As recent figures indicate, inequality and poverty in Colombia have increased in recent years, especially after the Covid-19 pandemic. The deterioration of these indicators places Colombia among the most unequal countries in the world. The Multidimensional Diagnostic on Inequalities in Colombia also demonstrates that gender gaps are particularly prevalent in the country. Indeed, employment rates are lower for women than for men at all levels of education. For example, in 2020, while the employment rate of women without any level of education reached 31%, for men it was 65%. 

In this context, the Colombian government is committed to reduce the gaps between population groups and between territories and has identified closing gender gaps as one of its priorities. Given this situation, it is critical to delve into the understanding of the causes and solutions to inequality, and identify ways through which inequality can be reduced through public policies, social spending and fiscal policy. 

In order to support the Colombian government in the development of public policies aimed at reducing inequalities, the Extension of the EU-AFD Research Facility on Inequalities, in close collaboration with local research centres and local authorities, has already:

1. Elaborated the Multidimensional Diagnostic on inequalities and generated statistics on inequalities with the National Administrative Department of Statistics (DANE). The diagnostic is a statistical overview of inequalities from multiple angles that seeks to support public policy decisions by providing key information for the reduction of the most important gaps in the country.
2. Implemented a fiscal incidence analysis through the methodology of the Commitment to Equity (CEQ), and, in close collaboration with the Ministry of Finances, elaborated a tool, which enables to assess the impact on inequalities of the latest tax reform in the country, through micro-simulations. 

These two studies opened the door to new possibilities of analysis that provide data, information and relevant knowledge for the Colombian Government as an input to strengthen the design, implementation and monitoring of policy instruments that can reduce the inequality and gaps between population groups, especially those of fiscal policy and social spending.

This research project will use innovative methodologies to take advantage of the information derived from the merging of surveys, databases and administrative records to strengthen the understanding of the impacts of the fiscal and spending measures of the Colombian government on closing gender gaps, and more generally, to strengthen the analysis of income inequality measures in Colombia.

This study also aims to generate an in-house capacity allowing the Government of Colombia to continue reporting and analysing new inequality metrics that inform the design of more equitable public policies in the country.

The research project will:

• Develop a methodology for the analysis of the impacts of fiscal and government spending measures on closing gender gaps and income inequality in Colombia, based on the CEQ tool;
• Determine the necessary methodological and operational components that will be updated on a recurring basis by different actors involved in public policy decision-making;
• Estimate a battery of indicators of the impact of fiscal, tax and social spending policy on gender gaps.

The analysis will use surveys, databases of supply and demand of social programs, as well as administrative records and tax information of natural persons, integrating them into a CEQ model. These data will serve as a basis for the inclusion of the gender approach and for the analyses that will be carried out as part of this research.

Throughout the research, working groups will be organised with the National Planning Department, the National Administrative Department of Statistics, the National Tax and Customs Directorate and other stakeholders who can contribute to the conceptual and methodological development of the research, the analysis of the results and the application of the tool to policy processes.

You will find below the different research papers related to this project:

In progress

South Africa’s Economic Reconstruction and Recovery Plan was launched in October 2020 by the Presidency in response to the economic impacts of the Covid-19 pandemic. Besides the Presidential Employment Stimulus program, it included emergency social protection measures, among which the introduction of a special Covid-19 Social Relief of Distress grant (SRD), providing ZAR350 per month for unemployed people not covered by any other form of support. The South African government now seeks to develop options for the future of SRD grant.

Find out more about the Extension in South Africa

The objective of this research project is to produce motivated recommendations on how the SRD should be designed going forward into the longer term, in order to maximize the impact of the grant on employment outcomes and to ensure it effectively reduces poverty, while maintaining its cost to an acceptable level:

1. To maximise the impact of the grant on employment, the project needs to understand how to design and label the grant to encourage its use for job search.
2. To ensure the grant effectively reduces poverty, the project must figure out the most cost-effective way to target and assess the eligibility of recipients. Moreover, poverty reductions can be scaled up by determining measures that could encourage take up among the most disadvantaged. 

Once these goals have been achieved, and in order to inform public decision-making, these findings must be communicated to a number of stakeholders in government and civil society.

This project is part of a wider research program conducted with several South African research centres and in close collaboration with the South African Presidency. Four other research projects analysing the externalities of the Covid-19 stimulus policy are currently being developed as part of the first pillar of the Extension's activities in South Africa.

This research project uses the model generated to conduct the 2014/2015 fiscal incidence assessment and introduces updated data for 2019-2021. It simulates five scenarios around eligibility criteria, targeting mechanisms, value, disbursement model and conditionalities and computes the potential impact on poverty and employment outcomes.

You will find below the research paper related to this project: 

• Proposal for the extension, redesign and repurposing of the SRD for the goal of poverty reduction

It is worth noting that another paper has been published on the implications of the SRD grant, funded by AFD outside the Research Facility on Inequalities: Systemic exclusion from a South African social assistance transfer (February 2024)

In July 2019, Infusion Knowledge Hub conducted a study on opportunities for wholesale in Stock Road in Philippi in the Western Cape Province on behalf of a large South African supermarket chain. The purpose of the study was to understand the trading environment in the informal and small business market to elicit a value-added cash and carry shopping proposition (Vawda, Prinsloo and Prinsloo, 2019). 

In June 2022, as part of a research program launched by the Presidency of South Africa and Agence Française de Développement, funded by the European Union, Infusion Knowledge Hub replicated the study to determine whether there are shifts in purchasing behaviour amongst the informal and small traders that participated in the 2019 research. In doing so, the study aimed to provide granular data on shifts in the informal and small traders’ operating environment around Stock Road in Philippi between July 2019 and June 2022. In addition, the research investigated the spending patterns of 30 Social Relief Distress (SRD) grant recipients and 31 Basic Education Employment Initiative (BEEI) participants.

Find out more about the Extension in South Africa

This new research project aimed to contribute to the body of knowledge on the impact of social protection and employment stimulus measures on the formal and informal economies. 

Two studies analysing the local effects of the South African Presidential Employment Stimulus Initiative (PES) and the national social grants programme were produced: 

1. One study, presented in note form, that builds on Infusion's long-standing relationship with Shoprite to allow SALDRU to use Shoprite's customer data to explore the shopping habits of stimulus beneficiaries. The focus was on unpacking purchasing data related to beneficiaries who receive the Distressed Social Relief Grant and those who are part of the school assistants programme managed by the Department of Basic Education (DBE).
2. A research paper that details through descriptive and inferential statistical analysis the transfer to a mobile application, called NECTA, of a landmark study by Infusion and Shoprite conducted among informal vendors and "Spaza" stores in Philippi. This data provides an overview of what has been happening in these businesses since July 2019 (the date of the initial project), as well as an opportunity to see how the new "post-stimulus" environment is impacting the trade and decision-making of these business entities as well as some of their customers.
    

You will find below the research paper related to this project: 

• Measuring stimulus effects around Stock Road in Philippi on the Western Cape. 

In South Africa, the social grant system is relatively comprehensive in scope, directly benefiting one in three individuals, and mainly empowering the most vulnerable such as children, the elderly and people with disabilities from poor households. Despite the progressiveness of this system, there remains a lack of assistance to the unemployed, who are presumed to be able to support themselves through the labor market (Ferguson, 2015). However, such a view overlooks the widespread and structural nature of unemployment in South Africa, where over 70% of the unemployed have been unemployed for more than a year. 

In this light, the expansion of the country's social grant system in response to the Covid-19 pandemic played an important role in filling this gap. On the margins of the system, a special Covid-19 grant of R350 was introduced to support this previously unreached and important group of unemployed adults. With one of the highest official unemployment rates in the world (32.6 percent in the first quarter of 2021), the grant was an important form of support for millions of vulnerable adults and was the first to use an explicit labor market eligibility criterion that could be considered a "labor market vulnerability transfer."

Find out more about the Extension in South Africa

Conducted by the UCT-DPRU team, the objective of this research project was to quantitatively study whether the Covid-19 grant acted as a source of labor market recovery by leading to increased investment in productive labor market activities. 

To do this, the research aimed to provide a detailed and quantitative descriptive analysis of transitions in labor market outcomes among Covid-19 grant recipients (measuring whether individuals moved from vulnerable to more productive activities, for example), as well as an analysis of the correlation between grant receipt and labor market outcomes. Finally, it estimated the causal effects of subsidy receipt on a range of productive labor market activities. 

The analysis exploited representative survey data collected during the pandemic in South Africa (from the National Income Dynamics Study: Coronavirus Rapid Mobile Survey, NIDS-CRAM) to answer the following cross-sectional and longitudinal questions about the role of the subsidy: 

• What is the correlational relationship between receipt and job-seeking behavior, labor market participation, and the probability of finding a job ?
• What is the correlation between receipt of the subsidy and the transition from a relatively unproductive labor market state to a more productive state over time?
• Does this relationship vary across different groups and subgroups of recipients?

You will find below the research paper related to this project:

• Can cash transfers to the unemployed support economic activity ? Evidence from South Africa. 

In South Africa, informal work is a feature of the labor market - one in six South African workers is employed in the informal sector. During the pandemic, millions of workers without legal or social protection were disproportionately affected by the negative impacts of measures to prevent the spread of Covid-19 (loss of jobs, hours of work and income...). As a "forgotten" sector in many ways, it should not be forgotten that the informal sector provides livelihoods, employment, and income for millions of workers and business owners, and contributes significantly to the country's Gross Domestic Product (GDP). 

In response to the social and economic effects of the pandemic on vulnerable groups, the South African government has further developed its social protection system. As part of the social assistance component of the Covid-19 stimulus package, it introduced a new Social Relief of Distress (SRD) grant in April 2020. This social assistance grant is for the first time targeted at many informal workers on the basis of their employment status.  

While the positive links between the subsidy and economic activity had already been studied, as well as the limits to this interaction, it remained to be understood whether and how the SRD had been used by informal workers and what economic effects had been generated. This project was conducted by CSDA as part of a larger program to analyze various components of the South African government's Covid and recovery stimulus package.

Find out more about the Extension in South Africa

To better understand the effects of the Covid-19 and recovery public policy stimulus on reducing inequality, this study qualitatively analyzed the interactions and impacts of the SRD (as well as other subsidies, and the stimulus package more broadly) on local economies.

In particular, it focused on the experiences of women and men traders in the informal sector, who represent a significant proportion of informal sector workers. Through the data collected, differentiated patterns by gender, location, and level of the informal worker in his or her work organization have also been revealed.

You will find below the research paper related to this project:

• The local economic development effects of income transfers. The Social Relief of Distress grant.

South Africa’s spatial inequality translates in significantly different lived experiences among members of different communities across the country. Statistics South Africa gathers data on a range of socio-economic outcomes of individuals and households through an array of national surveys; these data can be analysed at the national, provincial, district and sometimes municipal level, and provide us with a sense of well-being, deprivation and inequities in these, between these different geographies. However, there is not yet one standardised set of data that would allow for a coherent, systematic and longer-term understanding, visualisation and tracking of a broad set of indicators on well-being, that allows for a better understanding of socio-economic outcomes at the community level. Yet, understanding this local context is important, as it is within that local reality that policies and interventions aim to make a difference. South Africa’s government has recognised this too and, with the introduction of its District Development (DD) Model, aims to see different spheres and departments of government work together for larger impact, “higher performance and accountability for coherent service delivery and development outcomes”. A consolidated, central point of information that is accurate and regularly updated, would provide a strong basis for the implementation South Africa’s DD Model. 

This project therefore proposes the development of an interactive, online Community Explorer that would allow researchers, policy-makers and civil society members to build a stronger understanding of well-being at the community (or main area) level in South Africa. Such an understanding is crucial to inform development efforts implemented at that community level. We suggest drawing on the local level information for the Steve Tshwete municipality to pilot the Community Explorer approach.

The local municipality of Steve Tshwete is part of the Mpumalanga province, an area that is home to one of the country's largest coal mining areas and accounts for 83% of the coal produced in South Africa. Steve Tshwete can be considered as one of the commercial centers of this province, with one of the largest local economies in the district dominated by the mining, manufacturing and financial sectors. As such, coal mining and the three coal-fired power plants currently in operation are by far the largest contributor to local employment, accounting for 40% of it. 

Find out more about the Extension in South Africa

This project proposes to leverage the data and tools already available on the South African Youth Explorer (and the related WaziMap tool). The SA Youth Explorer is a SALDRU-led project that constructs and maps a range of indicators that measure key dimensions of well-being among young people, at various geographical levels. Using Census 2011 data, these indicators are currently constructed for the following domains: demographics, education, living environment, economic opportunities and youth poverty (including income poverty and multidimensional deprivation). In addition, the project has begun the construction, verification and maintenance of a central database of service provision, that allows for government-provided services to be mapped down to the main area level.  Finally, it is the project’s aim to explore the possibilities of adding a third layer of knowledge with local labour market demand side information. As such, the overall aim of the proposed project is to provide “an understanding of the functionings of geographical areas as economic and social systems” and thereby “to promote the construction of an integrated and effective” approach to policy and planning that would ultimately contribute to the social betterment of all.

In addition, the project will use the administrative South African Revenue Service (SARS) and National Treasury (NT) Firm-Level (SARS-NT) Panel data developed as a joint SARS–National Treasury–UNU-WIDER initiative which gives matched employee-employer level information and thus allows computing labor market demand indicators. The greatest advantage of the administrative SARS–NT Panel data over other firm-level surveys is that it allows us to have employee-related information such as income, age and gender, as well as firm-level information such as labour costs, gross sales, industry sector, firm age, productivity, firm size, learnership and training cost .  Another advantage of the administrative SARS–NT Panel data which is important for the project is that the worker and firm information can be aggregated to four different geographical levels, namely: province, district municipality, local municipality, and main place . With these geographical levels, it is possible to create local averages of various worker and firm variables that can then be mapped alongside Higher Education Institutes present at the local level.
 

You will find below the two research papers related to this project: 

• Developing a Youth Labour Market Index for South Africa at the sub-national level
• Youth and the just transition. A profile of young NEET in Mpumalanga