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Africa and the G20

Arpita Anant
Archive data: Person was Associate Fellow at MP-IDSA Arpita Anant was an Associate Fellow at MP-IDSA. She joined the Institute in 2007 and was associated with the Internal Security Centre… Continue reading Africa and the G20 read more
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Bilateral and multilateral interest in Africa’s development is plentiful, but has been seen as not very effective. So the launch of yet another new initiative, this time by the G20 in July 2017, beckons some reflection. The G20s focus on Africa is not new, though somewhat unique. Over the period of the last decade, other informal multilateral groups have also sought to address Africa’s issues. The BRICS have for long focused on Africa; their relationship is symbiotic.1 Their association with Africa had been through trade, FDI and development assistance to wring “mutual benefit and solidarity rather than on gift giving or pure commerce”.2 The G8 too has been in a mode of “partnership” with Africa especially for a decade since the year 2000.3 The UK4 and Germany have been instrumental in putting Africa on the G8 agenda.5 The Africa Action Plan of the G8 (2002) was launched to augment the NEPAD. However, not many targets set were met; and these initiatives remained philanthropic in nature, with little focus on trade, investment and governance issues.6 What then is the nature and significance of the latest G20 effort?

G20’s Compact with Africa (CwA)

At the Hamburg Summit of the G20, July 7-8, 2017, G20 Africa Partnership was launched.7 The partnership, called Compact with Africa (CwA) is aimed at promoting private investment and non-commercial infrastructure in Africa. It consists of related initiatives such as #eSkills4Girls, Rural Youth Employment, African Renewable Energy and facilitates investment compacts. The partnership was made supplementary to the African Union’s (AU) Agenda 2063 and the Programme for Infrastructure Development in Africa (PIDA), with an implementing and monitoring role for the AU and the NEPAD.8 The partnership was devised jointly by the African Development Bank (AfDB), the International Monetary Fund (IMF) and the World Bank for the G20 Finance Deputies for inclusion in the G20 finance track 9 The partnership was able to attract ten African countries in 2017- Côte d’Ivoire, Morocco, Rwanda, Senegal, and Tunisia joined in March 2017; Ethiopia and Ghana joined in June 2017; and Benin, Egypt and Guinea joined in October 2017. A permanent Africa Advisory Group was set up within the G20. By October 2017, the G20 had mapped all available avenues-government, firm and investors, both bilateral and multilateral, for specific countries, as well as common platforms available to facilitate the Compact.10 It is the first time that representatives of the AU (Guinea) and the NEPAD (Senegal) were invited as guests for the Summit. 11

G20 Focus on Africa: A History12

The first reference to Africa in the G20 came in the Toronto Summit of the G20 in 2010 which made a commitment to ensure that concessional lending facilities to the African Development Bank (AfDB) would continue despite the financial crisis of 2008.13 The Annex to the declaration refers to a 200 per cent increase in the capitalisation of the AfDB which would increase its funds from $1.8 billion to $6 billion and a corresponding increase in the annual lending to it. This was done since Africa was lagging behind in the achievement of millennium development goals.14 It also mentioned the particular concerns of food security and agriculture modernisation as pertinent immediate concerns that the G20 must look into as priority.15

At the Seoul Summit held later in 2010, the importance of regional economic integration in Africa was recognised and the G20 countries committed to help with that through trade facilitation and building regional infrastructure.16 It was also decided that two of Africa’s countries would be among the five non-member invitees to G20 summits.17 The Multi-year Action Plan on Development pledged to support existing initiatives and facilities in the New Partnership for Africa’s Development (NEPAD), African Water Facility (AWF) and the Investment Climate Facility for Africa, in addition to requesting the AfDB to identify barriers to regional trade integration in Africa.18 It also pointed to the need for the African Tax Administration Forum to improve tax collection to aid domestic mobilization of resources. Among the specific policy commitments by G20 countries, Japan pledged to double its ODA to Africa over the 2007 level by 2012, Canada doubled its G8 Gleneagles commitment on its aid to Africa and its G8 L’Aquila commitment to double its food security aid to Africa and France announced the formulation of national policy for supporting sustainable development in Sub-Saharan Africa among four other regions.19

The G20 Cannes Summit Leaders’ Communique’ of 2011 made a reference to its “Action Plan on Food Price Volatility and Agriculture” and its support for food security initiatives of the ECOWAS, NEPAD’s agricultural risk assessment initiative and the need for the G20 High Level Panel to support NEPAD’s infrastructure projects in Africa.20 Under the French presidency, financing of infrastructure projects in Sub-Saharan Africa was a priority and 5 of 11 such projects were identified were in the region.21 On food security, with G20 support, the ECOWAS pilot project of creating a food reserve was initiated.22 The G20 Remittances Toolkit was launched to reduce the cost of remittances to mainly African countries.23

The Los Cabos Summit Declaration of 2012 made no additional commitment specific to Africa but took note of the food security initiatives in the Horn of Africa and Sub-Saharan Africa.24 Under the Mexican Presidency however, the African Development Bank teamed up with the World Bank, OECD and United Nations to produce a toolkit for Inclusive Economic Growth.25 The Los Cabos Summit launched the AgResults initiative to assess progress on the food security front.26 By December 2012, the ECOWAS pilot project was made a part of the Global Initiative for Resilience in Sahel and Western Africa (AGIR).27 The Tropical Agricultural Platform (TAP) was launched at the same time to assess particular requirements of agriculture in tropical countries. The Principles for Responsible Agricultural Investment (PRAI) were prepared in October 2012.28

The St. Petersburg Leaders’ Declaration of 2013, announced its support for “Transparency in Trade”, a collaborative initiative of the AfDB, International Trade Centre, the UNCTAD and the World Bank to promote use of trade policy data and analysis for exploring opportunities for trade and facilitating them.29 It also announced the completion of the assessment of Project Preparation Facilities (PPFs) for Infrastructure in Africa.30 During the St. Petersburg Summit, the Development Working Group “welcomed the Infrastructure Consortium for Africa (ICA) Assessment of Project Preparation Facilities (PPFs) for Infrastructure in Africa and the ICA held a workshop to launch a project preparation network.”31 Once this was completed in November 2012, based on the High Level Panel on Infrastructure and ICA report, the AfDB launched the Africa 50 Fund in November 2013 to channel $US 100 billion from public and private sources for infrastructure development in Africa.32

In 2013, the AgResults intermediary fund was set up within the World Bank to receive contributions for food security.33 To assess particular requirements of agriculture in tropical countries, the Tropical Agricultural Platform (TAP) was launched in December 2012, which started getting inputs from the Forum for Agricultural Research in Africa (FARA).34 Africa was one among the two areas for the field testing of the PRAI put together by the Inter-Agency Working Group (IAWG, i.e. the FAO, IFAD, UNCTAD and the World Bank) in 2013.35 Moreover the G20 contributed to the integration of agriculture risk management in agricultural policies in the Comprehensive Africa Agriculture Development Program (CAADP) through its association with NEPAD in the IFAD supported Platform Agricultural Risk Management (PARM).36 In line with the Seoul MYAP and the directions of the Development Working Group, the AfDB established the Trade Finance Plan in 2013 to enable the US$ 1 billion to be channel for trade facilitation in Africa.37 Duty Free and Quota Free trade and Aid for Trade are other policies from which Africa benefitted. The Australian presidency of the G20 in 2014 saw the IFC funded Global Small and Medium Enterprise (SME) Finance Facility focus worldwide on very small SMEs in high impact, targeting several African SMEs.38

The Leaders Communiqué of the G20 Summit in Turkey in 2015 made specific reference to the first ever meeting of the Energy Ministers of the G20 and the adoption of the G20 Energy Access Action Plan: Voluntary Collaboration on Energy Access. The first phase of this programme was envisaged to focus on Sub-Saharan Africa since it faces the most acute energy crisis.39 52 countries of Africa, among other regions, also received attention of the Climate Finance Study Group of the G20 which designed a toolkit for better access to climate finance aimed at adaptation to climate change.40 A Practioner’s Dialogue on Climate Investment (PDCI) was initiated by Germany in 2015, and its 2016 edition was held in Africa in 2016. 41 The G20 Summit in China in 2016 launched an initiative for industrialisation of the LDCs and countries in Africa in the wake of the “new industrial revolution”.42 The G20 action plan on Agenda 2030 which was adopted after the Summit brought forth several countries’ commitments to help with the achievement of specific SDGs in Africa.43

Significance of the Compact

The G20’s focus on Africa, thus, is not new. So far the main areas of focus have been agriculture and food security; areas of limited focus have been climate and energy, infrastructure, trade and SMEs. Yet, the Compact is significant for several reasons.

In the context of the G20, first, for the first time in the history of G20 summits since 2009, there is a dedicated policy document on Africa.44 This may indeed be regarded as a high-point in the dyadic relationship; for in the earlier summits, priority was accorded to various issues of development the world over and particular focus on Africa came only as a corollary of that. Also, with the setting up of the Africa Advisory Group, Africa’s interests are somewhat institutionalised within the G20. Second, the compact attempts to bring together all existing projects and actors so as to synergise them and fill in the voids of private investment and infrastructure development in the Compact countries. Third, it seeks to channelise private investment in new and critical areas such as skill development of women and rural youth, as well as a focus on renewable energy.

In the larger context of bilateral and multilateral engagements with Africa, the Compact is not very unique. It recognises the agency of smaller individual African countries, beyond South Africa and Nigeria, a trend that has been on the ascendant for nearly a decade.45 Like many other initiatives, it also goes beyond the limited vision of providing ‘aid’ to enable its development to provisioning investments.46 And finally, the Compact is avowedly demand driven and focuses on human resource development, thus making it conceptually akin to South-South partnerships.

It also has several inherent limitations. Though G20 is more representative than the G8 and was effective in dealing with the financial crisis since 2008, it has been dogged by a crisis of legitimacy as a club of big nations, allegations of lack effectiveness on matters of global economic governance, and shifting priorities based on the rotating Chairmanship of the group.47 Moreover, it is an informal grouping of unequals with differing interests and visions. So, though proverbially well begun is half done, in this instance it may not be so.

Conclusion

An increased level of engagement of the G20 with Africa could be significant as it could activate the existing G20 initiatives. It is also significant because it proposes to venture into new and critical areas such as skill development of women and rural youth, as well as a focus on renewable energy which are fundamental to capitalise on increased private investment. Such fundamentals, if strengthened, would have a salutary impact on development in Africa. Discernible progress may also encourage other African countries to join the Compact.

Dr. Arpita Anant is Associate Fellow, ALACUN Centre, IDSA.

Keywords: Africa
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