SA-TIED’s research could help transform SA and turn its fortunes around

Mzansi needs bold action to turn its fortunes around, and such action must be founded on credible evidence-based research. The Southern Africa — Towards Inclusive Economic Development (SA-TIED) programme is playing an important role in this regard.

This long-term initiative, which aims to bridge the gap between research and policymaking, is a collaboration between the UN University World Institute for Development Economics Research (UNU-WIDER), the National Treasury, the International Food Policy Research Institute, and many other government and research organisations in SA.

SA-TIED recently released a report summarising its major research contributions so far. These contributions are not policy proposals, but are meant to inform the policymaking process and fill important gaps in our evidence base.

A recent virtual Business Day Dialogue, hosted in partnership with the SA-TIED programme, unpacked the diverse work of the programme, while exploring the question: “What’s needed to transform SA’s economy?”

Hosted by financial journalist Gugulethu Mfuphi, the panel for this discussion included finance minister Enoch Godongwana, acting deputy director-general of the economic policy division at the National Treasury Boipuso Modise, and director of UNU-WIDER Prof Kunal Sen.

Modise said the SA-TIED programme has made a significant contribution to building capacity in economic analysis and evidence-based policymaking.

“Through the programme, 11 PhD scholarships were awarded to public servants, while more than 50 students participated in the Young Scholars Programme,” she said, explaining that the latter exposed master’s students to the work environment while producing relevant research. 

Modise said the success of the programme is due to deep engagement between researchers and public institutions, and the commitment of all the partners to work together to improve the interface between research and policymaking.

A key component of the SA-TIED programme is a tax data lab, a secure, state-of-the-art facility located at the Treasury, which makes tax data available to academics and policymakers for research purposes. It provides anonymised data across all the tax products of the SA Revenue Service (Sars), which in turn provide nuanced and detailed insights into the economy. 

Godongwana explained that the tax data generated by the lab allows government to evaluate policy design, including the long-term effects of social programmes. Linking different data sets allows government to approach policy questions from new angles and perspectives.

SA’s current tax policy, which is built on efficiency, fairness and simplicity, aims to grow revenue, he said.

“The SA-TIED report allows us to better understand the challenges SA’s economy faces and support more inclusive policy design,” he said.

He added that critical to stimulating the country's economic growth will be supporting small and medium sized enterprises.

Operation Vulindlela — a joint initiative of the presidency and the Treasury — has been tasked with accelerating the implementation of structural reforms to increase economic dynamism and support potential growth. 

Creating an environment in which small businesses can emerge and grow will be key to the country's economic recovery.

Godongwana also said a recalibration of policy measures to support greater access to private sector finance — particularly for SMEs — is required. 

Conceding there was no silver bullet to ensuring a robust and resilient economy, he said it was important that various activities, including SA’s economic policies, were co-ordinated. 

While macroeconomic policy on its own could not address the country’s poor growth trajectory, Godongwana said efficient macroeconomic policy played a critical role in addressing income inequality.

Sen, who is an international expert on the political economy of growth and development, said UNU-WIDER would continue to guide SA-TIED's research along with local partners as the programme moves into its second phase in 2022. 

“The next phase of SA-TIED will emphasise collaborations and inclusivity across the entire operation, including the three programmatic pillars of research, capacity development and policy-bridging, as well as adopting a curious approach to explore new research areas, collaborations and activities that can result in even larger impact on the ground in both the short and long term,” he said.

New areas that the second phase will focus on will include an increased investment in building data infrastructure for policy-relevant research about enterprise development, public revenue mobilisation and inequality.

“Countries need data and evidence to create, amend and evaluate policy,” said Sen. “SA has been at the vanguard of data collection in Sub-Saharan Africa with strong and long-standing institutions collecting data for research purposes.

“Making tax administrative microdata available for research purposes places SA at the forefront of big data research for development and puts the country in a novel position relative to other developing and emerging economies.”

The pandemic has amplified the macro fiscal challenges SA was already facing, said Sen. The second phase of SA-TIED will put the spotlight on fiscal policy questions and macroeconomic policy modelling, which will help inform policymakers. This will include research and analysis on how the country can devise policies that lead to sustainable growth, but at the same time reduce inequality through fiscal redistribution.

Click here to view the full SA-TIED report.

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