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An African voice at the G20 Summit
The 2nd April 2009 was a pivotal date globally as world leaders came together in London at the Excel Conference Centre for the G20 Summit, represented by the heads of state of the G20 grouping of countries, to formulate a way out of what experts are calling the worst financial crisis since the 1930s. We are living in a period of major economic turbulence, political disorientation and paradigm shifts.
The world’s strongest economies have entered a recession, which has in turn threatened livelihoods, jobs and social structures across the globe.
As governments scramble to put together stimulus packages to bail out their struggling financial institutions and boost their declining economies, the African continent’s sustained progress towards its Millennium Development Goals has been reversed and the crisis poses new threats to democracy, peace and undoubtedly economic progress.
South Africa’s former Minister of Finance Trevor Manuel told the Reuters news agency that “if an African country would have been the cause of the crisis, the IMF [International Monetary Fund] would have been at you like a tonne of bricks.”
As I made my way to the Excel Centre in the Canary Wharf area, London’s financial hub, under the heaviest security, I could not help but ponder Mr Manuel’s statement, but most importantly on how the day would end and how significantly the decisions made at the round table would affect Africa and the rest of the world.
The unlikely voices speak out
For the first time, African leaders were vocal about not being the catalyst of the economic crisis. However, it was felt that Africa would bear the impact of the downfall of the developed nations.
South Africa was also the only African country represented at the G20 summit. The irony is that South Africa has avoided going into recession even though unemployment is at 20%.
For the first time, South Africa’s position at the summit was strengthened by a special envoy invited to speak on behalf of the rest of the African continent.
The high level delegation was made up of Nepad representatives, including its chairperson and Ethiopian prime minister, Meles Zenawi; the African Union (AU) Commission chairperson, Jean Ping; and the African Development Bank (AfDB) president, Donald Kaberuka. They brought with them a mandate on how the developed world could help Africa out of a crisis it did not create.
“This is a significant achievement for Africa, and it is better to have a seat at the table than not”, said Kaberuka. “We have to start somewhere. Today it’s just two representatives, tomorrow will be more. The fact that we were invited to bring forth a mandate from Africa is a landmark in the continent’s relations with the G20 nations.”
For Africa, being invited to the round table of the largest financial summit is a milestone. One may wonder if this meant that South Africa’s role to represent all Africans was being questioned by the continent. It is because of this that South Africa had to position itself as a voice not only for itself, but also a stronger voice for the rest of Africa.
South Africa’s role at the G20
The question of how South Africa should position itself in relation to the G20 Summit was asked by most financial and political experts. The answer to this question is not an
easy one.
South Africa is considered a privileged country, being part of the G20, G8 and the latest formed group with China, the G4. This means that it can engage in all levels of reforms for itself and, as many believe, on behalf of the African continent.
The AfDB predicted that Africa’s growth rate is expected to slow down to 3% in 2009 from the annual average of more than 5% achieved in the past decade.
Many African countries were beginning to build credibility by implementing practical macro-economic policies, but the global financial crisis has provoked a sudden and sharp increase in borrowing costs of emerging markets and developing economies, including Africa.
The continent is set to lose $40 billion in 2009 as a result of idle growth, which continues to plunge as the crisis takes hold. The impact of these losses is huge for the poorest of the poor living on the continent.
The effects of the crisis are wide and varying – from crashing copper prices in Zambia, a declining tourism industry in Kenya, and reduced remittances from African diasporas resident in the developed world.
It was essential that South Africa highlighted this and, in particular, ensured that the developed countries kept their promises for the Millennium Development Goals and maintain the flow of aid.
South Africa bore the responsibility of proving to the world’s leading nations that Africa could play a decisive role in abating the recession and re-establishing the global economy.
The G20: who they are and the issue on the table
The G20 was set up after the Asian crisis in the 1990s led world leaders to conclude that there ought to be a forum for economic debate including a wider range of countries. It had its first meeting in 1999. No permanent staff is employed and the chairmanship rotates each year.
Britain is in the chair for 2009; hence its Prime Minister Gordon Brown was the host.
The summit budget, according to Downing Street, was estimated at £19m, including security. According to the host country, this was to be a modest businesslike summit and the business at hand: to enhance a global co-ordination and response in order to help restore global economic growth.
World leaders were expected to make three commitments:
• to take whatever action is necessary to stabilise the financial markets and enable families and business to get through the recession;
• to reform and reinforce the global financial and economic system to restore confidence and trust; and
• to put the global economy on track for sustainable growth.
Much groundwork was done prior to the meeting. The G20 finance ministers (including Trevor Manuel) met in early March in Horsham in the United Kingdom.
At the end of the gathering, a communiqué was issued stating: “We have taken decisive, co-ordinated and comprehensive action to boost demand and jobs, and are prepared to take whatever action is necessary until growth is restored. We commit to fight all forms of protectionism and maintain open trade and investment.”
The South African/African mandate at the summit
Key recommendations were made by both the high level delegation of the New Partnership for Africa’s Development and the AU as well as South Africa. Kaberuka stressed that previous commitments to increase aid to Africa must be delivered quickly.
Some other key
recommendations included:
• providing additional resources – all countries must work with the same urgency in rescue packages;
• increasing policy space and flexibility;
• promoting trade; and
• increasing transparency, accountability and equable representation – providing adequate voice and voting rights to African countries in international financial institutions and major global governing bodies.
“Africa has a stake in the commitments made at the 2005 G8 Gleneagles Summit, in climate change and in reform of the international financial architecture,” said Kaberuka.
He added that “Africa and its people legitimately expect to sit around the table when these issues are discussed, to speak and to be heard.”
South Africa’s mandate reiterated emerging markets’ worries of protectionism, development and trading.
The greatest concern was job creation, preventing the unemployment rate from soaring, and the foreclosure of international companies based on African soil.
The plan for recovery
At the end of the day, after all the photo opportunities and heightened protesting, the G20 leaders reached an agreement to tackle the global financial crisis with measures worth
$1 trillion (around R8.5 trillion).
The IMF received the biggest increase of $750bn in its resources, which would be made available for countries that find themselves in further difficulties in the future. At least $19bn would be made available to the poorest countries.
Former South African President Kgalema Motlanthe affirmed the G20 summit had taken decisive and courageous steps.
He said that the deal focused on ways to avoid unemployment and acknowledged the importance of emerging markets to boost trade.
Leaders also agreed on new amendments to the global banking system, including institutions like hedge funds coming under global regulatory control for the first time.
Tighter regulation for credit rating agencies to prevent conflicts of interest was also implemented particularly in light of the sub-prime mortgage crisis in the United States.
One of the most controversial issues discussed was the tax haven averters. In the future, a list of tax sanctions will be deployed against countries that do not comply with anti-secrecy regulations (African leaders avoiding taxes in their own countries will now be blacklisted).
Kaberuka declared that “lessons from today’s crisis management must enable architecture for tomorrow which promotes, sustains and spreads the benefits of globalisation to global citizens”.
How well the agreed proposals will succeed in the real world is still to be seen, but one thing is certain: Africa may no longer sit on the sidelines and let the rest of the world make decisions on its behalf.
The crisis should be seen as an opportunity for African leaders to come together and work at harnessing their trading and development policies on the continent.
It may not be one man for himself any longer, because what this economic crisis has shown us is that if the aid providers have none to give, then Africa will perish.
South Africa, seen as having the strongest economy on the African continent, will have to play a more aggressive leading role in both its policies and reforms in Africa.
Perhaps a United Africa may not be a bad idea after all.
If it can allow African countries to work together in strengthening their position economically – on the continent and abroad – it would be welcomed.
Thabang Motsei
