Bilateral aid to Africa reduced about a quarter in 2025The largest annual decline in official development assistance in the history. Meanwhile, sovereign debt interest payments now consume on average 27% of government revenue Across the continent, up 19% from 2019.
The pressure to finance development from within has never been greater. But to accomplish this requires African governments to understand their economies precisely: which tax policies work, which incentives serve their purpose, how fiscal decisions deliver their results.
Administrative tax data, the anonymized filings, returns and transaction records generated through the tax system that African revenue authorities already have, is one of the most powerful tools to answer those questions. South Africa, Uganda and Zambia have created the means to use it, and what they are discovering is how they govern.
each has established one Secure Research Data Lab Where researchers work with anonymized tax records under strict confidentiality protocols. All three were developed Support from the United Nations University World Development Economics Research Institute (UNU-WIDER). It provides technical expertise and facilitates knowledge-sharing across countries, while ensuring that data, research agendas and findings are maintained by the institutions that use them.
We have been part of that support, from setting up laboratories and preparing raw administrative data for research, to facilitating partnerships and ensuring that findings reach the people charged with acting on them.
The evidence these data labs are generating is incorporated into solutions including tax policy reform, budget decisions, labor market programs, and Social Security. This could deepen how governments understand the economies they are responsible for and the people within them.
From research findings to decisions
In South Africa, National Treasury Secure Data Facilityfoundation stone of Southern Africa Towards Inclusive Economic Development ProgramHave been doing this work for more than a decade. The cumulative effect reflects that longevity. The data has repeatedly highlighted how the economy works, often at odds with policy expectations.
The findings have shaped many decisions. For example:
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Research It turned out that the corporate tax system was quietly favoring debt over equity financing. This was causing companies to borrow more than they expected, making companies and the economy more fragile in a recession. informed about this Corporate tax restructuring in Budget 2020.
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analysis of employment tax incentiveWage subsidies for young workers in a country where nearly 60% cannot find work have revealed a more complex impact picture than its designers expected. This informed the decision to extend the subsidy during the COVID-19 pandemic.
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Research Which measures how much economic activity increases when a government increases spending or cuts taxes, emphasizing the importance of growth-oriented investments such as infrastructure, education or public health.
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Analysis of behavior patterns at the tax border provided evidence To design fair policies that reduce tax evasion and broaden the tax base.
Similarly, in Uganda's commercial capital Kampala, adjustments were made to policies based on data use.
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Research was conducted through Uganda Revenue Authority Secure Data Lab he got it Less than 15% firms Were paying both national corporate income tax and local business license fees. This gap existed for years. This had never been quantified before.
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Separate research showed that the cost of corporate tax incentives was approximately Revenue of US$42 million forgiven. More than half of the companies that benefit are likely to remain profitable at the full statutory rate of 30%. The incentive system designed to attract investment was, in measurable terms, more generous than the investment required.
For policymakers, such findings do not simply describe a problem. They rename it. Questions have focused on how to collect more revenue, where the system is working against itself, and what can be changed.
Some examples from Zambia:
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tax gap research The country's compliance gap is estimated to be between 47% and 56%. This helped identify for the first time where revenue was being lost and how audit resources could be better targeted. Conclusions fed directly In the 2026 budget. The audit strategy of the government was revamped. And the findings informed the deliberations of the Tax Policy Review Committee.
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separately, Research on VAT Administration A structural inefficiency was exposed: large companies generate liabilities and credits simultaneously on the same account, a circular flow that consumes administrative effort without generating revenue. Without transaction-level data it was invisible. When it was identified, the problem was fixed.
From a number to a life
Data, even compelling ones, exist in abstract form. What brings them into reality is the chain of consequences, from research findings, to decisions, to the lives that shape the decisions.
Zambia's domestic revenue contribution to the national budget is Increase from 55.7% in 2020 to 73.1% planned in 2026. This reflects fiscal decisions being taken with increasing precision and confidence in a country that now has the tools to question its own tax system rather than rely on external assessment.
That strong revenue base has also made possible free education initiatives that have benefited almost 2.3 million children Those who were earlier out of school were back in classes. A research laboratory did not put those children there. Evidence-informed fiscal policy did.
South Africa's record adds another dimension. microsimulation modeling showed that social relief of crisis grant Poverty was declining significantly when decisions needed to be taken about its future. The evidence changed the decision that could have been made reliably. The distinction matters, because it makes clear what these laboratories are really for: not to produce research, but to create conditions that allow governments to govern better.
case in practice
The solution to Africa's financing challenge will not come from outside. The most sustainable path forward lies through domestic revenue systems that are efficient, fair and robust, based on evidence. This requires a special kind of analytical honesty: a willingness to rigorously examine fiscal systems and act on what the data reveals.
Development economics has long argued that evidence-based policy making produces better outcomes. South Africa, Uganda and Zambia are making this argument in practice. They are doing so through what they have created, what they have received, and what they have chosen to do because of it.
At a time when external financing is shrinking and debt service is rising, the quality of fiscal decisions is not an academic question. This is the difference between governments that can clearly see their economies functioning, and those that cannot.
The data already exists. The model has been proven. What remains is the will to use it.
Amina Ibrahim receives funding from NORAD QZA-18/0207 Domestic Revenue Mobilization.
Patricia Justino does not work for, consult, hold shares in, or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond her academic appointment.
By Amina Ibrahim, Research Fellow at UNU-WIDER, United Nations University and
Patricia Justino, Professor and Designate Director, World Institute for Development Economics Research (UNU-WIDER), United Nations University