or two representative price transactions per product.
  - Recommended compiling PPI using detailed product-level weights where possible; alternatives include estimated proportions, ranking, or equal weights as last resort (Annex IV referenced).
- Timing:
  - With the preliminary sample, initiation/recruitment should begin in early 2022; finalize sample by end of 2021 and commence price initiation by March 2022.
- Recommended Actions:
  - Discuss availability of product level sales data for selected manufacturing establishments.
  - Select the manufacturing PPI establishment sample using a ‘cut-off sample’ methodology.
  - Initiate each establishment for manufacturing PPI by personal visit.
  - Prepare for initiation of establishments for PPI.
  - Discuss proposed industries with national accounts.
  - Finalize the PPI sample by end 2021.
  - Commence initiation of establishments for manufacturing PPI.
  - Compile the PPI using detailed product level weights.

### Detailed technical assessment and recommendations — B. Agriculture
- Intermittent progress on an agriculture PPI; problems collecting price data from commercial farms exacerbated by COVID-19.
- Priority to secure cereal crop price data from the Botswana Agriculture Marketing Board (BAMB):
  - BAMB compile and disseminate monthly producer prices broken down by crop and by grade reflecting market price per 50kg bag (Annex V referenced).
  - BAMB website currently inaccessible; BAMB continues to disseminate prices via social media, but mission recommended not relying on social media as a data source.
  - SB should meet BAMB to arrange supply of current and historic price data to begin preliminary cereal crop indexes.
- Seasonal missing prices:
  - Items such as root vegetables are seasonally available; when out-of-season, attempt to impute missing prices.
  - Recommended imputation methods: overall mean imputation and targeted imputation; avoid carry forward unless price is regulated or fixed.
  - If a price is missing and not due to seasonality, it is generally acceptable to impute for three successive periods before identifying a replacement transaction.
  - Discuss missing prices with the establishment/farm; when replacement is needed, use suitable implicit quality adjustment methods demonstrated by the mission.
- Farm engagement:
  - SB had limited success obtaining data from poultry and horticulture farms despite outreach and a letter from the SB National Statistician; COVID-19 constrained efforts.
  - Recommend extensive face-to-face engagement with poultry and horticulture farms, leveraging farming associations for support.
  - Consideration of legislation to support data collection was discussed but may generate undue bad feeling given recent difficulties.
  - Engagement exercise will be resource intensive; authorities should consider available resources.
  - Engage Department of Agriculture Business Promotion to identify large commercial horticulture farms to improve sample and response.
- Egg price data:
  - SB receives regular price data from the two main egg farms in Botswana; both provide monthly unit value prices, one provides disaggregation by egg size.
  - These data look stable and could support compilation of an egg price index.
  - Work with the second egg farm to provide price data by size of egg; if unavailable, begin compilation of a price index for eggs and consider disseminating alongside mining and utilities indexes.
- Recommended Actions:
  - Arrange meeting with BAMB to agree supply of price data for cereal crops.
  - If BAMB provides price data, begin compilation of a PPI for cereal crops.
  - Use either overall mean or targeted imputation for missing seasonal prices.
  - Commence intensive engagement with horticulture and poultry farmers to secure price data.
  - Engage Department of Agriculture Business Promotion to identify main commercial farms.
  - Work with second egg farm to provide price data by size.
  - Begin compilation of preliminary egg price index and consider dissemination alongside mining and utilities indexes.

*Source: 1. Botswana: Priority Recommendations (IMF TA mission report excerpt)*

### 27.      The Botswana CPI currently excludes owner occupied housing costs (OOH). These

### 1bwaea2022001 - 27.      The Botswana CPI currently excludes owner occupied housing costs (OOH).

### Background and context
- The Botswana CPI currently excludes owner occupied housing costs (OOH).
- During the October 2020 TA mission, SB indicated they would like to use the rental equivalence approach for measuring OOH, making use of a rental survey that is currently conducted.
- At that time, there was no source of expenditure data available with which SB could calculate a weight to include OOH in the CPI.
- The CPI was last updated in 2018, using weights from the 2015/2016 Household Budget Survey (HBS).
- The next HBS is scheduled to take place in 2022/2023, with the results expected to be available soon after. This will likely be in 2023/2024.

### Rental survey coverage and recommended scope
- SB have been increasing the sample of rental prices collected to better reflect owner occupied properties.
- The rental survey collects prices for six representative housing strata in Botswana:
  - Low cost 1 room house
  - Botswana Housing Corporation house type LC48
  - Botswana Housing Corporation Type 2 ‘improved’
  - 2 ½ house with servant quarter
  - 2-bedroom house
  - 3-bedroom house with single garage
- Price collection mainly takes place in the two major cities in Botswana: Gaborone and Francistown.
- The mission reiterated that for OOH only market rent should be used, so the housing corporation strata should be omitted from index calculations.

### Data source and methodology for compiling OOH weight
- The SB national accounts have provided data on housing stock and average rental prices from the 2015/16 Botswana Multi-Topic Household Survey (BMTHS).
- These data are broken down by cities/towns, urban villages, and rural areas.
- The mission reviewed these data and determined they are suitable to compile an expenditure-based weight for OOH.
- The weight would be compiled by taking the housing stock for OOH and multiplying this by the average annual rental price (the rental equivalent) in each area.
- There appeared to be a further breakdown of the housing stock and average rent available by type of property (within area), such as detached, semi-detached, flat etc.
- By introducing this additional level of stratification, SB should be able to compile a more accurate estimate of total expenditure that is less influenced by compositional effects.
- SB should investigate this source of data further before using it to compile a preliminary weight for OOH.

### Findings and recommended analytical steps
- In the medium term, the authorities should assess the impact of including OOH costs in the CPI.
- SB should compile a weight for OOH using the BMTHS data and use this along with the rental price survey to compile an analytical CPI including OOH.
- This analytical index should be disseminated internally within SB only and used to assess the impact of OOH.
- In the longer term, the authorities should continue work to make the rental survey more representative of OOH and aim to include OOH in the headline CPI as part of the next CPI update.

### Recommended Actions (as listed)
- SB should continue expanding the amount of rental prices collected to ensure the survey is representative of the OOH sector.
- Compile preliminary estimate of expenditure for OOH using data from national accounts.
- Discuss the potential to use the more detailed stratification of data by type of property and assess the impact of this level of data on the initial estimate of OOH expenditure.
- In the medium terms compile an analytical CPI including OOH and disseminate within SB only to trial the impact of including OOH.
- In the longer term, assuming the internal testing of the analytical CPI including OOH proves to be successful, aim to introduce OOH in the headline CPI at the next rebasing.
- SB should plan to update the CPI once data from the 2022/2023 HBS are available.

### Timeline, milestones, and status excerpts
- Additional price data collected for 2- and 3-bedroom house. Target: End 2022. Implementation status: Ongoing.
- Preliminary estimate of OOH expenditure compiled and assured with national accounts. Target Completion Date: January 2022.
- Meeting held with national accounts and an updated estimate of OOH expenditure compiled using up to date data. Target: February 2022.
- Analytical CPI including OOH compiled and disseminated within SB only. Target: July 2022.
- CPI including OOH disseminated monthly. Target: 2024. Implementation status: Not started.
- Rebased CPI compiled using up to date weights data. Target: 2024. Implementation status: Not started.
- SB should plan to rebase the CPI once data from the 2022/2023 HBS are available.

### Officials met during the mission
- Mr Tapologo Baakile — Statistics Botswana — tbaakile@statsbots.org.bw
- Ms Oneetse Gaosekelwe — Statistics Botswana — ogaosekelwe@statsbots.org.bw
- Mr Phaladi Labobedi — Statistics Botswana — plabobedi@statsbots.org.bw
- Mr Rejoyce Mbalekelwa — Statistics Botswana — rmbalekelwa@statsbots.org.bw
- Mr Daniel Magogwe — Statistics Botswana — Dmagogwe@statsbots.org.bw
- Mr Tetelo Thuo — Statistics Botswana — tthuo@statsbots.org.bw

*International Monetary Fund — Excerpt from mission report on Botswana CPI treatment of owner occupied housing costs (OOH).*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1bwaea2022001.pdf_
