Philipp Krause’s study of fiscal policy think tanks is a welcomed contribution to the field. It offers a rich reflection on the diversity of think tank models and establishes a clear relationship between think tanks and their environment.

Unlike other think tank studies, it attempts to understand think tanks in the contexts of their political systems—similar to Adolfo Garce’s must-read work on political knowledge regimes and think tanks in Latin America.

The study is motivated by a desire to improve South Africa’s fiscal policy debate and policymaking. At On Think Tanks, we agree that think tanks are a powerful vehicle for this.

Krause argues that South Africa’s fiscal system lacks the capacity to produce the independent fiscal policy research and analysis needed for well-founded decisions. Furthermore, the country’s majoritarian political system leaves a significant gap for independent scrutiny of fiscal policy.

This situation is found across the Global South + – low capacity to produce and use independent evidence for well-founded decisions and a politically motivated de-facto rejection of unofficial sources of evidence.

If recent reports on the decline of government capacity and democratic institutions are anything to go by, then this will likely worsen.

In response to the challenges faced by South Africa, Krause suggests that the country needs a fiscal policy think tank similar to the Institute for Fiscal Studies (IFS) in the UK. He reasons that the IFS think tank model provides an independent and credible voice to challenge and scrutinise government fiscal policy.

In this article, I will focus on this recommendation. I do this in the spirit of encouraging a useful debate for those who, like Krause, work to promote better-informed policy debates and decision making.

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The arguments for an IFS in South Africa

Philipp Krause’s recommendation is grounded in the following arguments:

Technical counterweight to government

He suggests that a fiscal think tank could serve as a technical counterweight to the government, offering alternative fiscal policy perspectives and enhancing the public’s understanding of public finances. He argues that this model fits well with South Africa’s institutional landscape, where the majoritarian nature of fiscal policy-making limits internal scrutiny.

Institutional fit and funding

Krause considers the institutional fit for such a think tank in South Africa to be strong due to the majoritarian system, which struggles to self-scrutinise fiscal policy. Krause argues that funding could be justified to improve fiscal transparency and accountability, similar to how the IFS Green Budget is funded by the Nuffield Foundation in the UK.

Role and impact

The think tank’s main entry point would be before the budget cycle (the IFS is famous for its role around the national budget), helping to shape the policy agenda early on. Its role would be to provide high-quality analysis that influences fiscal policy over the long term.

Other think tank models fall short

Krause looks into alternative models, including:

• Autonomous input provider: such as the National Institute of Public Finance and Policy (NIPFP) in India. It operates under the supervision of a board with representatives from state and national governments and the central bank. It focuses on high-quality, quasi-academic research and provides bespoke technical inputs to government entities. However, it lacks statutory authority and relies on the quality of its work to influence fiscal policy.
• Fiscal hub for civil society: this type of think tank focuses on making fiscal policy understandable to civil society but may struggle to find an insider audience. Krauss mentions BudgIT in Nigeria, the Institute of Public Finance in Kenya, and the Accountability Initiative at the Centre for Policy Research in India.
• Independent anchor: Krause views this as the least realistic model due to the political investment required and the existence of other independent fiscal institutions. He doesn’t, however, offer an example. I wonder if this would be the equivalent of Peru’s Fiscal Council, an independent body that oversees and advises the Ministry of Finance (although it has no political authority over it).

Krause concludes that a traditional fiscal think tank is the best path for South Africa to impact fiscal policy. It can provide a credible voice and engage in high-level policy discussions outside the formal budget process.

But is the IFS even possible outside of the UK? A reflection and counter-argument

While the author’s recommendation is based on the successful model of the IFS in the UK, I believe this model may not be so easily adapted to a different context. Here’s why.

Funding challenges

While South Africa’s funding for research is in much better shape compared to other countries faced with economic instability, securing diverse and sustainable funding sources is much more challenging than in the UK. This financial uncertainty can compromise the independence and effectiveness of think tanks as funders might try to influence their research agendas and outputs. In this context, many think tanks must turn to projects and consulting to make ends meet.

The IFS enjoys funding from several domestic independent public research funding bodies, government departments, a broad and rich political philanthropic community, and individual and corporate membership.

On the other hand, the South African Institute of International Affairs (which celebrates 90 years in 2024) is a good equivalent independent think tank on foreign policy matters. Despite its history and standing, SAIIA depends entirely on foreign funding.

But foreign funding is a potential problem for a would-be influential think tank like a South African IFS. Legislation curtailing foreign funding of civil society has been introduced or is being debated by legislators worldwide (including in Russia, India, and the US). I would not bet against it becoming commonplace across Africa in the near future.

In sum, the funding contexts could not be any more different.

Political and institutional context

South Africa’s political and institutional environment differs markedly from the UK. Krause labels South Africa a majoritarian political system that may not be as receptive to independent critiques, especially if they challenge the dominant party’s policies – even if the ANC has recently lost its absolute majority in parliament.

Incorporating Adolfo Garcé’s analysis, we could suggest that while the UK presents what he calls technocratic elitism (centralised politics and rationalism), South Africa’s model is more akin to plebeian majoritarianism (centralised politics and anti-intellectualism). Again, I say this fully aware that South Africa is ahead of many other countries in the Global South in its support for and use of evidence.

Why, then, would the South African Government listen to a South African IFS? The quality of its staff and work will not be enough. Research done by On Think Tanks shows that think tanks’ credibility is primarily dependent on factors beyond their control and has little to do with research quality or researchers’ skills.

In the UK, the IFS’s effectiveness is partly due to its established role within a mature democratic system that demands (even if it does not always value) independent analysis. But there is more. The confrontational and ‘always on’ nature of UK politics has much to do with the IFS’s position as a credible voice.

Two critical features of UK politics illustrate this: (1) MPs in the House of Commons sit across from each other. Political debate in the UK is confrontational, and it consists of shouting down your opponent with everything you’ve got, evidence included. (2) Prime Minister’s Questions take place every week. Every week, the Prime Minister and the cabinet must stand in Parliament to be challenged. Every week, every day even is a good day to come up with a new idea.

This partly explains why there are so many think tanks in a relatively small geography. Joseph Braml examines this and other factors in his comparative work of think tanks in the US, the UK and Germany. (In fact, drawing on Braml’s work we could argue that the IFS would not work in the US, either.)

This also explains why British political institutions are so eager to receive new ideas. It is not rare to see politicians and civil servants at think tanks’ lunchtime events scouting the next idea. Ideas from outside are welcome and encouraged — as long as they help win the day.

In contrast, South African institutions might resist the establishment and influence of an independent think tank.

A pawn in a very unique game

Think tanks play a political role at a more practical level. Krause contrasts the IFS with the Office of Budget Responsibility (OBR) in the UK. The OBR is a statutory body that provides analysis and serves as a watchdog of sorts to the government, but it does not have a policy agenda. Is it a think tank? Interesting discussion for another article.

But what I think is really interesting about the OBR and the IFS is that they serve very practical and useful political functions. When the OBR was created in 2010 by the then Conservative-Liberal Democrat coalition government, it responded to the need to restore credibility and trust in economic and fiscal forecasting. Before the OBR’s establishment, economic forecasts were produced by the Treasury and were often criticised for being overly optimistic and politically influenced. In the UK, the Head of Treasury is reserved for senior party leaders. This lack of credibility in economic forecasting was a significant issue, especially during periods of economic instability and fiscal challenges.

And what had just happened in 2010? The global financial crisis! And what was the coalition government saying? “We are not going to be running the economy along party politics like the [former] Labour government!”

The IFS plays a similar useful role. Along with the OBR, it is the go-to source whenever the government wants to undermine the opposition—and vice versa. It is useful for party politics. “The IFS says” makes the weekly Prime Minister Questions accusations or answers a bit more credible. At the same time, it is not powerful enough that a negative assessment could bring down a government.

So British political parties let them be. They use them for partisan politics.

Public engagement and impact

The impact of think tanks relies heavily on their positioning in the public space. And the media plays a crucial role in this – far more important, I would argue, than anything a think tank can do on its own.

British news media (across all channels) generate, engage with, and publish a relative high quantity and quality of fiscal policy data, information, analysis, and opinion. This is what Miko Lauer in Peru referred to as density. Economic policy in general enjoys of high density of of data, information, analysis and opinion.

People know about the IFS not because it has great communications (which it has); they know about the IFS because the media amplifies its brand and ideas and bolsters its reputation. The BBC calls it “reputable” and the Telegraph newspaper cites it as “independent”.

In South Africa, as in much of the Global South, public engagement in fiscal policy is comparatively relatively low, and the media does not have the same capacity to amplify think tanks’ work as effectively as in the UK.

Think tanks need robust public debate and media support to influence policy effectively, and this is not equally prevalent in South Africa—even if it is ahead of the rest of the continent.

Capacity and expertise

Building the necessary expertise and capacity for a think tank to be effective can be challenging. The IFS benefits from a pool of highly skilled economists and long-standing relationships with academia and government.

South Africa is at the top of the league regarding spare economic policy research capacity in Africa. However, developing similar expertise, institutional capacity, and credibility may need significant time and investment. This development phase could limit the immediate impact of a new think tank.

We know, from our ongoing engagement with think tanks, that even leading South African think tanks today face serious challenges in hiring qualified economists. A new think tank focused on economic policy would need to resort to paying premium salaries to compete with the private sector, the Central Bank, and the Ministry of Finance.

There is also the risk that a new think tank will undermine others in the system. We often find that foreign funder-driven efforts to create new economic policy initiatives end up poaching staff from the few places that have them: central banks, ministries of finance, and universities.

This was a critique often leveled at the International Growth Partnership, for instance.

A think tank is not an island

Even if you took the IFS and relocated it to Pretoria, you would not get the IFS. The IFS is successful because there are also:

• Several other think tanks that address fiscal policy issues.
• Many more think tanks working on social policy, environmental policy, local government, parliamentary affairs, and so on.
• Trade bodies and unions with policy research capacity.
• Universities with multiple public policy-oriented departments and research centres.
• NGOs, watchdogs and multiple campaigning bodies that look into fiscal policy and its effects on the general public.
• Well-funded government offices and units.
• General and specialised media that generates, communicates and scrutinises fiscal policy data, information and opinion.

Africa is home to several think tanks that follow the ‘“autonomous research unit under the Ministry of Finance” model. Most were originally funded by the African Capacity Building Foundation: KIPPRA in Kenya and ZIPPAR in Zambia are two examples. These think tanks are considered among the strongest in the region, but they have struggled to make a lasting difference on their own.

No IFS outside the UK?

While the IFS model provides a valuable example of an independent fiscal think tank and many of its best practices are worthy of being copied and adapted, every country’s unique political, economic, and social context suggests that a direct transplantation of this model may not be optimal.

A more tailored approach addressing local challenges and strengthening the broader fiscal policy debate may offer a more feasible and effective path for establishing robust, effective, and fair fiscal policy outcomes in South Africa, Africa and across the Global South.

First, strong think tanks and research centres at universities could be strengthened to deliver some, if not all, of the services delivered by the IFS in the UK.

Then, there will still be a need to invest in the broader policy research ecosystem: building future economic policy research capacity, strengthening the media’s capacity to promote more nuanced policy discussions, investing in policymakers’ capacity to use evidence, etc.

And finally, the many strengthens of the IFS should inspire think tanks everywhere. Their use of the budget announcement to set the agenda is an indisputable best practice.