Purpose of sector classification
This guide describes the institutional sector classification to be applied by organisations participating in South African Reserve Bank surveys, which are used in the compilation and publication of macroeconomic statistics. In terms of regulation 59(4) as published in the Government Gazette No 21726 of 8 November 2000, banks shall provide an institutional breakdown of liabilities and assets (Form DI 900) in accordance with the information contained in this guide. Members of the formal exchanges also classify their clients participating in trades in accordance with the framework set by the guide; see Table 4. The guide provides information on the institutional sector classification of transactors engaging in economic activity such as production, consumption, saving and investment, paying particular attention to the classification of issuers and holders of securities, recipients and suppliers of credit, and buyers and sellers of financial assets.
The Institutional Sector Classification Guide for South Africa divides institutional sectors according to the 1993 System of National Accounts (SNA). The SNA is an internationally accepted guide providing an analytical framework for the systematic recording of economic transactions. The core element of this publication is the Institutional Sector Classification which is presented in Section II.
The Research Department of the South African Reserve Bank collects financial data in respect of the major institutional sectors on a regular basis from financial institutions, such as banks, insurers and pension funds, as well as from other organisations in the public and the private sector. This information is used to compile macroeconomic accounts for the analysis of, inter alia, the flow of funds between sectors, establishing which sectors require which types of financing and which sectors provide in these needs.
To enable the reader to get an overview of the public sector at a glance, all the public-sector institutions contained in the Institutional Sector Classification Guide have been repeated in Appendix A. The lists of institutions related to the public sector in Appendix A serve as the reference list of "RSA public-sector bodies" for the purposes of the regulations related to counterparty capital adequacy risk weighting in terms of the Mutual Banks Act, 1993 (Act No 124 of 1993) and the Banks Act, 1990 (Act No 94 of 1990), respectively. The original source of the lists of the public-sector institutional units is the Constitution of the Republic of South Africa Act, 1996 (Act No 108 of 1996) and the Public Finance Management Act, 1999 (Act No 1 of 1999 as amended by Act No 29 of 1999), also published on
The economic activities in which institutional sectors or units engage can be further classified according to the Standard Industrial Classification of all Economic Activities (SIC), which is presented in Appendix B, Table 2 and Table 3 of this publication.
Institutional units and sectors
The total economy consists of institutional sectors, which are an aggregation of institutional units. An institutional unit is an economic entity that in its own right can own assets, incur liabilities and engage in economic activity and transactions with other entities. Institutional units are either legal or social entities, or households, and can be divided between resident and non-resident units. An institutional unit is a resident of the Republic of South Africa when it has a center of economic interest in South Africa, i.e. when it has premises within the economic territory of South Africa from where it engages or intends to engage indefinitely or over a finite but long period of time (normally more than one year) in significant economic activity.
All resident institutional units are grouped into four main mutually exclusive institutional sectors on the basis of similarity of principal economic objectives, functions and behaviour. These institutional sectors are:
- the financial corporate sector;
- the non-financial corporate sector;
- the general government sector (including social security funds); and
- the household sector (including non-profit institutions serving households).
Corporations in the financial and non-financial sectors are resident institutional units whose principal activity is the market production of goods and services at economically significant prices with the intent to generate a profit or financial gain for the shareholders. Shareholders collectively own these institutional units and have the authority to appoint directors responsible for their general management. Quasi-corporations are unincorporated enterprises each with their own separate set of financial accounts, and are treated as corporations, classified as institutional units separate from the units to which they legally belong. Therefore, quasi-corporations owned by households or government units are grouped with corporations in the financial or non-financial corporate sectors.
Institutional units in the general government sector are unique legal entities established by the political process with legislative, judicial or executive authority over other units within a given area. The general government sector consists of the institutional units of central, provincial and local government inclusive of:
- social security funds at all levels of government; and
- non-market, non-profit institutions that are controlled and mainly financed by government units.
However, general government excludes public corporations, even when government units own all the equity of such corporations, and also excludes quasi-corporations owned and controlled by government units. Unincorporated enterprises owned by government units that are not quasi-corporations (and therefore do not have separate accounts) remain an integral part of those government units and are therefore included in the general government sector.
A household is an individual or small group of individuals sharing the same living accommodation, and pooling some or all of their income and wealth while consuming goods and services such as housing and food collectively. Defined as an institutional sector, the household sector includes unincorporated business enterprises without own separate sets of financial accounts owned by households, whether market producers or producing for own final use. Only those household unincorporated market enterprises that constitute quasi-corporations are treated as separate institutional units.
To complete the set of macroeconomic accounts, economic activity and transactions between resident and non-resident units need to be recorded. From an accounting perspective it is convenient to describe the rest of the world as an institutional sector. Non-resident institutional units transacting with resident institutional units are grouped into the foreign sector or the rest of the world.
All resident institutional units are also grouped into the private sector and the public sector. The private sector consists of all resident institutional units not controlled or owned by institutional units in the general government sector. The public sector consists of all institutional units in the general government sector, and corporate sector institutional units in the financial and non-financial sectors owned or controlled by units in the general government sector. The public sector consists of:
- the public financial corporate sector;
- the public non-financial corporate sector; and
- the general government sector.
Table 1: Institutional units and sectors