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Partnerships with Global South governments improve development policy and support achieving the Global Goals

In Mozambique, Tanzania, South Africa, Uganda, and elsewhere, UNU-WIDER is on the ground to support national development plans, collect and create data for economic analysis and national and international policy processes, and build the capacity of government officials to develop national economies and provide for the welfare of their people.

This work is carried out through several long-term UNU-WIDER programmes, in unique project constellations fit to local contexts, developed together with local partners, and uniquely responsive to local priorities and other context-specific dynamics. When speaking to people engaged in these programmes, they often attribute the projects’ major successes to key features of UNU-WIDER's programme design that deliberately differ from other institutes and agencies.

These programmes are built on the strength of the WIDER network and developed in partnership with government departments, ministries, international institutes, and local and international universities. Here at UNU-WIDER, we refer to them as our ‘country programmes’.

The country programmes do three things really well. They build and support local capacity to undertake economic research and analysis and feed this evidence into the national economic policymaking process. They undertake research, support major surveys, and develop datasets, methods, and tools to create an evidence base upon which good economic decision-making can rest, expanding the academic frontier in the process. And, they work with ministries to ensure that economic research is relevant and useful to policy formulation. All of this creates real and demonstrable impact and helps Global South countries respond effectively to the often incredibly difficult development challenges they face.

The capacity to respond effectively to development challenges

Two of UNU-WIDER’s longest engagements are with Mozambique and South Africa. Both the Inclusive growth in Mozambique (IGM) and Southern Africa – Towards Inclusive Economic Development (SA-TIED) programmes are partnerships with economic policymaking bodies and are now in the second phase of their implementation. In South Africa, one highlight of the programme was the development and release of South Africa’s administrative tax data for research and economic policy analysis, which made South Africa the first on the continent to develop this capacity.

The success of this effort has inspired other governments in sub-Saharan Africa to follow suit and UNU-WIDER is now engaged in similar projects with Zambia, Tanzania, and Uganda, where a new data lab was launched in 2022.

The country programme in Mozambique partners with the National Directorate for Economic Policies and Development, the unit inside the Ministry of Economy and Finance that is responsible for producing analysis for development policy and coordinating the country’s national development strategies and five-year plans.

The IGM programme also supports the Ministry of Economy and Finance to produce national poverty reports based on regular household budget surveys and the national census with a methodology the programme helped develop to estimate aspects of multidimensional poverty in Mozambique and trends over time. This index is now a criterion for budget allocations on the provincial level and was used by the government to design emergency social protection measures during COVID-19. These efforts support the country’s capacity to gather, access, and analyse key economic data critical to achieving Mozambique’s poverty reduction goals and SDG 1: End poverty in all its forms everywhere.

IGM also carries out important economic surveys to support the creation of a strong evidence base for other kinds of development policy. Surveys of Mozambican manufacturing firms provide critical information to the government about the private sector. Another survey follows university and Technical and Vocational Education and Training (TVET) graduates to help the government reduce labour market frictions and support youth employment critical to the economic development of the demographically young country.

IGM helped develop and update the ministry’s Quadro Macro tool, which is used to conduct macroeconomic analysis and planning that national medium-term fiscal frameworks are based on, to elaborate annual budgets, and in discussions with the International Monetary Fund (IMF). Specifically, it was work carried out by IGM that enables the Quadro Macro tool to account for important new revenues Mozambique is expected to receive from its natural resources, such as the recently discovered natural gas reserves in the north of the country. These highlights also include the trainings, events, and employment opportunities these programmes provide to local early-career researchers, which build the future human capital capacity these governments need to continue to conduct their own research, analysis, and policy formulation.

Giving developing countries the right tools to create informed policy with SOUTHMOD

The ongoing SOUTHMOD collaboration develops, maintains, and trains policymakers and official analysts in tax-benefit microsimulation models. Through SOUTHMOD, we work closely with government stakeholders to use these country-specific microsimulation models to create better policies.

These models simulate the effects of various tax and benefit policies on the national population’s well-being and on government budgets. This enables policymakers and researchers to conduct very specific cost-benefit analyses of various policy options. For example, these models help policymakers find the most budget-neutral (or inequality-neutral) way to provide emergency relief to rural populations during a food crisis, vulnerable populations after a natural disaster, or the entire population during a global pandemic.

Like SA-TIED and IGM, the SOUTHMOD project is in its second phase. Through SOUTHMOD, UNU-WIDER now hosts eight national tax-benefit microsimulation models, partners with Southern Africa Social Policy Insights (SASPRI)—which hosts two additional ones for South Africa (SAMOD) and Namibia (NAMOD)—and is developing a ninth model in a partnership with the Rwanda Revenue Authority that began in 2022.

Convening South African agencies to open dialogues – a model for the region

SA-TIED—which embarked on its second phase in 2022—is a collaboration between the National Treasury of South Africa, the South African Revenue Services (SARS), and UNU-WIDER that secures and anonymises tax data collected annually by the revenue services. This work brought international researchers, experts from local universities, and analysts and officials from National Treasury and SARS together in ongoing dialogue.

The programme built a secure data canter inside the National Treasury to enable economic analysis of the tax data—which includes information on the earnings and employment of individual taxpayers and on the revenues, jobs, and tax receipts of formal firms—and facilitate evidence-based policymaking. It provided employment to students and early career researchers and economists in the data lab, supporting the development of South Africa’s future policy analysts.

An important outcome of SA-TIED’s tax data work is the interface it created between economic researchers outside of government bodies and the policy officials inside of them, but also between government agencies. With communication channels opened, researchers and analysts can learn directly from policymakers what research they need to make good decisions for the country, feeding into the policy discussions that directly impact South Africans.

The research conducted by SA-TIED, for example, was an important part of national discussions around tax reforms aimed at reducing inequalities and supporting the national budget, the recent implementation of a national minimum wage, and the government’s active employment policy targeting youth unemployment in South Africa. Both administrative tax data analysis and tax-benefit simulations conducted with SAMOD provided evidence for policy formulation and ongoing fine-tuning of policy during implementation.

When COVID-19 struck, the formulation of South Africa’s new benefit transfers to provide emergency relief also relied on evidence created under SA-TIED. Incredibly, the new transfers that South Africa implemented reduced poverty in South Africa, even during the economic downturn.

Looking forward

Looking forward to 2023 and beyond, UNU-WIDER will continue to work with partners in the Global South to achieve the Global Goals. By increasing the usage of the SOUTHMOD models, Global South policymakers gain better tools to create policies to provide better services. Improvements of administrative tax datasets in South Africa will further support public revenues and economic growth in the private sector. The work to finalize the administrative tax datasets and undertake important analysis with the data continues in Zambia, Tanzania, and Uganda. The exciting work being done in UNU-WIDER’s country programmes continues to demonstrate the power that partnerships can bring to solving development challenges.

This article was originally featured in the UNU-WIDER Annual Report 2022. Read the full report here.

Timothy Shipp is an Editor and Communications Associate at UNU-WIDER with a focus on mobilizing knowledge related to the achievement of SDG10: Reduced Inequalities and SDG5: Gender Equality. He is the managing editor of the WIDERAngle.

The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.