 Good day. This is the first of five video sessions on the Zambian Tax Benefit Microsimulation Model, MicroZamod. This first session is just going to be a brief introduction to micro simulation and to the model. So what we will cover in this first session is we'll look at what is micro simulation? We'll then go on to look at what is micro-zamod? What does micro-zamod do? How does micro-zamod work? And lastly, we'll look at what is covered in the rest of this training. So what is micro-simulation? We have the classic definition from Mitten et al. who defines micro-simulation models as using micro-data on persons or households or firms or other micro-units and simulating the effect of changes in policy or other changes on each of these units. The differences before and after the change can be analyzed at the micro level to show the overall effect of the change. And we can once again go on to look at this definition in the diagram form where we have a household survey data set. In this instance, this will be the Living Conditions Monitoring Survey of 2010, which contains detailed information on households, family structure, income and expenditure. We then start off by simulating the existing policy systems in the forms of taxes and benefits. And thereafter, we're able to analyze the impact of this on the individual, the impact on poverty and inequality, and the impact on redistribution. So what can micro-simulation be used for? Micro-simulation can be used to answer a variety of questions such as how does the current tax and social benefit system impact upon individuals in different groups, for example, different income groups and different family types? To what extent does the current system of social benefits reduce poverty and inequality? And micro-simult has a built-in statistics tool, which is able to do this quite easily. We can also answer the question, what would the cost be of implementing social security policy reforms? So for example, if we wanted to modify the rules to a certain policy, say for example, the social cash transfer policy, or if we wanted to introduce a new cash transfer. And then again, we would be able to assess the impact of these modifications on poverty and inequality. So micro-simulation is a static tax-benefit micro-simulation model, which is based on an existing model called URAMOD. And URAMOD has been developed over a 20-year period by Professor Holly Sutherland and colleagues and is currently used in over 25 countries in Europe. However, there is a current UNU-Wider collaboration, which is called SouthMOD. And SouthMOD is a collaborative endeavor between Essex University, UNU-Wider and SASPRI. And it involves a major research program in which tax-benefit micro-simulation models for selected developing countries in Africa and elsewhere are in the process of being built. The outcome of this work will be a set of models for individual countries and research papers that contain simulation analysis of tax and benefit reforms. And currently SASPRI is working with local partners to develop models for Mozambique, Tanzania and Zambia. And part of SASPRI's activities also involve updating the South African tax-benefit micro-simulation model SA-MOD and the Namibian tax-benefit micro-simulation model NAMOD. So micro-SAMOD, which is the Zambian tax-benefit micro-simulation model, is currently being developed with ZAPAR, which is the Zambian Institute for Policy Analysis and Research and SASPRI to develop the model and the underpinning data sets. So micro-SAMOD has a standalone user interface, which allows for user-friendly, stable, extensive functionality and helpful guidance over user actions. The model workings are transparent and the user has full control over the simulations carried out. And this is very important, the feature of transparency, as some micro-simulation models are not like this. So the current version of micro-SAMOD, which is version 1.4, is underpinned by the 2010 Living Conditions Monitoring Survey, as I mentioned earlier. However, this is currently being updated to be underpinned by the 2015 Living Conditions Monitoring Survey data set. So the first step in micro-simulation is to collect data on the incomes and expenditures of individuals in a representative survey of households. As I mentioned earlier, the current version of micro-SAMOD is underpinned by the LCMS 2010 and this represents the characteristics of the Zambian population in 2010. So after cleaning this data set contains information on 102,873 individuals in 19,397 households. And the weights from the LCMS 2010, as adjusted, are used to calculate national figures from the simulations. The second step in micro-simulation is to have a series of policy rules, which can be applied to the individuals in the data to determine what social transfers they are entitled to and what taxes they are liable to pay. And in order to simulate a policy, we have to be able to do two things. Firstly, we have to be able to translate the rules into a format that can be understood by the model and this is relatively straightforward. We then have to be able to collect the information needed to apply these rules and this can be a bit more difficult due to data constraints. So for micro-SAMOD version 1.4, policy rules for the years 2010 and 2015 have been incorporated into the model and work is currently underway to add 2016 and 2017 policy years into the model and when this is completed, this will produce version 1.5 of micro-SAMOD. So the policies that are currently simulated in micro-SAMOD are we currently have one social assistance policy which is the social cash transfer. We have five direct slash indirect taxes which are personal income tax, turnover tax, value added tax. We have some excise duties and we have the medical levy which was only simulated for 2010 as this was discontinued after 2010. And then we have social contributions in the form of the employee and employer pension contributions. And another part of this training will be to review any other policies that need to be implemented for the years 2016 or 2017. So we've spoken quite a bit about what the model is able to do. However, there are some things that the model is not able to do. So what does micro-SAMOD not do? So some existing policies are currently not simulated and those are the policies which are not on the policies list. So for example, the farmer input support pack and the home grown school feeding scheme are not simulated currently. However, work is underway to add these benefits into the model. The model also does not simulate behavioural changes. The model also does not take into account any macroeconomic effects. The focus is on the direct impact on households. However, the output from the model can be used as the starting point for more complex analyses involving behavioural change and micro-macro linkages. So this is an overview of the model. And what I'll be doing quite frequently in these sessions is switching from the PowerPoint slides to the live demonstration of the model. So we firstly have data which is in text format and this is already supplied with a model but new data sets can be added and existing ones are mended. We then have the model program which stores all the model parameters and allows the user to make changes and run simulation. Lastly, we have our output which is also in text format and this can be analysed using a statistics package or one of the built-in tools. And as I mentioned earlier, MicroZamard has a built-in statistics presenter which is able to do quite a number of analyses. So now I will be switching over to the live version of the model to demonstrate the user interface. So this is what happens when you open up the model. And how we get to the user interface is we simply click on the Zambian flag and this will produce the user interface which we've just seen on the previous PowerPoint slide. So this is the MicroZamard user interface. We have seven tabs at the top of the user interface which each open up to reveal a ribbon menu. We then have the representation of Zambia's tax benefit system for different policy years and this is currently in its collapse state. We have the Run MicroZamard which is currently called Run Neuromod Button and another menu with additional functionalities. So now I'll switch over to the live version of the model to show you these. So we have our seven tabs on the top of the user interface which each once clicked on open a ribbon menu. We have the representation of Zambia's tax benefit policies in this first column over here and we have our Run Neuromod Button which enables us to run all of our simulations and run the model. So as MicroZamard is a fairly new model, so here are a list of examples of how MicroZamard might be used and these are examples from South Africa. So in South Africa we were able to use the South African tax benefit micro simulation model SA Mod to simulate a youth benefit which was done for the National Department of Social Development and this was for unemployed young people in the country. We were also able to simulate a carer's benefit as currently in South Africa only a child benefit exists. However there is no benefit for the carer of the children. So we were able to simulate this benefit using SA Mod again for the National Department of Social Development. We were also able to simulate a non-means tested universal pension again for DSD and National Treasury this time and our most recent work using SA Mod was simulating a non-means tested universal child benefit again for the National Development of Social. So in the rest of this training course we're going to be looking at getting started with MicroZamard and looking at the model in a bit more detail. We'll then look at the tax and benefit policies in a lot more detail. We'll then go on to do a few practical exercises such as introducing new policies and amending existing ones and lastly we'll look at analyzing the output data. Thank you.